When it comes to buying business aircraft in a market characterised by increasing inventory levels and shifting global dynamics, selecting models that maintain strong residual values makes sense. Historically, the best value retention has been enjoyed by those models with good aftermarket support, especially from OEMs who buy back aircraft as part of a customer upgrade to a new aircraft or enhanced variant.

“Dassault has been pretty smart in the past with its Falcon family products,” says Andrew Butler, a partner at Altea. “On the other hand, some Gulfstream customers have recently seen disappointing results given the deluge of G550s on the aftermarket once the G650 was introduced. At Altea we believe the same might happen with the G650/ER now the G700 has begun deliveries in earnest.”

For an aircraft straight off the assembly line, the steepest depreciation is generally in the first years of operation. In the case of a highly in-demand aircraft where the existing order book is full, a backlog of orders could cause some appreciation in the asset, which would slow the eventual and inevitable rate of depreciation.

“It would be risky and ill-advised to purchase an aircraft as a speculation bet,” says Corporate Jet Consulting’s Max Hooper, “but there are lengthy lead times with some models, and quite often in this period the delivery customer’s travel profile or circumstances might change. It has been known for another buyer to step in, pay a premium in order to skip the queue and purchase the aircraft upon delivery from the intended purchaser. The main trade-off here would be that the specification and styling wouldn’t necessarily be what they would have chosen.”

For an aircraft that has been in operation for a number of years, the rate of depreciation will be influenced by how many hours it has flown, where it sits in its maintenance cycle and its general condition and operation. If the aircraft is enrolled on a maintenance programme, this will have a very positive impact on value as it can reduce financial exposure and, in some circumstances, extend its life. Likewise, if an aircraft meets all of the latest compliance and is equipped with the latest avionics, then it will hold its value better than one that isn’t. “That being said,” adds Hooper, “upgrades can sometimes cost more than the lost resale value, so this should be assessed on a case by case basis.”

Aircraft hold their value best when they are a popular model and there is little availability on the pre-owned market. Hooper continues: “There are currently no Challenger 3500s on the market. Admittedly as of today there are only 140 in operation, but there are only five of the previous 350 variant available for sale out of 419 in operation, which represents 1.2 per cent of the global fleet.”

The Citation Latitude has near identical figures with five aircraft on the market out of a global fleet of 429, and it is a similar story with the Praetor 600 and Phenom 300E where 0.8 per cent and two per cent of the global fleet are available for sale, respectively.

Hooper cautions that upgrades or other cosmetic and cabin choices can have a detrimental effect on value, so when it comes to styling, neutral should be a priority if looking for the widest market appeal and value retention. Unconventional paint schemes and interiors will almost certainly need to be changed by the next owner, which will impact value, and cabin layout can also have an effect. The sales price may be impacted by having an eight versus 10 seat configuration, by whether or not there is a crew rest area or even by the location of the galley.

External factors such as tariffs have had an effect due to the overall uncertainty surrounding imports and exports, and while the commercial appeal of an aircraft may differ by region, this is largely down to regulatory requirements or product support. The country of registration could be important, but given measures currently in place, there is more likely to be a greater disparity in aircraft value by region in conjunction with origin of manufacture. And in the US, if bonus depreciation reaches 100 per cent as expected, aircraft values could be positively impacted in Q4.

“There is a split when looking globally,” advises Butler, referring to N-registered aircraft that fly mainly with US owners and operators as opposed to EASA-registered aircraft that require no modifications to obtain certification. “As a rule of thumb, US owners and European owners mainly look for aircraft that have history tied to their respective areas.”

The pre-owned business aircraft market is experiencing significant shifts. Various industry reports say business jet inventory increased by 24 per cent throughout 2024, peaking at 2,016 units in November before closing the year at 1,851 units. Despite this surge, the percentage of the in-service fleet for sale remained at approximately seven per cent. “A seller’s market,” says Burrows Aerospace CEO Simon Burrows. “This dynamic underscores the importance of selecting aircraft models that not only meet operational needs but also retain the highest value over time.”

Generally, buyers are looking for aircraft that are five years old or younger, as they are still under the manufacturer’s warranty with low time, being well maintained, on maintenance programmes and with a good pedigree. “Aircraft meeting those criteria are in high demand and hold their value the best on the pre-owned market,” he notes. “Their limited supply and advanced features make them a wise choice for those looking to invest in an aircraft that will best retain value over time, as well as for current owners who may be looking to sell at the most opportunistic time to maximise returns.”

The biggest challenge to asset value certainty is maintaining the asset, notes Butler. Making the necessary upgrades will keep the aircraft relevant to new buyers, and of course its flying history is important. “High time/high cycle can have a negative effect on asset value,” he notes.

What happens when an upgraded variant is launched? Well, that can depend on whether the OEM has a strong aftermarket presence. But generally an upgraded variant of any type is never good news for an incumbent, unless of course that new upgrade fails to deliver on what the OEM promises.

The Embraer Phenom 300E, the Praetor 600 and Gulfstream G650ER stand out as top performers for Burrows, with very strong residual values.

He says that in the current pre-owned market, a five-year-old, low time and well maintained Phenom 300E on maintenance programmes will likely sell at a premium to the price paid by the original owner when taking delivery from the manufacturer, outperforming many competitors in its class. An owner who bought the aircraft from the manufacturer five years ago could possibly sell it in today’s market at a 10-15 per cent premium thanks to its great performance, best-in-class cabin comfort and modern avionics. These, combined with a low supply of less than 2.5 per cent of the fleet, yield strong residual values. “This dynamic creates attractive opportunities for current owners who are looking to sell their Phenom 300E and who can also take advantage of the fact that buyers don’t want to wait upwards of two years to take delivery of a new 300E from the factory,” he explains.

Demand for the pre-owned super midsize Praetor 600, with its 4,000nm transcontinental or even transatlantic capabilities, is driven by the aircraft’s performance, versatility, cabin altitude and comfort, as well as full fly-by-wire system. Currently there is very little supply – only one unit on the market as this goes to print – and recent models, when they do become available, command a high premium. “Recently we have seen them being sold eight to 13 per cent above what the original owner paid, so this is a great time for Praetor 600 owners who are considering a replacement to sell their aircraft and walk away with a very attractive deal,” he notes. As with the Phenom 300E, the wait for brand new is more than two years.

The ultra long-range Gulfstream G650ER attracts buyers who want its range and speed but not a four-zone cabin, and who don’t want to spend upwards of $70m. They are actively looking for well maintained G650ERs that are on maintenance programmes and have a good pedigree, but with only about 4.5 per cent of the fleet available for sale, the supply-demand imbalance supports strong resale prices. “This dynamic may shift in the coming months and years as more and more current G650ER owners take delivery of the new G700, and eventually the G800, increasing the supply of G650ERs and potentially negatively impacting residual values,” says Burrows. “It will be something for G650ER owners and operators to keep an eye on.”