JetSwiss Pilatus PULSE - June 2023

PRE-OWNED PILATUS MARKET: SETTLING INTO THE ROUND

THIS MONTH’S BACK PAGE FEATURE: 4 LEGAL DON’TS WHEN BUYING AN AIRCRAFT

PILATUS PC-12 MARKET OVERVIEW FOR JUNE 2023

SETTLING INTO THE ROUND

What I love about competition golf is it’s just you and the golf course. You cannot control what another player does, what the weather might be doing, course conditions, etc. There are only a few controllable factors for a player which include your preparation, midround adjustments, and the space 6 inches wide between your ears, your mindset. A tournament round usually starts off with first-tee nerves, adrenaline pumping, and potentially a lot of effort in order to get the round started off properly. Usually, by the third or fourth hole, you know what your game looks like that day, and you start to settle into the round.

The Pilatus market is starting to settle into the round.

Inventory levels and nestled in. We started the year in the low 30’s and have been hovering around 50 airplanes for sale in the last two months. Pricing is no longer on the rise, but major drop-offs have not occurred either. Sale price data will suggest the market peaked in Q3 2022 when PC-12s averaged 110-115% of their new price. That number is now averaging around 105%. Transaction data suggests activity is picking back up after a very quiet Q1 and start to Q2. Only 8 airplanes sold in Q1. That number has doubled in Q2, and we still have a month to go. The new normal has been set. Buyers and Sellers are starting to get a sense of what the market conditions look like and there is enough confidence moving forward they’re able to make sound buying and selling decisions.

As we look ahead to the remainder of 2023, we are having discussions with our clients about

preparing for what the marketplace will look like. More and more, it is evidently clear that buyers want turnkey solutions. If there are aspects of an airplane that need to be dealt with, that’s okay, just as long are the homework is done and a plan is in place. There will certainly be some adjustments that must take place. No game plan is perfect, we’ll have to react to the worldwide landscape. There are always political implications for our industry, and we’ll react accordingly to place our clients in the best position possible. Continuously looking at pricing dynamics, aftermarket upgrades, and various demand factors, allows us to adapt to the changing landscape. Lastly, through publications like this, aircraft evaluations, and detailed discussions with our clients, we are able to get those decision-makers in the right mindset to be successful. Setting proper expectations and telling our clients the truth allows them to make informed decisions and delivers rewarding results.

All of 2022 was like standing on that first tee trying to pipe a drive down the middle of the fairway with the next group waiting in the wings and the beverage cart barreling down the cart path. It was a chaotic environment; we were left standing there trying to remain in the “zone.” We watched some shots get nailed down the middle, others soared out of bounds. It was a wild ride for the preowned airplane industry as a whole. Rolling into 2023 was like coming off the first green with all craziness of the first hole behind us now there is not anyone in sight. We’ve now eased into the round and the goal is to make a lot of pars and birdies while limiting the bogies. Being prepared, making slight adjustments, and having a good mindset will carry us through the rest of the round… I mean year.

Fly Safe, Scott Glenn

MARKET CHANGES IN THE LAST 30 DAYS BY MODEL YEAR

$7,000,000

$6,000,000

Asking Price Total Hours

$5,000,000

$4,000,000

Asking Price By Total Hours Under Contract No Contract

$8,000,000 0 2500 5000 7500 10000 12500 15000

Similar to the Asking Price vs Model Year chart, this information helps our clients determine “the mileage on the car” for their specific budget.

$3,000,000

DOUBLED $2,000,000

“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.

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.

PILATUS

PROJECTS PER YEAR. WE ARE THE WORLD WIDE LEADER OF PILATUS PRE-OWNED SALES.

Asking Price By Model Year

ASKING PRICE BY MODEL YEAR

$3.370M PC-12/45 AVERAGE ASKING PRICE

$3.937M PC-12/47 AVERAGE ASKING PRICE

$4.996M PC-12NG AVERAGE ASKING PRICE

$7.200M PC-12NGX AVERAGE ASKING PRICE

$12.661M PC-24 AVERAGE ASKING PRICE

TIME ON MARKET

4 LEGAL DON’TS WHEN BUYING AN AIRCRAFT

By: John Farrish InFlight Law

Buying an aircraft is an exhilarating experience, but it’s important not to rush through the process. Many buyers make common mistakes that can be easily avoided with proper due diligence. Here are four key mistakes to steer clear of when purchasing an aircraft:

1. DON’T IGNORE BIG BROTHER – HE IS WATCHING

We won’t get into politics, but let’s just say, general aviation is in tax collectors’ crosshairs. It is imperative to implement a tax plan before you go under contract. Even if you buy the aircraft in a state with no sales tax, you may still be subject to a “use tax” when bringing it into your home state. Tax planning should go beyond just considering the date and location of closing.

2. DON’T LET THE FOX GUARD THE HENHOUSE – HAVE SOMEONE INDEPENDENT PERFORM THE INSPECTION

Many aircraft purchasers are so excited to start flying their new dream machine that they will often fly right past a diligent inspection process. The first key is to bring the aircraft to an independent inspection facility. Have a fresh set of eyes inspect the aircraft. The purchase agreement should clearly specify the standards for repairs and maintenance, including the functionality of systems and adherence to inspec-tion schedules. Addressing these details in advance through a properly worded air-craft purchase agreement can prevent disputes during the inspection process.

3. DON’T ACCIDENTALLY START AN AIRLINE – FOLLOW FAA RULES ABOUT YOUR LLC AND OWNERSHIP STRUCTURE

When structuring the ownership of your aircraft, it’s crucial to follow FAA rules and regulations. Registering the aircraft under a Limited Liability Company (LLC) without an operational agreement in place can inadvertently lead to running an illegal com-mercial flight operation. This can result in FAA fines, license actions, and potential in-surance coverage denial. Ensure compliance with FAA regulations and consult pro-fessionals familiar with aviation law to avoid legal and insurance issues.

4. DON’T BE A HERO – DON’T DO IT ALONE

While you may be knowledgeable about flying, acquiring an aircraft involves complex transactions that benefit from a team of experts. Hiring professionals with expertise in different areas can provide financial protection, peace of mind, and save you time. Consider the following experts:

Aircraft Broker/Dealer: An experienced professional broker/dealer can advise on air-craft values in a specific market segment, provide accurate pricing data (historical as well), and connect you with potential sellers before they list their aircraft publicly. Highly specialized firms excel in this arena, and with tight markets/high demand, pri-vate sale opportunities are extremely valuable.

Aviation CPA: Collaborating with an aviation-focused certified public accountant can help optimize tax benefits, ensure compliance with reporting requirements, and streamline accounting processes.

Aviation Attorney: Engaging an aviation attorney who understands Federal Aviation Regulations (FARs) can help negotiate contracts, establish FAA-compliant operating structures, oversee closing procedures, and review legal agreements related to the hangars, management, charters, or pilot arrangements. Also, understanding the landmines of an aircraft purchase agreement can mean the difference between a smooth transaction and a post-closing lawsuit! A good aviation attorney is invalua-ble.

All of these “DON’Ts” are easily avoided with a just a little bit of due diligence. Use your broker/dealer as a resource to help you find the perfect team, put together the perfect transaction, and start flying your perfect plane.