Molly McMillin sits down with Chris Reynolds, business aviation valuations manager, certified senior aircraft appraiser and editor of Aviation Week’s Aircraft Bluebook, to discuss what's happening with valuations and the market for business jets and turboprops.
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Molly McMillin:
Hello and welcome to today's BCA podcast where we focus on what is happening today in the pre-owned business aircraft market, especially when it relates to values. I'm Molly McMillin, Aviation Week managing editor for Business Aviation, and I'm delighted to have with us today Chris Reynolds, a business aviation valuations manager, certified senior aircraft appraiser and editor of Aviation Week's Aircraft Blue Book. Welcome to the program, Chris.
Chris Reynolds:
Good morning.
Molly McMillin:
So Chris, you're preparing for Aircraft Blue Book's fall edition related to values. And just a general question, what are you seeing in the market today?
Chris Reynolds:
Good question. We're nearing the fall book, which comes out here in a couple of weeks. Of course, Aircraft Blue Book comes out every 90 days. We do March 1, June 1, September 1 and December 1. So it's been an interesting year. So I think we were starting to see a little bit of a change maybe in optimism of where we were in Q1, Q2 was, I think, picked that up. Q3 is going to be interesting to see. I think there's a lot of optimism, like I said, from the market surveys that are out there from different companies that are constantly reaching out to the brokers and buyers and owners. A lot of things have started to change for us, obviously with government roles and rules and laws and et cetera. So I think what we've seen, what we've kind of observed over the last quarter or over the summer going into the fall book, is really just a lot of just not much change from value standpoints.
Most of the values in the book will reflect a no change this quarter. So I think a lot of the downward pressure we saw last quarter was really taken last quarter, and we felt comfortable with where inventory levels were and where price points are. Now, that doesn't necessarily mean that prices aren't going up or prices aren't going down, but I think we're starting to see a lot of value indications on both sides of that line. So we see the market as stable inventory levels are, depending on who you ask, they're somewhere in the neighborhood, maybe 5 to 6% of the overall fleet, which is a good healthy, which is a good healthy inventory level. So it's a stable flattish point as you get into the analysts of pricing changes, what people are asking for prices. I think there's been some decreases in asking prices from where we were at the high point here over the last few quarters of the last few years, especially as we get into some of the legacy aircraft, but not drastic, in other words, still good strong demand out there and good strong sales that are occurring.
As for those of us that are actually tracking pricing changes, trying to ascertain value out of those comparable aircraft sales out there, it's nice to have a lot to choose from. It is difficult sometimes because there's such a wide gamut of what prices are. There's still strong sales, and then there's somewhere that look like maybe the sales, where the values are maybe coming down a little bit in certain markets. So at the end of the day, time and condition is a huge dictator for any asset, especially when you're dealing with older or used aircraft. But yeah, overall sentiment that I had doing the book was that values were stable, nothing was really screaming, wow, we've got major changes here or major trends that are going on here. I think that the value changes that we did exhibit in the upcoming fall book largely reflect maybe price corrections from our own value assessments versus trends. So there's some minor depreciation that's occurring, and I think it's returning more to a normalized expectation of change.
Molly McMillin:
Well, that's sure a lot different than a couple of years ago, right when it was hard to even keep up with all the increases. And
Chris Reynolds:
Certainly it's always difficult for price guides or anybody that does any kind of an indexing or price valuation to ascertain value out of the comparables when the comparables, the sales are leapfrogging the previous one. So it's really hard to, you don't want to guess where they're going, and that's not what our publication, it's a historical in nature publication, so we're always basing off where things have been as opposed to trying to project. That's not what we do for this particular publication. So when you're trying to run an analysis off of what you're seeing in the market, sometimes it's difficult to find a true representation of an average value across a broad spectrum.
Molly McMillin:
Were there any surprises in this fall edition?
Chris Reynolds:
No, and I think that's the surprising point. Like I said, for lack of better term, it's just kind of a boring book and that's a good thing. We don't like to see drastic swings one way or the other, and our industry is somewhat cyclical anyway, so there are some aspects to every price upswings that we have a bounce back to a norm for certainty, and I think we've really started to see that. So there's still a lot to unpack I think, but we're definitely getting to a point where that predictability is definitely there.
Molly McMillin:
I was noticing the International Aircraft Dealers Association recently put out second quarter statistics from their members and might mention a couple of things. For the first half of 2025, they closed 616 deals, which was down by only four from the first half of 2024, so pretty flat there on number of deals. And then they have 495 acquisitions under contract down from 570 a year ago. That's for the first half of the 2025. And interestingly, they lowered the price in 76 deals during the first half of 2025, which was down from 211 a year ago. So lowering the price, it appears that they don't have to lower the price today like they did a year ago.
Chris Reynolds:
Yeah, I think we're in definitely, I think different places now, even from when that came out and what the time period was that that was surveyed. If we think back to the spring, what was going on in the spring in the markets with tariffs, obviously they're the big T word that always gets kind of thrown lately. There were definitely some spooks into what was going to happen for the rest of the year, and really it becomes that whole uncertainty aspect and what buyers get sidelined, who pulls back out of deals or who is thinking about getting into the market that now says, let's wait six more months. I think a lot of that has, I'll say it's necessarily subsided, but we'll say it's maybe eased or even if it hasn't eased, I think people have become more accustomed to or dealing with the landmines that are out there for that. We're still trying to sort through some of the other individual aspects of tariffs, obviously in our industry, what countries are currently tariffs, what percent, who's exempted, what's exempted. We talked the other day or earlier today about the country where they made that aviation explicitly exempt from regardless of what tariff rate is. So there's some benefits there. And then I think there was some news the other day about Pilatus and their deliveries. So there's definitely still some wait and see to be sorted out the remainder of this year as we move forward.
Molly McMillin:
Right. Pilatus just a few days ago, said that they were going to pause PC-12 and PC-24 deliveries to the United States because of tariffs.
Chris Reynolds:
I know that I think in that same statement, there was a comment that said some of that delivery would be allocated to other places, but as probably their largest customer being in North America and probably the US it's easier said than done too. So hopefully those things will be resolved quicker, so that doesn't have to become a case, but it is, it's a wait and see. We'll see how that actually affects those values and because the aircraft they produce are very popular aircraft.
Molly McMillin:
And then on the flip side, there's bonus depreciation that was restored in the latest big beautiful bill.
Chris Reynolds:
Yeah, I think that's a very key item that a lot of people were waiting for to see earlier this year. I know a lot of surveys that I've seen that's constantly cited as an optimistic aspect because it's obviously a huge component of expense of owning some of these business aircraft turboprops all the way up to business jets, whoever's paying that tax liability.
Molly McMillin:
You mentioned turboprops on valuations. Can you talk a little bit about turboprops versus jets?
Chris Reynolds:
They're just a constant performer and it's an owner-operator market, but you have also places like Wheels Up and stuff that are operating them successfully too. I think they continue to make strides to making that model that they're working work and get to a profitability standpoint. So we'll see how that continues to go. But they're a large operator, so obviously wanting them to be successful is good for keeping those from being on the market. But turboprops, they fit a very unique role for a lot of different entities, especially in the older operator side. So the values on those remain strong.
Molly McMillin:
What about, we talked a little bit before we started the recording about interest rates. How much do they play into valuations and purchase price and that sort of thing?
Chris Reynolds:
The common component that we get from most people is that it's just not a big issue for a lot of people, so
Molly McMillin:
That isn't a factor so much.
Chris Reynolds:
No, I don't think, I mean, obviously there's a cost of borrowing, so I think it depends on the individual. Obviously if you're financing, interest rates are something that they're going to keep consideration, but I don't think it's the largest caveat out there for people that are buying aircraft at the moment.
Molly McMillin:
I realize you don't get into forecasting, Chris, but for everything you're seeing, I know you're doing a lot of appraisals currently, and from everything you're seeing in the market, what are you expecting for the rest of the year and maybe into early next year?
Chris Reynolds:
Like I said, I'm optimistic. I as well as everyone else in the appraisal side business that we've worked on so far this year, I think values have, again, I think have remained strong when we comp out aircraft for subject aircraft that we're appraising. I don't really feel like we've been in any markets where we've been just utterly surprised where a client is for a bank or someone is buying an aircraft and we do the appraisal and we come out and we say, oh my gosh, we just can't support that value. There's nothing to support that. So I think buyers and sellers are very in tune with the price points. I think sellers are mostly doing a good job of representing their aircraft at reasonable prices to where aircraft, they're not having to make tons of price adjustments. I mean, I think you mentioned that in the IADA survey there where they talk about price reduction and so forth. Like I said, I think we're seeing what we would expect when we appraise an aircraft. I don't find that it's been overly surprising to when we learn what the purchase price is of the aircraft is. So I think everything feels like it's in line. Good aircraft still sell for, I think they still command strong dollars, but not unreasonable dollars.
Molly McMillin:
And is there still a break between the younger aircraft as opposed to aircraft that are, say a few years old, say, is it seven years or what's the current
Chris Reynolds:
I mean, I think the legacy aircraft, I mean obviously they rode up with all the rest of the values that rode up. I think there will continue to be the ones where we see value attrition as we get further along these next few years. Now, I mean, however, as long as the inventory levels stay at a healthy spot, nothing has to plummet. But obviously if there is disruptions that cause inventory levels to drastically climb, well then the older stuff is the stuff that will probably take the biggest hit the quickest. But with new deliveries still kind of where they are, it does still create a healthy, strong demand for aircraft. But I saw one comment, I don't remember who made it, it might've been Jefferies or JP Morgan, but somebody said that 60% of business jet sales are replacement aircraft for current owners. So
That's a healthy component of the market, which leaves the remaining 40% or whatever to get picked up by all the rest, which are not current owners, which not necessarily first time owners, but maybe owners are returning. But so we consistently find homes for aircraft. So as long as I said the inventory levels stay, I think this decent mix they're at values, I think will remain pretty stable. So that doesn't mean they won't go down, but I think under normal times, we expect values of aircraft as they get older or any kind of machinery equipment to depreciate over time. And that's been the trouble the last few years that has been backwards. So with short supply and inventory, older aircraft in some cases got major drastic bumps in value because simply supply and demand. So as we move forward, I still expect to see older aircraft start to depreciate. I expect to see some people that got into the market in the high points there with the older aircraft to get out of those aircraft too, because they simply become more expensive to operate and to maintain versus their value.
Molly McMillin:
Because hearing people buying things that maybe were at end of life and they picked them up because there wasn't inventory on the market to do otherwise.
Chris Reynolds:
And as you approach it, as you approach engine overhauls, if you're not on maintenance programs or as you approach major maintenance events, heavy checks and so forth, and some of these aircraft, they become major components of value and then you get into a cost basis analysis of the whole value of the aircraft. So we'll continue to watch that to see. Fortunately, we haven't really seen anything that just tanked off or just jumped off the cliff as we've moved on, and that's what we'd like to see. We don't like to see things just crater out because it kind of takes on a life of its own that way. But yeah, I think the end of the year looks optimistic based on what we've seen from pricing standpoint in the Blue Book, based on, I think this upcoming book largely being what I would call kind of a flat book.
Like I said, there's still some depreciation and there's a few increases, but mostly I think we've seen this book is more of just truing up our prices to market versus trying to really follow. There's a big trend one way or the other. I think there's a healthy market there. I think in the IADA survey they put out, seemed like a lot of the assessments were three out of five stars kind of thing. So everybody else feels like things are kind of in the middle. So the sales market, their six-month projection from their surveyors, the banks willing, being willing to lend the insurance market, everything had those three point whatever scores, like 3.4 or 3.1 out of five stars, five being the best, one being the more pessimistic side. So it feels like the surveyors and the owners and the operators and the brokers all feel, I mean, everybody's kind of saying the same thing. There's definitely an optimism for, I think the third and fourth quarters of this year and then moving into 2026.
Molly McMillin:
Right. Well, we'll leave it there. That's all the time we have for today. But thanks Chris, for all of your insights and talking about valuations in the market. We appreciate it.
Chris Reynolds:
Yeah, absolutely.
Molly McMillin:
Thank you to Jeremy Kariuki, our podcast producer, and certainly thank you all for listening. We'll see you next time.
Jeremy Kariuki:
Thanks for listening to the BCA podcast by Aviation Week Network. This week's episode was produced by Jeremy Kariuki. If you enjoyed the show, don't forget to like or follow us on your podcast app of choice. If you'd like to support us, please leave a rating wherever you listen. Thanks again, and we'll see you next time.
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