JMesingerJuly12_JMesingerNov06 19/06/2012 11:05 Page 1
THE AVIATION LEADERSHIP ROUNDTABLE
Not Just Another Article About The Market... was preparing to make a speech in early June in Teterboro, NJ about aircraft transactions in an evolving market and the steps for success. It was to be given at the NBAA Regional Forum. The event was standing room only, and although I am not so sure I can claim to be a Rock Star, I do believe the topic was so important, given what still looks like a rocky road ahead. The crowd was clearly topic-driven. In preparing for this speech, I was not only able to draw on my own company experiences but the experiences of other key players in our industry - including this very publication. By having World Aircraft Sales Magazine aggregate such great writers, I could just flip through the publication and find all I needed to begin to weave the industry tapestry together. Amstat and JETNET are both very solid inventory reporting publications, Brian Foley a respected industry trend spotter, and ARGUS one of the finest industry trackers of operations by individual operators and charter providers, and all have prominent views of our industry from which to draw. So now let’s slice, dice and reassemble what I read in preparation for the speech. Amstat and JETNET reported on available inventory and they both looked at it on the basis of year-over-year as well as month- and year-to-date. Both companies reported interesting findings. It seems that available inventory by category is down; however the corresponding transactions for those categories are not up, indicating that inventory is being removed from the market rather than selling. The root cause of this phenomenon could be a very positive sign, and most likely means that the individuals who had placed this inventory for sale are now perhaps finding the health and strength of their own companies improving, and the solid foundation for the reason to have purchased aircraft originally is being felt again. The business tool is back in play! The other reason aircraft were on the market for sale may have been due to purely opportunistic sellers thinking they could sell for a higher price than was possible. With today’s market conditions not allowing for
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overpriced listings, those offerings have been pulled from the market. The reason could, of course, be a combination of the two. “If I cannot sell for that price, let’s put the asset back to work.” Both reasons result in less available inventory for sale. Now let’s discuss the segmentation of the global inventory. Europe is just starting to acknowledge what we in the United States acknowledged in 2008. Too much debt, too little growth, and companies that were the pillar of the business foundation have eroded possibly beyond salvation. This is a terrible combination of circumstances. One in five aircraft registered in Europe are for sale with a “for sale” inventory amount by category in excess of 19%. There is no way so much excess capacity can be re-absorbed into that single region of the world, and so some great buying opportunities may present themselves for us in this part of the world. The danger here is that anytime you have an abundant amount of inventory it all suffers price wise. So let’s discuss the effect of all this inventory, and its resulting effect on price. Luckily for the Europeans they will most likely not see a value reduction like we did in 2008 because that reduction has already been accounted for in a global adjustment of price. Exceptions would be for those owners who purchased prior to 2005 through 2007. With all that being said, I am still seeing price fluctuations and reductions every day. These are minimal by comparison to 2008-2009, however. I get emails daily that say, “Drastic Price Reduction”, “Must Sell”, “Next to Sell”! Typically, these fall on deaf ears. Usually it takes more than an announcement of a price reduction, or a statement of desiring to be the next to sell to get the needed attention of the market. If it were that easy everyone would come to the market on day one and proclaim their airplane will be the next to sell. The old fashioned hard work of marketing and awareness must still be an overriding factor above a price reduction alone. We regularly pick up the phone and call a list of about 85 dealers and brokers around the world to discuss in great detail our offerings. (We must help the sales partners we have in the market differenwww.AvBuyer.com
tiate our offering from the myriad of other offerings.) So often the aircraft on the market start to all look the same. Only model year and hours separate most from each other. That, of course, is a huge marketing mistake if anyone selling leaves the unique features of an aircraft up to the buying side of the transaction to discover. There are so many factors that one should use to try to positively separate a listing from all the others. The problem for us all is the large amount of available inventory for sale and the corresponding smaller market to sell into, coupled with a fluid pricing platform. The solution is harder work and greater effort if you are to get your particular aircraft sold. I do not mean to minimize price in the equation, but price alone or a simple “Next to Sell” statement is not enough. Hard work, constant calls to the buying brokers and dealers, and clear marketing makes sales happen. Don’t be discouraged by our market, be encouraged to get out ahead of your competition and set the stage for success. ‘Robust’ would be an exaggeration if used to describe our market, but ‘Alive’ is not a big enough word. ❯ Jay Mesinger is the CEO and Founder of J. Mesinger Corporate Jet Sales, Inc. Jay is on the NBAA Board of Directors and is Chairman of AMAC. He served on the Duncan Aviation Customer Advisory Board for two terms and is now on the Jet Aviation Customer Advisory Board. Jay is also a member of EBAA and the Colorado Airport Business Association (CABA). If you would like to join in on conversations relating to trends in Business Aviation, share your comments on Jay’s blog www.jetsales.com/blog, Twitter and LinkedIn. More information visit www.jetsales.com Do you have any questions or opinions on the above topic? Get them answered/published in World Aircraft Sales Magazine. Email feedback to: editorial@avbuyer.com Aircraft Index see Page 4