The Importance of an Aircraft Valuation and Appraisal before the Purchase of an Aircraft!

An aircraft valuation is a crucial step in various scenarios, ensuring you have an accurate understanding of the aircraft’s value and supporting key decisions. You should consider conducting an appraisal when you try to secure a finance/refinance, purchasing a pre-owned aircraft, selling a share in your aircraft or to change your insurance coverage. Appraisals vary in depth, scope, and cost, ranging from basic pricing digests to detailed physical evaluations. Each type is suited to different needs, depending on the aircraft and the complexity of the transaction. Hereby are the three most used options:

The Basic Aircraft Valuation: a Pricing Digest

A Pricing Digest Valuation, such as those provided by Vref or Bluebook, is the simplest and most cost-effective option. This method relies on historical sales data and general market trends to provide an estimated value for an aircraft. Pricing digests are widely used and sufficient for most of the transactions, particularly those involving common aircraft models.

However, the data in pricing digests tends to lag behind the current market, often being at least three months old. But the data of a limited-production aircraft model, can be even much older. Additionally, these valuations might not fully reflect the impact of recent upgrades, such as avionics improvements or STCs (Supplemental Type Certificates). Also, the current market sales and purchase figures will not be considered, this can significantly affect the value. Despite these few limitations, pricing digests remain a valuable starting point for most buyers.

Desktop Appraisal

A desktop appraisal provides a more customized evaluation, performed by an appraiser who considers the aircraft’s specific characteristics but also the current market trends.

Desktop appraisals are particularly useful for turboprops, light jets, and aircraft with unique features that affect their marketability. While more precise than a pricing digest, a desktop appraisal does not include a physical inspection of the aircraft. Instead, the appraiser relies on available documentation like the Maintenance Due Date list (Cardex, Cescom, CAMP), Equipment List, Service Bulletins (SB’s), Airworthiness Directives (AD’s), Logbooks, and any other specification that could be of interest to form their valuation. This method is well-suited for transactions requiring moderate detail without the expense of a full physical appraisal.

Physical Appraisal

A physical appraisal is the most comprehensive and detailed type of aircraft valuation. This method involves an in-person inspection by an appraiser, who examines the aircraft thoroughly, including its exterior, interior, avionics, and mechanical systems. The appraiser also reviews in depth the engine logs, maintenance records, and other key documentation to assess the aircraft’s condition and history. This approach is akin to a pre-buy inspection and is essential for unique or heavily modified aircraft. Physical appraisals are also commonly required for larger jet aircraft, as their complexity and value demand a meticulous evaluation. Because of its thoroughness, a physical appraisal provides the most accurate assessment of an aircraft’s value. It is particularly useful when the stakes are high, such as in transactions involving rare, high-value, or extensively modified planes.

The choice between these types of appraisals depends on several factors, including the aircraft’s uniqueness, the complexity of the transaction, and the buyer’s specific requirements.

• For routine transactions involving standard models, a Pricing Digest Valuation provides a quick and affordable solution.
• When greater detail is needed, particularly for turboprops and light jets, a Desktop Appraisal balances accuracy and cost-effectiveness.
• For high-value, rare, or heavily modified aircraft, a Physical Appraisal offers the most detailed and reliable valuation.

Aircraft valuation is a critical step in ensuring you make a sound investment. Whether you choose a Pricing Digest Valuation, Desktop Appraisal, or Physical Appraisal, understanding the value of the aircraft you’re purchasing, helps protect your investment, and provides clarity throughout the transaction. Each method offers unique benefits and is tailored to different buyer needs, ensuring the process is as informed and accurate as possible.

If you need assistance with any of these aircraft valuation methods, we are here to help. We can guide you through the process and ensure you get the insights you need to make an informed decision. Feel free to reach out to us at sales@faaircraftsales.com or give us a call at +31 (0)15 820 0999. We look forward to assisting you!