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 firstname.lastname@example.org. 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.
I have been writing lately about what feels like an overnight surreal change in the overall market condition, from high inventory levels with long sale cycles and multiple price reductions to low inventory, short sale cycles and more aggressive pricing. With global markets all beginning to breathe life at the same time it may not just be North America going forward that will dominate the transaction activity. With the awakening of markets around the world all that supply in many categories that is currently out of North America may stay out of the country and sell to foreign buyers, resulting in even less inventory in North America and even less to import for a local client. For the first time in about 10 years we are seeing firmer pricing and much more difficulty finding the plane that really checks all of the boxes for our buyers including great pedigree, great records, great maintenance, great cosmetics and compliancy with respect to modifications and NextGen mandates.
It is now time to acknowledge that the “Buyer’s Market” has faded away and I am excited to declare a healthy balanced market. This is so important since the markets of recent past did not allow for stability. Yes, perhaps you will pay a bit more for your perfect plane today, but the good news is you should be able to count on a significantly lower and more predictable residual loss rate. In fact, in several categories you may even see a flat line for several quarters.
I have spoken for the last several years about the importance of the buyer being able to be credible and bring confidence and certainty to the seller and the overall transaction. It is time now to remind the selling side they have an equally critical role in this process. I have come across two sellers in just the last week that have promoted themselves as real sellers, ready to sell and promising a traditional and customary transaction. I of course had real buyers who in the offer process were already demonstrating real ability and willingness for a great show of certainty. After protracted discussions between sides, and by the way a willingness to meet the stated price of both sellers, the sellers said “oh, we decided not to sell!”
If in today’s market one comes just testing the water by dipping their toe in or crying wolf, they will be hurting their ultimate position as a seller. The broker community as well as the buying community will begin to know their patter and not be willing to risk approaching the aircraft with their real buyers.
This is not to say that when a real buyer meets a real seller that there will not be a competitive tension. That always occurs when a great plane pops up and you have several prospects all at once. If the plane is priced correctly for the new supply/demand equation there can be a frenzy created. So, if you are a buyer and you find that needle in the haystack, jump and don’t sit back. I am not suggesting you forgo all of the prudent due diligence, it just means get your offer in and start acting like a real buyer and not a tire kicker.
What is there today may not be there tomorrow. Therein lies the competitive tension. Remember a little tension is not a bad thing as long as you don’t get paralyzed by it. Stay focused on the end game and trust your aviation professional. I think it is also important to get your buying ducks in a row. Have your aviation attorney hired. In fact, I would suggest you allow the attorney to build an LOI template in advance so all you need to do is add the price and the specific aircraft info. If financing will be a factor, start early to chose that partner and have them teed up. If management is needed, start that process early as well. In other words, be ready to jump and jump with a team. This team will help guide you on markets, legal, tax, financing and operational needs.
In summation, here would be the takeaways from this article. The market has changed and changed quickly. Aggressive prices are being asked and received by sellers. This is OK as long as within reason. That decision can be made with the collaborative effort between yourself and your aircraft professional. As a seller, be credible. Do not toy with the market. Markets and its players have long memories. Be ready. Build your team early. Enjoy the balance because I think it is sustainable.
Please read the latest blog post from Jay Mesinger for the AIN weekly blog series AINsight.
I have reported over the last ten years that first-time buyers were trickling back into the market and how critically important that was to the implied confidence in our industry. After all, if you are not an owner why in the world would you get in to ownership in periods of value free falls? This also applied to transitions in fleet makeup by people or companies that already owned aircraft but were reluctant to sell due to low prices being paid, as well as being reluctant to re-invest due to a continued downward spiral in values. Why the new market anomaly? Now there is a new-found confidence in the market.
I reported last month that inventory levels of aircraft in most segments were way down. This drastic reduction in global inventory is changing quickly the dynamic of buying. No matter how low levels go, there will of course still be aircraft that do not have great pedigree, do not have good mechanical history or for one reason or another would not check the boxes for most buyers even at reduced prices. The low inventory levels are reshaping transactional processes for us all.
We are starting to see a dramatic shift in where our business is taking us this year compared to last year in terms of increased acquisition projects. At Mesinger Jet Sales we have the most powerful valuation and marketing tools in the industry that are continually adapted to an ever-changing market. For the last ten years, with inventory at record high levels, there were multiple options when working on an acquisition. Today, with aircraft all over the world, fewer for sale and more buyers, it takes a level of sophistication and advanced modeling to make a great buy for your client and find the needle in the haystack.
So, it’s time to take out the old play book and dust it off. In many ways we were spoiled and did not have to import planes for our North American buyers, we could find plenty right here at home. We are now in a position of having to find ways to locate planes that can be imported from at least countries that more closely align with our FAA registry requirements and that have a similar culture with respect to hangaring planes, managing planes and maintaining planes. If you have gotten into this business in the last 10 years you may be finding that without that old play book to refer back to you are not going to be able to get up to speed on this skill set as quickly as your competition.
You must have the knowledge and experience today to ask the correct lines of questions to be able to qualify a foreign aircraft before investing to go look at it. After all, traveling across the country is nowhere near as expensive as traveling half way around the world to see one.
The next fact to have to assimilate is that you are not the only one in all likelihood that is after that needle in the haystack. How do you create a space for your client first to know about and then quickly jump into the buying mode for that plane when you find it? Certainty for the seller is key. This may seem easy as everyone says they have a real cash buyer and they can move quickly. These are nice words but think about them all for a moment. To say your buyer will pay cash could mean they do not need financing, but since financing is not an allowable contingency in an LOI or contract, that is a sort of hollow statement. My client wants to move fast! Again, what buyer that is real doesn’t want to get in their new plane and start enjoying the life that business aviation brings to you? That the buyer is real is nice to hear too, but based on what criteria? Certainty, and then the ability to capture the seller’s attention comes from years of doing this and creating a credibility in the market. A seller will know that when you call with a buyer, you have checked all of the qualifying boxes and the seller’s broker knows as they present two offers to the seller which one, based on reputation of the buyer’s broker, will close.
So, it is a new world based now more on identifying a great plane, understanding how much to pay so that you do not miss the value yet you don’t overpay, and providing certainty to the seller so you can have their full attention. This very rapid shift in market dynamics also means that we must help our respective buyers feel a new confidence in market pricing for the perfect plane. With limited availability of the great plane and more than one person vying for that opportunity, being willing to pay a more aggressive purchase price is new and understandably might be hard to grasp for the buyer. There is always a time gap in shifting markets for buyers and sellers depending on the direction of the shift. We just keep helping our clients focus on the idea that missing the right plane now could mean paying more for the next great one, with uncertain time between the next great opportunity. See you all out there.
Please read the latest blog post from Jay Mesinger for the AIN weekly blog series AINsights.