ISTAT Jetrader - Summer 2020 - 39

supported by a set of assumptions, which should be carefully
reviewed before relying on them. This would include "soft
market" values, which are increasingly being used given the
current market. Additionally, it is possible to get a disconnect
between Current Market Value and a future value, whereby
the future value might actually be higher than the Current
Market Value. This relationship, optically, can seem at odds
with logic, especially now. This usually is predicated upon
the connection between Current Market Value and Base
Value and any applicable discounts or premiums used by the
appraiser to reflect their view of the market for that particular
asset, at that given moment. Those discounts or premiums
tend not to be applied to future values, which results in
either a significant increase or decrease in value for the next
period. This construct also applies to the difference between
a previously forecasted value and that value as of today.

Case-by-Case Basis
Given what we have learned from previous cycles, one might
be inclined to provide broad assumptions on asset values,
but it should not be the definitive angle of attack on how
to assess current values and potential recovery, especially
for aircraft that are further down the curve in terms of
age and maintenance life cycle. Newer, core aircraft are
expected to remain in service or will ultimately return to
service, but there will always be the odd exceptions due to
one-off circumstances for opportunistic aircraft owners.
Aircraft that are facing expensive airframe and/or engine
overhauls that have material cash maintenance reserves on
account might be broken down for parts. Conversely, older
aircraft that may have just finished expensive maintenance

on short stub leases will most likely be returned. For owned
aircraft, airlines remain adept at creating "Franken-aircraft,"
whereby components and engines are assembled based
on life remaining from other aircraft or engines. For leased
aircraft, remaining tenor, return conditions, and end-oflease compensation or penalties will play large factors in the
decision to retire or return.
We, as ISTAT Certified Appraisers, understand that
we will be significantly challenged by this current market.
For our clients, the simplicity of pulling up a value from an
online subscription needs to be carefully reconsidered for its
appropriateness, and extracting such a value should be the
first step of many in their analytical approach. These values,
while valid, should not instantly be taken at face value,
nor should one immediately subscribe to the fundamentals
of the past where a half-time current market value would
be the default placeholder. As always, when compared to
other large industrial sectors, ISTAT Certified Appraisers
are working to provide guidance in an opaque market with
limited data points. We also are prepared for the challenge
and to be challenged; we have many tools in our toolbox
when it comes to assessing value, and it is in this type of
market that most, if not all, of those tools should be utilized.
Thinking outside the box, for all parties concerned, should
be the standard course of action in this uncertain market.
Of note, as 2019 came to an end, the ISTAT Appraisers
Program embarked to review our definitions to ensure
they were properly constructed, could withstand the test
of time, and were appropriate given the challenges of our
market (good or bad), its inherent cyclicality and history of
exogenous shocks. It is important to note that this task is
not being conducted with the goal of changing anything,

It is important for us to touch upon the three pillars that guide ISTAT Appraisers Program
appraising methodologies. These fundamental approaches are: Replacement Cost
Approach, Income Approach and the Market Comparable Approach.
prior to the current crisis may return to service. Needless
to say, the simple "half-time" construct might need to
be reconsidered with a more concerted effort to review
maintenance status. Aircraft that are core to a fleet will have
a better chance of returning to service, even if having to be
parked for longer than expected. We should not forget that
many airlines were backfilling their fleets as they waited
for new narrowbody aircraft to deliver. This backfill of
capacity is no longer needed, and those aircraft that were

but rather to ensure that our structure remains intact and
relevant, and to only change or amend if needed. At ISTAT
Americas earlier this year, the IAP spent much of our
continuing education session walking through this important
project. Needless to say, while our work was not all for
naught given where we are today, the current environment
does add a layer of complexity and furthers our discussions
to include how we manage and support our industry in
unprecedented times.
Jetrader

* SUMMER 2020 * 3 9



ISTAT Jetrader - Summer 2020

Table of Contents for the Digital Edition of ISTAT Jetrader - Summer 2020

ISTAT Jetrader - Summer 2020
From the President
News & Events
Perspectives: Q&A With Nils Hallerstrom
Live from Austin
Fixing the Leaky Pipeline
ISTAT Certified Appraisers: Valuing Aircraft During Market Disruptions
Aviation History: The Avro Canada Arrow
A Tribute to Jack B. Feir
Appraisal: A330 Freighters and Boeing 777F
ISTAT Foundation: Thinking Globally
Advertiser Index
ISTAT Jetrader - Summer 2020 - Intro
ISTAT Jetrader - Summer 2020 - ISTAT Jetrader - Summer 2020
ISTAT Jetrader - Summer 2020 - Cover2
ISTAT Jetrader - Summer 2020 - 1
ISTAT Jetrader - Summer 2020 - From the President
ISTAT Jetrader - Summer 2020 - 3
ISTAT Jetrader - Summer 2020 - 4
ISTAT Jetrader - Summer 2020 - 5
ISTAT Jetrader - Summer 2020 - 6
ISTAT Jetrader - Summer 2020 - 7
ISTAT Jetrader - Summer 2020 - News & Events
ISTAT Jetrader - Summer 2020 - 9
ISTAT Jetrader - Summer 2020 - 10
ISTAT Jetrader - Summer 2020 - 11
ISTAT Jetrader - Summer 2020 - Perspectives: Q&A With Nils Hallerstrom
ISTAT Jetrader - Summer 2020 - 13
ISTAT Jetrader - Summer 2020 - 14
ISTAT Jetrader - Summer 2020 - 15
ISTAT Jetrader - Summer 2020 - Live from Austin
ISTAT Jetrader - Summer 2020 - 17
ISTAT Jetrader - Summer 2020 - 18
ISTAT Jetrader - Summer 2020 - 19
ISTAT Jetrader - Summer 2020 - 20
ISTAT Jetrader - Summer 2020 - 21
ISTAT Jetrader - Summer 2020 - 22
ISTAT Jetrader - Summer 2020 - 23
ISTAT Jetrader - Summer 2020 - 24
ISTAT Jetrader - Summer 2020 - 25
ISTAT Jetrader - Summer 2020 - 26
ISTAT Jetrader - Summer 2020 - 27
ISTAT Jetrader - Summer 2020 - 28
ISTAT Jetrader - Summer 2020 - 29
ISTAT Jetrader - Summer 2020 - Fixing the Leaky Pipeline
ISTAT Jetrader - Summer 2020 - 31
ISTAT Jetrader - Summer 2020 - 32
ISTAT Jetrader - Summer 2020 - 33
ISTAT Jetrader - Summer 2020 - 34
ISTAT Jetrader - Summer 2020 - 35
ISTAT Jetrader - Summer 2020 - ISTAT Certified Appraisers: Valuing Aircraft During Market Disruptions
ISTAT Jetrader - Summer 2020 - 37
ISTAT Jetrader - Summer 2020 - 38
ISTAT Jetrader - Summer 2020 - 39
ISTAT Jetrader - Summer 2020 - Aviation History: The Avro Canada Arrow
ISTAT Jetrader - Summer 2020 - 41
ISTAT Jetrader - Summer 2020 - 42
ISTAT Jetrader - Summer 2020 - 43
ISTAT Jetrader - Summer 2020 - 44
ISTAT Jetrader - Summer 2020 - 45
ISTAT Jetrader - Summer 2020 - A Tribute to Jack B. Feir
ISTAT Jetrader - Summer 2020 - 47
ISTAT Jetrader - Summer 2020 - Appraisal: A330 Freighters and Boeing 777F
ISTAT Jetrader - Summer 2020 - 49
ISTAT Jetrader - Summer 2020 - 50
ISTAT Jetrader - Summer 2020 - 51
ISTAT Jetrader - Summer 2020 - 52
ISTAT Jetrader - Summer 2020 - 53
ISTAT Jetrader - Summer 2020 - ISTAT Foundation: Thinking Globally
ISTAT Jetrader - Summer 2020 - 55
ISTAT Jetrader - Summer 2020 - Advertiser Index
ISTAT Jetrader - Summer 2020 - Cover3
ISTAT Jetrader - Summer 2020 - Cover4
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