BeechTalk - BT - Aircraft inventory levels are critically low.

Username Protected · **Posted:** 18 Feb 2022, 13:27

Username Protected wrote:

Turbines can only get down to 421C expenses if you fly the turbine 250 hours or more per year. 250+ hours in a Turbine is a lot of money at the end of the year.

For owners who only fly 75 to 100 hours per year the 421C is less expensive in total dollars per year .

You can not rationally compare turbine costs to piston costs on a per-hour basis. You should compare on a per-mile basis (or, like Gerald suggests, a per-year total budget for x miles of travel).

Turbines come out less-worse when compared per-mile.

Username Protected · **Posted:** 18 Feb 2022, 13:29

Username Protected wrote:

That's what happens when you print trillions of dollars and give it away.

Yes, starting in the 1960s. And it wasn’t offered up equally.

Username Protected · **Posted:** 18 Feb 2022, 13:32

Username Protected wrote:

Turbines can only get down to 421C expenses if you fly the turbine 250 hours or more per year. 250+ hours in a Turbine is a lot of money at the end of the year.

For owners who only fly 75 to 100 hours per year the 421C is less expensive in total dollars per year .

That is making a lot of assumptions. A 425 and a 421 are in the same price class. A 425 has more predictable maintenance, and flown a typical 20,000nm per year is often cheaper.

The “turboprops need jobs” adage is only true if they cost much more, since capital cost, hangar, and insurance are all so much more. Not the case with the conquest I (or MU2, or aero commander).

A B200 is a different beast, especially if you overhaul, in which case you’ll get crushed.

Username Protected · **Posted:** 18 Feb 2022, 13:49

Username Protected wrote:

A B200 is a different beast, especially if you overhaul, in which case you’ll get crushed.

Because an overhaul investment is never recovered? You don’t get dollar for dollar, but 80 cents on the dollar is not unreasonable

Username Protected · **Posted:** 18 Feb 2022, 13:59

Username Protected wrote:

Turbines can only get down to 421C expenses if you fly the turbine 250 hours or more per year. 250+ hours in a Turbine is a lot of money at the end of the year.

For owners who only fly 75 to 100 hours per year the 421C is less expensive in total dollars per year .

That is making a lot of assumptions. A 425 and a 421 are in the same price class. A 425 has more predictable maintenance, and flown a typical 20,000nm per year is often cheaper.

The “turboprops need jobs” adage is only true if they cost much more, since capital cost, hangar, and insurance are all so much more. Not the case with the conquest I (or MU2, or aero commander).

A B200 is a different beast, especially if you overhaul, in which case you’ll get crushed.

Username Protected · **Posted:** 18 Feb 2022, 16:02

Username Protected wrote:

The thing is - if you can afford the plane you want and its available, then my view is go ahead and buy it. Enjoy it and don’t worry about the market. Especially if you plan to keep it for several years - just know that you will suffer depreciation (perhaps a lot of it). Or if you have a second or third plane in the hangar, then sell one (or both) and take the money. What I wouldn’t do, necessarily, is sell my only plane to get the money then turn around and find out that I couldn’t really replace it with with anything better for a reasonable price that made sense under whatever budget I was working with.

For some people, waiting for the market to turn is not the best option. Some of us are getting older (in my early 60s, for example), and waiting presents its own set of risks, including developing medical issues that make it difficult to get a 3d class medical or even Basic Med, and also rapidly approaching the magic age of 70+ where insurance becomes very challenging and expensive.

Yes the “water is wet” and the market is nuts. But if you are going to fly, and have the means to purchase and operate the plane you want, then buy it and fly it and don’t look back. Carpe diem. That’s my motto right now. I’ve pulled out the bucket list and am checking items and to heck with the inheritance … lol

Just don’t put in money you can’t afford into this hobby/avocation/addiction …

Plus one. If you have the money & want to do it this is not a practice run. I'll be 70 in September & wished I had purchased a jet 10 years ago.

Username Protected · **Posted:** 18 Feb 2022, 16:39

I don’t know what percentage of these folks are putting down cash, maybe a large percent…but in the next year or so, if the inflation we are seeing does not reverse, I anticipate some significant increases in interest rates…if that happens the pool of people not paying cash is going to shrink significantly and then who, except those, rare?, cash paying buyers is going to be making an offer on an airplane emerging from a bursting bubble.

Username Protected · **Posted:** 22 Feb 2022, 18:29

Time for me to chime in as we are almost to page 100!

I'll be 55 my next birthday, and since my family has owned an airplane of one sort or the other since 1974, I have to admit I've never seen an upside market like this one. However, I should note I have seen some equally impressive downside markets. In 1985 you could buy a ratty but flyable early KA90 for 125 grand, a 1956 172 for 5 thousand, etc.

The listed markets sparse and I think lots of stuff is moving word of mouth.

Ultimately, most depreciable physical assets should have some tangential link to their use value - does a million dollar plus Cirrus have that much use value?

Disconcertingly, I see lots of return - anywhere there's lots of return there's also lots of risk.

Username Protected · **Posted:** 23 Feb 2022, 10:01

It’s just a feeling at this point, but I feel like we may be seeing some easing of demand in the overall market. It may just be wishful thinking on my part, but I suspect we are seeing at least a leveling off.

One interesting dynamic has been airplanes advertised at “stupid” prices, one of my clients referred to them as “lottery airplanes” meaning if the owner sold it for that price it would be akin to winning the lottery! These airplanes haven’t sold, that has exposed the fallacy that there was no price ceiling.

No matter what happens, we’ll be talking about this market for decades!

Username Protected · **Posted:** 23 Feb 2022, 19:21

Username Protected wrote:

Time for me to chime in as we are almost to page 100!

I'll be 55 my next birthday, and since my family has owned an airplane of one sort or the other since 1974, I have to admit I've never seen an upside market like this one. However, I should note I have seen some equally impressive downside markets. In 1985 you could buy a ratty but flyable early KA90 for 125 grand, a 1956 172 for 5 thousand, etc.

The listed markets sparse and I think lots of stuff is moving word of mouth.

Ultimately, most depreciable physical assets should have some tangential link to their use value - does a million dollar plus Cirrus have that much use value?

Disconcertingly, I see lots of return - anywhere there's lots of return there's also lots of risk.

Value is defined as the regard that something is held to deserve; the importance, worth, or usefulness of something. That can really only be determined by the one that owns it or wants to own it. I suspect that people that pay $1 million for a Cirrus value them for $1 million just as someone that buys a Corvette for $100,000 values it for that amount. Just for the record, just because something is a depreciable asset doesn't mean it has to go down in value, that is more of an accounting term.

Username Protected · **Posted:** 24 Feb 2022, 02:47

Username Protected wrote:

Time for me to chime in as we are almost to page 100!

I'll be 55 my next birthday, and since my family has owned an airplane of one sort or the other since 1974, I have to admit I've never seen an upside market like this one. However, I should note I have seen some equally impressive downside markets. In 1985 you could buy a ratty but flyable early KA90 for 125 grand, a 1956 172 for 5 thousand, etc.

The listed markets sparse and I think lots of stuff is moving word of mouth.

Ultimately, most depreciable physical assets should have some tangential link to their use value - does a million dollar plus Cirrus have that much use value?

Disconcertingly, I see lots of return - anywhere there's lots of return there's also lots of risk.

Value is defined as the regard that something is held to deserve; the importance, worth, or usefulness of something. That can really only be determined by the one that owns it or wants to own it. I suspect that people that pay $1 million for a Cirrus value them for $1 million just as someone that buys a Corvette for $100,000 values it for that amount. Just for the record, just because something is a depreciable asset doesn't mean it has to go down in value, that is more of an accounting term.

Username Protected · **Posted:** 24 Feb 2022, 06:35

The house sitting on the land IS a depreciating asset unless money is spent maintaining/upgrading it - the land it sits on goes up (and sometimes down) but houses go to zero eventually.

Username Protected · **Posted:** 24 Feb 2022, 10:53

Username Protected wrote:

The house sitting on the land IS a depreciating asset unless money is spent maintaining/upgrading it - the land it sits on goes up (and sometimes down) but houses go to zero eventually.

Correct. However the accounting depreciation schedule never mirrors the real world schedule.

In the U.S. the IRS requires you to depreciate the purchase of real estate (excluding land) over 27.5 years. Last I checked, almost all buildings last for hundreds of years with basic TLC.

Username Protected · **Posted:** 24 Feb 2022, 13:56

Chip:

With 405 new business jets and 376 turboprops delivered, what percentage of the real market demand is being met with new product?

Based on historical growth and future growth of the market, do you feel manufactures are adequately addressing demand for the future? If not what market segment is being underserved?

If we really wanted to get cheeky, what's in better shape, new car shipments or new aircraft deliveries?

Username Protected · **Posted:** 24 Feb 2022, 14:52

Username Protected wrote:

Chip:

With 405 new business jets and 376 turbines delivered, what percentage of the real market demand is being met with new product?

Based on historical growth and future growth of the market, do you feel manufactures are adequately addressing demand for the future? If not what market segment is being underserved?

If we really wanted to get cheeky, what's in better shape, new car shipments or new aircraft deliveries?

The manufacturers are falling far short of meeting demand in any turboprop or jet market. I can't think of any new turbine aircraft that you can order and take delivery this year, maybe an M600? Most manufacturers have sold orders well into 2023 with more popular aircraft being sold out until 2024 and even 2025.

The reality is they can't. Even if all manufacturers doubled their production it wouldn't be enough and they simply can't do it.

The manufacturers are also aware that this can drop just as fast as it escalated, no one wants to spend the money and effort to make dramatic increases in production just to end up with unsold inventory and cancelled orders.