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Part 7: Showing an Airplane

This article is the 7th in a continuing series
A Career Change: Learning the Aircraft Brokerage Business

It’s been a little while since my last writing about the newness of my job and the challenges and successes of learning a new industry, but lately I have been pulled up off the bench quite a bit; asked to perform in the game and make some plays.  I wasn’t much of an athlete growing up, so often times the bench was my spot.  But in professional settings I have had the fortune to be called up to play in the game with real consequences.  A couple of weeks ago I was told that in a matter of hours I would be on a plane to Los Angeles to show a G550!  It just so happened that everybody else in the company was working on other deals and in different parts of the country, so it was my moment.  I was very familiar with the details of the airplane, I listened to my father and brother tell me what to expect in a showing like this and I packed my bags and got on the plane out to LA.  I knew I was ready and they knew I was ready!  My brother told me he expected 3 people to come look at the plane. As I stood on the ramp in my suit, with the spec and photo packs in my hand, the people I was meeting with pulled right up in their Global Express and all 7 of them came off the plane right towards me.  Not 3.  It felt very cool to be in that moment at that time, performing for the team and succeeding.  The showing went great and I had that notch in my belt telling me I can do this!

It reminds me of one of my first jobs in Hollywood.  I was working on “Something’s Gotta Give” with Jack Nicholson, Diane Keaton and Keanu Reeves, as a PA in the post production department.  I’d been working on the film for months, at the bottom of the ladder, getting lunch, picking up dailies in the morning from the lab and putting about 20,000 miles on my car in a year driving around Los Angeles.  Then one day out of the blue they came in to the office and said, Mesinger, we’re sending you to New York to screen the film at a premiere at a Times Square theater.  They were going to get me two first class tickets, one for me and one for the film (about 6 cans of the actual film from our cutting room.  No other copy exited at this point), a hotel room and a per diem.  I had just lived in New York City while I was in college and had left months before this, so I would be getting to return to my old town and friends on a business trip. A big one!  The same goes for my trip to LA for the G550.  My wife and I had just moved from LA before starting our new life in Colorado and I would be returning to my old home, friends and family on a business trip.  A big one!  Life has a funny way of throwing you opportunities at a moment’s notice.  The trick is to be prepared, focused, confident in your abilities and appreciative of the experience.  The bosses wouldn’t send you if they didn’t believe in you.  The job here at J. Mesinger Corporate Jet Sales is filled with new challenges like this every day and I just focus and learn from each of them.  Stay tuned for a report from my next mission; a trip to Detroit I went on last week to review an airplane we are listing.  It includes late departures, freezing rain, log book reviews and new headshots!

Asking Prices

The idea of an asking price is an interesting conversation in our industry.  Some people use them.  Others say “Make Offer”.  Many people believe that if you just say “Make Offer” a prospective buyer will have to call you to ask about the price and you will have a chance to engage them.  We, however, feel strongly that listing an aircraft for sale with an asking price helps a buyer focus on our clients’ aircraft.  They help buyers know that our sellers understand the market and have a generally accurate expectation of where their aircraft should sell.  I believe that having asking prices helps us elicit more phone calls than not having an asking price.  Of course, this only works when the seller really does have a sales price expectation that is aligned with the actual market conditions.  And, in fast moving markets, up like in 2006 and 2007 or down, like in late 2008 and 2009, it is hard to set an official asking price because you don’t want to overprice the aircraft or sell it short of what the market might bear.

Buyers regularly call us and thank us for including asking prices with our listings.  They appreciate that they don’t have to call, and some are looking online well after business hours, to gain a general understanding of the sellers’ expectations and the market for a given aircraft type.  Real buyers, however, do then call and tell us that they have focused on our aircraft because they understand the value proposition and believe it aligned with the market conditions.  Even if you don’t publicly list an asking price, you still need to have an answer to the question about an asking price when a prospective buyer calls.  There is no definitive answer or guidance, but as a general discussion and idea, I think that stating an asking price helps sell airplanes ahead of the competitive listings.

Two Ways To Tell A Story

When we list an aircraft for sale, we read the aircraft records and go see it to most thoroughly understand it and accurately represent it.  We work hard to identify all details and then tell the best story about it possible.  Every aircraft is unique.  Each has different features and pedigree that we must craft into a story to define the value proposition for a buyer and maximize the sales price for our seller.  I regularly use this blog to tell the narrative about an aircraft listing beyond what the factual aircraft specifications alone can define.  We believe that it is critical to tell this story to help an aircraft stand out from the pack.  And, repeatedly, this strategy proves successful. 

Telling the right story to highlight an aircraft doesn’t stop at our office doors, in our marketing, in a blog post or on a phone call.  It continues at every showing opportunity and in every discussion until we cross the finish line at the closing of the sale.  If an aircraft has a uniquely shaped baggage compartment, but in reality it provides the same cubic feet of storage space as a standard one for the given aircraft type, I would want to make sure that a buyer knows that they aren’t loosing baggage space.  I would craft that message into my story.  Why let a buyer get distracted for concerns that don’t really need to exist.  Or, when showing an airplane, weather permitting, pull it out on the ramp.  Aircraft shine best when in the sun.  In a dark hangar, paint can often look drab and dull.  Or, if you are selling an early serial number of a certain make and model, but it has had modifications and upgrades to make it more comparable to later serial numbers, it is important to point that out to prospective buyers who might otherwise be concerned that they would be buying a “lesser than” aircraft if they buy the early serial number.  

The features and benefits are always different, but if you really understand the asset and think about where a buyer might get distracted or miss a valuable feature, you can build the right story to most effectively craft the value proposition.  This won’t necessarily mean that you will sell an aircraft for more than the market will bear, but it will hopefully help a buyer recognize the value of your offering and help sell an aircraft ahead of the competition.

Buying sight unseen (or rather, without any information)….who really does that?

We have been hired exclusively on behalf of a large company in the U.S. to source a large body aircraft.  We have helped this client buy and sell in the past and they have again hired us because they trust us and our ability to help them find the best aircraft and complete a smooth successful transaction.  This means helping them understand the market and the available aircraft and then negotiating and completing their acquisition.

Over the last few weeks we have searched worldwide to uncover all available options.  We have been loud in our efforts to tell the world about our acquisition project in regular conversations with other brokers and dealers and in print and electronic advertising. 

In response to our “wanted” advertising we have had many brokers worldwide reach out to present aircraft.  Some of the people that we have heard from have direct contact with the owner of an aircraft and they have presented complete specifications, photographs, maintenance information and serial numbers.  They have presented us exactly what we need to understand the offering and consider it.

Others, however, have called to tell me that they have an “off market” aircraft and that if we make them an offer of $X we can get more details about it.  No other aircraft information has been presented, and when I ask for it they tell me that they will only disclose information when presented with an offer for their required price.  I keep telling these representatives that we will only consider aircraft for which we have full specs, photos, maintenance details and a serial number.  Some understand and others continue to get frustrated.  They want me to commit my clients to buying an aircraft for over $40,000,000 for which we know nothing about or even what part of the world the aircraft is in.  Who really buys an aircraft sight unseen and with no information at all? 

When a client hires us to help them buy an aircraft, they do so because they expect to be represented in a marketplace and be informed accurately and thoroughly about their options.  They know that our reputation for only representing well qualified clients on an exclusive basis will help us source aircraft because owners considering selling know that they can trust that we are not just “fishing” in the market.  Our clients hire us because they know that we will only present aircraft options which we have thoroughly vetted.  When they hire us they expect that we won’t waste their time with mystery aircraft for which we know nothing about.  The truth is I can’t imagine that an aircraft owner/seller would expect anything different.  Full disclosure (even under a confidentiality agreement which can be understandable) is the only thing that can work if a transaction is to be successful.  The buyer can know about, understand and feel confident in what they are making an offer on; and a seller can have confidence that a buyer won’t back out of a sale at a later date because of otherwise previously undisclosed details.

It Is Not New Stuff

Recently, we began to produce professional sales video presentations for the aircraft we have for sale. They have been very well received as they really help a prospect “feel” the surroundings. Seems like a novel idea right? Now comes the fun stuff. In 1985 I hired a PR/Advertising firm in Houston, Texas, to help me build the graphics for my company’s brand. They produced the logo we still use today, along with all of the collateral sales and marketing materials, including business cards, stationery, folders and a brochure. Oh yes, one more thing, a video presentation of the aircraft we had for sale. I was sitting with my sons Josh and Adam last week looking at the new video presentations and excused myself for a few minutes. When I came back I asked them if they knew where our old VHS machine was, we hunted around, found it, hooked it up and I slid in a video that this company made in 1985. I hope you will indulge me for five minutes and fifteen seconds. So now when aircraft sales companies say, ”We are producing a first of a kind video presentation for aircraft we have for sale, we are first!” I beg to differ. Click on the link below and stroll back in time with me. I think you will find this to be a worthwhile trip! I have also attached a link to our new videos. Except for the format, now delivered via Youtube, the value is the same. By the way, speaking of memory lane, I also found a Beta tape with a sales and marketing video I made for Piper Aircraft in 1978ish with John Leahy, who at the time was Business Development Manager for Piper Aircraft and is now the COO of Airbus. We have all come a long way. Stay tuned, I will let everyone know when I put that up for viewing.

Conklin & de Decker Aircraft Acquisition Planning Seminar

Last week I attended the Conklin & de Decker Aircraft Acquisition Planning seminar in Scottsdale, Arizona with my father, Jay Mesinger.  This was the 11th annual conference and I would recommend it to anyone thinking about aircraft ownership for themselves or their corporation.  The complexities of owning such a high dollar asset are not to be taken lightly and the more information you can glean from experienced professionals the better off you will be. 

My father gave the opening presentation on making the case for business aviation.  He has been writing extensively on this topic throughout his career and most recently in the series Business Aviation and the Boardroom in World Aircraft Sales.  In these articles he details the various steps and planning needed to present the values of business aviation to a corporate board.  The presentations at this seminar were very informative and dealt with everything from management and operating costs to budgeting, taxes and insurance.  It was great information for the first time buyer or the head of a flight department looking to gain a more insight into the complexities of ownership and fleet transition.  The conference was a wonderful experience for me as I navigate my new career in aviation and learn all of the facets involved.  At the same time, we can’t be experts in all things and at our firm we don’t try to be.  There are many great tax experts, legal experts, management companies and others in our industry.  We always refer each specific piece of the transaction to our skilled peers in the industry and then work as a team to best accomplish our mutual clients’ goals.  It is, however, important to understand the challenges a buyer faces in the purchasing process, but you do not want to be liable for a legal opinion or tax guidance when that might not be your field of work. 

When I worked in television I would always attend the finance and tax seminars related to the entertainment industry so I could stay on top of new regulations and trends as well as have the opportunity to meet peers and prospects in the process.  I want to thank everyone for the meals and the information sharing, as well as a big thank you to the entire Conklin & de Decker team for hosting a great seminar.  It was a pleasure to meet you all and I look forward to working with you in the future.  Since joining the family business and this industry I have met some great people who have welcomed me with open arms and I am appreciative of all the support and guidance.

Aircraft Values – They can’t be determined in a vacuum.

I am on a flight headed home after closing on the sale of a Falcon 2000 that we have been representing for sale.  The Falcon 2000 market and the recent activity in it are a good example of how our aircraft markets are starting to find their footing one make and model at a time.  There was a six month stretch this year where there was very little activity at all in the Falcon 2000 market.  This past summer after several months of no activity we sat down to discuss the market with each of our clients.  We believed that there were one of two things going on; there were either no buyers at any price or the entire Falcon 2000 market was still overpriced.   

Based on evaluating traditional pricing spreads between different aircraft types it became obvious that the Falcon 2000 market had not adjusted far enough at that time to fit correctly into the product line up of all corporate aircraft types.  We needed to look not just at competitive Falcon 2000s, but also other aircraft types that were experiencing activity to understand what prices of Falcon 2000s should have been.  If the buyers in the market could not recognize value because they were able to source other competitive aircraft at more respectively competitive prices then they were not going to buy Falcon 2000s.  The Falcon 2000s did not need to be priced exactly the same as these other aircraft, but they did need to be respectively competitive within the overall market for buyers to recognize value.  

And, as it turned out,  there were some buyers in the market;  prices had just not adjusted to a respectively competitive place to make it a compelling market to pursue.  Over the last two months there have been several Falcon 2000 sales.  All of them have sold at prices that were lower than the sellers initially hoped for, but within respectively competitive price ranges where buyers were able to recognize value which is what made them ultimately step in.  The Falcon 2000 market has finally found its footing in the competitive landscape and it offers incredible value for buyers in both capital costs and operating costs.  One market at a time we are on our way to a healthier aircraft marketplace. 

I hope you have a great Thanksgiving!

Important Information From the NBAA 2010 Tax and Regulatory Conference

NBAA 2010 was a great experience for me.  This having been my first show, I was able to learn so much about our industry and the people who are involved with it.  Several of us from our organization participated in the Tax and Regulatory conference during the convention to stay on top of issues that are important to our clients.  We always advise our clients to employ the help of legal, tax and insurance professionals, but it is important for us to understand the issues they face.  Two issues discussed during the conference that really stood out were FAA re-registration requirements and making sure to match insurance amounts against the current fair market value of your asset.  Included in this blog post are links to articles written by industry professionals on each topic.  There are several great aviation attorneys and insurance experts in our industry and we always provide multiple names when giving referrals.  The people whose articles we have included spoke on the respective topics at the Tax and Regulatory conference and these are just two of the leading experts for our industry in their respective fields.    

The first issue that I want to highlight is FAA re-registration.   A new process has recently been instituted and mandated and as of October 1, 2010 all aircraft owners who have purchased their aircraft before October 1, 2010 have to re-register their aircraft with the FAA on a pre-determined schedule.  It is crucial to make sure you follow the FAA guidelines and time frame regarding this new policy.  All aircraft that have been initially registered after October 1, 2010 will have to re-register in three years and the expiration date will be clear on your first registration.  One of the presenters at the tax conference was Joanne Barbera of Barbera & Watkins, LLC.  Please follow this link to read a fact sheet about re-registration that she wrote that will give you much more detailed information about the issue and provide an easy to read schedule for registration.  Don’t forget to re-register or it won’t be wheels-up until you do! 

The second issue that seemed very important in today’s environment of decreased aircraft value is insurance.  It is necessary to have insurance for your aircraft, but what was made clear at the tax conference is how important it is to have the right amount of insurance.  As your aircraft value changes, it is important to adjust the amount of coverage you carry.  If your plane were to incur major damage to a degree that it might otherwise be scrapped and the aircraft is over insured, the insurance company will have an incentive to repair the aircraft, rather than scrap the aircraft.  So be sure to adjust your insurance value to the current market value of your aircraft each year.  Please follow this link to an article that Stuart Hope of Hope Aviation Insurance, one of our presenters at the conference, wrote for Business Jet Traveler about the six steps to buying the right policy.  Step 3 specifically relates to the issue I’ve brought up. 

I hope this information helps you regarding some of the big issues related to aircraft ownership that we found to be of significant importance during the NBAA 2010 Tax and Regulatory conference.

NBAA 2010 Wrap-Up

It has been a great show this year.  The general mood has been upbeat and I believe it has been successful for everyone who participated.  Last night at the 2010 Gala, NBAA helped raise more than $225,000 for the Corporate Angel Network (“CAN” –  Congratulations to NBAA and everyone who donated!  CAN is a great cause and this money will help the organization help children and adults with cancer get to treatment centers all over the country. 

On Tuesday, my father Jay Mesinger moderated an excellent panel discussion about business aviation in Asia and China.  The participants spoke to the opportunities and challenges that exist for business aviation in Asia and started to discuss steps to help advance the growth of our industry in the region.  It became evident, however, that the challenges are real, and not all of the solutions are in place.  This should be an area of continued attention and interest for our industry.  

On Wednesday, I participated in a panel discussion on Social Media in Business Aviation and it was a success.  The room was packed with people looking to learn how to incorporate social media into their corporate marketing and people who wanted to learn how to utilize the information disseminated through social media.  I think we were able to help many people feel less intimidated and more knowledgeable about utilizing social media for themselves and their organizations.     

During this week we were also able to connect several clients with vendors to facilitate future business and pre-purchase inspections. 

As you can see it has been a busy week, but a successful one.  Congratulations to everyone who has been here and to NBAA and our industry on a successful convention.  Here is to all of our continued success and business throughout the next year.

NBAA 2010 – Tax, Regulatory & Risk Management Conference – Update Day 2

I didn’t have a chance to write last night because I had to run right from the end of the tax conference to several evening events.  But, that doesn’t mean that I didn’t see some great presentations and learn some very important industry updates.  During the second day of the Tax, Regulatory & Risk Management Conference we saw presentations about: FAA Registration Issues, States Sales Tax, Importing and Exporting Aircraft and more.  The FAA Registration Issues and new requirement for all aircraft owners to re-register their aircraft during a scheduled window of time is critical to maintaining currency in your registration.  Letting your registration lapse can affect the perfection of liens, validity of your insurance and legal flight operations.  Please watch our blog for further and more detailed updates on this topic.

Additionally, David Grizzle, FAA Chief Counsel gave the keynote speech and did an excellent job.  In the beginning of his speech he quoted Wayne Gretzky when saying how he believes a good organization and/or process should work.  “A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be.”  When you start a project, or in my case a negotiation, don’t just think about the moment, but think about the desired outcome.  David has clearly kept this in mind during his tenure to date with the FAA and as a result been successful in his career there.  I work to always think of the outcome (or where I want the puck to be) before I start something and I can tell you that it does make a positive difference!

Please don’t forget to attend Jay Mesinger’s presentation today: NBAA Business Aviation Update in Asia/China which will occur in Hall C Room 103 starting today, October 19th at 3:30PM.  I will also be presenting on the NBAA Social Media in Business Aviation panel discussion tomorrow, Wednesday, October 20th from 4 to 5PM in Hall B Room 312.  We hope to see you at our event!

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