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Environmental Issues Unlikely to Impact Sector

December 9, 2019

The use of an airliner type of aircraft for personal travel may seem at odds with the move towards greener methods of travel but there are so few such airliner types that this segment of the market is unlikely to be adversely impacted.

Values courtesy of The Aircraft Value Analysis Company;

Airliner Business Jet Current Market Values – December 2019
Aircraft Age ValueUS$m Trend Analysis
A318 Elite 2006-082008-13 16-2619-34 A 2008 A318Elite is on the market for $22.5 million. The danger for older airliner types is that the interior may represent the styles of a decade or so ago and will therefore lack the presence of more modern offerings. A dark wood interior with gold fittings has perhaps limited appeal in the used market, particularly if the aircraft is to be used in a charter capacity. The A318 continues to be a viable VVIP aircraft meeting the needs of owners that require capacity at a reasonable price. With the A318 not being a member of the neo ACJ family, the market will be limited.
A319ACJ 1998-032003-072007-112011-172019neo 12-2015-2721-3732-7485-95 A 2008 A319ACJ is on the market for $47 million which is on the high side even with only 3,688 hours. The ACJ319 represents versatility having the capacity and configurations that will suit the needs of VVIP operators as well as those needing entourage space. With a range in excess of 6,000 nautical miles (assuming additional tanks are installed), the aircraft represents one of the most versatile of airliner VVIP aircraft. The arrival of the A319neo may see the replacement of some older ACJ319s in the medium to long term but for the time being the aircraft is seen as desirable. It is to be noted how much more expensive than the A318Elite the ACJ319 is.
A320 Prestige 2009-112011-172019neo 28-4134-8295-110 It is possible to upgrade a commercial A320 but this will be expensive and will have much higher time on the airframe and engines and finding finance to convert an older A320 will be more difficult. There are perhaps less than 20 ACJ320s in service in varying roles. As such the number being advertised can also be expected to be low with only two being identified for sale. The A320 offers more capacity and volume and may allow a second bedroom which is not so easy on the ACJ319. Values are seen as having experienced some stability even as Airbus is pushing the A320neo variant of which some have already been ordered but replacing an existing aircraft with the A320neo will take time.
A340-500 2002-09 40-80 There may be an issue if trying to find finance for such an aircraft as any lender will be seeking to cushion themselves from the issue of remarketing. The loan to value ratio may therefore be much lower than expected. There are very few A340-500s in a VVIP role and this is either good or bad. The time needed to sell such an aircraft can run into years and there will need to be considerable flexibility when negotiating the price. Pricing can be extremely variable depending on the needs of the seller such that changes of $10-20 million may be seen. The low utilization has little impact on the fuel component of operating costs and engine maintenance costs can be very limited in such operations. Calendar related maintenance issues can be an issue. The market for the A340-500 is losing some of its impetus as operators have the option to opt for twin engined aircraft which offer similar interior capacity but four engines do offer some performance advantages.
BBJ 1998-032003-082008-112011-17 12-1714-2625-3336-63 A 2015 BBJ is on the market for $48 million. The BBJ sees a number on the market at any one time. There has been some downward movement in pricing of the BBJ. Again the older examples will perhaps be more difficult to place. The original hybrid BBJ is losing some of its appeal as age increases and new types are available. The interior space may not be as great as imagined. Seven or nine auxiliary tanks are preferred to ensure that range is at the maximum with anything less warranting something of a discount.
BBJ2 2001-052005-112011-172019MX 15-2523-4744-7595-110 The aircraft can still be traded as at $50 million this not only represents a discount of some 50 percent compared to a new example but it can also be secured within a reasonable period of time. The capacity of the BBJ2 is considerable offering a number of interior options that can greatly enhance its efficiency yet such space can see a highly personalized interior which may not be attractive to potential buyers The BBJMAX8 is priced at over $95 million and this may see some operators seek to replace existing units but because the demand for passenger aircraft is so great then finding a slot for the BBJ MAX will be problematic.
BBJ3 2009-112011-172019MX 38-5352-83105-115 The replacement BBJMAX9 is priced at more than $105 million which suggests that the interior costs some $40 million when compared to the price of $55 million for a commercial B737-9. There were only a few ordered and as such there are few on the market and these can taken months if not years to sell. The BBJ3 is not for the faint-hearted in terms of price but capacity offers many options that can provide efficiency. Finding a buyer can take years particularly if the interior does not appeal and requires refurbishment. The aircraft offers yet more space but is naturally not so popular as the BBJ2.
BBJ747-8 2010-19 115-295 Remarketing the aircraft may also be difficult as most owners in this category have their interior tastes which suggests at a minimum, some reconfiguration would be required all of which takes time and money though at this level that is not usually an issue. The price of Air Force One may run into billions – a fixed price contract has been agreed at a modest $3.9 billion for two aircraft. The earlier B747-400 is available as a VVIP aircraft and there is a 1991 vintage aircraft with 16,000 hours being advertised for $28 million. Boeing is still offering the B747-8 to any VVIP customer but the cost for the normal operator the cost may be more than $300 million if a particularly ostentatious interior is selected which compares with $150 million for a commercial customer. The cost of fitting out the aircraft in a VVIP configuration will be in excess of $100 million.
B767-200VIP 1984-02 9-45 The type is also readily available although there will be a long wait to customize the interior. The aircraft is ageing and there will be newer B767-300s and B777s that will perhaps be viewed as replacements for the smaller -200 in the coming years. Values are remaining stable in view of the lack of alternatives. There are a number of B767s in a VIP configuration with well known business owners particularly as the cost may be justified. The interior space is particularly large when compared to the cost of acquisition and conversion cost.
B777-300VVIP 2003-19 80-230 The capacity of the aircraft is substantial and is able to meet the needs of any owner although the two decks of the B747 and the A380 do offer opportunities. The cost of a B777-300ER VVIP can be expected to be in excess of $250 million depending on configuration.
Embraer Lineage1000 2009-19 14-38 The values of the Lineage 1000 have not performed well. In less than five years the value of the Lineage has fallen by half. There are a number on the market. Operators have more choice in this segment in terms of dedicated long range business jets such that Embraer has to sell the aircraft on the basis of its volume rather than its range as range is not its forte. The Lineage 1000E offers more range, a new IFE and cockpit options and this has inevitably impacted the pricing of the 1000.
Commentary reflects the changes in the market since the previous update of September 2019.



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