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The dangers and uncertainties of an unstable market are plentiful. Businesses struggle to find their footing and make all possible adjustments to survive the storm. We are seeing some recovery, but it’s no secret that the helicopter industry is still trying to cope with a depressed market. We’ve seen almost every possible situation play out during the downturn; from acquiring operational funds through the leveraging of assets, the sell-off of assets, returned leases, bankruptcy and restructuring, and some closing the doors completely. In almost all cases, an appraisal is required and depending on the situation, the parties involved are either looking for the highest possible values or the lowest possible values.

The pressures these businesses are experiencing are often passed along to the appraisal firm. Frequently, this is manifested in the appraisal request itself: requests for certain “types” of appraisals that would be misleading in a given set of circumstances, requests for a guarantee of a clients’ pre-determined opinion of value, changes in the definition of a type of value, approaching an appraisal assignment for a purpose for which it will not actually be used, etc.. An appraisal performed for the clients’ desired outcome rather than actual market conditions and for the proper purpose is not only misleading to any end user and takes away any real value in the appraisal, but it is also unethicaland comes with sometimes serious consequences.

Most notably, it is the inflated values that will cause the greatest damage down the road. Not only can inflated values skew an entire market segment, they can leave investors and lenders holding debt backed by assets that are worth much less than they think. We’ve repeatedly seen, over the history of the helicopter industry, the devastation this practice causes for everyone involved. While values which have been overly discounted may have somewhat less harmful effects, they still have a negative impact on true resale value for a particular model or a whole segment of the market, especially for models that are not frequently traded. They may also bring the wrath of the regulatory authorities with arguments of “bargain purchases” and the resulting tax implications.

Market perspectives will vary from one business to the next. An operator may have a different opinion than a private owner, who may have a different opinion than a lender or lessor. The appraiser exists to bring clarity to those varying perspectives by interpreting the value of the helicopter in relation to the market as it actually exists. Appraisers should come from a completely unbiased position, free from outside influences, using only facts, knowledge, and experience to develop an opinion of value. As a result, an appraiser will never be able to please every client’s value result expectations. Professional and ethical behavior is the only way the appraisal profession can maintain the public’s trust.

Appraisers and firms with inadequate qualifications or experience, or appraisers willing to purposely misrepresent values to satisfy the client’s specific needs tend to be more commonplace in a depressed market. It is important to make sure that you are not only employing a qualified and experienced appraiser, but one that maintains the highest standards. A reputable appraisal firm will not change their methodology and values to suit the needs of the client.

End users of an appraisal should take time to read the complete report. Note hypothetical conditions and assumptions, explanations of the methodology, definitions, and purpose used in the valuation process. Are all of these parameters appropriate for the situation and purpose? If the previous value results are available, compare them to the current value results. Significant value changes from one appraisal to the next may help identify potential issues. Watching for problem areas becomes even more important for lessors, lenders, and operators that require annual or bi-annual appraisals.

Differing appraisal methodologies, governing bodies, regulatory authorities, certifications and accreditations, U.S. Standards ( https://www.appraisalfoundation.org/ ) vs International Standards (https://www.ivsonline.org/), are all factors that influence how values are determined. Knowing your appraisal firm and its specialties is key to the accuracy of the values you will receive. While true market realities can be painful, knowing those realities, accepting them, preparing and dealing with them will not only ensure that the industry continues to have a healthy recovery, but it will help it recover faster, and avoid future negative effects of improperly and unethically performed appraisals.

About HeliValue$, Inc.
As pioneers of the helicopter appraisal process and methodology, HV$ has provided helicopter and parts appraisals for four decades. Our ASA accredited staff annually appraise over 2,500 helicopters. HV$ is the trusted advisor and industry-wide interpreter for an international clientele of manufacturers, vendors, helicopter operators, banks, leasing and insurance companies, and aviation law firms.

HV$ has also continually published The Official Helicopter Blue Book® since 1979. Information regarding specifications, current and historical resale values, current and historical manufacturer pricing, component overhaul and retirement intervals, and hourly maintenance costs are available for most of the 200 models covered in the Blue Book.

HeliValue$, Inc. held its first quarter Blue Book pricing review on April 5, 2018.  Resale pricing adjustments were made for the following models: 

**Piston helicopters are still under review. Once updates have been made, a list of affect aircraft will appear in a new newsletter.

Resale pricing adjustments are based on actual sales transactions and current market conditions such as overall trends in asking prices, increase or decrease in supply, demand, and sales volume.  We obtain sales pricing data from owners and operators, lenders and lessors, brokers and equipment manufacturers worldwide. 

While we do review all models each quarter, frequently traded models are updated as soon as they begin to show variation from the previously published values.  Stay up-to-date on resale pricing changes by purchasing an annual subscription.  

Q1 Market Overview

The resale market, in general, has enjoyed an uptick in activity throughout the first quarter of 2018.  The single turbine markets are seeing more activity than we’ve seen in the previous four quarters.  Notably, older vintages of the Airbus AS350 series are experiencing the largest increase in activity as well as a bump up in sales prices.  The newer vintages are not experiencing the same level of activity.  However, as the older aircraft move off the market it’s likely that newer aircraft will begin to see similar activity.  Other models in this category that have seen an increase in activity this past quarter are the older Bell 206 Jet Rangers, Bell 206 Long Rangers, Bell 407 series, MD 500E, and Robinson R66. 

In the light twin category there has been sales activity with the Airbus EC135P1/T1 series, EC135P2/T2 series, EC145T1, Leonardo A109E, Bell 412EP, 429, and MD 900/902.  The medium market continues to be soft with some movement of VIP configured aircraft.  It’s worth remarking that there has been a noticeable increase of twin-engine offshore aircraft that are being sold and converted to alternate mission types such as SAR and VIP. 

After several years in the doldrums, the heavy twin market has seen a few resale transactions in the first quarter.  Two Airbus AS332L1 series, one EC225LP, and one Sikorsky S61N.  Any other movement in the heavy market was within the leasing sector.