The Relationship between an Aircraft’s Value and its Maintenance Status

Aircraft market values are influenced by a host of determinants, and key among them is its maintenance status. Maintenance status is directly linked to maintenance value and, depending on the age of the aircraft, can account for a significant portion of a modern aircraft’s market value. However, the impact of maintenance status is rarely constant. Similar to aircraft values, maintenance status values are highly influenced by market conditions; values naturally decline in a recession and rise again as the industry recovers. Maintenance status is also determined by the manner in which an aircraft operates. The rate of deterioration of high cost maintenance events (i.e. engine restoration and LLP replacement) is affected by several factors such as average flight length and region of operation. Lastly, the effects of both labor and material inflation are key drivers of escalating maintenance costs and therefore efforts should be taken to account for these variables when forecasting future maintenance exposure. The material presented herein is intended to be both a guide and a resource tool for those interested in gaining a better understanding of the determinants that impact maintenance status, and to point out how an aircraft’s maintenance status can influence its market value. The Relationship between an Aircraft’s Value and its Maintenance Status Theory of Aircraft Maintenance Adjusted Valuations