The last five decades have seen private aviation go from a rare hobby to an integral part of daily life for many of the world's top executives. At times the growth of demand for newer and faster turbine aircraft far exceeded our ability to produce those aircraft, and in the
"It doesn't matter if you buy an aircraft that is a long way away from the cliff or one that has fallen off... just don't buy an aircraft that is near the cliff!"
late 1970's and early 1980's the industry achieved unprecedented production numbers of private aircraft. The production of aircraft began to keep pace with the demand, but then two separate factors combined to dramatically reduce the number of aircraft being manufactured. The first was that the United States entered into an economic decline and at roughly the same time Congress passed laws that increased liability for the companies that produced aircraft. The result was that many manufacturers discontinued production completely, and by the end of 1983 very few new airframes began the journey down the production line. Many aircraft that were certified and delivered in 1984 and 1985 actually started production in 1982 and 1983! The companies who survived the economic crisis and continued with production were forced to limit their production to the most profitable and popular models while simultaneously raising prices to compensate for the increased liability.
The result was that production fell short of demand and values of used aircraft rose as demand outpaced availability, over the next twenty years prices of existing used aircraft generally increased, many selling for much more than they were sold for when new! The mid 2000's saw the pinnacle of aircraft values, but by the end of the decade prices had fallen sharply and though many aircraft models have seen "recovery" of their value we have not seen the increase to which the industry had become accustomed.
Today, we see production of new aircraft stable and increasing. It's an exciting time in aviation with new manufacturers entering the game and the sales of mid and large cabin jets booming. The increase in technology and manufacturing techniques have resulted in new aircraft that are more efficient and less expensive to operate.
The question for today's buyer is often between a newer aircraft with it's lower operating cost or an older aircraft with a lower acquisition cost. When a purchaser considers options based on lower acquisition cost, the older and higher time an airframe the more attractive the price. The market offers a good selection of very viable "Legacy" aircraft at prices that are a fraction of their newer competitors.
These "aging" or "Legacy" aircraft may be perfect for savvy buyers looking to maximize the benefits of having a very low cost basis in the aircraft, but careful consideration must be given to the purchase. These aircraft are usually inexpensive because of the lack of buyers for them, and it is not likely that demand will increase as it has in the past. The numbers of aircraft produced in the 1970's and 1980's have resulted in a bubble in the aircraft market, and that bubble is aging.
In the 1990's an airplane built in the 1970's was used and one built in the 1980's was new! These 70's and 80's vintage aircraft were the fleet, anything newer than that was very rare. It's almost hard for me to say but, now... they're just old. An aircraft that happens to be one of the many, many aircraft produced in 1979 is now 37 years old.
Is this perceived financial cliff at 40 years? It appears to be for a lot of aircraft, but may be even closer for some. With so many aircraft produced in less than ten years and all of them approaching or even passing the 40 year mark what will happen when so many take the dive? Will it shorten the window of when a legacy aircraft becomes an ancient aircraft? Are we approaching a time when any aircraft built in the 70's or 80's will be considered less than viable and therefor not have any real value as a flying airplane?
One thing is for sure, when it comes to legacy aircraft, buyers should tread very carefully and consider hiring an expert to guide them through the process of determining how good of a value an aging aircraft actually is.
TIP: It isn't what you pay for an aircraft, it's the difference
in what you pay for it and what you sell it for!