The unique marketplace of aircrafts continually fluctuates. Aircraft values have historically followed the trends of the economy just like any other business or industry. Even more so, aircraft values have historically lagged 2-3 quarters behind the Gross Domestic Product of the United States. When you can tie the different aspects of the economy into the sales cycle of aircraft, what you get is an added understanding of what other factors drive aircraft prices.
No person can determine exactly just how much a airplane will be worth in ten years. We often hear someone say, “It sure would be nice to be able to predict just how much these aircrafts will be worth in the future, but that’s impossible.” Certainly, no one can actually say that your Boeing 747 is going to be worth exactly $60million in twelve months from now, but you should be able to make an skilled prediction and have some idea.
Nevertheless air transportation plays a very big role in the world’s economy. It smoothes the progress of the movement of business personnel, serves as a key input into fast-growing industries such as tourism, and allows the vital communications necessary to sustain many modern, high-technology, service industries. It carries out a central role in meeting the developing trading needs of the world, as internationalization and globalization become more and more important to the nation’s economy. In addition to its economic role, air transportation serves important social functions, not only meeting the access needs of remote, small communities, but also facilitating continuing contact between members of geographically dispersed families—an increasingly common feature of modern society.
The high-cost airlines are facing disarray. They state that they can hardly survive in the present state where low-cost airlines are eating directly at their customers in a commodity marketplace and without the thumb of the government on the scale to help them, it is only a matter of time before they will have to succumb. They will have to make significant wage reductions and decrease their size or go out of business. Another factor that is eating in to the airlines’ wellbeing is strikes and even the threat of strikes, it forces the company to offer price discounts to either keep their customers or win them back.