The Beginning of the End for G.A. in Canada?

[Colonel]

[quote]Even If I hit powerball, I don't think I could justify buying a brand new Cessna[/quote]

It has always been so.  Few people buy new aircraft
with cash. 

In the old days, commercial operators like flight schools
would buy new Cessnas because their utilization was so
high.  They would fly the ass off them for 1000 hours in
a short period of time, then sell them off before they
had to start spending money on maintenance.  The
reliability of a new aircraft made it worth while - they
didn't want to have cancelled flights due to mechanicals.

Even today, I am skeptical as to how many people buy
even expensive cars (Mercedes, BMW, Audi, Porsche) with
cash in hand.  They're leasing them, and they don't cost
anywhere near as much as a new Cessna.

[David MacRay]

A new Caravan is much more expensive than a new 172 but I believe the value is there.

I was going to mention cars. I stopped by the (excuse my spelding) Lamborghini dealer here. I still like them. I would love to take one for a drive. Even borrow one for a couple of weeks. I would not buy one. They simply cost too much. I'm not saying they should cost less, just that I would rather own other things. There was a 911 from 1982 or 1983 for $149000 or so. I would buy it if I could. And really that is kind of silly too..

[ScudRunner-d95]

[quote author=David MacRay link=topic=5609.msg14762#msg14762 date=1486917740]
On the other hand, I have seen some mighty C-172s that made me laugh at the asking price. The owner thinks it's a plane they are not afraid to fly so, it should cost as much as the rest. 1956, engine on condition, original paint and interior, expensive radio from 1972.
[/quote]

Reminds me of this from the COPA guide

[quote]Flying Junk

Some aircraft are worth a lot less than the current owner thinks it is worth. In recent years aircraft values have fallen dramatically due to the rising Canadian dollar. In 2006 most aircraft are worth 35% less than they were in 2003. Some owners haven’t realized that and are asking unrealistically high amounts for the plane they are selling.

This has recently produced an interesting market effect. In 2005 about half the used aircraft advertised in Canada were over-priced and the other half were priced close to their actual value. Since then most of the “right-priced” aircraft have sold. Guess what that leaves in the market in 2007? Now you know why many Canadian buyers are looking south of the border for planes. Beware of aircraft that need a lot of work – they can be worth very little, despite what the owner might say about it.

Here is an example of just that:
The fall 2006 BlueBook value of a 1967 Cessna 150 (average paint, interior and avionics and 900 hours SMOH) in Canadian dollars is $19,147

The owner is asking $30,000, of course!

- Except this aircraft really needs repainting. The cost of repainting is $10,000; since an “average value” is based on average paint (half way from “new paint” to “time to repaint”) you deduct half the cost of a paint job from the value of the aircraft. New value $14,147.

-Except this aircraft really needs a new interior – the seats are torn, side panels broken and the headliner is shot. Cost of a new interior is $4000, so you deduct half of the cost for the value of the aircraft. New value $12,147.

- Except that this aircraft’s engine is over 1800 hrs SMOH (the recommended TBO), is “on-condition” and is therefore due for an engine overhaul. Deduct half the $21,090 cost of an engine overhaul. Now the aircraft value is $1602.

Except that this aircraft has no radio or transponder in it; those were sold separately, leaving a hole in the panel. Those items would be part of “an average condition C-150”. Because they are missing you have to subtract the whole cost of installing those. A nav-comm and transponder will cost about $7500 including installation. The new value of the aircraft is now below $0 and is only worth “salvage value” and that is what you should offer for the aircraft.

Undoubtedly the owner still thinks it is worth $30,000, but it isn’t.

Don’t pay too much for “Flying Junk” because the amount of money needed to bring it up to “average” condition will mean that you will never get your money back out of it when you sell it.

If you paid the $30,000 this owner thinks it is worth and then installed new radios, repainted the plane and overhauled the engine then you would have spent about $70,000 on a plane that would be worth about $35,000 today in that totally refurbished condition on the resale market.
If the owner insists it is worth far more than it really is, be prepared to walk away and look for another aircraft.[/quote]

[praveen4143]

I think the cost of maintenance is also a major factor. Old aircraft are getting older and losing value by the day, but the cost of spare are getting prohibitively more expensive that it is a joke to consider purchasing new parts to repair something and the search for parts salvaged from an airplane become much more lucrative.