I was talking to a great friend today who is from the publishing side of our industry. He had a question to ask me with respect to the hows and whys of certain practices in our standard operating procedures as aircraft brokers. He wanted to know if the participants in a deal really understand the nuances of a deal? Since he is not truly in the day to day operations side of the industry, he relies on what he reads and what he is responsible for publicizing. This leaves him with a slight void as to what the real implications of a process may be.
His question actually stopped me in my tracks. I thought about who I typically direct my articles to and realized that I usually write to my fellow aircraft brokers, as well as the industry touch points. I may not have been focused enough on those people who come into and out of the acquisition and sales arena no more often potentially than every five to ten years. Meaning, I may not be talking enough to the customers.
When I talk about market conditions and pricing trends, those are topics for a large audience. However, it is important that I write directly to the customer more often to bring to their attention some of the new phenomena in our industry such as off-market aircraft, back-to-back transactions or other potential deal pitfalls that they should be on the lookout for as a possible concern. These were not necessarily in play the last time they were engaged in a transaction. So, I am dedicating this article and more in the future to the customer to help them become a more informed consumer.
Gone are the days of the “Hand Shake Deal”. This does not mean that trust and good faith are eliminated from the deal, it just means given the complexity of aircraft and the transactions, the idea that a deal can be sealed over lunch and a handshake should not be standard operating procedure. I always say if it is not written in the four corners of the contract it does not matter. The “what ifs” are just too many and have too far reaching of implications if a deal begins to go awry. I have seen friendships destroyed over napkins and handshakes. After all, no aircraft should come between old friends or well-intentioned people.
No one today should be uninformed. I remember the days before computers and industry listing services like AMSTAT and JETNET the value of the dealer was what they knew that no one else knew. Today information abounds. In fact, there is so much of it that one needs to be sure what they are reading is real and interpreted correctly. I cannot tell you the amount of false reporting we hear and see in our office with respect to sales prices or records findings on aircraft that are for sale. Our industry is really very unsophisticated compared to most others in this regard and it leaves a buyer and/or a seller in the dark. Being in the dark is a not very transparent place to be.
A specification sheet for an aircraft that is no more than a cut and paste of the spec sheet that was used to buy a plane ten years ago with just the new times and cycles written in and the new paint and interior colors added may not be worth the paper it is written on. This is truly just a recipe for error and repurposing a deal. When you buy a plane today be sure you have an inspection item in your pre-buy that tasks the inspection facility with auditing the spec sheet you were provided. So many small but critical things could have been changed since the old sheet was developed from scratch that the plane you thought you were buying is not at all the plane you have under contract. When our firm is hired to sell a plane the first thing we do is send our technical director to the plane to build a new specification sheet from scratch with supporting documentation from the logs and records. We know they will be audited by a smart buyer.
Now here comes the plug for why you should hire an aircraft broker to assist with your sale or acquisition. Due to the complexities of today’s transactional world I promise you it will cost you less to engage than it will to go it alone. In every transaction, and not for malicious reasons, things can go wrong. Examples being accidental misrepresentations, changing regulatory requirements, equipment installed on an aircraft that may work the second you buy the plane but due to lack of future support by the manufacturer will leave you with a boat anchor if it does fail, can all be huge costs. This type of equipment includes cabin management systems, switch panels at each seat to control basic functions like reading lights, satellite TV systems and on and on. Having a professional at your side is cheap by comparison of even one antiquated system discovery. I intend to continue to write about more new phenomena in upcoming articles.
Approach this industry with open eyes and smart support. Remember as my old friend Zig Ziglar used to say, “price is a one-time thing and cost is a lifetime thing.”
I want to end this article with a big Happy New Year to everyone! I hope you all had safe holidays. I had a very good and successful client say to me yesterday he believes the global economy is strong. 2018 should be a great year for us and our clients. See you soon somewhere in the world!