After Duncan Aviation delivered a 32-year old Falcon how old is too old for a business aircraft?
Last week Duncan Aviation delivered a fully-refitted Falcon 900B business jet that had seen over three decades of operation to its new owner. Purchaser, Greg Hatcher, said “I purchased this aircraft, knowing it needed love and care. In the end, I flew away with an aircraft that looks better than the new one next to it on the ramp for a lot less money.”
When it comes to business aircraft when do the problems that arise with age negate the benefits of using the aircraft? Anthony Kioussis, President and CEO, Asset Insight, told Corporate Jet Investor that there are turbine business aircraft over 40 years old still being traded. This past July saw the sales of Learjet 55s, ranging from 33 to 39 years, and three Cessna Citation ISPs, with an age range between 35 and 43 years. Kioussis said there are even some turboprops that are approaching 70 years of age still in operation.
“In terms of physical life expectancy, an aircraft’s maintenance programme allows the asset to be operated indefinitely, absent a hard stop from the manufacturer, such as through a “Maximum Cycles” figure. But that’s a lifespan limiter few business aircraft will ever reach,” said Kioussis.
Lifespan is often subjective
According to Kioussis, the lifespan of a business aircraft is often subjective, an aircraft is likely to reach its financial obsolescence before it reaches its operational obsolescence. However, that point is dependent on the owner’s perspective. “One could say that technological constraints are most likely to retire aircraft. And yet, owners of ageing aircraft chose to install ADS-B equipment on their asset, finding it less expensive than replacing the aircraft.”
The advantage of using an older business aircraft is its lower acquisition cost. That said however, Kioussis noted that many buyers do not spend sufficient time analysing the aircraft’s future maintenance requirements and, as such, pay more than they should per hour of use through maintenance expense, as well as the asset’s loss of use while maintenance is being completed.
Kioussis continued: “Older jets become unsustainable to run when parts become difficult, if not impossible, and expensive to acquire. Operating Regulations can also make operating an older aircraft too restrictive to operate. Although relatively inexpensive at the moment, fuel consumption can make older, inefficient jets unsustainable as well. The cost to obtain insurance for an older aircraft may also play a role in its demise. Finally, its ‘lack of availability’, due to excessive maintenance and unreliability, can also raise an aircraft’s total cost per actual flight hour unsustainable.”
‘Likely to sell for the cost of their metal’
The oldest aircraft currently flying, generally speaking, are turboprops and light jets said Kioussis. “These aircraft are often flown less than their larger ‘truly business’ brethren aircraft, cost less to maintain, and are thus able to live a longer life. Also, many older turboprops and light jets have been able to meet the noise restrictions that have sidelined larger jets – such as Gulfstream G-II and G-III).”
Kioussis concluded: “Many older aircraft are presently with their final owner – although the owner may not know it. If, and that is a big if, such assets trade they are likely to sell for the cost of their metal. However, you might be surprised, as might many existing older aircraft owners, at the lack of value even the metal is able to obtain. Although, historically, many ageing aircraft have been sold for parts, there are now so many parts out there for certain models that some older assets will probably be converted into coffee pots following their next sale.”