As a means of emphasizing the role of inflation and production efficiency and the impact on residual values, the values of newly delivered A321-200s have failed to increase over 23 years – the value of a new A321-200 today is less than two percent higher than one delivered in 1996.
The market may often look at interest rates in terms of lease rentals but the role of inflation plays a significant part in determining residual values and has contributed to values failing to meet the expectations of forecasts made 10-15 years ago. When the A321-200 entered the market in 1996 the value approximated $48 million and today the value of the much improved version is only $49 million. During the same time interval U.S. general inflation has increased by 62 percent which would have seen the value of a new A321-200 today being nearly $80 million. In the years before the financial crisis values of new A321s were increasing such that a peak of nearly $53 was recorded before tumbling by 20 percent in two years. With residual values of aircraft falling by an average of 8-10 percent per annum, the value of a new aircraft needs to increase by some 4-5 percent per annum for residuals to exhibit a much shallower fall but with values of new aircraft failing to register an improvement, the annual fall is that much greater.