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Values of Some Airliner Type Business Jets Stable

January 23, 2017

The market for the larger business jets became dire in 2016 with falls of more than 30 percent being recorded for some aircraft types but for the larger dedicated airliner types the market was less severe.

While a limited operator basis is usually seen as a negative, for the airliner type of VVIP jets the very limited resource can make the used market more robust. The limited opportunity to acquire a new airliner type VIP transport in a meaningful timeframe inevitably causes difficulties for interested customers. The used market will therefore likely offer the most obvious solution. There have relatively few airliner types delivered over the last decade though a number of BBJs are being advertised.

The private jet industry has been seeing a growing trend among the ultra-high net worth for commercial airliners to be converted into supersized private jets. While a Gulfstream, one of the most popular private jets in the market, can carry 16 passengers much more comfortably than first class on a commercial airline, a converted airliner can offer passengers an even more luxurious living space, including bedrooms, boardrooms and even dining rooms. This sector for luxury airliners is nothing new in the private aviation sector, but it’s becoming an increasingly important revenue stream for the main players Boeing and Airbus, both who now have specialized departments dedicated to converting the aircraft into customized private jets. Airbus concluded that in some cultures in particular, the UHNW generally likes to travel with a larger entourage than most private jets allow. This found that the Middle East, Chinese and Russian clients are those that travel in groups of a dozen or more and have a particular interest in buying a luxury converted private airliner. These larger group requirements are also aligned with global billionaire growth trends. Demand from China, Middle East and Russia has created a new and much needed revenue stream for Boeing and Airbus.

The number of seat alone is not necessarily a deciding factor in acquiring an airliner for VIP use. Customization is important, and converted airliners mean that aircraft can be fitted with every VIP requirement – to include showers, a full-service kitchen, state boardrooms, cinemas, pianos, and fish tanks. Costs can vary, but a private B747 “shell” costs around $200 million, while an Airbus A380 would cost around $250 million. Buyers then typically spend between $100-200 million upwards on customized furnishings and fittings. As well as being the ultimate status symbols for the top-tier niche of aircraft owners, converted VIP airliners are also available in the private jet charter market. Whether for large corporate events, private group travel or music tours, the converted VIP airliner is the pinnacle of private jet luxury.

The used values of the airliner type aircraft are therefore enjoying far better fortunes than most other segments of the business jet market. The absence of delivery slots in the short term and an expanding global market is inevitably creating a shortage of such aircraft and as such used values can be expected to remain stable if not improve in the near term.

Values courtesy of The Aircraft Value Analysis Company;

Airliner Business Jet Current Market Values – January 2017
Aircraft Age ValueUS$m Trend Analysis
A318 Elite 2006-082008-13 24-3528-45 While small in terms of airline size, the A318 offers considerable capacity when compared to the dedicated business jets, even the larger offerings. The pricing of A318s in a VIP configuration remains comparatively stable though there are a few on the market which has the potential to cause some competition. A 2009 example is priced at $33.5 million which a 2011 has an asking price of only $31.5 million but the final sale price could be some ten percent lower depending on the relative attraction of the interior.
A319ACJ 1998-032003-072007-112011-17 13-3025-3934-5448-85 The A319ACJ or Airbus Corporate Jet has not been delivered recently. A number have already been sold on the pre-owned market which indicates that the aircraft is being traded. A 2011 vintage aircraft is still on the market for $39 million after a number of months on the market. There are actually some 72 in service of which six are being advertised. The configuration of the interior can vary considerably from a basic business class to a VVIP.
A320 Prestige 2009-112011-16 43-5750-95 There are some 12 A320 VIP jets flying as the type has been largely sidestepped in the corporate world unlike the BBJ. There are only two on the market but they have been advertised for more than a year. Values are seen as having experienced a modest fall as Airbus is likely to be pushing the A32neo variant.
A340-500 2002-07 75-99 The A340-500 is very specialist and rare. The four engines may actually be viewed as attractive. A 2002 example but with a high number of cycles is priced at $110 million though a later built aircraft with few hours was priced below this amount. A new A350 has been ordered for VIP use.
BBJ 1998-032003-082008-112011-17 16-3026-4340-5355-81 The BBJ has been delivered in some numbers with 120 currently in service of which 16 are on the market. Such is the age profile that there now exists a steady ebb and flow. Pricing is therefore competitive. Most early examples are likely to be priced below $35 million. Prices have fallen by a small degree. The BBJ is naturally the immediate choice for VIP use.
BBJ2 2001-052005-112011-17 22-4036-6460-91 Being larger, there was more limited appeal for the BBJ2 but there are still 17 in service of which two are on the market. The capacity of the BBJ2 is considerable offering a number of interior options that can greatly enhance its efficiency. The BBJMAX8 is priced at over $95 million and this may see some operators seek to replace existing units.
BBJ3 2009-112011-17 55-7370-100 There are only seven units Based on the larger B737-900ER, the BBJ3 is not for the fainthearted in terms of price. The aircraft offers yet more space but is naturally not so popular as the BBJ2. Remarketing may be more difficult than imagined and it will take time for a buyer to be found. The replacement BBJMAX9 is priced at nearly $105 million. There have only been a few BBJ3s delivered.
BBJ747-8 2010-16 150-260 Boeing may be seeking to offer the BBJ B747-8 at a heavily discounted price to keep production going but the number of customers for the type is likely to be limited – very limited.
B767-200VIP 1984-02 10-55 There are a number of B767s in a VIP configuration with well known business owners. The interior space is particularly large when compared to the cost of acquisition and conversion cost.
Embraer Lineage1000 2009-17 22-40 While used pricing may have stabilized somewhat recently this is only after a fall in value from nearly $50 million to around $35 million. The Lineage 1000 is based on the E190 and has sold in reasonable numbers. The volume compared to dedicated business jets is that much greater but not the range. Embraer is finding the market for business jets challenging. The values of the Legacy 650 have experienced considerable falls.
Commentary reflects the market as of the last quarter.
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