Please read the latest blog post from Jay Mesinger for the AIN weekly blog series AINsights.
Boulder, Colorado is an interesting city with respect to growth. We have a planned open space program that basically circles the entire city with land that cannot be developed. This totally limits growth for homes and businesses outside of these limits. It props up home and land prices within the city and county and only allows for growth within our borders, so we are becoming denser but not larger. Home owners are therefore left with very few choices if they want to move to Boulder or find a bigger house within Boulder. Enlarge or improve the house they have or buy into a neighborhood that will support that type of investment. Enlarging means expanding your footprint if allowed or popping the top and going up. Right about now you must be wondering where could Jay be headed with this article! Indulge me please.
Before you buy a house, you inspect it. The main inspecting point of a house would be the foundation. It must be solid, it cannot be cracked. It is the most important piece of the value proposition of the investment. You can start to see how this relates to aircraft. Today in our short supply, high demand aircraft environment, we are seeing buyers look back to find the value kernels in our remaining aircraft inventory pools, mostly by looking at the classic planes. The Gulfstream Vs, Falcon 900s, the Global Expresses. You can also see this reflective look at the mid-size planes including the Challenger 300s and Falcon 2000s to name a couple. People are scouring the markets, finding the solid foundations and investing fewer extra dollars to end up with a plane that meets 2020 mandates and also has the latest cockpit LED screen enhancements and cabin entertainment features. In other words make it look, feel and connect as if it where the latest technology, yet have as much or more than fifty percent lower capital cost tied up in the plane, compared to a newer model.
This template for life extension can actually fit the lighter jets as well with the Garmin solutions being introduced to the market that allow for 2020 compliance and other enhancements at a fraction of the cost. These types of solutions do make even the smaller planes step up to the ability of today’s new planes. This is the future of the classic aircraft. No longer thinking it may go away, now one can go down a proud path of modernization and compliance for less than the current production model.
If you think this phenomenon is not catching on just look at the classic markets in most categories and watch the solid foundation aircraft inventories shrink. Next, pick up the phone and call the more popular shops and see how long it takes to just get some ROM numbers for these improvements. Even more crazy will be the dates available to get a slot to finally perform these upgrades. In some cases, depending on the scope, it could take three to four months to get in. Astonishing how different today is compared to just a handful of months ago. We as a buying segment are forced to get more resourceful than ever. This resourcefulness can have big rewards though. Big bangs for fewer bucks. In most cases the flight characteristics are minimally different from the newer iterations of the plane. The Classic Global to the XRS or the Gulfstream V to the G550 and on and on.
In many models, even the winglet additions can make ramp presence on par with old versus newer models. These are all very smart ways that our industry can take a finite pool of inventory and expand the numbers for longevity. Now back to the solid foundation and popping the top. When your neighbors start to improve their houses the entire neighborhood wins. Property values are affected positively. This is also happening in these classic models being upgraded. The value of the models firm up. Breathing new value life into this classic segment is wonderful and adds to the balance of our industry.
A solid foundation is the key to this formula for success. Great pedigree, great records and great maintenance still are the drivers for the attention and ultimate sale price your aircraft will receive as a seller and the basic drivers for the attraction of the buyers who want to build their perfect next plane.
Today we had the pleasure of hosting our second Mesinger Pulse – Live event. This will be a regular 10 minute conference call hosted by Mesinger Jet Sales, providing market intelligence for buyers and sellers. The calls are meant to keep participants anonymous and questions are optional. We look forward to hosting many more of these events in the future. If you are interested in being invited please write to firstname.lastname@example.org and we will be sure to add you to the list.
In preparation for an industry influencers panel in the next few weeks I was on a conference call with some top industry sales professionals to build the agenda. One strong participant said he is watching the greatest optimism in our market since pre-2008. No mystery there. It is thick in the air. More calls and more reasons to feel good about the direction of our market.
But the discussion progressed and the conversation quickly turned to the fact that the market for real transactions was flat. Almost seems like an oxymoron. Optimistically flat!
So why is this the feeling among some? I think it is because of the very low inventory levels. No matter how excited we are to be out of a ten-year lull with tumbling residual values the days of trying to find a great plane in the same day as you start to look are gone. This creates several other anomalies.
It is very important today to not let our clients get discouraged with the longer wait time for a great plane. You must help set the expectation of patience. I know that when a buyer decides to pull the trigger long wait times for satisfaction can be problematic and can actually cause a buyer to go back to the fence and wait this pendulum swing out. When prices were dropping the sense among buyers was to wait, prices will just get lower. When markets correct and get better buyers say maybe it would be better to wait, prices will go down again or at least stop rising.
The reality of market corrections is when it is right for a buyer to buy based on their individual or company needs help them assess the market, find the sweet spot for them, and buy. Sellers can have the same paranoia and think they will sit on the fence and wait for the market to stop dropping. Take heart, we are in a very balanced market. Yes, perhaps pricing is more aggressive then it has been but residual loss rates have all but stopped if not at least slowed dramatically.
Now let’s switch gears. One of the by-products of what seems like a demand rich market is the fact that some sellers think it is as easy to sell planes without the help of a broker by just returning a call of an unsolicited email offer on their plane. It reminds me of the fax machine days. Owners and Sellers would just watch their fax machines and as those unsolicited offers came across, take the offer and proceed down the path of the sale.
That all seems easy. But as I always say, “if it were easy, everyone would be doing it.” Airplane transactions are honestly one of the most complicated transactional feats known to man. First, how does one even know what to say yes to, not just with respect to price, but even more importantly usual and customary terms. I think there are probably a thousand ways in a transaction for the sale of a plane to come apart. I have clients that ask, “how do you do this job?” So, with the good of a balanced market comes the complications that can plague a sale regardless of the market conditions.
I have talked recently in these articles about the need to really understand what one is selling and what one is buying. The accuracy of the specification and the history of the aircraft being sold is so important. No one wants to invest in travel, contract work and inspecting to find surprises that could have been avoided in the right preparation for a sale. So, when just shooting unsolicited offers across to owners who have not engaged a sales professional and taken the time after the engagement to build a marketing package that includes specifications and a good description of history, buyer beware for a surprise. I am not saying the surprises will be malicious, it’s just what happens when an owner tries to respond to a sale inquiry without good professional representation.
These are not new occurrences, they are just the way of the world in a demand rich, supply poor environment. These could be labeled great times for us who make our living everyday in aviation. Regardless of the segment we work in, business is healthy. Yes, if one were counting the transactions they may seem flat or at least farther in between as we struggle to find that needle in the haystack of our discriminating clients, but patience is the virtue to be awarded today. Sit back and trust your aviation professional and you can rest assured you will be happy with the results. Be optimistic!
Please read the latest blog post from Jay Mesinger for the AIN weekly blog series AINsight.
Due to a growing global economy, there has been a turnaround in worldwide jet sales, and the aircraft market is balanced for the first time in years, creating a healthy, sustainable marketplace, according to a veteran broker. “The days of an airplane losing 20, 25 percent a year, which is of course not sustainable, are gone,” said Jay Mesinger, CEO of Mesinger Jet Sales, adding demand is now outpacing supply. “It’s the first time that my industry has been so bold to use words like ‘half full’ or ‘optimistic’ or ‘enthusiastic’ in years, and those are the words that are universally being used by all of us engaged in aviation.” Mesinger shares his perspective in this week’s NBAA Flight Plan podcast.
Isn’t it ironic that just six months ago the mission of the sales professional was to turn inventory as quickly as they could? With continual erratic and assured residual loss rates the longer one stayed on the market the less one was expected to sell for. Don’t get me wrong, this seismic industry shift does not wipe away the reality that aircraft are still pieces of equipment that depreciate literally every day. However, with demand outpacing supply and great aircraft getting harder to find, prices are firming and buyers are willing to pay more for the best plane. And, by the way, if they are not willing to do that and do that quickly upon locating the best, right plane the person next in line will. In fact, the biggest mistake a buyer can make today would be to think you are out there alone trying to buy the best plane.
This article may seem slanted to the seller. It is not. I actually want to write it from the perspective of a balanced market. I made a speech recently where I asked those in the audience to raise their hands if they were brokers. Then I asked those who had been in the profession for longer than ten years to put their hands down and those who have joined our industry in the last ten years to leave theirs up. To that second group I assured them that the first group had a real edge over them. I went on to say that the longer tenured of us had a playbook for this kind of market environment. We just had to pull it out and dust it off. The newer group had to learn the ropes. By that I mean having to operate in an environment that has very little inventory. Finding a great plane quickly by literally just pulling up a list of available aircraft in the morning and seeing a half dozen qualified aircraft to choose from, and picking one by sundown, is no longer a reality.
In fact, today there may be absolutely no right aircraft for sale that matches the criteria your buyer has outlined and will therefore take a new or remembered patience for the buyer. An ability to not lose confidence in a process of hunting and turning stones over. It is now as much about the credibility of the aircraft sales professional and their reputation in the global market as anything. It will be that credibility that may be the very factor that has the selling side say, “I know that buying group and when they come to the market looking I know they are not fishing. They represent real qualified buyers.” Then the selling team must be able to quickly asses the value adds and weight them so as to notify the buyer with high confidence that this is the plane to buy and to not hesitate. Pay the right price. Don’t start low and expect to keep the attention of the seller. Take the advice of your trusted sales professional and act!
I never suggest that any buyer bypass all of the prudent, smart steps in buying. It starts with an LOI that is well constructed with as many of the business terms inserted in it from the get-go to ease the drafting of a purchase agreement. Next is to be able to quickly visit the plane and do a cursory evaluation and be able to then sign off based on that visual inspection and move forward with a balanced purchase agreement. Then get the pre-buy scheduled and move to that phase quickly to assess the real attributes of the records and mechanical condition of the aircraft. Finally, be able to move to the closing. This entire process must be deliberate and timely but must not be short circuited in any way. We actually are choosing the premium, or most expansive, pre-buy options package that the inspecting facilities are offering and this will give even more confidence to the buyer that the due diligence is not hastened. As we represent sellers today we are preparing them for the more aggressive asking prices with the expectation of the more aggressive sale prices, along with the more expansive requests from buyers to inspect deeper. After all, both sides need to feel the reality of this market. Firmer pricing with more need to be able to identify the integrity of the offering.
There is no doubt that this market is different than the very near past. There is also no question that the dynamics hang in the balance of many global economic and geopolitical conditions. I say we all embrace it, but continue to be smart and do not consider this market is on autopilot.
We are proud to be representing a great turn-key Gulfstream G450, Serial Number 4039 for sale. Here are some highlights:
Great Pedigree – This aircraft has always been based and registered in the U.S. with extensive Gulfstream Service Center maintenance history.
Recent Major Inspections – The 144-month inspection package was completed by the Gulfstream Service Center in Las Vegas in June 2018.
Good Cosmetics – The aircraft was last stripped and painted in 2016 by Standard Aero and both the paint and interior are in very good condition.
Highly Equipped & 2020 Compliant – The aircraft is equipped with Enhanced Cert F avionics, WAAS/LPV, CPDLC FANS 1/A, ADS-B Out, TCAS 7.1, Synthetic Vision v. 2.0, RAAS, an 88 parameter 135 capable Flight Data Recorder, SwiftBroadband Internationally capable Internet and GoGo Biz with Text & Talk and so much more.
This Gulfstream G450 needs nothing and it is ready to be put right into service.
Gulfstream G450s follow a long lineage of innovative large body long range aircraft with the Gulfstream GIV having entered service in 1987. In 1993 Gulfstream delivered the first GIV-SP and then in 2004 the first G450. Since 1987 Gulfstream has delivered over 830 GIVs, GIV-SPs and G450s to operators around the world; today there are over 350 Gulfstream G450s in service.
Gulfstream G450s incorporate the Honeywell “PlaneView” cockpit featuring (4) 14” Honeywell LCD EFIS screens including both a Head-Up Display (HUD) and an Enhanced Vision System (EVS) as standard equipment. The PlaneView cockpit was developed as a joint collaboration between Honeywell and Gulfstream with the intention to completely redesign Gulfstream’s digital flight deck experience. PlaneView was built on the successful foundation of the Honeywell SPZ-8000 avionics series implementing the Primus Epic platform providing the greatest situational awareness and data management possible.
According to Conklin & deDecker G450 performance statistics:
- the “seats full” NBAA IFR Reserve range is 4,070 nautical miles,
- the balanced field length is 5,578 feet,
- the Part 91 landing field length is 2,650 feet, and
- the normal cruise speed is 476 KTAS.
Please call us today to learn more about this incredible Gulfstream G450 and you can find full specifications, photographs and a video about this aircraft on our website at http://jetsales.com/jets/2006-gulfstream-g450-sn-4039/.
Please read the latest blog post from Jay Mesinger for the AIN weekly blog series AINsight.
We are proud to represent on an exclusive basis, a great Gulfstream G200, Serial Number 110. Only owned and operated by US based companies and never part of a fractional ownership program. It has approximately 4,400 hours total time, which represents average time for its vintage and is unique as many G200s have higher than average time. The engines are enrolled on Pratt & Whitney ESP Gold, the APU is enrolled on Honeywell MSP and the avionics are enrolled on Rockwell Collins CASP. It is currently operated on a FAR Part 135 certificate, the 144 month and 4,000-hour maintenance tasks were accomplished in April 2017, it was painted in 2016 and new silver leading edge de-ice boots were installed and much of the interior was refurbished in 2014 which is in very good condition today. This G200 is also equipped with several options and upgrades including a jumpseat, pocket doors dividing the galley and the cabin and GoGo Biz Internet with Wi-Fi and Text and Talk among other avionics upgrades.
There are almost 250 Gulfstream G200s flying around the world. The G200 has been a great aircraft for Gulfstream for the last 18 years and Gulfstream is dedicated to its continued service and support. Today Gulfstream manufacturers the successor to the G200, the G280. For discerning buyers focused on reliability, potentially lower maintenance costs and better future residual value there is a distinct difference between buying a high time old fractional program aircraft and a well maintained lower time corporate aircraft. This G200 Serial Number 110 checks the boxes for that discerning buyer.
Call us today to learn more at +1-303-444-6766 or email us at email@example.com. You can also review detailed specifications and lots of photographs on our website: http://jetsales.com/jets/2005-gulfstream-g-200-sn-110/. We look forward to speaking with you soon.