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Values Continue to Reflect Strong Market

June 16, 2014

The price stated on an invoice which is sometimes used to justify a particular value will not necessarily include all the factors. The net invoiced price may include pilot training – perhaps amounting to one to two percent of the purchase price, spares provisioning, product support programs and a premium for arranging the financing. In addition, manufacturers may offer purchase incentives whereby there will be discount when turning options into firm orders at some point in the future. While most customers will have to bear the brunt of an escalation clause, sometimes manufacturers may be willing to reduce the effect of escalation. The net price sometimes cited may only show the price for the base aircraft, excluding all Buyer Furnished Equipment (BFE) and Specification Change Notices (SCNs). The net purchase price does not necessarily reflect the actual cost of the aircraft yet this is sometimes equated to the Value of a new aircraft.

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