Ascend predicts steeper business jet depreciation curves

Ascend Flightglobal Consultancy has revised their business jet depreciation curves downwards. The company says that they made the move due to the long recession in the industry.

ALSO SEE: Older business jet values continue to fall, says IBA

Ascend derives its depreciation curves by tracking the market values of over 100 business jet types and variants. By analysing how values change over a period of time, the company is able to forecast future values. Since 2008 the company says that it has made almost 14,000 changes to current market values.

“Market value performance of business jet types clearly shows us that the methods of depreciation pre-2008 categorically do not work in the same manner as in a post-2008 environment,” say Ascend analysts Daniel Hall and Chris Seymour in the company’s May ViewPoint newsletter.

“The old methods of depreciation at low percentages (typically 3-4%) do not correctly reflect future value performance, and financiers and owners have been, and will continue to be caught out,” continued Hall and Seymour. “Our future value depreciation curves have been steepened.”

Future values are used as a tool by banks and financiers to work out how much an asset might be worth at the end of a finance term or lease.