Appraised Value: What's an aircraft worth?

By Fred Workley

The maintenance you perform on an aircraft has an impact on its value. Appraisers use the maintenance records as well as visual evaluations to determine value. The availability of maintenance records and their completeness related to the accomplishment of the maintenance program, life-limited parts, and damage history also has a bearing on the appraised value of an aircraft.

The primary objective of an aircraft value appraisal is the determination of a numerical result, either as a range or most probable dollar amount of a value now, or at some specific point in the past or future. A good source for these details about aircraft appraisals is the International Society of Transport Aircraft Trading "Transport Aircraft Appraisal Program."

Base value

Base value is the appraiser's opinion of the underlying economic value of an aircraft in an open, unrestricted, stable market environment with a reasonable balance of supply and demand. It assumes full consideration of its "highest and best use." An aircraft's base value is found in the historical trend of values and in the projection of value trends and presumes an arm's-length, cash transaction between willing, able, and knowledgeable parties, acting prudently with an absence of duress, and with a reasonable period of time available for marketing. In most cases the base value of an aircraft assumes its physical condition is average for an aircraft of its type and age, and its maintenance time status is at mid-life, mid-time (or benefiting from an above-average maintenance status if it is new or nearly new).

Base value pertains to a somewhat idealized aircraft and market combination. It may not necessarily reflect the actual value of the aircraft being appraised. Rather it may serve as a starting value to which adjustments may be applied to determine the actual value. Base value is related to long-term market trends thus it is often applied in terms of projections of residual values and historical values. There are times when the value of an aircraft is not reflected in long-term market trends, when projected future profits or discounted rental streams may give a better value.