Mesinger Pulse – “Circling the Wagons”
There are multiple private and public industry events taking place this month and next. Many of the airframe manufacturers and fractional companies are gathering small select industry participants to discuss our current market as it pertains to their specific positioning as well as broader discussions about trends and projections. We are always honored to be invited to these group discussions and always leave with a greater sense of worth and understanding about our great industry. On the more public side of events, National Business Aviation Association (NBAA), recently hosted their Regional Forum in Morristown, NJ, and NBAA-BACE takes place in Las Vegas next month.
All of these events allow for a gathering of large and small operations to collaborate, consolidate and deliberate the markets and influencing events. No doubt the continuing topics will touch on market strengths, pre-owned pricing and availability of aircraft, new versus pre-owned sales statistics, as well as new product roll outs and introductions. Some of the discussions fall on historical knowledge, some rely on predicting trends and some just fall into the gut check area.
As I am writing this article a quick glance at the Dow Jones for today show the markets up 260 points due to a collective sigh of relief for the minimal apparent loss of life from Irma. I only bring this up to demonstrate the fragility of the financial markets domestically and internationally. Just last week the markets were struggling for days over the provocative statements being hurled around by the US and N. Korea. As I read the different blogs that appear daily regarding financial markets as well as specific trend prognostications about our industry I see a theme occurring regarding what is looking in some circles as a lessening of the residual loss rates of aircraft in some categories. Also, along with that sentiment is the discussion of the differentiation between the cost of the new offerings from manufacturers and the opportunities afforded in the like-new aircraft. The theme is twofold. First, is it sustainable and second, is it real? Funny how time changes things. Go back down memory lane with me to 2007, and remember that not only did the value of young aircraft not go down against the price of a new ones, in many cases they actually could have been the same price.
And what about the discussion of supply and demand? It is said that there may be a percent of available aircraft by category that equals as much as 10-15%, but then the conversation goes on to say that once you parse the list of available aircraft down to the select few that are registered in the United States, have great pedigree, no damage history and the most popular configuration, you may only be left with a very few aircraft rather than 10-15% of the fleet in that segment. This may be true, however the distraction that can be made by the noise that we hear and see daily with eblasts like “Huge Price Reduction” or “Next to Sell” or “Owner Wants It to Be Sold Today” can be very seductive for what the untrained eye may make one feel about a deal as they approach a market segment. This distraction can cause you to miss the real deal by taking precious time away from the right opportunity.
If there is one take away from all this it is the reality of the tenuous nature of the market we are all in. Deals are taking longer to close. Still not totally sure there is any one reason for this phenomenon but it adds to the stress of each transaction. The saying “time kills deals” has never been as true as it is today. Given the volatility of our world and the added time of the transaction the collective sigh of relief that is heard when a deal closes is remarkable. Hurricanes, debt ceilings, dictators and unstable geopolitical environments are all contributing to a shaky recovery that could take two steps back rather than one step forward at every sunrise.
So why say circle the wagons? It seems like in old westerns the circling of the wagons provided a barrier from the enemy. I’m not always sure who the enemy is in our case, but providing a barrier never hurts. It also gives us a chance to talk amongst ourselves to discuss the ideas and share the thoughts that can help build a strong front for our future. I look forward to seeing you all next month in Las Vegas. It is always joyous to gather and enjoy each other’s company. This year is shaping up to be a record year for attendance and an amazing opportunity for understanding shared product introductions and new service offerings. If you have not already made plans to attend NBAA-BACE it is not too late. Go online to NBAA.org today and register. I have seen the list of educational and informational programing and it is exceptional.
Also, please make plans to attend the Corporate Angel Network event on Wednesday night. This event is perhaps the best networking event at the convention. Wednesday, October 11, 2017, 6:00 p.m. – 8:00 p.m., Wynn Hotel Las Vegas – Lafite Ballroom. See you there!