There are several true indicators of the health of our market. I have always pointed to the First-Time Buyer as an important one. After all, why in the world would anyone buy into an unhealthy market space. If residual loss rates are tumbling, why buy? Stability is a key factor in attracting a first-time buyer. Another very important indicator of the health of our industry is the Fleet Transition.
We have been very fortunate over the years, as have many of my fellow sales professionals, to facilitate fleet aircraft transitions for our clients. What of course is more common is the relinquishment of one plane to be replaced by another. This is typically caused by a desire to have a newer plane or a mission change. What I am seeing a bit more of now, which is a terrific indicator, are true fleet transitions. These are not seat of the pants decisions. They are planned and programmed by the owner/operator often a couple of years in advance.
The manufacturers are giving our industry a real boost with the advent of the new models being introduced. These new models are giving state of the art technology not just in the cockpit but throughout the cabin. A clean sheet of paper design that really gives the buyer a reason to consider this type of grand transition. In some cases, it is even prompting a change to what might have been long-standing client/vendor relationships. Literally giving up what in many cases had been decades of operational relationships for another.
Major shifts like that are typically started by a new design that the owner feels will meet a mission better. Or it could be a shift in operational destinations and one’s perception of the ability of one manufacturer over another to provide support in that region of the world.
One of these multiple aircraft transitions requires a myriad of balls in the air. First, there is the delivery schedule available from the manufacturer. Next, understanding that the flight department must work skillfully to coordinate completion details and timelines, working backwards from the proposed delivery date to the order date. Colors, finishes, exterior paint design as well as avionic choices and options must all be considered. So many details to manage for what is usually a very busy flight department just working to deliver to the client the safe day-to-day operation that is the crux of the desire to have planes in the first place.
Of course, pilot training is the next area to coordinate. This is especially tricky if the transition is to a new model aircraft or a different manufacturer’s product. Remember, the client is excited about the transition but cannot afford to miss critical use of an aircraft. Training is not just for the flight crew. Maintenance techs as well as flight attendant training complicates the transition.
When do you put what will be the relinquished aircraft on the market? How much time do you give the sales process to leave the flight department with as much capacity as possible? No one wants too many planes and no one wants too few. It is complicated. This question is always answered one specific detail at a time. If the relinquished plane would enter a more robust market the days on the market may be able to be predicted as fewer. If it happens to be a less robust market, longer lead time with more days on the market will need to be calculated.
Hangar space is also an issue during a transition. If the relinquished planes have not been sold as the replacement planes begin to come to town an alternative hangar solution must be factored into the transition cost and complexity.
The other side of the transition is also a boon for our industry. Often when a plane sells into the pre-owned pool, modifications as well as upgrades in the cockpit and cabin occur. Pilot training, insurance policies get written, hangars get rented and on and on. The ownership ball starts rolling from that piece of the transition. Excuse me for veering from the bottom line of the article, the excitement of the phenomenon of the fleet transition. I have not seen this occur in the numbers that I am starting to see and be a part of for many years. Economic confidence that the buyers are feeling. New exciting technology being introduced by the manufacturers is spurring a wonderful industry buzz. There is so much good that comes from the fleet transition. Time for a shout out to the manufacturers for making the huge investment in R&D and then taking that investment to the actual design and build phase. This is what keeps our industry young and vital!