The Mesinger Blog

Originally published as a blog for AINsight for Aviation International News on 11/6/20

It seems like all we have done lately is count! Now it is time to take out a calendar and count the days. We are still getting calls every day from prospects asking if it is possible to get a plane bought and put into service by the end of the year. Given the complexity of the entire process that task is getting more and more difficult by the day.

The first thing that must happen, and happen in just days, is to find the plane to buy. Believe me if you are contemplating this exercise, know you are not at the head of the line. Many of the best choices are already in play and the remaining planes may not either be the best pedigree, the best equipped, the most solid choices overall. That is not to say that you couldn’t wake up in the morning and find that perfect plane coming to market. It is just this end of the year rush that may have taken many choices off the table.

Let’s say you can find that perfect choice. Next you or your representative or flight department personnel will want to go see it, and review at least initially the logs and records. That may take as long as a week to set a visit and accomplish the cursory review. Many of the people calling us are first time buyers. Therefore, on a parallel course there will need to be a search for either pilots, or better yet, a management company. These searches do not just fall off a tree. This is a carefully executed search that has many critical facets. The management company will among many other operational pieces, have to locate hangar space in the appropriate city and find contract pilots ready to take the important flights to qualify for the bonus depreciation by year end.

Once you have the plane identified then the all-important contract phase begins. This could take up to 10 days to accomplish. Given the rush to get planes purchased and in service, the maintenance facilities are slammed with pre-buys. Getting a slot and having the confidence to pay the inspection cost up front usually does not occur until you have the certainty of a contract signed by buyer and seller.

These are all precious days. Another tricky part can occur if during the inspection items are discovered that parts or engineering requirements start to hold up RTS of the aircraft. COVID-19 has presented several supply chain complications.

Can it all be done if one starts the process on November 6^th? Some would say yes if you for instance found a plane new at one of the factories. Getting that into service would be a much easier path. No pre-buy, easier contracting process and fewer into service risks. I have seen buyers wave a pre-buy at year end. That is risky and a path we would not recommend.

The list of critical path players needed to accomplish a transaction will include an aviation attorney, tax strategist, management company, maintenance company, and a broker.

I do not want to take any wind out of anyone’s sails but just approach these year-end-starting-today transactions that have a must close mandate with eyes wide open.

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!