Blog - Mesinger Jet Sales

Mesinger Pulse – The Aviation Business Pendulum

Many global economic factors have shifted the business aircraft activity primarily back to North America. I have been talking and writing for the last year about these Global economic shifts of the emerging markets. The lower price of oil, the sanctions placed on Russia for their incursion into Ukraine, anti-corruption laws in China and economic stagnation in Europe.

Why is North America so strong? A myriad of factors including business growth, increased confidence in the economy and a basic return to profitability in many business segments. I do not mean to paint too rosy of a picture. Not all companies are enjoying this return to profitability and many are shifting their need for long range travel or working to keep costs down. As well, energy producing companies and the ancillary companies that supply goods and services to the oil producing countries and oil producing companies are struggling and may take years to recover. While we wait for recovery in other parts of the world, we in North America, have to work harder than ever to keep the transaction level strong here. Upholding the confidence of the market place is something we as aircraft sales professionals and for that matter every facet and segment of aviation industry providers has a responsibility to participate in a positive way. If we all do our part to be a force of strength our segment of the market will stay strong and give the leg up the industry needs to keep growth in our sights at home and around the world.

As I talk to clients and financial minds I do hear that there could be a downturn in our North American economy coming. They can point to many obvious and less obvious signals from the financial sector of our country.

So, what if our economy slows? The overall effect of that on our North America sales surge will be greatly determined by the timing of the recovery in other parts of the world. If the emerging markets have not gained speed when and if a downturn occurs, then inventory levels could continue to rise even higher, with corresponding reductions in transactions in the North American sector. Might it be fair to say that what is probably prudent to always consider is that a global industry may be hit from many sides at many times and a complete directional shift by all participants at the same time is unlikely.

But, what if economic indicators from the United States continue the positive trends exhibited in higher than expected job growth and wage growth and your business could now benefit from the use of a business aircraft. Don’t delay getting in to the markets, with the right expectations of residual value, the cost of ownership and the tremendous impact an aircraft could have to your success, whether buying new or pre-owned. Legacy aircraft can represent tremendous values with foundations and upgrades capable of taking you in to the future. New aircraft have technology never before seen and can take you farther and faster than ever before. What if you stepped up and made a positive difference to your business’ bottom line and personal well-being?

Let’s face it, business aviation will not go away. The need and desire are firmly planted in our being. There will be markets and there will be buyers and sellers. One aspect of our industry growth that has been so smart has been the corresponding advent and growth of the important industry advocate associations, NBAA, EBAA, AsBAA, LABAA, MEBAA and on and on. Not to mention the powerful work of the regional and local associations. These groups both in North America and all over the world have sought to strengthen the awareness of the benefits of business aviation and build upon global regulatory work to open airspace and keep the political focus in perspective regardless of the sectors current economic woes. We are so lucky as an industry to have these powerful alliances.

I will be speaking at the NBAA Regional Forum in White Plains on September 15, 2016. My speech time is at 10:30 am and will focus on this exact topic. In fact, I am excited to create a presentation that will include input from everyone in the audience. Not just questions at the end but actually building on the segment strengths of the audience. So if you are planning to attend the event, please come so your industry segment can be included in this discussion. I assure an invigorating and meaningful presentation that will connect the dots of our industry.

https://www.nbaa.org/events/forums/2016HPN/agenda/

My reader’s comments and input are critical to me as I create topics for future articles. Please contact me directly with thoughts: jay@jetsales.com

The Quality Challenge(r)

With so many options to choose from in today’s aircraft markets, it has never been more important as a buyer to critically examine the options in front of you. Not all pre-owned planes are alike when they reach a vintage over fifteen years old. A buyer has to consider operational history, maintenance history, upgrades and reliability when deciding which aircraft will carry them in to the future for years of safe and enjoyable travel. We are representing an aircraft that will do just that for the next owner.

1997 Challenger 604, S/N 5316, N484CR located in Englewood, CO at the Centennial Airport is an exceptional offering in not only the 604 market, but in relation to comparable markets as well. It has been extensively upgraded, optioned and well cared for. It has been professionally maintained and operated while being enrolled on the GE OnPoint engine maintenance program and MSP maintenance program for the GTCP 36-150 APU. Recent maintenance includes the 6/12/24/48 month and 400/600/800 hour inspections in April 2016 at Flying Colours in St. Louis. During this maintenance event the owner also complied with Service Bulletin (SB) SB 604-29-013 which is the hydraulic system 3 accumulator relocation; likely to become an Airworthiness Directive (AD)

The upgraded equipment includes not only the 150 APU, but the PrecisionPlus avionics upgrade, WAAS/LPV, ADS-B Out (DO-260A), TCAS 7.1, DBU-5000 and a lightning detection system. The owner has also installed Gogo Biz high speed internet and Wi-Fi. Additional communication equipment includes the Aircell Axxess II SATCOM and flight phone system.

The 12 passenger interior of this 604 allows for maximum passenger load and comfort while travelers have space for group meetings and relaxation. Cosmetics have been maintained to a high standard and show well for their age.

It is time to take a close look at this quality Challenger 604. With all of the outstanding benefits highlighted above it will shine compared to the competition and represents a great value proposition for the next buyer. Call us today to learn more arrange your viewing. You will not be disappointed!

2009 Falcon 900EX EASy S/N 215, N375SC

We are proud to exclusively represent for immediate sale a 2009 model Falcon 900EX EASy, S/N 215, N375SC.  This is a highly equipped, impeccably maintained, beautiful, 1 U.S. corporate owner aircraft.  The engines have been enrolled with 100% coverage on the JSSI Premium engine maintenance program since new.  The aircraft has been upgraded to EASy II Certification 2 with enhanced avionics, enhanced navigation, LPV and Synthetic Vision.  Additionally, it is NEXTGEN compliant with CPDLC-FANS 1/A, CPDLC-ATN B1, ADS-B Out and TCAS 7.1.  It is also equipped with Aircell GoGo Biz ATG-4000 high speed internet with Wi-Fi.  And, the 1C inspection package was completed in April 2015 and the paint and interior are in very good condition.

The owner of this aircraft is a large public U.S. furniture and design company.  Aesthetics and functional design are critical to this forward-thinking organization.  They acquired their first aircraft in 1972 and have been proponents of the value add contribution of business aviation ever since. Monday through Friday every week they dispatch two aircraft (they are long-time Falcon operators) with sales people to pick up customers and bring them back to their corporate headquarters in Michigan.  The valuable one-on-one time in the aircraft has proven to be a winning strategy.  Employees of this company will tell you that they attribute much of the company’s success to their hands-on sales strategy made possible through the use of their aircraft.

Often a customer’s first personal experience with the company is on the airplane.  The design and condition of every part of the customer experience matters to this company and the airplanes are a huge part of that experience.  The paint and interior are kept in great condition and each aircraft has a dedicated maintenance technician focused solely on their aircraft keeping them in the best possible condition with the highest possible dispatch reliability.  Missed trips or bad experiences are not acceptable as they would translate into missed sales opportunities.

This is truly a turn-key excellent aircraft and the company that owns it has their replacement aircraft in service, they understand the competitive market and they are ready to get this sold.  There is no better priced late model turn-key Falcon 900EX EASy available for sale anywhere in the world.  Review detailed specifications, lots of current pictures and a video about this aircraft on our website at http://jetsales.com/jets/2009-falcon-900ex-easy/ and/or call us today to learn more.  We look forward to discussing this with you.

Mesinger Pulse – Too Much, Too Little, Too Late, Just In Time

If you are reading this article you have either bought or sold a plane in the past, planning to buy or sell or are currently buying or selling. You might also be an aircraft sales professional who has been engaged to buy or sell on behalf of a client. If any of these are the case, this article is written for you.

A lack of stability in markets always brings out the most interesting approaches and opportunistic challenges in the valuation process. In the last few weeks I have had several instances that have reminded me of these challenges from my experiences in previous unstable markets. Let’s take the title in the order it was written.

Too Much

This is when a seller decides to put their aircraft on the market and is not willing to embrace a market reasonable asking price or a market reasonable final sale price and simply expect too much. Often a misconception occurs when a seller believes the value of their plane has some connection to what was paid, what was invested or what their friend sold theirs for. Or even worse the seller believes they will find the one buyer who will be willing to overpay regardless of market metrics. What is actually most important is what was the very last one that sold in that category and how much did it sell for, adjusted to match the criteria of your aircraft by equalizing the year model, difference in airframe time and equipment. In our current supply side environment if you are looking at comps from 90 days ago you probably are not using the best intel. Markets are changing quickly as sellers become more and more anxious about not missing the next sale. So if you price too high and ask too much real buyers may mistake you as something other than a real seller. They may feel you are not advised well or do not understand the current market. This could cost you a sale and by the time you wait for the next buyer to come along it will cost you even more due to what will assuredly be a lower price at a later date. I have written often about what is a new normal for residual loss rates which are between 7-10% annually barring any unforeseen global political or economic shifts. In today’s world those shifts seem to come daily! So don’t be one of the sellers that have to realize they asked too much, missed sales and found out you were too late to recapture yesterday’s market value.

Too Little

This is the exact opposite but is also an occurrence in a supply rich volatile market environment. You prepare to make an offer on a plane and take the approach that whatever the seller is asking or the market is representing itself to be you are going to just offer significantly less because it is continuing to go down. Typically, you or your trusted aircraft sales professional has done the market research and have focused in on a very short list. This short list is comprised of the aircraft that stand above the complete list of available inventory and would be options you would be happy to end up with. Then you look at the research, shake your head and say offer this. This is a number that has no association to anything other than an opportunistic attempt to pay significantly less than the real market will bear. I always say when helping buyers we don’t want to buy a cheap plane cheap, we want to buy the best plane at the best price. There is a difference. So if you have taken the time to work through the available aircraft and really identified the best plane for you, why act like you don’t care if you buy it or not and later have to settle for far less plane? Sure you might pay less later since you know they are going down but why pay less for less of a plane. That is another big difference. I always find the slicing and dicing of the available inventory in every segment a very interesting exercise. With the amount of available inventory on the market here in North America it is possible to eliminate the planes based and operated in far off parts of the world or those that have a history of major damage. Next eliminate those planes that are not configured like you want, with a final elimination for those that are obviously overpriced, and you end up with a pretty short list of aircraft. With the amount of aircraft available today you can often get many features and upgrades installed, for much less than one hundred cent dollars, paid for by the seller with their hundred cent dollars during the course of their ownership.

Too Late

Don’t miss the value of the first plane on your list. If you offer too little you are very apt to be perceived as not being a real buyer which is just as bad as being perceived as not a real seller on the flip side. And it will be too late. You will almost find yourself feeling as if you are bidding against yourself if a seller just rejects your offer out of hand and you want to come back with a new offer without the benefit of a counter to help shape the discussion going forward. Don’t lose track of why you entered the market to buy. You wanted this important business or personal tool for a reason!

Just in Time

Bottom line, trust your partners who you engage to consult and execute on the transactions, trust the numbers. Don’t expect too much when you try to sell based on all the input. Don’t try to pay too little and miss the best plane and most importantly as a buyer or a seller don’t be too late, the moment is now. The parade is moving and it will pass you by. Be just in time!

Mesinger Pulse – We Are Not Happy Until You Are Not Happy

Have you ever felt like that is the slogan for some service providers in the world? Do you feel like some work and work at making you unhappy rather than happy? As if they come to their job every day just to make their customers mad! Believe it or not I wonder if some owners and sellers of business aircraft think those of us who price aircraft for sale subscribe to this belief.

In today’s world of high supply and shrinking demand, in great part due to the emerging markets languishing, the price instability might seem like a conspiracy theory to push prices down. I have always said if I could really control prices I would make them go up not down. I promise the market is not in a free fall, but rather in a very predictable decline of what appears to be 8-10% per year residual loss. By the way this begins from year one as you fly the new one off of the lot.

If you watch the daily on-line updates or print publications that come out weekly or monthly one could quickly begin to feel we are in a doom and gloom scenario. In the last month all of the manufacturers published their first quarter reports, with most reporting sales down year over year with go forward predictions of continued declines. It is true sales of new aircraft are down. Remember, the OEM’s had planned to produce and sell aircraft to what appeared an insatiable appetite around the world. Many of these countries had relatively small numbers of turbine aircraft operating for personal use and the need to satisfy this demand sent all the OEM’s scrambling a few years ago to keep up. It takes years to build up that infrastructure and supply and it will take years to scale back. This scaling in both directions sent shock waves through our industry.

In 2003 when the markets began a never seen before growth spurt, the idea of the then limited supply of new or like new planes created significant premiums on their backs. This lasted until the global collapse of this growth in these emerging markets starting in 2014. It was the end of 2014 that the price of oil began to drop. In 2015 the drop rate was increased and most oil producing countries as well as oil producing companies and many companies that provided goods and services to these countries and companies pulled back capital dollars. That meant the almost immediate halt to purchasing new aircraft.

This reduction or elimination of capital expenditures continues today. If you compound the price of oil and the collateral damage done with the austerity and anti-corruption legislation in China and the economic sanctions placed on Russia, you quickly see that North America is the bright spot for aircraft transactions. The problem is North America is not a large enough market on its own to support the entire world supply of aircraft.

That information hopefully helps to shape the reason for the high supply of aircraft available and the diminished demand. The good news is that even though the OEM’s sales are down with a predicted continued decline in sales for the next few years, the selling of pre-owned business aircraft is still a viable market, albeit mostly in North America. This is much more positive an outcome than the 2009 standstill globally for sales.

It does however keep the residual loss rate increasing by 8 to 10% annually. In fact, I do not see that trend ever stopping. Today, given the aging fleet, increased inventory due to an emerging market paralysis and other global uncertainties, as bad as it might seem, at least it is predictable.

So back to the title, “We are not happy unless you are not happy.” Nonsense. We are never pleased with a service offering that cuts against our clients. Our industry is filled with wonderful professionals who care greatly about their clients being happy. Listen carefully to your trusted sales professional and trust the numbers.

Mesinger Pulse – As a Buyer How Should You Try to Influence the Price?

Everyone likes to have a hand in influencing the purchase price of an aircraft. The Sellers always want to point to a rebounding market. They are focused on their particular aircraft’s pedigree and mechanical integrity and always see the glass as half full. The Buyers are always focused on the high supply and lower demand, and are quick to point out that given the high supply, pedigree and mechanical integrity are abundant and might not add as much value as a seller would hope.  I believe both can be correct and that is why typically a meeting of the minds on middle pricing ground is what usually occurs.

I am writing today about the myths and truths regarding pricing, first from the buyer’s perspective. After all, as it is said with the Golden Rule: The one with the “Gold” rules. That may be one of the myths. Just because you can afford to buy a plane, you do not get to set unrealistic pricing models. And, if you can afford to buy you should be sure that you don’t just buy a cheap plane cheap. You are not rewarded for buying the least expensive plane but from buying the best plane at the smartest price.

The buyer cannot just put on a blind fold and throw a dart at the wall and declare that where it sticks is the right price for the plane. They must endeavor to determine the right price using a combination of research, interpretation and common sense. We work daily in our office to look closely at market segments. We do not do this work in a vacuum but rather envelop market intel on the collateral markets to the target plane as well. This gives us the overall market view. We then need to adjust this view by weighting the financial benefit of a specific aircraft within the chosen segment. Pedigree, hours, programs, mechanical history.

Next comes the interpreting. Since there is no real recordation body to capture actual sales prices, it is the constant calling into the market, talking to brokers and sellers that fills in the gaps for sales prices on recent sales. By the way, any prices gathered that are over ninety days old are probably not relevant today. Things are moving quickly in some markets. The interpreting comes when you find that buyers say they paid less and sellers say they got more. Seeking out the reality is where the relationships and skill as a researcher come in. Common sense is being able to sniff out the complete pricing picture such as maintenance handled as part of a pre-purchase inspection and who was responsible, buyer or seller, or possible premiums paid by a buyer for a unique financing structure. Put all this intel together and one begins to see how the buyer should work to correctly influence the market with good solid offers. These offers will no doubt be less than a seller would hope for, yet in a range that between a willing seller and a willing buyer gets a deal done.

A quick visit back to the Sellers logic. The thought of a rebounding market where prices will start to go up rather than down reminds me of an article I wrote a couple of years ago about flat being the new up. In that article I said that if we could just have several quarters of flat pricing rather than downward trends we could claim that as a recovery. Let me amend that discussion to say that if we could just have several quarters of predictable residual loss, we could call that a recovery. The sellers need to remember that before there would ever be a rebound in prices the market would have to stop going down. My question back to sellers and owners when asked to speculate on when the market will go up is, go up form where? The predictable part of the residual loss rate would mean that the only downward trend in pricing would be the agreed upon seven to ten percent annually that the industry embraces

Our market today is active yet limited to basically North America. The paralysis of the emerging markets has put this recovery once again on the backs of a smaller than global buying market. Over the last many years the OEM’s have produced planes to fulfill the appetite of a much larger market. The is no reason to believe that this globalization in our industry will not come back, just not in the next few years. So when buying today it has never been more important to understand all of the offerings available in a saturated market and how the pricing is affected by pedigree, mechanical history, cosmetic condition, avionic upgrades, not to mention aircraft to the left and right of your target. Go in with eyes open to the true annual residual loss and buy when the time is right for your needs.

Mesinger Pulse

Jay Mesinger CEO/President
Mesinger Jet Sales
303-444-6766
jay@jetsales.com

“Writing my articles for the last 18 years has provided me an opportunity to give back to an industry that has given so much to myself and my family.” -Jay Mesinger, President/CEO, Mesinger Jet Sales

Boulder, Colorado- “MESINGER PULSE”, A monthly newsletter to be published by Jay Mesinger, Mesinger Jet Sales.

After writing monthly for aviation publications for many years, Mesinger has decided to broaden its readership and self-publish this new monthly article. The article will draw from Mesinger’s 42 years of experience as a leading aircraft broker and industry participant. The article will provide “Mesinger’s industry perspective”.

During his writing career, Mesinger has been unbiased, balanced and focused on providing a unique and enjoyable style of writing looking into the current and future industry trends and business aviation growth process. Yearly, Mesinger attends the global business aviation conferences, speaks regularly at business aviation gatherings and has been a member of the NBAA Board of Directors as well as served as Chairman of the NBAA Associate Member Advisory Committee. Mesinger is currently on the Jet Aviation Advisory Board.

The article will be distributed via email to industry participants on the second Monday of every month. It will also be available on the Mesinger Jet Sales website at www.jetsales.com/blog and their corporate LinkedIn page. Visit www.jetsales.com/contact  to sign up to assure receipt of the articles.

Price & Pedigree

You can’t turn back hours on an aircraft just like you can’t turn back miles on a car.  You can, however, help overcome higher total time with price and pedigree.

We are proud to exclusively represent for immediate sale two great Falcon 2000s, Serial Numbers 19 & 31.  Both aircraft have been owned since new by one U.S. Fortune 25 company with an established first-class Part 91 flight department.  They are used to support domestic corporate travel needs where dispatch reliability and safety are mission critical.  And, there is a no-expense spared approach to maintenance.

The operator of these aircraft has an incredibly capable and sophisticated in-house maintenance team and larger inspections are primarily performed at either Dassault Aviation or Duncan Aviation.  In 2014 and 2015 respectively for S/N’s 19 & 31, Duncan Aviation complied with the 3C inspection packages, landing gear detailed inspections, wing tank modification “dry bay mod” and new paint.  As always, when we listed these aircraft for sale, our technical director spent several days in our client’s hangar reading all of the logbooks from day one to present and looking at each aircraft.  The logs are in great condition.  All 8130s, tags and associated documentation are kept with their applicable logbook entry, all historical work order detail is available and everything is in good order.  There is no finer pedigree in the world than what you get with these two Falcon 2000s.

Our client is selling these aircraft as part of a fleet transition and the replacement aircraft have already been acquired.  They understand the competitive market and are ready to be competitive within it as our asking price demonstrates.  These are great aircraft and they will represent a great value for a buyer.  As my father always says, “don’t just buy a cheap airplane because it is cheap, buy a great airplane and make a great buy.”

Falcon 2000, Serial Number 19, N790M Specifications & Photographs

Falcon 2000, Serial Number 31, N790Z Specifications & Photographs

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