A person buys an aircraft because they either fall in love with the plane itself or they fall in love with the idea of a good deal.
If a person doesn’t love the plane itself, the price is what must be attractive enough to grab a buyer. The two main factors when talking about resale are time and price. Both of these are affected in different ways by different factors.
First impressions matter! People always remember the first impression of an aircraft, for good or for bad. Colours are often the first impression on a buyer. If they see an aircraft that has green seats, and they don’t like green seats, then this aircraft becomes “that’s the aircraft with the green seats that I don’t like”; which over time becomes “that’s the aircraft I don’t like.” Non-standard colours like these green seats are hard for most people to fall in love with. Most buyers cannot look past this and instead of seeing an aircraft they can modify for minimal expense, they see an aircraft they don’t like. When people aren’t falling in love with the plane, you will need to make them fall in love with the price.
Impact of cost of resale
Non-standard colours create much longer than normal resale time. Why does it matter how long it takes to sell your aircraft? Every day an aircraft isn’t sold, money is being lost. For example, 4% interest on a $25 million aircraft is approximately $2,739 per day. After hangar fees, crew salaries, insurance, subscriptions, maintenance, etc. you are looking at anywhere from $4,000-$6,000 per day.
In June 2011, one of the biggest brokerage houses in the business sold a Global Express fitted with red seats. The average time on the market for a Global Express was 278 days. This aircraft was on the market for 487 days. Interest cost alone was $572,451. It took extra time to find a buyer who could look past the red seats.
Colours that historically sell best
Neutral, earth tone colours typically provide the fastest resale and often the best prices. How do we know this? When a broker buys an aircraft and has the interior refurbished, they will always choose neutral colours because they know these will perform the best on the market. Neutral interiors aren’t polarising in buyer’s minds. When people aren’t distracted by bright colours, they can instead focus on the aircraft’s other strong selling points.
Configuration refers to the interior floor plan. Below are examples of differences in resale related to the configuration of specific aircraft.
Citation XLS: Dual v. Single Forward Divan
There is the option in the Citation XLS to have the dual place divan for two passengers or to have a single place divan and a cabinet. Of the 13 Citation XLS sales in 2011, nine of them had the dual place divan. Of the 16 for sale right now, five of them have the dual place divan. This shows the market has a strong preference for the dual seat over the single seat. The majority of sales are the minority on the market. Buyers like to have as many seats as possible, and the cabinet takes away an extra seat. If you own a dual place divan, you are better positioned for resale due to the greater demand for this configuration.
Gulfstream IV: Forward v. Aft Galley
In the Gulfstream IV, the aft galley is more common, but buyers prefer the forward galley. In January 2012, there were 40 Gulfstream IV’s on the market; 31 of those (77.5%) had the aft galley and nine (22.5%) had the forward galley. In 2011, 10 Gulfstream IVs sold; four of them (40%) had the aft galley and 6 (60%) had the forward galley. Once again, the majority of sales were the minority on the market. This comes down to passengers wanting privacy. They do not want the crew walking back through the cabin to the galley when they are trying to sleep or get work done. With a forward galley, this is not a problem.
Falcon 50: Forward v. Aft Toilet
In a Falcon 50, you used to have the option of a forward toilet or an aft toilet. The average time on the market for a forward lavatory is 914.5 days. The average time on the market for an aft lavatory is 593 days – almost a year and a half longer. Once again, people appreciate privacy. Passengers do not like to use a toilet right behind the cockpit and by the crew. People buy private airplanes for privacy!
Number of Seats
During 2007, an early model Global Express hit the market. It took 188 days to sell, compared to an average of 86 days at the time. The reason for this was that the dual aft couches were not certified for take-off and landing, restricting the number of certified seats to 10 (normal certified seating exceeds 13). Buyers buy an aircraft to have the freedom to go where they want and with whom they want. Restricting seating limits a buyer who is spending millions on an aircraft not to be restricted.
Effect on resale
State of the art customisation is perfect for unique buyers, but it is incredibly costly to find another person who shares those particular tastes. When it comes time to resell an aircraft with a custom interior, people often view it as more money and time they will need to spend to adapt the interior to suit their tastes. Refurbishment costs, plus a risk premium, need to be accounted for in the sale price. To help maximise resale value of an aircraft with an interior strongly suited to specific tastes, consider making minor changes to make your interior more neutral to appeal to more buyers.
Interior installations require proper certification paperwork. That paperwork is often specific to each country. However, certain paperwork is easily accepted by numerous authorities worldwide. An STC (Supplemental Type Certificate) is one of the more widely accepted certification forms. This is something to keep in mind when customizing your aircraft. Ask your interior shop how they will certify your interior and whether or not that certification will hinder a change of registration. The more widely accepted your interior certification paperwork is, the easier and better the resale process.
Connecting the world
High-tech entertainment systems help people fall in love with aircraft! Wireless internet, iPod docking stations and multiple flat screen TVs all help buyers feel like they are in a state-of-the-art machine. VHS Players, old SAT phones and Cathode ray tube TVs make an aircraft look old and out of date. People have not had a VHS player in their home for years, so why would they have one in their aircraft? The person buying an aircraft has top technology in their everyday lives and demand it in their aircraft. The entertainment system is one of the only things a person can physically connect with when looking at an aircraft.