Mesinger Pulse: Did We Get Caught Flat Footed?

Originally published as a blog for AINsight for Aviation International News on 9/3/21

Let me explain. We as a collective industry have been working to get our messaging right to understand the unprecedented activity currently in pre-owned aircraft markets. As I have talked about in many articles and webinars, it was really hard to quantify if prices of aircraft were going up or were they just flattening out. Was inventory really shrinking before our eyes to record lows or was it just right sizing based on a new demand ratio?

We are experiencing a supply versus demand ratio like we have possibly never seen. During the emerging market phenomenon that lasted from 2003 through 2008, supply of our inventory was also stressed, however the biggest difference between then and now was that in the emerging markets buyers only wanted new or like-new aircraft. The smaller, older planes did not fall into that stress.

The mantra we have been using at our company the past 6 months is when you come in as a buyer you must be patient. Of course, we might find a plane in 2 days, but it might take 90 days. Patience is a virtue. I am always assured by my clients that they can wait. Then on about week 2 of the hunt there seems to be a crack in the veneer of the patience.

What is different today is we will not see multiple planes on websites or in catalog magazines. They will trickle out one at a time and sell in days. In most cases for the asking price.  How should we feel about that? I guess it is time to be OK with this frenzied pace. What is critical is that you do not get swept up in the pace and be allowed to miss what we all know is critical due diligence. There is no way that anyone should buy a plane without a comprehensive pre-buy. There is no way to accept weak or missing records. There is no way one should not have a very proper purchase agreement. As my good friend Zig Ziglar would say, “price is a one-time thing, cost is a lifetime thing.”  

Remember this is not the wild west even though it may seem like it. This is just a pandemic reality of the largest number of first-time buyers coming into our marketspace ever. How does one best protect themselves when entering this market? Use common sense. If it seems too perfect it just may be. If you are feeling pushed you just may be being pushed. Transactions are expensive so make sure you don’t have to do them too often. Make sure you are well represented and that whomever you have chosen to represent you is capable of building all the purchase tools you need to make good choices including mission profile modeling, budgeting work, pre-buy inspection protocols. Each and every part of a complex 360-degree process must be well thought out. Do not be afraid to get in this ownership process but do be afraid to get in without smart help at every turn.