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Used Aircraft Maintenance & Marketability Analysis – May 2021

Used Aircraft Maintenance & Marketability Analysis – May 2021

NAFA member, Tony Kioussus, President & CEO of Asset Insight, LLC, shares the latest Used Aircraft Maintenance & Marketability Analysis for May 2021.

For the eleventh consecutive month, strong sales activity and limited new listings decreased availability of inventory on the pre-owned market. The average Ask Price for Asset Insight’s tracked fleet increased 4.1%. Which business aircraft were impacted the most? Tony Kioussis explores.

Asset Insight’s tracked inventory fleet contracted by another 4.6% last month, while the May 28, 2021 market analysis covering 134 fixed-wing models revealed 1,546 aircraft listed for sale, equating to a year-to-date (YTD) decrease of 19.1% for the tracked fleet.

The latest inventory’s Quality Rating decreased another 0.5% to 5.271, keeping the fleet within the ‘Excellent’ range, on Asset Insight’s scale of -2.5 to 10. Nevertheless, the lower number signifies the assets available will have to complete more near-term maintenance events.

May’s Aircraft Value Trends

Average Ask Price for Asset Insight’s tracked fleet increased 4.1% during May, equating to a 2.5% rise YTD, and a 4.2% gain year-over-year (YoY).

  • Large Jets registered a 12-month high Ask Price with a 5.2% increase. The group’s average price ended May 5.4% higher YTD, and 5.8% higher YoY.
  • Mid-Size Jet pricing increased 4.6%, but the figure was still 5.0% lower YTD, and 9.6% lower YoY.
  • Light Jet average Ask Price rose 6.4% for the month, but was 8.3% lower YTD, and 11.8% lower YoY.
  • Turboprop Ask Prices fell an insignificant 0.1%, leaving the group’s figure unchanged YTD and 2.0% higher YoY.

May’s Fleet for Sale Trends

Asset Insight’s tracked fleet posted an inventory decrease for the eleventh consecutive month, with May’s reduction equating to 87 aircraft. The tracked fleet has now contracted by 366 units YTD, equating to a 34.5% contraction since the June 2020 peak inventory month. Group inventory decreased as follows:

  • Large Jets: Inventory decreased 5.9% (-23 units) and is down 14.6% YTD (-63 aircraft).
  • Mid-Size Jets: Posted a decrease of 6.9% (-36 units), and YTD availability has fallen by 23.0% (-120 aircraft).
  • Light Jets: Availability decreased an additional 1.8% (-10 units), reducing inventory by 21.5% YTD (-119 aircraft).
  • Turboprops: The ‘for sale’ fleet decreased by 4.4% (-18 units), with 64 fewer aircraft available YTD (a 15.7% reduction).

May’s Maintenance Exposure Trends

Defined as the aircraft’s accumulated/embedded maintenance expense, Maintenance Exposure worsened (increased) by 2.0% to $1.515m for the month, setting a 12-month high (worst) figure.

What does this mean for inventory aircraft? As mentioned earlier, while available assets will, on average, experience more near-term maintenance events by virtue of the lower Quality Rating, the overall cost to complete those events is predicted to be higher. By individual group, Maintenance Exposure results varied.

  • Large Jets: Worsened/Increased 2.2% to post the group’s 12-month worst (highest) figure that was also 4.9% higher/worse YoY.
  • Mid-Size Jets: Decreased 1.0% to post the group’s second consecutive 12-month low/best value, while also improving/decreasing 2.6% YoY.
  • Light Jets: Increased/Worsened a substantive 7.8% for the month, a figure that was 22.4% higher/worse YoY.
  • Turboprops: Increased/worsened by 0.5% to post the group’s 12-month high/worst value, and that figure was 1.8% worse/higher YoY.

May’s ETP Ratio Trend

Asset Insight’s inventory fleet’s ETP Ratio, which has been rising steadily this year, rose/worsened to another all-time high 76.3%, compared to April’s 75%.

The ETP Ratio calculates an aircraft's Maintenance Exposure as it relates to the Ask Price. This is achieved by dividing an aircraft's Maintenance Exposure (the financial liability accrued with respect to future scheduled maintenance events) by the aircraft's Ask Price.

As the ETP Ratio decreases, the asset's value increases in relation to its price. ‘Days on Market’ analysis has shown that when the ETP Ratio is greater than 40%, a listed aircraft’s Days on the Market increases, in many cases by more than 30%.

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This report was originally published by AvBuyer on June 17, 2021.