Mesinger Pulse: What Is Just Below The Surface?

NBAA-BACE2018 is now just a memory. Of course, the words and actions used to describe our current state of affairs at the show like, half-full, enthusiastic and high-fives all around should not surprise anyone. But what was the undercurrent? What is just below the surface of our marketplace? I will be attending, speaking and listening at several upcoming highly attended events over the next few months and they will be very telling, regarding the activity at the end of the year, and what is predicted for the near future.

Each of my daily phone calls as well as the gatherings of industry professionals always gets back to the question of what is on the horizon. I have high hopes for and enthusiasm about our market conditions. I do not see all aircraft listings flying off of the shelf, but I do see and believe in the continued shortened selling cycle of aircraft that are properly priced and renewed buying interest from first-time buyers, which is always positive for all of us. Let’s not misunderstand what properly priced means. There are two things it does not mean. It does not mean that to sell more quickly one must price their plane at some bargain basement price. And it also does not mean someone can just throw a dart at the wall and regardless of smart market data just say when it hits the wall, “that is what I want to sell for.” It is also irritating when an aircraft comes on the market and the broker for the seller says, “my client is in no hurry to sell, so he is going to hold out for his or her impossible pricing.” That tells me that seller is not real and should not be engaged with what is surely a precious commodity, a real and ready buyer.

So now let’s define what properly priced really is. At Mesinger Jet Sales we believe in the numbers. The numbers that we derive from hard investigative work and smart analysis of that data. We believe that aircraft that have a great pedigree, great historical maintenance and fabulous records and logs, as well as very nice cosmetics and highly modernized avionics and connectivity will bring a higher dollar than other less equipped offerings. The great planes can be bullish, within reason, regarding an expected sale price, and should reflect that in a slightly higher asking price. Remember though, that is a fine line and a seller cannot arbitrarily ask a higher price and expect to sell for more because a great plane that checked the boxes was the last transaction in the market. All planes are different and must be priced thoughtfully based on the specific offering.

The thinking that every plane is worth more than the next is what will begin to drag a market into a slower reaction mode even with an environment of low supply and high demand. Buyers must still be treated and thought of respectfully. If sellers just think more, more, more, they will start to potentially see less, less, less. We cannot also be lulled into believing that short supply in our markets will last forever. Remember, Gulfstream’s 500 and 600 and Bombardier’s Global 7500, 6500, and 5500 deliveries are right around the corner, and aircraft are beginning to be traded in against those new aircraft causing inventory levels to creep up.

Pricing is critical and analysis of the marketplace is again on the move. External factors are always at play as we assess our marketplace economics. Yes, the U.S. economy is very strong, as is much of the global economy, however strong economies, at least in our country, can lead to higher interest rates and that can lead to a reassessment of overall acquisition costs. Geopolitical events can always impact upward momentum. As I mentioned, there are real risk factors out there right now however, I am not suggesting that our market will slow down, I am suggesting we as an industry can sometimes be our own worst enemy. We must be good stewards of our marketplace. We must guide and offer support to our sellers and buyers to be sensible when establishing pricing parameters for both buying and especially selling. We could price ourselves out of our own market. We could be creating internal risk factors to the market economics.

So, as each of us approaches the final two months of our year, let’s be positive, smart and vocal about our prospects. Let’s find the buyer or find the seller quickly by articulating clearly and with full transparency our needs. Let’s not let each other spend time on projects that cannot work based on miss matches. We have had a great year and we intend to keep our heads down and plow through the end of it and into the next with the same vigor and enthusiasm. Let’s all join forces and be at the finish line together getting these last few deals done. Then we must shake it off and dash together to the starting line for 2019. No rest for the weary!