Return of reasonably pleasant commercial air travel will devalue small airplanes?

The value of little airplanes has soared in the past two years, more like South Florida real estate than inflation in general. Planes that are reasonably good for transportation, e.g., the Cirrus SR22, are up 50-100 percent in value as used aircraft. There have been substantial price increases on the new ones, but it is unclear what they’re worth because they’re impossible to buy without at least a one-year wait.

If a Cirrus, which has no pressurization, no ability to climb over thunderstorms, no kitchen, and no bathroom is “reasonably good for transportation” what is “excellent for transportation”? JetBlue! At a price that is essentially free compared to operating the Cirrus, JetBlue has pressurization, the ability to fly over weather, a kitchen where coffee is brewed, and three bathrooms on every Airbus. In the unlikely event that JetBlue’s plane is broken, there are spares that are rolled out within a few hours.

Commercial airline travel in 2020 was perceived as unsafe. You were informed that SARS-CoV-2 would probably kill you. Commercial airline travel in 2021 was correctly perceived as unpleasant, with constant announcements regarding masks and a constant reasonable fear that a mask dispute would break out on the plane, potentially leading to a diversion and not getting to your destination on time. Maybe it wasn’t so bad to pay $1.2 million for a piston-powered airplane, endure the noise, vibration, and uncertainty about whether one would reach one’s destination (weather, mechanical, fatigue?). And the $10,000 per year hangar bill? A small price to pay to avoid a killer virus. Another $20,000 per year for data subscriptions, maintenance, and insurance? Where do I sign up?

Could a little downward nudge from the stock market decline combine with rediscovery of the pleasantness and practicality of commercial air travel to make people rethink whether they want to elbow their way past 15 other people and be the high bidder for a Cirrus, Bonanza, or turboprop? A friend who owns a jet charter business says, regarding airplane valuations, “they follow the stock market triple leveraged”. The market has already declined quite a bit in 2022 and it is unclear that his formula is in operation yet, but there might be a precedent for a General Aviation Winter caused by the airlines.

The glorious years of mass production for generation aviation were 1960s and 1970s. Upper middle class people thought it was a reasonable idea to buy a Cessna or Piper for family transportation. Gerald Ford began the deregulation process for the airlines and it was completed by Jimmy Carter in 1978 (history). By 1986, fares for leisure travelers had fallen dramatically and Cessna stopped making little planes. Part of the justification for the shutdown was liability, but there was a glut of small planes that lasted until roughly 1996 when Cessna started up again. Piper was similarly afflicted, but never shut down completely. See “Airplane production to resume June 1” (UPI, May 1986):

Floundering Piper Aircraft Corp. will resume production of its entire line of small airplanes June 1, having sold off more than half of its oversupply of new planes, the company said Friday.

Piper, which like other small aircraft makers has suffered from a severe downturn in sales since the 1970s, suspended production of eight of its nine models of small piston-driven planes in February and laid off 630 workers.

The company has laid off several thousand employees as it trimmed operations. It now has 1,800 employees, down from 8,000 a few years ago.

I’m not expecting a mid-1980s-type crash due to the restart of mask-free airline flights, but that’s only because the piston aircraft industry is already so tiny that it can’t shrink much. The question for this post is whether the return of reasonably pleasant $200 airline flights will cause small planes to revert to their historical values, adjusted for Bidenflation.

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4 thoughts on “Return of reasonably pleasant commercial air travel will devalue small airplanes?

  1. The “return” of reasonably comfortable airline travel?

    Are suggesting the 1980s? Post 9/11 that no longer exists outside of tiny outlier airports where the security theatre is light weight.

    Plane values will definitely come in if fuel prices stay high.

    I will continue working hard, if for no other reason than I love traveling and do not enjoy being crammed in an airliner.

  2. I think, like houses, if the number of planes is very limited, prices will stay up there. Interest rates may be more of a factor (assuming that you need a loan to buy one — many are probably group buys?). Of course, fuel prices may affect the amount of usage they really get. Meanwhile, JetBlue’s fleet is aging; plus they have quickly evolved from an airline everyone loved to one that seems to be very hated. Huge numbers of flight cancellations (no crews?) may be part of that? Southwest seems to have a more aggressive aircraft replacement plan (and has been better with getting people hired), but got caught up in the Max fiasco (but timing was right? i.e. during COVID), but I’m not privy to the real #s. P.S. Pretty turboprop: https://www.instagram.com/reel/CcOkNybjedR (audio on for best effect! 😉

  3. The question for this post is whether the return of reasonably pleasant $200 airline flights will cause small planes to revert to their historical values, adjusted for Bidenflation.

    I think some but not all. The pilot shortage is real and there is a great demand for basic trainers like the 172 and possibly the SR-20. I think those planes will loose less value when the bubble pops.

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