Buying a used aircraft is an emotional decision, and Colibri has learned that first impressions matter
Oliver Stone, MD of Colibri Aircraft, says interior configuration – including colour –can have a significant impact on an aircraft’s resale value. “First impressions matter. People buy planes when they either fall in love with the plane or the price,” he says. “It’s emotion versus logic.”
He recalls a Gulfstream III that sold for $3.3 million in 2007, $2 million below the going rate at that time, partly because of its vivid green upholstery. Unusual decor can also lengthen resale time. A Global Express took a leading broker 487 days to sell in 2010-11, compared with a then average for the type of 278 days, resulting in additional interest payments of more than $570,000.
The main reason was its quirky interior design, Stone believes. “Instead of seeing an aircraft they can modify for minimal expense, buyers see an aircraft they don’t like.
“Neutral earth tones typically provide the fastest resale – and often the best prices,” he says. “Neutral interiors aren’t polarising. When buyers are not distracted by bright colours, they can focus on the aircraft’s other selling points.”
A less sought-after layout can also deter prospective buyers. An early model Global Express that hit the market in 2007 took 188 days to sell, more than twice the average at the time, because the dual aft couches were not certified for takeoff and landing, restricting the number of certified seats to 10 compared with the usual 13 or more. “Buyers buy an aircraft to have the freedom to go where they want and with whom they want,” Stone says. “If they’re spending millions, they don’t want restricted seating.”
In another example, the market shows a clear preference for a dual-seat divan in the Citation XLS rather than a single seat plus cabinet. The layout with the extra seat is a minority version on the market, but accounted for nine out of 13 sales of the XLS last year, Stone says.
Similarly, in the Gulfstream IV, an aft galley is more common (31 out of 40 aircraft on the market in January 2012 featured one) but buyers prefer the forward galley. Last year, 10 Gulfstream IVs were sold and only four of them had the aft galley.
“This comes down to passengers wanting privacy. They do not want the crew walking back through the cabin to the galley when they are trying to sleep or get work done. With a forward galley, this is not a problem.”
The reverse is the case with the Falcon 50, which came with the option of a forward or aft toilet. The average time on the market for aircraft with the forward lavatory is 914 days, compared with just 593 days for the aft lavatory. Once again, buyers are voting for privacy and don’t like passengers to have to use a toilet right behind the cockpit and by the crew.
Onboard entertainment also helps people fall in love with an aircraft, or not. Wireless internet connectivity, iPod docking stations and flat-screen TVs make a better impression than a VHS player and an old sat phone, though Stone points out that this can go too far. In the case of one Gulfstream, seats and even windows had been removed to accommodate a big screen – not to everyone’s taste.
The paperwork necessary to support an interior completion makes a good rule of thumb. An STC means an aircraft is more transferrable than if it comes with a Form 337 for a customised VIP modification, because it can be difficult to find another buyer who shares the same tastes. As refurbs become more expensive, this cost, plus a risk premium, is deducted from the price.
“Sometimes, the items you cherish will not be fondly shared by the overall marketplace. It is important to remember that while it’s always vital to a sale to be realistic on price, it is not always necessary to be lowest if you have something people can connect with,” Stome summarises.