The Mesinger Blog

Originally published as a blog for AINsight for Aviation International News on 10/2/20

No this isn’t an interactive Zoom article. I really won’t be able to count the raised hands as you read this, however if you keep a little score card of how many  times you raise your hand as you read I think it will give you a new perspective of what we are all going through during these strange COVID times. So here we go:

EVERYONE RAISE YOUR HAND IF you believe that your opportunity to talk to people about business aviation is increasing over the last couple of months. This is not about strictly being in the brokerage side of our industry. This means simply, in the course of your daily conversations. You can be on the management side, the insurance side, the maintenance side or even if you are an operator of a business aircraft and are talking to your associates.

EVERYONE RAISE YOUR HAND IF you believe that demand is increasing for people really wanting to buy an aircraft for the first time. After all, the first-time buyer is and always has been the growth opportunity for our industry. I have always said when an aircraft is sold to a first-time buyer, pilots get hired, insurance is sold, hangars get rented, maintenance gets performed and a whole cycle of business aviation activity gets started.

EVERYONE RAISE YOUR HAND IF you believe that rising demand will affect the price of aircraft upwards. This is an interesting one. Except during the rise of the emerging markets when the BRIC countries, the Middle East, and Russia were coming into the market and the exploding demand caused premiums to be paid on new and like new aircraft, previous recoveries merely slowed the residual loss rate of the economic event. They did not create enough demand to send prices back up to the pre-event time period. And as we currently see the surge in activity from first-time buyers, we also see a retreat in acquisitions from corporate flight departments, thus maintaining a balance in supply and demand which will keep prices from rising

EVERYONE RAISE YOUR HAND IF you believe that once we start to really gain traction in reopening the economy, as well as confidence returning to the consumer to revert back to commercial flying, the phenomenon of the first-time buyer coming into our market, with such rarely before seen vigor, will settle back to a more normal ratio. Over the years when the economy was not struggling with pandemic like events, we at Mesinger Jet Sales probably had a percentage of our overall acquisition business of about 25% from first-time buyers.  Today, during this pandemic event, we are dealing almost exclusively with first-time buyers. Truly an exciting time for our entire industry!

EVERYONE RAISE YOUR HAND IF you would like to have an indoor dinner party, get on a plane and go to some exotic trip with your best traveling friends or family; Go to your favorite restaurant for an evening of joy and laughter and great dining; Hug your children and grandchildren! Now add up your score and analyze the answers. I look forward to your comments from this article. Write me at jay@jetsales.com. I will report to the readership everyone’s scores next month.

Originally published as a blog for AINsight for Aviation International News on 9/4/20

Well, it is hard to believe we are turning the calendar to September. We have now been working in the shadow of COVID since March. Moving through Winter, Summer, and now into the Fall at the end of this month. In reporting on our industry during this period so many questions have been asked with only a few answered. Travel restrictions have plagued the world, greatly affecting the mobility of businesses and vacation travel. One theme has been consistent during this period. If we can travel again, when we can travel again, how will we travel? This conversation has had a huge impact on our methodology in doing business. Zoom became the interaction du jour. I have had so many people who I speak with say they spend hours each day on zoom calls and by day’s end they feel empty not energized. We as human beings crave the actual interaction with people.

So many other people I speak with have said, “I will never get on a commercial airplane again until there is a vaccine that we know everyone has taken and that will protect us.” The comments are real and heartfelt. The fear of contracting the virus has made us all rethink what used to be normal methods of travel and life itself.

The question so many of us in our industry have asked is how many of those people calling and talking about never traveling commercial again will actually translate into people acting on those feelings and fears, rather than just speaking in hyperbole, and buying a plane? It is time to report on these feelings and fears.

In the last two weeks at our company, we are seeing more buyers, and to better define the buyers, first time buyers coming to us and signing up to go out and buy! So, the talk and conversations are turning into real action. This surge in activity is across the board with respect to model. Smaller size all the way to large, long range planes are being scooped up in this wave.

Many of my sellers have read articles in the last few months that have predicted this surge of activity. Each one forwarding me the article with a, “Hold on look what’s coming note attached.” I do want to caution those sellers of a reality that is accompanying this buying activity. Buyers are not blind to the market conditions. They are not waving away good buying sense. There is enough inventory to not cause premiums to be discussed or paid.

The buyers are aware of the equipment they are buying and understand the nature of the depreciation that is normally found in equipment as well as the overall effect of this pandemic on pricing. No idea how prices will continue, however, I am sure they will not go up. As the feelings and fears translate into activity and transactions do not miss an opportunity to sell if confronted with a real offer from a real qualified buyer. This translation may not be a long-term phenomenon. Grab it while you can!

Originally published as a blog for AINsight for Aviation International News on 8/7/20

As we are all lamenting as we write and speak and have client conversations that we are in a very strange time. Some might even say they are flying blind with respect to values and activity today and in the future. Actually, I am not willing to go there. I absolutely do not believe we are flying blind. I firmly believe that values and activity can be pegged.

There is no doubt that we as a country and world at large do no fully comprehend where the right-hand bracket on COVID is yet, however I refuse to close my eyes and allow myself to just bump into unidentified circumstances while flying blind.

At our company we are working hard each day along with many of my fellow aircraft professionals to have our eyes wide open and shape the future rather than being shaped by this phenomenon. I do not mean even for a moment to suggest that this is not a terrible pandemic that we are all working to survive. I do mean that there is something very powerful that we can all be doing. It has never been more important to speak factually, do not perpetuate rumors, and be leaders.

For us this translates into not focusing on being Market Makers, but instead putting all of our energy into building a vibrant and robust Marketplace. The difference is huge. The Market Maker is often discussed when talking about stocks and other commodities that are purchased for resale and profit. I am much more excited to be a part of creating a marketplace. That is the environment that promotes, markets and builds solid markets for the aircraft we all have for sale. This marketplace fosters right pricing, right representation and right dialog around the offerings.

I believe the key to keeping values up and reducing large residual loss rates is embedded in the ability to compare and value different pieces of the aircraft. Setting the correct value adds for pedigree, operational history, location of the aircraft, as well as number of owners. Promoting the quality of the records and the maintenance performed on the aircraft.

We must not be dragged down into a discussion about how bad the virus is and therefore how low prices must go. We must certainly allow for that honest discussion but we must be stewards of our marketplace and keep the high value of safe efficient travel first and foremost. It might be that the mix of use may change during this pandemic, possibly less international travel and a higher component of domestic flying, but flying is flying and whatever keeps these planes in the air is positive and strengthens our marketplace. So while the idea of being a market maker may seem more difficult today, the idea of working together as an industry to build and support and strengthen our marketplace should be enough to have us all open our eyes and abandon the idea that any of us have to fly blindly through this period.