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Additionally, changes have been just in the first few months of 2018 all other facto•rs affecting aircraft values
since the U.S. tax reform was enacted,” Proctor said. “The market is generating more activity and demand and that is likely to increase as the economy continues to heat up, interest rates rise, and most indicators point to a general economic upturn.”
What is the tendency for the rest of 2018?
The 100 percent expensing rule is an excellent incentive for aircraft owners to step up to a high-quality aircraft. Also, the decrease in the federal income tax rate should be a good incentive for companies and wealthy individuals to buy an aircraft for the first time because they can redirect money savings from taxes to buy an aircraft.
If buyers take advantage of the new tax benefits during the rest of the year by accelerating the purchase of pre-owned aircraft, very soon aircraft will start selling faster and the oversupply should start decreasing. As a consequence, pre-owned aircraft values should rise slowly in 2018 (given
made to travel expense deductions and the Federal Transportation Excise Tax (FET) has finally been clarified (owner f lights on managed aircraft are not subject to FET but are subject to non- commercial fuel tax).
Note, for those using aircraft for both business and pleasure, please ensure you speak with your CPA about maximizing the first-year bonus depreciation to ensure non-business guests do not result in disallowances.
What is going on with aircraft values in 2018?
AMSTAT, Aircraft Valuation Tool Report, released in early April 2018, indicates a recent uptick in business aircraft values. According to this re– port, the average estimated values for four of the five major business aircraft segments have risen since the start of Q4 2017.
remain stable). T&T
Pablo Perez is an Accredited Senior Appraiser, ASA of the American Society of Appraisers. As owner of Antares Jet Apprais-
als, Pablo provides aircraft appraisal services and aircraft consulting in the business jet and turboprop markets. He also provides aircraft sales consulting through Aldebaran Aviation. Pablo is based in San Francisco, California.
John T. Van Geffen is a partner at the Avialex Law Group, LLP spe- cializing in litigation, aircraft and commer- cial transactions and
regulatory compliance matters. John is the Western Pacific Regional VP for the International Air & Transportation Safety Bar Association and sits on the Board of Trustees at the Oakland Aviation Museum.
Business aircraft values
Oct 17
Feb 18
Variation
Heavy jet segment
$14.1M
$15.2M
+7.8%
Medium jet segment
$3.1M
$3.1M
+0.4%
Super-mid jet segment
$5.7M
$7.0M
+23.7%
Light jet segment
$2.3M
$2.4M
+6.9%
Turboprop segment
$2.2M
$2.6M
+18.8%
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Source: AMSTAT
According to Andrew Young, AMSTAT General Manager, “the in– crease in estimated values ref lects recent increases in market demand and a tightening market with fewer options for buyers.”
The National Aircraft Resale Associ– ation (NARA) believes that tax reform is driving aircraft values.
“While political and economic developments around the world can influence the market, now is a great time to buy an aircraft before prices increase,” said NARA Chairman, Brian Proctor. He notes that used aircraft in excellent condition are selling at a faster pace than in years past.
“Our NARA-certified brokers have recognized a change in the marketplace
June 2018
TWIN & TURBINE • 23