How to Find Value in LATAM’s Older Business Jet Market

Shopping for older business jets in the US and European markets is normal behaviour for Latin American buyers. But there’s much more to getting a bargain than just the aircraft’s price tag.

Aircraft availability, maintenance history, and access to spare parts all play a major role in defining value, as well as the aircraft’s ability to meet the buyer’s specific travel needs and its adaptability to the diverse operational conditions in the Latin America region.

When the buyer takes a wider perspective of what defines value in an aircraft, they quickly find that the signs of value in the lower-cost business jet or turboprop marketplace are varied.

A prospective buyer may initially want a year-2000 (or newer) model aircraft based on their bank’s financing requirements, James DeSouza, International Director for AeroBrazil Group highlights. “If the buyer is a cash buyer with a limited budget, they will consider an older aircraft,” he adds.

LATAM can be very different depending on the specific market that’s being analysed. Nevertheless, it can be segmented to a few markets, according to Gabriel Bastos, Head of Global Sales for aircraft brokerage Guardian Jet. (Brazil, for instance, has a strong preference for airplanes up to five years old and still under warranty – or at least those which are less than ten years old.)

“Now in Mexico, due to its proximity to the US where maintenance-related issues such as parts import, customs, and taxes aren’t as complicated to manage, the market tends to favour slightly older airplanes with bigger cabins and longer range for the same specific budget,” Bastos notes. “We see many 15 to 20 year-old airplanes going to Mexico as preferred options.”

A well-maintained older aircraft with a healthy maintenance track record will do the same mission as a newer one, and it might even have the same interior and exterior look as a five-year-old aircraft.

“I think aside from price, our company and most Mexican customers focus on finding a used aircraft that has low total time, good maintenance pedigree, and where you can make a good acquisition based on ‘value’, which would be the benefits-to-costs ratio,” David Ortiz, Aircraft Sales Manager for Mexico-based Jet Mach says.

Other Considerations That Impact Value

Interestingly, the perception of value in the Latin America market might vary between regions, with an aircraft’s operational conditions having a higher cost-to-benefit ratio than simple aesthetics or technology.

Anderson Markiewicz, Director of Aircraft Sales & Acquisitions for Líder Aviação, believes that the capability to transport several wealthy people to destinations such as luxury condos on the beach (which have short runways), is a critical decision driver.

“Brazil is a large country, and the local culture is to carry as many passengers on board as possible (within legal limits, of course),” he highlights.

Apart from Embraer private jets, all other business jets and turboprops are imported into Brazil and Latin America, which keeps the aircraft’s value high after the importation process is completed, DeSouza notes.

In fact, it can take up to four months from identifying the right aircraft to completing the import process, flying in the stipulated country, and paying the required taxes to nationalize the aircraft.

“Since the pandemic, Brazil has seen an increase in aircraft imports, with domestic aircraft sales transacting at higher prices and completed very quickly – often from the moment the aircraft is placed for sale and sold,” DeSouza adds.

However, any aircraft showing anything that could potentially lead to a maintenance event with significant downtime and high costs must be scrutinized. That means buyers closely reviewing of its maintenance status, avionics, any required or imminent system upgrades (owing to obsolescence), cabin condition and exterior paint condition.

“Also, the history of [the aircraft’s] operation – or as we call it, the aircraft’s pedigree – is very relevant, as certain technical issues could surface on a heavy check that only happens a few years from now and could cost hundreds of thousands of dollars to correct,” De Souza highlights.

Leading Pre-Owned Aircraft Types in Latin America

As explored in a previous article, many variables impact a buyer’s purchase decision in Latin America. In contrast, the perception of variables ranges depending on a particular region’s travel needs and operational conditions.

In Brazil, the most common pre-owned turboprops by far are Beechcraft King Airs, Markiewicz reckons. The Piper Meridian, Cessna Caravan, Piper Cheyenne, Daher TBM, and Pilatus PC-12 are also popular options.

“As to the popular jets, the Cessna Citation family is the most numerous, followed by Embraer’s Phenom 100 and Phenom 300, the Hawker 400 model and Bombardier Learjets.”

For Jet Mach, the best-selling aircraft are Bombardier products (mainly the Learjet and Challenger models), while Ortiz notes that Monterrey specifically has a very big market for Pilatus PC-12 turboprops.

“[The PC-12’s] incredible performance and low costs have made it an excellent aircraft for many companies and people who want to move at their convenience in an executive aircraft, but who don’t want to pay the high costs of owning a jet.”

Along the same lines, Bastos shares that turboprops are very popular in LATAM, as they are reliable and versatile airplanes and serve a flexible purpose in the business environment of the big capital cities and the short (and often unpaved) runways in the countryside.

He adds that on the jet side, however, it's interesting how certain brands will do better in different LATAM countries. “For instance, we see great acceptance of Learjets in Argentina and Mexico. In Brazil, the Embraer business jets will be more desired in the Light and Mid-size categories – for obvious reasons.

“In the long-range jet markets, we have been transacting a lot of Gulfstream G550s, as they offer an impressive range,” he highlights, and can be acquired at an attractive price.

The Older Business Aircraft Value Footprint

Even though acquisition prices are much lower for older aircraft, buyers usually focus on the mission an aircraft for sale can perform (the requirements for which may vary from Mexico to Brazil and Argentina).

Also, if the performance and aircraft specifications are good, then maintenance condition, enrolment on an hourly engine maintenance program (if any), and total time on the airframe and engines factor.

As summarized by Markiewicz, the signs of value to look out for in a lower-cost business jet or turboprop include pedigree; low hours; whether the aircraft has been kept in a hangar; whether it’s enrolled on maintenance programs; whether it’s freshly overhauled/had heavy checks completed recently; condition of the interior and exterior; lack of a damage/repair history; and lack of corrosion.

“With these parameters, owners can try to maximize the acquisition of a good, well-kept aircraft at a low price,” concludes Ortiz.

More information from:
AeroBrazil Group: https://aerobrazil.com.br
Guardian Jet: www.guardianjet.com
Jet Mach: https://jetmach.com
Líder Aviação: www.lideraviacao.com.br