Originally published as a blog for AINsight for Aviation International News on 7/7/23
Not a bad time to take stock of our year, as well as look ahead to what is in store. At our company we have enjoyed a good 2nd quarter. The first quarter was a bit slow rolling, as was also reported by many of our fellow sales professionals, but the second quarter picked up steam nicely. Planes went under LOI’s and contracts, pre-buys started up, and the act of buying and selling felt great again.
We are not acting in a frenzied way and patience is becoming the virtue we almost collectively forgot about. 2023 has brought much needed inventory to the table, which gives us all more choice and more opportunity to find the right plane to buy, and not just the only plane to buy. Along with more inventory, also comes another almost forgotten virtue, sellers having to play in a well-groomed sandbox. For the last two years the market clearly felt and acted like a sellers’ market. This gave no room to act responsibly as a buyer without the risk of losing the plane that was often the only one available. We were dealing with unsustainable prices being paid, lack of due diligence being allowed, and frankly even balanced contracts being more difficult to attain.
Welcome back to the normalization of our transactional business.
This all sounds too good to be true. So, is there any downside to our world today, and for the rest of the two quarters to go? Of course there are. As I always say, if this business were easy, everyone would be doing it, or at least doing it more successfully. Let’s talk about the headwinds. To jog your memory, 2020 was one of the best years for our company transactionally, as it was for most. In fact, all that success came in just two and a half quarters. Remember the first many months of 2020 when the pandemic was first sweeping the world, ours, like most industries, just stood still. This did not last thankfully, and by June of 2020 it seemed like we were all rolling at top speed. Prices had not yet begun to rocket up, and buyers, mostly first-timers, were standing in line to pick the best and still pay reasonable prices. Could 2023 be a repeat of that success for all involved? It could be, except for one huge difference. Available slots for pre-buys. Finally, by the end of 2022, we once again were getting back the right to do the due diligence that everyone knew we needed. Only one problem. The maintenance facilities, both OEM owned as well as independents, are so backlogged that they may be the deterring factor to repeating the success of 2020. No matter how many sales we can make, if we cannot find shop space and available labor on a timely basis to perform a pre-buy, the world we know slides to an abrupt halt. We are now waiting up to 2 months or longer to find a slot anywhere, much less the shop or top 3 shops you would like to go to.
This is a supply chain, labor, shop space, and high demand problem. Multi-faceted in the reasoning as well as the solution. I have been talking as often as I can to the shops, and hoping collaboratively, we could work on solutions. If we cannot find them, we may be destined to a mediocre year rather than a record-breaking year.
In either case it will be a year of more balance and less frenzy. It will be a year that should make us all glad to be a part of this thriving industry.