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.