PRE-OWNED PILATUS MARKET: WHEN OPPORTUNITY COMES FLYING
We’ve been thinking a lot about the opportunity of the pre-owned Pilatus market these days. At JetSwiss, we have opportunities to purchase aircraft, to sell someone else’s aircraft, and to assist with procuring an aircraft/setting up a flight department (Acquisition/Summit Services) several times a year. Each one of these circumstances represents an “opportunity” for revenue and profitability.
Is the objective to maximize each ‘opportunity’ to its fullest potential? Some would say that the goal of any business should be to maximize profits. This is exactly the attitude you should have. However, if a person steps back and looks at the 30,000foot perspective--there’s a difference between selling your used lawnmower to your neighbor at a fair price and selling it to him by ripping his lips off his face! Big difference…
In today’s Pilatus market, we are witnessing the ‘difference’ everywhere. Sellers who purchased their aircraft (say before January of 2021) or “pre-crazytown” Pilatus market values are now asking absurd prices. OR, my favorite Seller—he just bought a brand new aircraft and now he wants $1.5m more than sticker for it?!?!?! Did you sincerely want to fly the aircraft when you ordered it in the first place? Is this what “opportunity” looks like? Or, perhaps it’s free market capitalism at its best?
As of writing this edition, pre-owned values are still hanging in there quite well, with current prices reflecting the following percent of their original new sticker price:
/45 99%
/47 103%
NG 102%
NGX 125%
cost of ‘opportunity?’
Since our last publication in July, the Pilatus PC12 market has added 12 more airframes:
4 - /45’s
6 – NG’s
2 – NGX’s
In the last two months, the number of aircraft for sale has gone up by 14%. Conversely, the average price of an aircraft has stayed
the same. We feel that this is somewhat indicative of a normal year-over-year demand worldwide for the aircraft. On average, if you calculate the past 10 years of pre-owned sales, there are roughly 115 aircraft that are sold annually. This tells us that demand is still well in front of supply at current levels.
Again, so where is the “opportunity” here? In our opinion, we have exited the greed level of ‘opportunity’ in the market. We have now entered what we are quantifying as a somewhat healthy marketplace for buyers and sellers: terms are more equitable and normal for inspections, there’s a little bit of negotiation surrounding each project, and values have flattened out. They’re not going up dramatically, and they’re not decreasing dramatically. So, the ‘opportunity’ from our perspective is to execute a quality project for clients (both buyers and sellers), price aircraft for sale at fair market values, and advise our buying clients to purchase at fair market values when possible. Sprinkle in TO LIFT and a lot of diligence and you have ‘opportunity’ working!
Our biggest tool to execute this is our PVR (Pilatus Value Ranking). In conjunction with an outside consultant, we’ve spent the last two years developing a mathematical algorithm that takes the Pilatus marketplace and ranks each aircraft available from best value to worst value. For our sellers, we advise them to price the aircraft to be in the top 10 of the PVR ranking. Conversely, we advise our buying clients to purchase in the top 10 of this PVR. Again, ‘opportunity’ is defined—JetSwiss style.
In summary, the opportunity today is for smart sellers and smart buyers to execute a quality, fair, diligent, and neighborly transaction. Simple as that. It reduces risk, creates solid longlasting relationships, promotes a stable marketplace, and everyone walks away feeling like a winner. This is what we do. But don’t kid yourself. We are reminded a half dozen times a year of bad actors. It’s the real estate agent that told your neighbor his house was worth $300,000 more than the market—Just to stick a sign in the yard and standing in the driveway after work, your neighbor couldn’t wait to tell you what he was listing his house for! Funny, that same neighbor was nowhere to be found 138 days and four price reductions later. He was certainly not boasting about his process then, was he? It’s these bad actors (insert: Aircraft Brokerville here) that provide organizations like ours, OPPORTUNITY.
Much like “beauty is in the eyes of the beholder” so is ‘opportunity’. Our monthly PULSE publication is a great step towards knowing when to spot a beautiful opportunity. Give us a shout to discuss ‘opportunity’ and what it may mean for you!
Fly safe, Bub
Similar to the Asking Price vs Model Year chart, this information helps our clients determine “the mileage on the car” for their specific budget.
“Want to own a low time aircraft?” This chart will give you an indication on what you will spend. Note: aircraft under 1,000 hours total time historically yield much higher prices.
THE NUMBER OF PC-12S AVAILABLE HAS ALMOST DOUBLED
SINCE LAST YEAR.
This chart reflects the current market for Pilatus PC-12 aircraft that are on the retail market. Want to know how much your Pilatus dollars will buy?
This is a great place to start. As you can see, the aircraft model year plays a key factor in pricing of the aircraft, and thus generates a commensurate trend curve. This data provides a baseline for our aircraft evaluations.
PROJECTS PER YEAR. WE ARE THE WORLD WIDE LEADER OF PILATUS PRE-OWNED SALES.
$3.360M PC-12/45 AVERAGE ASKING PRICE $3.648M PC-12/47 AVERAGE ASKING PRICE $7.083M PC-12NGX AVERAGE ASKING PRICE $12.880M PC-24 AVERAGE ASKING PRICE $15,000,000 $10,000,000 $5,000,000 $0
BREAKDOWN OF DAYS ON MARKET FOR PILATUS PC-12
0-30 Days on Market
31-60 Days on Market
61-90 Days on Market
4-6 Months on Market
7-12 Months on Market
1-2 Years on Market
they will be secure. Good logs are about 30% of the value of your aircraft, so don’t lose them. Most maintenance providers will be happy to store your logbooks for you and probably at no charge. You don’t have to remember your logs at maintenance time, and they always have quick access to them should questions arise.
3. Do you recommend the warranty plans for Honeywell Maintenance and Avionics? Why or why not?
1. How far ahead should you schedule your annual/ maintenance event?
I would recommend at least 6 months. Ideally, we try to work like your doctor. Your doctor generally doesn’t let you out the door until you schedule your next appointment, and we try to do the same. We understand that planning for that far out in the future can be a little difficult, but if you need to reschedule or change your times, it’s a lot easier if you already have a slot than trying to find a slot at the last minute. We also recommend that you don’t schedule a critical flight hard up against the end of an inspection. Try and knock out any critical flights before your maintenance entry date, so that if something comes up in the course of the inspection, then there is flexibility to cope with delays.
2. Any aircraft care/operational hints to help reduce maintenance expenses?
Keeping the aircraft in the hangar and washing the aircraft on a regular basis helps prevent corrosion. If you’re visiting a coastal or high corrosion zone area for more than a day or two, considering washing the plane with fresh water and performing a fresh water rinse to flush out salt and other contaminants. This will prevent corrosion from starting. Protect your logbooks by keeping them in a fireproof safe or somewhere
Extended warranties have gotten a bad reputation primarily from the automotive sector. In advanced aircraft like a PC-12/47E, programs such as the Honeywell MSP program are an extremely good idea. The cost of suddenly having to replace a computer card routinely runs over $100k and some of the parts covered under this plan exceed $500k. An MSP contract runs for 3 years and generally costs about $30k per year. A single item being replaced during those 3 years will generally pay for the entire 3-year contract. One of the other benefits of an extended warranty program is it removes a lot of roadblocks to getting parts in. This gives the shop some leverage over the part supplier to keep their end of the contract up and while helping the owner get the parts they need in a timely fashion.
4. What problems do you see most in the PC-12?
The PC-12 family is a great series of aircraft and the key to keeping the aircraft trouble-free is following operating manual procedures and keeping up with scheduled maintenance.
5. Any recommendations to reduce maintenance downtime at annual?
Prior planning and communication with your service provider allow them to preorder and stage parts for your scheduled maintenance ahead of time. Send a list of your squawks to your maintenance provider a couple of weeks before the start of your inspection so they can start the troubleshooting process before the plane is even in the hangar. Keep good records of the aircraft times and cycles as your provider needs that information to plan your inspection. Bring your logbooks!
