Hi there,
In my quest to purchase a used aircraft, I came across an interesting observation. Some of you may already have noticed this and other may disagree.
Many of the ‘non-recent’, say pre-2000 model aircraft are likely worth more for parts than being sold once the engine expires. To value an aircraft with an expired engine, one must overhaul the engine and complete any overdue maintenance or defects carried in the logs. So we end up with
Va = Ceo + Com + Cx
where
Va = Value of Aircraft
Ceo = Cost of Engine Overhaul
Com = Cost of Overdue Maintenance
Cx = whatever is left over
So…worked example
60,000 = 30,000 + 4,000 + X
or Va=24,000 in this example.
Now why on earth would a vendor sell an AC for so little – they could merely sell the GNS, the engine to a kit builder and the rest for parts for far inexcess of the 24k. The 60k value merely represents a ‘cap’ for an aircraft of that vintage/fuel burn. And why on earth would a buyer pay more – they’ll be months waiting to get their toy in the air and have lots of uncalculated costs. Maybe twins are an even better example.
Therefore, I propose that the most efficient economic model for these engine expired aircraft is that they are broken for parts, sold to keep the newer fleet flying. This INCREASES the disposal value for the vendor and REDUCES the maintenance cost for owners of the newer fleet. The only party missing out is the manufacture who want to sell overpriced parts.
Finally, the theory concludes that the most effective purchasing strategy (for buying OLDER airplanes) for the private owner is to buy an aircraft with enough engine life to fulfill their requirement and then dispose of it in parts (or whole ‘at a discount’)
DMEarc
Repairs aren’t always done at retail price 
With that in mind, parting out a 50 year old (or whatever) single engined aircraft is typically more appropriate when the number labor hours is high – i.e. after accident or abandonment. For now that provides enough engine cores to meet demand from kit builders etc.
If you are parting an aircraft out, many expensive items will have to be inspected and certified, which may cost the thick end of your selling price. On the other hand, if you are licensed to do that yourself, parting old aircraft out is indeed a profitable business.
There are a number of points of view for a prospective buyer.
For example if I was buying a piston plane I would hardly fly it. I would get the engine rebuilt as the very first thing, so I am flying with a known quantity up front. So a shagged engine is a positive opportunity for me, while being a big negative for most buyers who actually want to fly with an engine which, according to the, ahem, ahem, logbook, has 300hrs left on it, and has possibly not, ahem, seen any prop strikes…
It’s true that when parting out an aircraft one is supposed to recertify major parts, but one can get that done if there is enough value. I have seen a quote of a few hundred quid for printing out a fresh EASA-1 form for a fixed pitch prop. However smaller parts, right down to cockpit trim items (and these can be awfully expensive to buy) can be transplanted without any logbook record being made (not legally – I am being pragmatic here). I have a collection of Socata cockpit trim components which came out of a crashed (force landed) TB which somebody broke up for parts, which must cost a few k from Socata.
It’s easier on N-reg because an A&P can inspect and declare a part airworthy. I believe he does need to satisfy himself that it is a genuine article so if e.g. he removes it from the parted out airframe that is OK. On G-reg this has also been done but it is more of a grey area and for example the head of one 145 company I know well says he would do it only if the donor airframe had a valid CofA. I don’t know if there is any supporting reg for this but clearly a “10 year hangar queen” won’t have what in Euro-speak is a valid CofA.
The chap who parted out that TB for parts doesn’t reckon it was worth his while. The major parts (wings, elevator, VS, cowlings, etc) went very quickly and the rest took years and took up space in his hangar. At the end he just pointed me at the pile of stuff and said “take what you want”.
Parting out airliners is a hugely profitable business and there are several firms (EASA145 of course so they can print out fresh forms) not far from where I live that do that.
I don’t understand your worked example, but an aircraft is a very poor investment no matter how you look at it (unless you purchased a Spitfire 50 years ago ) This means the value of the aircraft is more tied to the operational cost and the cost of getting an aircraft in operational standard. A new aircraft have low operational cost, but it is expensive to purchase. An old aircraft has high operational costs due to constant maintenance but is cheap. But even though an old aircraft with an expired engine is cheap, it is still a poor investment because you have to invest lots of more in it to get it in operational standard. People looking for a ready to fly aircraft would rather have a slightly more expensive newer one than a very expensive old one, so fixing up an old aircraft to sell it is no option. Selling it piece by piece is time consuming, laborious and uncertain and a kit builder would rather have a brand new Lycoming clone and the latest version experimental (and much more fancy) Garmin equipment than 10-15 year old “crap”.
So, the only sensible use of an old aircraft with expired engine is to fix it up to top standard, but only if you are doing it because you are going to use it. And you want to control it yourself, because you want to do it as cheap as possible.
It’s easier on N-reg because an A&P can inspect and declare a part airworthy.
Which in actuality consists only of him writing the phrase “installed used serviceable ‘widget’, name, date, A&P number” etc in the applicable maintenance log after installation.
For sure if an aircraft is parted out, a few bits sell very quickly and rest sell slowly if at all. I have a spare set of wings and controls for one of my planes that floated around for decades uninstalled. They were worth buying for $3K.
The one bit about a run out engine is that it is a fairly known quantity to replace. Either it can be overhauled, exchanged or replaced with a factory new engine.
In most cases, an overhaul will do and present the cheapest option. If a reputable company does the job, you will end up with a reliable engine.
What is far more demanding is any airplane which needs a huge avionic upgrade.
An engine approaching TBO or on condition? if it reflects in the price, why not. You may actually get a plane with very good avionic way under value if the engine is near or past TBO. I recently saw a Seneca being practically given away due to both engines near TBO, yet it was fully IFR and FIKI. The new owner reportedly got both engines done within a few weeks of buying it and now owns a full potential airplane with a more than adequate IFR stack.
The point is, if you reflect the overhaul in the price, you pay nothing for the airplane. If you pay what the owner wants and overhaul, you end up way overpaying for the aircraft. You could easily save yourself 1/3 by buying one with a recent engine…
I think aesthetic and structural condition of the aircraft needs to be entered into the formula. We got an engine overhaul + re-spray + corrosion treatment on our PA28. Money spent = ~£35,000. Total value added to the hull price of the aircraft to a potential buyer – the hull price before these major items of work = ?
that’s my point. I’ve no idea the year of your Archer but assuming circa 1980, it’s difficult to sell them for >£40,000 now. So if you spent £35k on it, you’d have to have purchased it for £5k to have avoided massive depreciation on the improvement works. It’s great if you keep it and get enjoyment but if you want to trade up/down/change…ouch.
