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This was posted by Bert Garcia,, on the Cessna 150-152 list. I thought it was a great post and highly relevant to the finances of flying and airplane ownership, so with his permission I am reposting it here.

The reason for putting my airplane on Aerotrader at AOPA VREF was to see
what kind of response I would get. This exercise was in anticipation of me
purchasing another aircraft and trying to gauge how long it would take to
sell my 150. Needless to say. 9-11 did have alot of people spooked and
response was initially very slow. I turned down the opportunity to purchase
that other aircraft because I sensed a decline in the market. However,
things have begun picking up again and I find myself behind the 8-ball not
being able to really show it because the prop is still off the aircraft and
I'm still doing some minor engine work to it.

I would agree with your market analysis up to a point. What you've said is
true for assets that follow a normal depreciation curve; i.e., boats, cars,
motor homes, fiber optic equipment, etc. It's well known that the
depreciation curve for these items is simply a downward slope that
terminates at $0 value after some given time. The curve is steeper for some
than others depending on the asset. However, a long term analysis of the
aircraft market speaks for itself. The valuation (was depreciation) curve
of a pre 90's aircraft is more of a checkmark or "Nike Swoop" with the value
falling initially from new then climbing back up to its original price and
then past it. The reason for this is obvious. There continues to be a
constriction in the supply for small aircraft, hence their appreciation past
their original selling price. Even that 1967 F model 150 selling for $12K
to $15K is selling above it's original 1967 selling price (not adjusted for

Cessna and other manufacturers know this and are taking advantage of it by
selling their aircraft at extraordinarily high prices attempting to capture
the value in the back, upward, part of the valuation slope at the time of
new product sale. They are pricing their aircraft high enough that it may
NEVER appreciate past its original selling price. This has two distinct
benefits for them. They keep the GA fleet small and the demand high, and
they increase overall profitability by selling 1000 airplanes at $150K
rather than 2000 of the same airplane for $75K. Before 9-11, Cessna was
getting $150K for a new 172 and Diamond was getting $100K for a two place
Katana. A local Raytheon manager who used to work in Wichita KS for Cessna
has often repeated to me that 172 airframes, while still mostly hand built,
cost the company about $15K to fabricate and assemble. Even with product
litigation insurance costs attached to each airframe, Cessna can afford to
profitably sell these aircraft for almost half of what they are asking

The effect on the used GA aircraft market was obvious. Thirty year old
airplanes became expensive again.

Now with regards to current conditions, I think your argument about aircraft
depreciation is based on two short term assumptions. First, the current
economic instability (however gauged) does have a dampening effect on
"recreational" capital expenditures (such as airplanes). Second, the
current FAA part 91 flight restrictions that have grounded certain aircraft
are artificially depressing their value. After all, if an airplane can't
fly, what good is it, right? Combined I do believe these will have a
dampening effect on the valuation of small aircraft but only for the next 6
months. The manufacturers are the real bench mark in this market. So long
as Piper and Cessna can continue to command $150K or better for a four place
aircraft and companies like Diamond can get $100K for a two place, the used
market will continue to remain the only available source to fulfill current

Now a word about the current level of demand. Simply put, it hasn't changed
since 9-11. There are still the same number of GA pilots in the pool.
While they may not be flying right now due to economic, weather or other
reasons, the fact remains that they are still out there and still very
interested in flying. Add to this the fact that there are more pilots that
airplanes in the market to serve them. It's been that way for a very long
time. Otherwise a 1965 Cessna 150E would have gone the way of a 1965 Dodge
Dart. If the economy improves in time for the spring flying season,
Feb/March/April, the pent up demand for recreational flying will explode!
Pilots are people too and they'll want to put the worries of 9-11 and a soft
economy behind them by taking to the skies.

In view of all of this, I have raised the price of my aircraft to $23,500.
I've also cleared a line of credit in order to take advantage of a good deal
on a 4 place that I came across a couple of days ago. Like you, I'm
constantly looking. There are people selling right now for various reasons
and they are experiencing a lower demand than a few months ago; hence the
lower short term prcing. To me that singals opportunity for a smart bargan

I might end up being a two airplane owner for a while but I'm certain a
reliable trainer like a 150 in great shape will continue to command a
premium when the flying season is reopened. After all, what other airplane
can you put car gas into or fly around on 100LL for less than 20 bucks an

You could say I'm going LONG on GA!

Good Luck!

Bert Garcia

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