Selling in a Buyer’s Market

By Ron Bower | May 1, 2004
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Some tips for avoiding the agony of finding out, when you sell your helicopter, just how much it really cost you.

About a year ago I wrote a column on Buying in a buyer's market. Now, we will look at the flip side. I still hold to my prediction of last year that the buyer's market would be lasting at least 12-18 months.

Several economic indicators seem to be pointing toward a better 2004, but the often overly optimistic industry forecasts are still more fragile than those of times past-and could change on a single event. One positive economic condition, however, is the current weak U.S. dollar on the world money market. The weak dollar should help encourage foreign buyers to come to the United States to make discounted purchases (due solely to the exchange rate) of any brand of used helicopters, and any American-made new helicopter. This situation usually works against American buyers purchasing European-made helicopters, since the price of those helicopters in U.S. dollars is often increased to cover the adverse effect of the exchange rate. Another negative situation is that some countries, such as Brazil, that were major importers for the last few "heli-boom" years, are now dumping helicopters into the world market as their economies and helicopter markets wane.


While there has been some market tightening, I still generally believe the buyer's market exists for most used helicopters. The transaction rate is sluggish, numerous helicopters are being advertised and there has been no noticeable increases in used prices. There are still more sellers than buyers for most used helicopter models. Most major manufacturers struggled, again, with new civilian ship sales in 2003. An exception is Robinson, which continually benefits from having top-quality, entry-level products and being in the broader, lower-end of the price pyramid (where there are more buyers at lower prices).

The ever-hoped-for windfall of funding for local governments to buy new helicopters for homeland defense has been slower and smaller than expected-with many alternative programs vying for, and often getting, those funds. Fortunately, U.S. military helicopter spending is buoying Sikorsky and Bell, and to a lesser degree other manufacturers, such as Schweizer with its Fire Scout and Argus unmanned aerial vehicle (UAV) projects.

A sad result for new helicopter sales is that the availability of lower-time used ships will be lessened in coming years. The used market, or secondary market, is directly dependent on the new-ship sales (the primary market) as its only source for newer, low-time used products. If new ship sales slow, the result is that the used fleet will have a higher "total time" average per aircraft. Higher time ships will likely have lower prices. This effect may enlarge the difference between the ever-increasing price of a new helicopter and an older used one-which then further works against new ship sales. (Remember the price pyramid.)

The industry-gagging, ever-escalating insurance premiums (regardless of an owner's loss history) for helicopter owners cause many owners to decide to sell when they get their renewal notices. For low-usage private turbine owners/operators, a $36,000 annual insurance premium drives the hourly cost through the roof. For example, if they fly only 100 hr. a year, that is $360 per flight hour for insurance-more than 150 percent of the hourly direct operating cost of a JetRanger. If the premium weren't enough heartache, most insurers now dictate an annual factory refresher training requirement that adds several thousand dollars. Many private used-helicopter buyers are self-insuring for hull loss and only carrying liability coverage. Again, this may drive some buyer's to less expensive used ships to minimize the self-insurance risk.

Remember that the used market prices are elastic and respond to market demand. The new helicopter prices are inelastic and all manufacturers seem to have their collective sticks stuck in the "up" position. If you bought a new helicopter in the last two or three years, you will likely take a financial hit when you try to sell it in the used market.

A helicopter truism is "You don't know what a helicopter costs you until you sell it." If you didn't buy it right, you only defer agony until you sell it.

I have found three common characteristics of most helicopter sellers:

They happen to own the very best helicopter their manufacturer ever produced. The warts are invisible to them.

Most sellers are not in tune with real market prices. Asking prices don't make the market-those are often just wishful thinking. What a seller paid for the helicopter has nothing to do with what the market price is. (Think of buying and selling stocks-you are the only one who cares what you paid for them). I have seen many used ships "up-for-sale" for well over a year.

Lastly, unless the seller was upgrading to a newer or bigger replacement, I don't remember finding a private helicopter owner that really wanted to sell his helicopter-owners seem to have a much closer emotional attachment to helicopters than to cars, boats, or even airplanes.

As a result, it is usually a more difficult and reluctant decision for owners to sell their helicopter-they just don't throw down the keys and say, "Get it out of here."

For a seller, once you have decided to sell, it is better to get in front of the market than be behind and chasing it. The strategy of "I'll just keep the helicopter until the market improves" is rarely a good financial decision due to the high on-going holding costs: interest, insurance, maintenance, hangar, pilot (in some cases) and other expenses. Also, if the market sags further, you are only in deeper. Most ex-helicopter dealers got in trouble by holding their helicopters too long and being eaten by the holding costs, especially as prices slid downward. It is hard enough to just decide to cut your losses in any financial transaction; it seems doubly hard when you really don't want to give up your helicopter.

It used to be that if you wanted to sell your helicopter, you could: 1) sell it yourself, 2) let a broker list and sell it for you, or 3) sell it quickly at a wholesale price to a used helicopter dealer. Now, basically, there are only the first two choices. Used helicopter dealers have almost disappeared due to the adverse economic and world-tension conditions since the turn of the new century, and also because there has been a significant change brought on by the Internet in how the used helicopter market now works. A decade ago, the several major used helicopter dealers would buy helicopters at wholesale for their inventory, do the needed refurbishment and maintenance, and resell the helicopter to meet customer's specifications offering one-stop shopping. Most of those companies are now out of business, or at least out of holding used inventory. I don't know of any dealers that are actively buying used helicopters for inventory-in a sagging market it is almost a sure way to lose money since they have to pay those unreasonable insurance premiums and holding costs, as well.

Certainly, it is relatively easy to list your helicopter on the Internet. But there is more to making an effective sale than running a brief ad and pictures. I have been running used helicopter ads for more than 21 years and many of the callers are "tire (skid) kickers," or even other sellers probing for pricing. If you are not inclined or available to interact responsively with potential prospects, the length of time to sell the helicopter will probably be extended. It may well be worth your turning over the marketing tasks to a proven helicopter broker for a few percentage points of commission to have it handled professionally.

Like a real estate agent, a helicopter broker should know the market better, have established contacts, already have an advertising program underway and be able to handle the closing in a more experienced fashion. They can also help you in determining your asking price. Rarely are local pilots or mechanics experienced or effective brokers, particularly if their livelihood is based on helicopters being there. Determine if your broker can handle international aircraft sales (remember the weak dollar, above), ask for recent references of customers-and call them. Find out what the broker will commit to do to help you. It is usually worth paying a couple of percentage points more for an established broker with a proven record in order for you to get a quicker sale and stop the holding costs hemorrhage earlier.

If you are considering selling your used helicopter, here are a few tips that might help:

Develop an accurate and detailed specification list and have attractive, uncluttered photos available.

Have a correct component analysis available showing times remaining on all life-limited components. Consider having all the records copied and available to express mail to qualified prospects-it makes the on-site pre-purchase inspection go quicker and gives you an earlier awareness of objections.

Know the Market

Arrange your logbooks and records in an orderly fashion. Make them "professionally cared for."

Get the helicopter in a "show ready" condition-clean, shiny, and everything working.

Anticipate a fault-finding pre-purchase inspection. Maybe even have your mechanic or shop involved early in the process to deal with issues in advance.

Don't let the insurance expire. Get ahead of the renewal notice if you are considering selling. You must have the helicopter flyable for demos and operational check flights.

Protect yourself with a well thought out purchase agreement that limits your ongoing liability. The contract should clearly outline the responsibilities of the parties, with specific dates for performance.

Be effective in salesmanship and price negotiations. The market price is really what a seller and a buyer agree upon. The more you know about the market, the stronger you can be in price negotiation.

Have clear and clean administrative and financial processes for closing. If your ship is financed, understand the lien release procedures.

Remember, it isn't a sale until you have all the money-and then let the helicopter depart.

Good luck and good selling!

Editor's note: Ron Bower has been tracking new and used helicopter transactions for 20 years on his proprietary computer database. He has bought and sold more than 350 helicopters, world-wide. Ron is an 8,500-hr. ATP rated helicopter pilot and holds both the east- and west-bound around-the-world helicopter speed records. He can be reached for questions or comments at

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