While a number of warbirds for sale had been languishing for buyers in the earlier part of the decade, in recent years there has been an increase in people looking to purchase these World War II aircraft. Their motivations range from nostalgia and a desire to own a part of history, to the social prestige associated with holding a rare piece of equipment. As for the profile of the investors and buyers, it extends from baby boomers looking to buy something that will preserve their parents’ memory, to rich people like Paul Allen (co-founder of Microsoft Corp) in search of pieces to add to their personal collection, or even museums such as the Cavanaugh Flight Museum and the Palm Springs Air Museum. However, strange as it may sound, 85% of the customers are individuals.
The Rise in the Demand
The demand is out-stripping supply by such a huge margin that a number of speculators and brokers have entered the market, attracted by the high returns. Only a few years ago, a pristine F4U Corsair could be bought for around $2 million. Today, the same plane has an asking rate of around $4 million, which represents a 100% return on investment! While not every example is as dramatic, the prices of World War II aircraft collectibles have been increasing by around 20% every year.
In fact, the demand for warbirds has now increased to such levels that even museums are finding it difficult to find specimens for display. A number of players have entered the market, looking to sell warbirds for a tidy profit. One such company is Provenance, which had $30 million in sales in 2012, selling 16 aircrafts. It employs seven people and shot to fame after buying a P-38 from its owner and selling it for $7 million to a Texas Oil Baron. The reason for the sky-high price? There are only four planes left out of the 10,000 P-38s that Lockheed built, and only a handful of others are being restored to air-worthiness.
Most such companies limit their purchases to popular warbirds such as Mustangs, Spitfires, Corsairs etc. because they have a huge market. Brokers throng air-shows where potential sellers show off their warbirds, looking to make a purchase that will reap rich dividends later. But that isn’t the only way warbirds are being procured for sale.
Many speculators are involved in combing jungles near Pacific theatres of war for crashed aircraft which they hope to restore and sell. Yet, others head to Russia where every once-in-a-while German and Russian aircraft pop up in remote areas.
The Reason of their Success
One important factor that has helped warbirds sales is that, while the pool of buyers and sellers is limited, it stretches around the globe. As a result, many companies kept doing brisk business even during the severe economic recession that swept through USA and Europe in the past couple of years. However, demand is now picking up again. This has also shored up the confidence of the buyers that they will get back their money, and that investing in warbirds actually makes more money than investing in other avenues.
Courtesy Aircraft, one of the leading companies involved in the sale of warbirds, sells around 40 to 60 aircraft a year. In addition to warbirds, the company also sells Cherokees, King Airs and Cessnas, but these general aviation aircraft account for only 20% of their sales. The company offers P-51 Mustangs, Skyraiders, Boeing PT-17 Stearman, North American T-6 Texans and T-28s for sale. The T-6s and T-28s are the most popular models with their customers.
So, now the thousand dollars question… How much do these warbirds sell for?
Tag Price for Warbirds
If one is to look at warbirds prices, one has first to understand that there are different categories of planes that all have their own price range. Take trainer aircrafts for example; those usually go between $30K and $100K. The next category comprises planes like the T-6s, T-28s and the T-34s which typically sell in the range of $130K to $200K.
For those with deeper pockets, warbirds like the B-25, A-26 or Yaks sell for $300K to $500K. Warplanes like a SkyRaider or a SeaFury sell for about $800K. What about a fighter jet like the Mustang? They sell for a whooping $1 million or more.
However, to keep things in perspective, buying a brand new Cirrus SR22 plane will cost around $500K. For the same price, customers can buy a B-25 or buy T-6s or T-28s and save a couple hundred thousand. Besides, unlike the newer planes which depreciate, warbirds appreciate in value as time passes which is the single most important factor behind the increase in warbird sales.
Another reason is the growing purchasing power in countries like China, India, and Singapore amongst others. This has also driven up demand for warbirds from the Korean and Vietnam Wars. However, selling warbirds to overseas customers isn’t a straight-forward process since they are classified as weapons of war and, hence, their sale is governed tightly by International Law.
For companies in the USA, a license for exporting these warbirds must be obtained from the Defense Trade Controls Office of the State Department. The buyer must produce a No Objection Certificate from their Government which allows them to import the warbird into their country. The seller also needs to submit an End User Certificate to the State Department specifying the intended nature of use of the warbird by the buyer. The entire process costs thousands of dollars each year in license and legal fees for these companies.
The Intricacies of the Warbirds Selling Business
Most companies which offer warbirds for sale only work as brokers. These brokers have extensive contacts with the who’s who of the corporate world and other wealthy professionals. They also have a huge network of air-line pilots, mechanics and military personnel. Besides, they actively seek out owners of warbirds in order to convince them to sell through them for a previously agreed-upon price. Once the price is determined, they set out to find buyers for the airplane. The broker merely takes a cut from the proceedings since not everyone has the liquidity required to put thousands of dollars into a plane which will take about a year or so to sell.
Meanwhile, more money needs to be spent under heads like maintenance charges, parking charges at the airport, etc. as well as on things like taking the airplane to airshows for display. Numerous websites too have sprung up which allow buyers to list their aircraft for free and essentially provide a regulated online market-place for buyers and sellers to meet.
So what is the state of the industry? The General Aviation Manufacturers Association releases statistics on the industry’s health quarterly and yearly. The statistics for 2012 show that despite the weak economic climate, GAMA members sold a cumulative 2,133 airplanes of which 1,044 were helicopters, 580 were Turboprop airplanes and 881 were Piston engines with the rest being Business jets. Obviously, most of these aircraft were new, but just the fact that the combined business of civil aviation shipments stood at $3.4 billion indicates that there are a lot more buyers out there now than ever before. Demand of this intensity is only going to benefit those who are involved in buying and selling warbirds.
Since the demand and supply gap is so huge, many restoration companies have also sprung up. Using modern technology, warbirds which were once thought of as impossible to fly, are now being restored to their full air-worthiness. While a few warbirds are inevitably lost every year in accidents, new ones take their place. However, the supply is still finite, and the demand almost insatiable and the beneficiaries of the situation are companies like Provenance and Courtesy Aircraft which have warbirds for sale.