Jetrader - Summer 2016 - 45

appraisal

Boeing 717-200

Mark Halsor and Dave Miller
Certified Appraisers, International
Society of Transport Aircraft Trading
Aircraft Information Services Inc., AISI
Tel: +1 (404) 870-2474
Email: mail@aisi.aero

Credit: Ian Lim. Photo released under the GNU Free Documentation License, Version 1.2.

Background
The Boeing 717-200 is probably most recognized as the last aircraft to be designed
by McDonnell Douglas and was initially designated the MD-95. After Boeing purchased
McDonnell Douglas in 1997, many thought
that Boeing would cancel the MD-95 project, but Boeing was anxious to compete in
the 100 seat market where their 737-600
was having very little traction.
The first 717 was delivered to AirTran
Airways in 1999 and the last of 156 717s
was also delivered to AirTran in 2006. The aircraft was, and still is, popular with operators
due to low maintenance and operating costs.
The aircraft's light weight, short-to-medium
range along and efficiency of its Rolls Royce
BR715 engines make it an excellent niche
aircraft for operators, such as Delta Air Lines,
Volotea (a regional European airline based in
Spain), Hawaiian, and Qantas.

valuing a Niche Aircraft
It is very difficult to properly value outof-production aircraft that have very specialized uses by only a handful of operators.
Delta, with 90 717s, has made it known
to the industry that they will purchase
almost any and all 717s that come onto
the market. Delta uses their 717s on the
Boston-NYC-Washington DC shuttle market (among others), where low operating
costs and high maintenance reliability is
especially important. It could be said that
Delta has caused the 717 to be very close,
if not squarely in, the standard definition
of a tight, current market.

By contrast, Volotea has announced an
up-gauge/expansion of their fleet from
the 125 seat 717 to the 150 seat capacity
of the Airbus A319. This would indicate
that the market will soon have to absorb
over 10 percent of the 717 fleet in the
near-to-medium term, a normally bearish
market indicator.
Hawaiian Airlines seems to be very keen
on keeping the 717 in service on the costsensitive, high-frequency, inter-Hawaiian
Island passenger market, another bullish
indicator. Qantas has announced plans to
pull more 717s into their 100 seat mainline routes and will most-likely acquire
additional 717s from Australian charter
operator Cobham.
So what do we think the full-life values
of the 717 should be?

Interestingly, the market shows very
little differentiation for values based on
Year-of-Build, with the earliest 717 produced in 1999 valued only about $2 million
dollars less than its 2006 counterpart in
both full-life base and current market values. This small year-of-build value spread
is confirmed by corresponding lease rates
that show very little year-of-build differentiation between early and later model,
in-service 717s.
You can also see that our prognosis
for future 717 value retention is relatively strong for an out-of-production
aircraft. We think the 717 niche market
will remain tight as strong, established
operators such as Delta and Qantas
quickly absorb any aircraft that come
into the market.

Value Matrix for 717-200
Year of
Manufacture

2016

Bv US$

CMv
US$

2006

17.17

16.81

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

11.62

11.22

10.87

Future Base values (2% Inflation per annum)
15.92

15.12

14.39

13.74

13.14

12.58

12.07

Jetrader * Summer 2016 45

Jetrader - Summer 2016

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