How Much Do Private Jets Depreciate In Value?

Have you ever wondered how much private jets depreciate in value over time? In this video, we'll explore the world of private jets and uncover the truth about their value, and we'll examine data from the past decade to see how much private jets have depreciated and what factors affect their value.

Generally speaking, private jets will depreciate in value.
This makes sense given that the older a jet gets the more maintenance is required, the less efficient it is, the less comfortable it is compared with new aircraft, and the older its technology is. Therefore, knowing that private jets depreciate in value, the most important question to ask is by how much.
Well, like virtually everything in aviation, there are a variety of factors that will influence the depreciation rate and no two jets are the same. As a result, some jets will hold their value better than others. Purchasing an aircraft that holds its value best will result in a minimal loss when it comes time to sell.
It is important to note that the depreciation rate is not the only factor that needs to be considered when costing out an aircraft. Additionally, there are other factors that can help offset the depreciation and there can be many tax benefits to depreciation.
There are three key factors that affect the depreciation of private jets: age, hours, and features. Essentially, the older the aircraft, the higher the hours, and the fewer features, the less the aircraft will be worth. Of course, there are nuances within these principles.
Firstly, age. The older an aircraft, the more maintenance will be required. Compared with newer aircraft, older aircraft will be less fuel efficient, less comfortable and have older technology. Therefore, older aircraft are worth less than newer aircraft.
However, much like with cars, the depreciation curve isn’t linear. Within the first few years, a private jet will see the greatest loss in value. However, over time, the curve will flatten and year-on-year will lose a lower percentage of its value.
Secondly, hours. Hours for aircraft are like mileage for cars. The more hours an aircraft has, the less it will be worth. Planes are designed to be used, and designed to fly.
Private jets depreciate based on the number of hours they have. The more hours they fly, the faster the aircraft will depreciate. The more you use an aircraft the more likely components will fail and need maintenance. The more use the interior will see which will require a refurb. These factors all influence depreciation.
Additionally, people like new things. To be the first owner of an aircraft is worth an awful lot. The ability to customize it exactly how you want and be the first person to use it. Subsequent owners will not have that level of customization and feeling. Therefore, it will lose value.
Thirdly, the features. Aircraft are full of technology. However, in the same way as a mobile phone, it quickly becomes out-of-date. Therefore, the older an aircraft gets, the more out-of-date the technology is. This, therefore, makes the aircraft worth less on the pre-owned market.
Of course, owners can replace the technology and upgrade it. However, it won’t be at the same level as an aircraft that has the latest technology integrated into it. Additionally, older aircraft may not be eligible for certain upgrades.
As is a common theme in the world of private jet aircraft, no two are the same. This also applies to the depreciation rate of different jets. The average depreciation rate for a private jet is 25% over 5 years. For example, if you purchased an aircraft today for $10 million, in five years it is estimated to be worth around $7.5 million. But there is quite a variety of depreciation rates. Ranging from 0.2% to over 60%. Why is this?
Well, with some of the aircraft it is important to note that the depreciation rate is high due to being a new aircraft. For example, the Gulfstream G700. There is very little data to go off. Therefore, this value will settle down over the next few years and likely come closer to that of the G650.
One of the main factors that influence the depreciation rate of an aircraft is popularity. The more people want an aircraft, the better it will hold its value. Having the G650 top the list is hardly surprising. It is a highly capable, comfortable, and modern aircraft. It is one of the most popular aircraft within the large jet category. Additionally, the PC-24 holds its value well given its unique capabilities. If you want a midsize jet that can land on gravel runways, this is your only option.

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