Cessna C172 depreciation

michael heffey

michael heffey

Filing Flight Plan
Joined
Mar 23, 2019
Messages
2
Display Name
Display name:
RMIT University Flight Training
Hi all
I'm a new member from Australia and director of a large University Flying school in Melbourne. We have been using mainly C172/182's for CPL & PA44 for MECIR training. We have the opportunity to re-fleet in 2020 and currently writing a business case to provide 3 options. Purchase outright, Lease and or a blend. We are also considering changing to Cirrus SR20's.

I'm trying to wrap my head around depreciation and forecast aircraft re-sale value over 5, 10 & 15 years. Does anyone have a fomula or experience in this area? Our current fleet on average is 8yrs and most aircraft fly on average 700hrs per year.

Any help or advice would be welcomed.
 
This sounds like a question that needs an answer from someone who knows Australian tax law.
 
michael heffey said:
Any help or advice would be welcomed.
Click to expand...
Unfortunately, most directions I can point you in are only applicable in the US. From a business standpoint, depreciation methods are usually dependent on the tax-status of the end user so it would be better asked on your side to a financial professional. And the same goes to re-sale value as this is somewhat subjective to the aircraft type, use, and location. Any figures from this side will not accurately define conditions on your side. But if you need one direction to follow, research and contact an aircraft dealer down under for the types you are interested in then let him work out some solutions/costs for you. In my opinion, this will keep your costs more inline for your location. Good luck.
 
Thanks and understand tax laws in Australia differ and guess I should have worded my question better. I'm trying to understand an average ball park resale value of purchase price (new) over a 5, 10, 15 year.

Research of aircraft dealers in the USA suggest a 80's model C172 is now worth approx 35% of purchase price comparative. So if the fleet purchase cost of C172 G1000 is $16m in 2020...is the re-sale of the fleet be worth 72% in 5 years, 55% in 10 years etc etc.
 
You might want to contact some aviation departments at some U. S. universities that provide flight training, they may be able to share their experiences with you. Off the top of my head, University of North Dakota and Kent State University (Ohio) are public universities that have flight training operations.

172s are very much in demand as trainers, and the resale prices are surprisingly high, even for 40+ year old aircraft.
 
One data point...I bought a 172 with 60 hours on it in 2006 for $205,000.00. I sold it about a year later (and it was exported to Australia) after putting 350 or so hours on it for $200,000.00.
 
michael heffey said:
Thanks and understand tax laws in Australia differ and guess I should have worded my question better. I'm trying to understand an average ball park resale value of purchase price (new) over a 5, 10, 15 year.

Research of aircraft dealers in the USA suggest a 80's model C172 is now worth approx 35% of purchase price comparative. So if the fleet purchase cost of C172 G1000 is $16m in 2020...is the re-sale of the fleet be worth 72% in 5 years, 55% in 10 years etc etc.
Click to expand...

It's going to be difficult to answer that because the number of aircraft built over the last 10 years is so small. Cessna has delivered approximately 125 172s per year over that period, and Piper approximately 50 Warriors and Archers. In 2018, Piper delivered 107 Archers and Cessna delivered 129 172s, and I believe the great majority of those went to flight schools and university aviation programs such as your own. They don't appear to come onto the used market. Doing a quick search in Trade a Plane, it looks like there are two new Archers listed for sale, and then the newest used Archer is a 2003 model. The newest 172 listed is from 2003, and the newest 172 that has an asking price is from 1997.
 
Last edited:
My crystal ball,hasn’t been correct for years. Prices on 172 aircraft are heading for the ceiling,for how long ,is anyone’s guess.
 
frfly172 said:
My crystal ball,hasn’t been correct for years. Prices on 172 aircraft are heading for the ceiling,for how long ,is anyone’s guess.
Click to expand...

Maybe we can sharpen its focus a little. In 2018, according to the FAA US Civil Airmen Statistics, there were 20,730 first issuances of a private pilot certificate for airplanes. I'm going to make the assumption that it required 50 flight hours on the average to earn that certificate. So, for those new private pilots, that's a total of 1,036,500 flight hours. Also last year, there were 45,354 student certs issued, so somewhere around 25,000 pilots got to the student level but not to private. If you figure each of them took 10 flight hours, that's another 250,000 hours, or a total of 1,286,500 training hours, just at to the primary level.

Now I'm also going to assume that 75% of those hours were done in a 172. I don't know how accurate that is, but that's what I'm going to use, which gives us a total of 964,875 hours of primary instruction and solo flight given in 172s. How long does the average 172 last? I really don't know. Leafing through Trade a Plane it's rare that I see one go to five figures. I'm going to guess that flight schools keep them going longer, so I'm going to use 15,000 hours. That may be a little generous, but that's what I'm going to use. If anyone has a better number let me know and we'll redo this. So 964,875 hours divided by a useful life of 15,000 hours means that primary training is going to consume 64 Skyhawks a year. That doesn't include those that are in private use, or are used in other training. Cessna delivered 129 172s last year, but in a typical year nearly a third of all U S built airplanes are exported, so maybe 90 joined the fleet. I have to think we are seeing a declining number of 172s in the U. S. fleet, and I think that will only send the prices up, especially for the later ones.
 
FormerHangie said:
I have to think we are seeing a declining number of 172s in the U. S. fleet, and I think that will only send the prices up, especially for the later ones.
Click to expand...

That assumes the demand for them does not decline. I'm not optomistic about that.

As an example, I think there is a possibility that a future US government which has a Democrat as president and that party controlling the legislature will ban the use of leaded fuel in conjunction with other laws to save the planet from being destroyed in the next twelve years.
 
You must log in or register to reply here.
Back
Top