NAFA member, Alasdair Whyte, Editor and Co-Founder of Corporate Jet Investor, writes about fellow NAFA member, Jason Zilberbrand, President of VREF Aircraft Value Reference & Appraisal Services and how he is changing the world of aviation.
Few people have changed the world of finance as much as Michael Bloomberg. When he was pushed out of Salomon Brothers he created a small data company called Innovative Market Systems. Although his first customer was a bank, Bloomberg went on to change investing by giving buyers data that had always been held by sellers – data on their desks.
Jason Zilberbrand, who was an aircraft broker for 15 years and who started his career as a futures trader, wants to do the same thing for aircraft.
In April 2018 he acquired VREF, one of the best-known aircraft value guides. He now wants to give dealers, buyers and financiers better data, values forecasts and the ability to manipulate data.
“When I was a broker, I was desperate for more information, but it was impossible to easily combine other data with aviation data. We are changing that,” says Zilberbrand. At NBAA they launched new charting software that allows users to look for correlations.
VREF has also published its first residual-value forecast. It covers 65 jets, helicopters and turboprops. The good news for owners is that Zilberbrand believes that values are likely to stabilize for most types. He says that the big drops in aircraft values, which we have seen in the last few years, are over.
“History does repeat itself, but we think it is more relevant to look back at the Dot.Com downturn rather than 2008,” says Zilberbrand. “The days of big falls are over for now.”
He also believes that fleet size is a great guide to value performance. “There is a lot of power in being the class leader,” he says. “This is why we are confident about the Phenom 300E, the Pilatus PC24, the Cirrus Vision Jet and the Challenger 350 for example. We are also bullish about aircraft at the beginning of the tech cycle – there are a lot of fantastic new aircraft coming and these will depreciate more slowly.”
As a basic rule, VREF forecasts that aircraft will lose between 4% in the first year (for a Phenom 300E) to 10%. But there are some exceptions – it is forecasting that a 2018 PC-24 will appreciate slightly for two years.
VREF estimates that a 2018 Challenger 350 is worth $26.673 now. It forecasts that it will be worth $17 million in 2022 and 2023 (it believes the value will be stable in those years).
It is very bullish about the Gulfstream G500. It values the aircraft at $45.5 million now and forecasts it will be worth $43.5 million in 2019 and $43.7 million in 10 years.
While he aims to empower buyers, he is also targeting his former competitors. He adds: “The people who really need data are the dealers who are taking out $20 million bank loans that they have guaranteed themselves. I have been through that and when you are coming home to your family after doing that you want as much data as possible.”
This article was originally published by Corporate Jet Investor on October 26, 2018.