Becoming an Aircraft’s Last Owner: Top Buyer Tips

What defines an end-of-life business aircraft, and what should possible buyers consider before acquiring one? Following are some tips from the experts.

When a business jet reaches 25-30 years old, the pool of buyers rapidly diminishes. It is not uncommon for aircraft of this age to have depreciated to such a point that their value is less than the cost of an engine overhaul or other major mandated upgrade – meaning there’s a strong possibility that the jet’s owner becomes its last, selling it for parts.

For some, however, shopping for end-of-life aircraft provides a more accessible route to private aircraft ownership. These owners acquire their planes with full knowledge that they’ll be its last owner. But what are the considerations that must be made before making such a decision?

How to Define an End-of-Life Business Aircraft

To begin with, it can be challenging to determine whether an aircraft is nearing the end of its life. According to James Becker, Senior Appraiser and Market Analyst at Elliott Aviation, an aircraft has both a physical and an economic useful life.

“The difference is that the physical life is the number of years or hours that the aircraft can be operated, without considering functional or economic obsolescence. The economic useful life is the number of hours or years that the aircraft may be profitably used for the purpose intended.”

Hence, defining which aircraft can be considered ‘end-of-life’ is generally difficult. The definition is a moving target that depends on a variety of factors, such as the value of a potential purchase and how long buyers will be able to fly the aircraft before it is completely grounded.

Marian Jancarik, Managing Director at Jetron, distinguishes three factors that could qualify a business jet as being an ‘end-of-life’ unit. The first is the total age and time of the airframe. Usually, he says, it’s over 20 years old and has more than 10,000 hours of total time.

“Second is the question of upcoming major maintenance on Life-Limited Components such as the engine, propeller, landing gear, or major periodic airframe maintenance (C-checks, etc.),” he adds. “The third factor concerns avionics upgrades (such as ADS-B Out, CPDLC, etc.).”

While an older generation aircraft might seem like good value, and buyers often get a lot of aircraft for their money, Christopher Mace, CEO at MaceAero, believes that this is a trade-off against the owners’ direct operating costs. With older technology comes higher running costs and lengthier lead times to source replacement parts.

“These aircraft will also be good or bad buys depending upon the history of the aircraft, the total time and upkeep from previous owners, and its position in terms of major inspections,” he adds.

“End-of-life aircraft in Business Aviation tend to be more calendar [driven], rather than significant flight hours like you would find in the airline world.”

Who is an End-of-Life Business Airplane Suitable For?

Needless to say that buying an end-of-life aircraft is certainly not for everyone. Graham Johnson, Vice President of Sales at Valor Jets, notes that the most likely buyer profile would be someone who’s had multiple aircraft in the past, understands the full pros and cons of aircraft ownership, and is unconcerned with the age and hours accumulated.

“An end-of-life aircraft wouldn’t be suitable for a first-time buyer, as the plane’s age with high hours usually will...spook a first-time operator,” he adds.

Buyers will also have to account for a lower dispatch reliability, understanding that the aircraft will most likely be below average – perhaps significantly so – when compared to newer aircraft, and therefore will not be appropriate for high-utilization flyers.

“These aircraft are more suitable for low-utilization owners willing to endure longer downtimes due to parts, pilot, and maintenance issues,” Becker outlines. Likewise, owners who are looking for maximum performance criteria in limited-capacity airports would likely need to opt for newer aircraft.

Price is an inevitable decision driver for these aircraft types, Mace highlights. “Those owners looking for a good purchase deal without huge capital outlay, or willing to accept a lower write-off of depreciation value on the final years of the end-of- life aircraft may also see benefits,” he elaborates.

Stressing the importance of being responsible with the decision, Jancarik adds the end-of-life aircraft option “offers a way to enter private aviation at a lower cost, but it requires careful consideration of ongoing operational expenses and regulatory compliance.”

End-of-Life Business Airplanes: What are the Limitations?

While some of the advantages of this market are the acquisition prices and the fact that not everyone is seeking the same unit, one of the main disadvantages, according to Johnson, is that with age and time, the aircraft parts will fatigue or require more updating or improvements, which can be more costly in the long run.

“Buyers should be aware of the full history of the aircraft and who [has maintained it],” Johnson highlights. Becker adds that while lower hull value insurance rates might be an advantage, higher operational and maintenance costs, a thinner supply chain, and fewer type- rated pilots present hurdles to end-of-life aircraft ownership.

“Older avionics systems are often no longer supported by the manufacturer and will require costly upgrades,” he notes, adding that there will be few charter leaseback opportunities, as charter operators often do not want to operate aircraft of this type.

Newer-generation aircraft provide passengers the advantage of a better cabin experience, with lower cabin altitude at cruise heights, reduced cabin noise levels, and better onboard systems and connectivity. Therefore, buyers of end-of-life aircraft should also be prepared to compromise in this respect.

And other disadvantages of end-of-life aircraft, according to Mace, often concern keeping up with regulatory changes that can be costly or even impossible — such as, upgrading to meet the latest navigational requirements.

It is worth buyers being especially careful with regards to the increasing noise abatement rules and limitations at airports which older generation aircraft cannot meet and therefore are turned away, he adds.

Examples of Popular End-of-Life Business Aircraft

So which models provide the best value for money as end-of-life aircraft? And more importantly, do specific models age better than others? Once again, the answer depends on competing variables.

Becker notes that turboprops produced in the 1970s and 1980s are generally considered to be within their useful economic life, while jets produced in that timeframe are mostly considered to be past their useful life.

“The Covid demand in 2021 and 2022 reversed the trend for a lot of aircraft headed for their last owner, but this just meant that more buyers were willing to put up with (or didn’t realize) the negatives of owning an end-of-life aircraft,” he highlights.

According to Johnson older Beechcraft King Airs and Cessna Citations are the most popular choices within the industry, with transaction volumes backing this up.

“For the turboprop markets, the King Air 90, 200 and 350 are the staple of a solid aircraft. A 1976-model King Air 200 looks the same as a 2023-model King Air 260, and they hold their value better than any other model aircraft in the industry,” he elaborates. “In the jet markets, the classic Citation 500 and 550 series are great entry-level jets, and being an older vintage model, the support and parts availability is strong.” 

Jancarik shares a similar view. “Some older jet models may still offer good performance but require careful consideration of maintenance history and upgrade requirements, such as old Cessna Citation 550s, and old Bombardier Learjet models,” he adds.

Interestingly, MaceAero tends to find that larger cabin aircraft are more likely to be kept flying to the end of their useful life, and it is quite possible buyers may just enjoy the larger cabin experience within their limited budget.

“These aircraft often have engines ‘on-condition’, which is another reason to keep them operating longer,” Mace suggests.

Knowing When to Retire a Business Aircraft

There is no definitive industry standard determining when an aircraft is ready for retirement. Becker believes that time arrives once the fleet starts getting down to an unsustainable number of units in operation, at which point the support will fall off considerably.

“A good indicator as to whether an aircraft is nearing the end of its life would be the percentage of the aircraft still being operated versus the total number produced,” he summarizes.

Similarly, Johnson reckons that a mix of years and hours must be taken into consideration, although older aircraft can complicate things financially from a loan perspective.

“One could be 30 years old and [still only have] one-third the [number of] hours or usage of a 10–15-year-old aircraft. However, where lending is involved, banks usually don’t like planes that are 15 years [or older], and some countries also [require] strict compliance regarding the age of aircraft.”

“It is vital for buyers acquiring such an aircraft to understand that, for example, if the engine has a hard time between overhauls (not on-condition), there will be a hard stop ahead, and the aircraft will be grounded until the overhaul is done,” Jancarik says.

In a nutshell, then, ages can vary with eventual aircraft retirement often being dictated by major inspection points.

“For example, some types will have 10-year inspection intervals while others can be higher or lower,” Mace concludes. “At some point, that inspection will not be viable given the cost of the inspection against the value of the asset itself. “At that stage, the aircraft may only be kept going by an owner’s heart rather than their head!”

More information from:
Elliott Aviation: www.elliottaviation.com
Jetron: www.jetron.aero
MaceAero: https://maceaero.com
Valor Jets: https://valorjets.com