Most owners never recoup their investment in major upgrades such as a new instrument panel or a more powerful engine. But it’s important to consider the long-term benefits that might not show up on a spreadsheet.
THE NEW OWNER: AIRPLANE MATH: WHEN DO UPGRADES MAKE ECONOMIC SENSE?
The calculus often comes down to avoiding becoming upside down, but not at the expense of enjoying your perfect airplane.
BY JASON M c DOWELL
READERS CONTACT ME pretty regularly for advice regarding airplane shopping, purchasing, and maintenance. I can only assume they’re inspired by the notion that an individual lacking flying skills, business acumen, and finances can successfully navigate aircraft ownership. I’ll admit I myself am often amused that I’ve made it this far. It’s enjoyable to help, though. Whether it’s a new pilot exploring ownership for the first time or a seasoned expert weighing upgrade options, I find it rewarding to help others avoid some of the hard lessons with which I’ve had to contend thus far on my own journey. I recently spoke at length with two individuals asking for ownership advice. One was considering a panel upgrade, weighing the pros and cons of a few options that ranged from some minor modifications to a complete overhaul. The other was torn between upgrading the engine and propeller on his Cessna 170 versus selling it and buying a larger Cessna 180. In each case, the most attractive option was to invest a fairly substantial amount of money into the existing airplane. Panel guy knew he wanted full IFR capability, and he knew he liked Garmin’s latest avionics. And 170 guy loved almost everything about his
airplane except for the modest power. Each recognized that a big upgrade would result in their perfect airplane…but each shared the same reservation—losing money on the airplane upgrade and reasoning they’ll never get it back through resale. They’re not wrong. In most cases involving major upgrades, the money spent on parts and labor will exceed the additional amount you can command when reselling the airplane. The majority of the upgrade cost becomes sunk, and this was the hangup I kept hearing. In the case of the full panel overhaul, the entire panel plus labor was forecast at around $60,000—nearly the value of the airplane itself. The resale value of the unmodified plane was around $80,000. Based on what I’ve seen in the classified listings, this would rise to perhaps $100,000 to $110,000 with the new panel installed. So about half of the panel cost would be money spent and never seen again. It was the same story with the Cessna 170 owner looking for more power. Yes, he could upgrade the engine and propeller, but he’d never get that money back out of the airplane when the time came to sell it. This is why he was considering selling the 170 and upgrading to the 180. He loved his 170, but the spreadsheet said the 180 would be the wiser investment.
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