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
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!