Mesinger Pulse – “My Clients Are Rich”

Well that was probably an attention-grabbing headline to this month’s newsletter. They say money can’t buy you love, it surely can’t buy health, but it can buy you a richness of life. I was speaking to a very old client of mine last week. By the way he is not old, our relationship goes back a long time. We were talking about the sale of his current aircraft. He was lamenting about values and then made a very interesting pivot. He reminded me that in 2008 he had an offer for the current plane we are selling that was over three times as much as we are getting for the same plane today. Rather than moan about the difference he went on to say that during the last 9 years this aircraft has brought him a richness of life.

During the period he has owned this aircraft, which by the way he flies himself and has had the pride of being a well-trained and very skilled pilot, he has traveled the world with his wife. Family vacations have been invaluable. The joy of the day to day ownership and the memories it has afforded the entire family have been enriching. So, in this context, my discussion this month is not about being rich economically, it is about being rich with joy and satisfaction.

Now my turn to pivot, as I have your attention, to the value of owning an aircraft. We can certainly focus on the personal rewards of aircraft ownership as well as the business value in owning an aircraft and using this amazing tool to get out in front of customers or out ahead of your competition. There is no doubt about the success of those companies that use business aviation in the day to day course of business growth and sustainability.

I am flying today to Shanghai to attend and speak at the Asian Business Aviation Conference and Exhibition (ABACE). This event will be so interesting, especially at this economic and geo political juncture of our world order. Speaking of rich clients, this amazing emerging market in Asia has been hampered by a set of anti-corruption regulations that were imposed by the current leader of China. Being rich has become a target for citizens of the country and stunted the growth of business aviation for the last several years. I am hopeful to find what I only hear about in the States, which would be a loosening of the regulatory climate in China around the anti-corruption legislation. I think I will experience a greater enthusiasm and actual buying trend in the region compared to the last few years.

Back to the idea of the richness of business aviation ownership. With the fear of safety back in the minds of travelers and now not being able to even take your iPad or laptop on a flight coming from certain regions of the world just plays into the hands of all of us that buy and sell business aircraft. These fears of travel on the airlines that come up with some regularity just push those people with the ability to buy either off the fence all together or at the very least peak their curiosity to act sooner than later to buy.

Couple the safety concerns or ease of travel concerns with an all-time low price point for these tools and we are seeing an ever-increasing number of first-time buyers coming into the market. They are asking questions, building budgets, and actually buying planes. Still, the greatest area of sales strength is North America and that will probably stay slanted like this until several stars align. The global price of oil will need to rise to the middle $70s and be sustainable at that level to crack open capital expenditures by the emerging markets. Right now, without that global participation, there is still such an overabundance of aircraft supply that prices should remain low. I still hear prospects and clients articulate that, as sellers, they are going to wait until prices rebound before they sell. My answer is always the same to these believers. Rebound from where since prices are still going down? And more importantly, I remind them that these are depreciating assets, so while you wait, the natural evolution of a piece of equipment is to go down in value with age. What we can all hope for with a more balanced supply and demand would be a reduction to a stable residual loss rate rather than what sometimes seems like a freefall.

So back to my friend who is selling but enjoying the memories and richness of the experience. I promise there are no shortages of memories that can be made. Jump in and start making memories and increased business wealth anytime. You will find much supply and a very welcoming industry to guide you to the right choice and best values. If, by the way, you are a seller, that supportive industry awaits you as well.