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When to trade your aircraft
Several factors affect timing, value and efficiency
Of course, it’s rare to have just one reason for trading your aircraft. Timing and consequences depend on many factors. This list is designed to help you look at all of the issues in order to make the best, most responsible decision and one that’s ultimately right for you.
The end of a typical five-year depreciation schedule is the No. 1 reason owners trade in their business aircraft. Once the financial benefit is exhausted, consider speaking to a tax professional whose specialty is in aviation about trading your aircraft in for a new one, especially if additional tax incentives are available.
Tax incentives on new aircraft
From time to time, federal and state governments pass legislation that provides special incentives on new aircraft purchases. From depreciation to breaks on sales tax, the savings can be substantial. Ask your tax advisor about the latest changes to tax laws.
Trading your aircraft before the warranty ends often results in a higher resale value. Leaving a few months on the warranty allows time for the next owner to work through unexpected expenses that can come with pre-owned aircraft. It’s a much-appreciated perk that will reflect in the price you receive for your aircraft.
Upcoming expensive maintenance or repairs
The closer you get to expensive maintenance events, inspections and repairs, the more difficult it is to trade in or sell your aircraft. Buyers factor the cost of the maintenance into your aircraft’s resale price. Consider trading sooner rather than later, or be prepared to pay the cost of the maintenance, one way or the other.
Not sure you want to invest the money, energy and lengthy downtime into major repairs? Consider trading in your aircraft for a lower value and move on with a new aircraft.
Changing travel patterns
It happens all the time. Maybe your stage length has grown from one and a half to three hours, and you need something faster, perhaps a jet. Or, maybe you’re making more short regional trips and need a turboprop. If your aircraft no longer serves at least 80 percent of your missions, it could be time to find one that’s far more efficient, or time to add another type of aircraft to your hangar.
Do you need to move more passengers to more places? Are you adding employees, customers, clients, vendors or facilities in other cities that you need to visit regularly? Is the cost of travel, including airline tickets, hotel rooms and car rentals, eating up your budget? Would getting your executives and staff out and back in one day improve productivity? If so, it’s time to re-evaluate.
Outdated cabin amenities
Could modern amenities in the cabin increase productivity? Wi-Fi connectivity with access to email and the internet, on-board high-resolution displays and comfortable club seating let passengers keep working even while traveling. Think about how you want to use your aircraft beyond just transporting personnel from point A to point B. Do you want it to function as an airborne office, allowing your staff to continue working, as well as strategize and prepare for their upcoming meetings?
Technological and support considerations
Keeping up with the latest FAA mandates costs downtime and money. Do you want to spend it on your current aircraft or invest in a newer, already-equipped model? Moreover, state-of-the-art avionics, such as high-resolution, real-time weather radar, terrain awareness and warning systems (TAWS) and automatic dependent surveillance-broadcast systems (ADS-B), increase safety by dramatically improving the pilot’s situational awareness.
Today’s aircraft incorporate a wealth of improved equipment, engineering and technology that enhance both reliability and performance. From reliable, digitally-controlled power plants, to specially-designed airfoils, to plush interiors and pristine mechanical systems, you just may want the peace of mind and the excitement that comes with owning a newer model.
Service and support
Would having access to an experienced, well-respected service and support network in your region make managing your maintenance and repair schedule easier and more efficient? If so, trade your aircraft in for one that’s built by an organization that’s serious about supporting you.