Originally published as a blog for AINsight for Aviation International News on 1/7/22
Well now that I have you thinking let me explain my question. As you enter one of the most important phases of your life, who will be your partner? Will it be someone who you have just met? Or will it be someone who is trusted? I hope it is the latter. Remember, this is not a relationship that is to be taken lightly. This is a relationship that represents a significant financial investment and one that must be founded on safety, transparency, and trust. This is about who you chose to help you buy an aircraft!
I have spoken about the frenzy of first-time buyers who rushed to complete transactions before the end of 2021 to garner 100% Bonus Depreciation. This created an uncomfortable buying process that include horse races, not only to see who can pay the most for the plane, but also often who will accept the least amount of due diligence with respect to inspecting prior to closing.
The next six to twelve months will be filled with stories, webinars and articles about the disappointment experienced by many of these buyers as they begin to fully understand what it is they purchased. Not just the price they paid, but also in capability of the mission fulfillment of the aircraft, and the mechanical condition. When I speak about who is with you at the altar, ask yourself how that person will be there for you when these questions start to arise?
As a result of the frenzy, I am not just seeing the dreaded back-to-back transactions taking place that muddies the waters between buyer and seller, but I am actually hearing about back-to-back to back-to-back to back-to-back transactions taking place. That’s right. Actual sellers can be three times removed from the buyer. Who will even be able to sort this web out when the problems start to occur? This is a surefire recipe for a very poor wedding reception.
I have had clients lament that they have never worked so hard to buy anything as they have in this past six months, and I may add unsuccessfully in some cases. High frustration, and to some an absolute disdain for our aviation industry was a result. Believe me, our multi-generational industry is not bad, some of the actors are. For the majority of us who earn our living in this industry and have for years we are suffering as well.
So, what is coming for us in 2022?
I do not see this high demand that has been created by the pandemic going away in 2022, I do not even see prices dropping. I am hopeful that a more orderly, business-like process will return to us all. I see a bit more supply being added to our markets through new aircraft deliveries, planes being traded back into the mix, and corporations for the first time in two to three years focusing on their fleet mix and desire to modernize. It will not take a large influx of supply to begin to balance out our market again.
Bottom line I am hopeful that 2022 will be a year of balance and more harmony. It will be a year that helps us all pick that perfect person to be at the altar with for a long successful relationship, because that decision matters greatly. Happy New Year all!