effects of Damage
Consider that you have the opportunity to buy either of two aircraft you have been dreaming about owning.
They are identical in every respect except that one had a hard landing that resulted in damage to one of its landing gear. The damage was repaired and except for the paper documentation, there is no evidence that the event even occurred. Both aircraft are identical in terms of flight worthiness.
But, would you be willing to pay the same amount for either aircraft?
Most price guides simply deduct a fixed percentage from the total aircraft value. As is this example, most damage events only affect one or two items, e.g. landing gear, wing, propeller, windshield, etc. and most components that account for an aircraft's value are unaffected by the damage.
If you deduct 10% or 20% of the aircraft's value due to the past damage event, your are deducting that percentage from potentially high value item like the avionics, and engines that were unaffected and may even be new since the event.
Does this make sense? Of course not. But still the two aircraft will clearly not command the same amount at resale! It's not that the two aircraft differ in terms of flight worthiness, but the market will not treat them as equivalent due to the stigma associated with the prior damage!
The marketplace decrease in value depends on the type of aircraft, the extent of the damage, and the method of repair. There are other factors as well.
The market is less accepting of damage history on certain classes of aircraft. For example, the stigma of damage is far greater to a corporate jet than it is to a single-engine piston aircraft.
The NAAA computerized program analyzes the current market for each particular type of aircraft when calculating value reduction for the type of damage incurred. The values of unrelated components are not affected.
This approach is based on the NAAA's experience in tracking the aircraft market since 1980 and from performing literally tens of thousands of Certified Aircraft Appraisals during this period.
This difference between the NAAA and the other methodologies can translate into a BIG difference in the real value of your aircraft.
Only NAAA appraisers have access to the computer software and data bases to properly account for the impact of historical damage.
Ask your appraiser what method they use to calculate damage history. If it is not the system described above, walk away!
Need more information? Feel free to contact me personally by phone at (519) 822-2206 or through email by clicking here.
John Polonenko is endorsed for the Uniform Standards of Professional Appraisal Practice.
John Polonenko is a member of the National Aircraft Appraisers Association.
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