Are aircraft over 20 years old safe to buy?
I am asked this question more and more lately. If I take the question literally as it is asked, I would answer it on the basis of safety of flight and the answer would be the less complex. Yes. The biggest effect as a result of age is not necessarily about safety. The effect is more often about enhanced inspection protocol and life limited component compliance. If all of the care is taken by the operator to maintain the aircraft according to the manufacturers’ maintenance programs, safety should not be compromised due to age, hours on the airframe or cycles.
Now for the more complicated answer. Most people ask me this question, however, with respect to residual value of an aircraft over 20 years old. Of course this answer needs to incorporate the above with respect to keeping up with maintenance and record keeping. The usual value adds will also apply as do having no material damage or corrosion, complete records and logs, good cosmetics and proximity to engine overhauls and mid-life inspections and/or being on engine program. The root of this question I am sure comes from the absolute unwillingness by 98% of the lenders to loan on an aircraft this age. I used to say an aircraft like most assets are not worth more than a lender will loan on them. I stand corrected! If this were a true statement today, these aircraft would have no value. In fact, today these aircraft have more of a value proposition than ever. Imagine being able to buy a 1990 Falcon 900B for literally one half of what you would have paid for the same aircraft 2 years ago. How about a 1990 Challenger 601/3A for sixty five percent of what you would have paid for the same aircraft 2 years ago. If that is not value what is?
The old days of having a trusted partner help us establish value based on lending appetite is over. We as an industry are left to help the buyers without this critical data point. For those buyers who can generate the funds to purchase through other available credit facilities they are left reaping the rewards. These older aircraft, if carefully evaluated based on the normal criteria outlined above, will have long lasting value that the smart buyer will enjoy based on years of safe, reliable flying and mission fulfillment. Let’s be very careful as an industry that we do not write off this segment of inventory due to lenders making choices about how to loan that absolutely do not take the combination of exceptional aircraft and solid credit worthiness of the buyer into account. We must as an industry promote this enormous segment of our life blood. There are 11,766 jets based in the United States and 3,834 units or 32.6% of those were built in 1990 or before. The value proposition of this huge segment must not be established based on what a lender will loan, but rather the individual aircraft’s ability to meet the mechanical tests established through a comprehensive pre-buy inspection and the buyer’s mission established through the mission profile and budgeting analysis. These aircraft are safe to buy. They are safe to operate and they will have a residual value that I believe can be relied on with confidence.