They all felt that the industry was moving in a positive direction for themselves and their clients. Prices were holding in a way that, although down slightly and still moving incrementally in that direction, did not provoke anyone to fear that the bottom was dropping out. Each felt that the value their clients see in aircraft ownership was continuing, and demand was remaining strong. In talking to our clients, thinking about not having the private travel solution that they have, was not a serious contemplation.

Of course, there are always discussions taking place internally and externally amongst their clients’ companies, flight departments, or friends who are operating aircraft. Generally, the one topic that garners the most attention is operating costs. The salaries of flight department personnel have risen dramatically over the past few years. These people are vital to the safe, efficient and reliable operation of these assets.

However, the increase in their cost has created greater visibility, thus invigorating the discussions. Not sure these will ever change in a downward direction, as service providers can be one of the stickiest forms of inflation. Attrition, increased ownership, and usage, without a drastic increase in labour are just a few reasons this line item will likely not go down in the near term.

Subjects that make a few people say: stop the world I want to get off, centre around the disruption of use caused by the ever-present supply chain issues. Labour is top of that list. The shortages of experienced personnel at the manufacturers and MRO and maintenance facilities are continuing to cause serious discomfort for all. Just yesterday I had a client tell me about a six-week delay in the scheduled modernisation completion date for their aircraft. This will of course cause alternative lift costs to rise as well as scheduling headaches that will accompany this delay. Multiply this across the industry and you will see the dissatisfaction this causes.

Many of my friends I spoke with who are sales professionals shared a similar band-aid solution. Start by setting better expectations for their clients, beginning with the extended time it takes for the sale and purchase timeline. What used to be 30–45 days for a prebuy could easily now be a 60-day process. And that is just the timeline for the event and corrective action. This does not even speak to the lead time in finding a slot and starting this process, which we all understand takes as long as an additional 30 days tacked on.

So, to help the client or prospect ease their frustration, we are all being very careful with this delicate discussion of timing to adjust to a new norm of expectations. These strategies can only be band-aids simply due to the fact that we, as aircraft brokers, can have very little impact on a solution for supply chains and labour shortages.

By-and-large our collective constituents have been on the side of staying the course and enjoying the benefits of aircraft ownership and operation. They are feeling optimistic about owning and operating even in a world of added costs as well as timelines for maintenance and modernisation.

They are looking forward to many years of enjoyment. With respect to those saying: stop the world I want to get off, we are all seeing very very few people who feel as if they approached the ownership with not enough facts and must get out.

Thankfully, the vast majority of first-time buyers are enjoying the excitement of ownership. This all adds up to a sustainable world for our owners and all of us who service this distinctive group.

The post What makes your world go round? appeared first on Corporate Jet Investor.

As a broker today, like our colleagues, we have more inventory to work with, and that alone should make hopping off the fence and into a transaction feel more comfortable for a buyer. We are long past the days of only 1-2% of manufactured aircraft for sale at any given time. Still trying to reach what used to be a benchmark for health of 10%, but in most categories, we are solidly at 5-7%. That brings terrific choice to the buyer community. Along with choice comes the opportunity for negotiation, the opportunity to provide real due diligence to the transaction, and the opportunity to have a calmer less frenzied transaction.

This all sounds wonderful as we look ahead to a successful year. However, as calm and balanced as we find ourselves, if one were to think what we do to complete a transaction is simple, then they are probably not really getting past the activity phase of the transaction. In any given transaction, there are a myriad of players. Each side has a team and melding them together to have one success story is not always easy. Some players have their own agendas, some have less experience in the process, and others have ideas for creating paths to success that cannot always be articulated to all involved.

So how do we get from what could be one of our most successful first halves of a year to celebrating in December after one of our best years? The answer is don’t take your eyes off the ball. Don’t sit back and just think everyone will play correctly together. Don’t dare just assume all will end up like it started.

We still must remember the customer first. They may still be nervous about entering the fray. They may be thinking about the national election, the geopolitical environment, or interest rates. We must not try to simplify what are real and complicated thoughts, but rather help put them into perspective and see the changed landscape we are operating in today with more choice and negotiation. Helping them focus on the benefits of operating their own aircraft. As I always say, the chance to get out ahead of your competition and be in front of your customer is invaluable. The joy of taking your kids, grandkids, and pets around the world to make memories is impossible to place a value on.

So not only do we, as industry professionals, have reason to count the ways, but we also can uncomplicate the complicated. So, join us in the transaction arena and let’s all work together to help our prospects turn that first phone call into a transaction.

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It’s an approach designed to ensure that business aircraft owners really do have the perfect ownership experience. “We lead with that as a culture and a mantra,” said McReynolds of the MRO business. “We tell them [owners] what it’s [their aircraft] going to look like going out of the door [after aircraft maintenance]. And we tell them about surprises when they happen. It’s an expectation they really appreciate.”

Often aircraft maintenance is one of the last things new owners think about when closing a transaction. But, in reality, it’s one of the most important parts of the ownership experience, which often becomes an afterthought, said McReynolds of Weststar Aviation. “The complexity in this thing we call maintenance; most people don’t think about. But hiring a DoM [director of maintenance] to represent your best interest in a complex environment is a key part of ownership,” he added.

‘All on the first day’

Buying a business aircraft is a collaborative effort, according to speakers. Jay Mesinger, CEO/president, Mesinger Jet Sales, which sponsored the Town Hall had this advice for new buyers: “I tell people when they start to think about buying to talk to their lender, interview [prospective] management companies and your aviation attorney – all on the first day They are all parallel paths that you need to come together at one time to enjoy your asset from Day One.”

So much of the industry’s focus lies on the transactional side – the buying and selling. “But there’s so much that goes on in the middle and that is the ownership,” he added. “Operating your airplane is all part of getting ready to, one day, sell it and buy another one. But let’s not forget this place in the middle where the joy can come in.”

Welcoming new entrants to this industry effectively depended on understanding the perspective of where they come from, said Bob Marinace, chief experience officer with private jet charter and management company Solairus Aviation. 

Those who come from fractional and charter “know the acronyms” and the basics of scheduling and using an aircraft but they don’t understand the ownership experience, said Marinace. “What we are about is to help educate and to explain how this will differ from what they have experienced so far,” he added.

‘One of the first things you talk about’

Too often the selection of a management company is not prioritised, said Stewart Lapayowker, managing shareholder, Lapayowker Jet Counsel. “Unfortunately, for new aircraft owners, selection of a management company seemed to get overlooked and then it’s a scramble to fine one,” said Lapayowker. “But it should be one of the first things you talk about.”

Some of the key questions to answer, he said, are: Are you going to set up your own organic flight department; are you going to have a managed aircraft and if so, who will be the manager? It is important to engage a management company that understands the new owner’s preferred structure and can be flexible and deliver the services they are looking for.

“First-time buyers haven’t got the experience [to make informed decisions on their own],” said Lapayowker. “But they get a lot of free advice. Everybody at a cocktail party tells you how to do it right.”

You can watch the hour-long, free-to-view CJI Town Hall, Masterclass here. The next Masterclass – devoted to buying business aircraft – aganin sponsored by Mesinger Jet Sales, will take place on Wednesday, September 25th. These Town Halls complement CJI’s Aircraft Transaction Masterclass.

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Houdini was once performing an escape stunt at a maximum-security prison, where he was tasked with escaping from one of the cells. He worked and worked to pick the lock, and his time to perform the escape was running out. His exhaustion was increasing and the sweat was pouring down his forehead. Finally, after hours of unsuccessfully trying to pick the lock and escape, he fell forward with fatigue against the door, and it just pushed open. You see, the door was not ever actually locked, except for in his mind. He had to get out of his head and see the door for what it always was: unlocked.

I’ve recently been to several aviation events and continued to host webinars, and I’m always interested in the perspectives of the participants. Many have been saying that their business activity is down this year, and others are predicting a downturn. It is not unnatural for election years to create brief periods of uncertainty and create a bit of fence-sitting from operators. After all, the one thing that financial markets do not like is uncertainty. Geopolitical events, inflation, and undoubtedly, presidential elections can drive this feeling. However, if you look at this year’s election slate, neither side really has a better or worse attitude towards aviation and the use of private jets to accomplish growth in business. So, without getting political, neither side should create havoc for our use of business aircraft.

Sure, depreciation may be treated a bit differently, tax treatments may be a bit different, but no one wants to do away with using the aircraft. Is business down or headed there? Sometimes business begins to resemble what you say or think it is. But that can work both ways. You can certainly work less hard and create an outcome based on that, or you can work twice as hard and build at times what others say is impossible. No doubt, this is an unusual time in our economic world. It is a period of unease on many levels. One way we as an industry can overcome this is to talk about the certainty of our industry. We know for sure that business aviation creates business opportunities. We know for certain we operate in a very safe and efficient environment. We know for certain that our markets are stable and less frenzied than what we experienced during the pandemic and through much of 2023.

You see, there is much to talk about to help those sitting on the fence step off and those who are predicting doom and gloom to redirect their uncertainty. Our market seems strong to me. Our company, like many of my friends who I speak to daily, reports 2024 could be one of their best years. So as always, one could sit back and rely on what might seem like an uncertain period, or you could act and be ready for the best year your company has ever experienced. Frankly, I like the latter myself! It can get so easy to shake your head up and down as you listen to others talk about markets and business being down. It is more difficult to work harder, smarter and longer. You have to get out of your head and into the reality of the market we are enjoying.

This is my first article to be published in the Corporate Jet Investor. I am so proud of this new home for the Mesinger Pulse. We will be published on the first Friday of each month going forward. Thanks for reading!

The post ‘Get out of your head and into the market’ appeared first on Corporate Jet Investor.

Mesinger Pulse will be published on the first Friday of every month.

“After publishing the Pulse for decades I am really excited to be moving and publishing the Pulse at our new home at CJI. We will be debuting the new address on May 3rd, and will then publish the first Friday of each month there after – we are also really excited about our new Masterclass series we are producing with them,” said Jay Mesinger, CEO and president, Mesinger Jet Sales. “We strongly believe that a well-informed market is a strong one.”

You can see the latest Masterclass here.

If you would like to contribute to our Expert Advice section please email: Mike@corporatejetinvestor.com

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“A lot of selling is about getting ready to sell,” the Masterclass host Jay Mesinger, CEO and president of the company told attendees. It was timely advice for many new owners. “In the past pandemic years, we had so many buyers come in, that there’s bound to be a whole host of people who were first-time buyers but are now becoming first-time sellers. And first-time sellers are going to need the programming of how to do a sale correctly”

A good starting point is planning the sale and recruiting the right quality and type of advisers to conclude the sale successfully. In addition to selecting a broker, sellers needed to choose a specialist aviation lawyer, maintenance facility to complete a pre-purchase inspection (PPI) and specialist financial help. Plus allow enough time to conduct due diligence.

‘Not as excited about the idea of selling’

Fully engaging first-time sellers in the sale of their jet is the primary mission of Sue Carriere, partner with business aviation law firm Carriere, Little & Leach. “One of the things I find with sellers – especially first-time sellers – is that they are not as excited about the idea of selling as they are about the idea of buying. So, getting them engaged to provide the information I need is my first goal,” said Carriere.

Focusing only on aviation law, Carriere works with clients’ advisers to ensure liability protection, tax mitigation, and FAA compliance. “Tax planning is as important on the selling side as well as the buying side,” she said. “They may have fully depreciated the plane by taking advantage of bonus depreciation or, in rare cases, keeping them for a long time. Now they need to engage an aviation savvy tax planner because it’s a very specific area of taxes.”

Sellers need to ask: is there recapture of the depreciation? “A lot of people never hear those words until it’s too late,” said Carriere. So, It’s important to plan the tax ramifications for the sale of the old plane, as they are planning a replacement strategy for the new plane.  Also sellers needed to engage specialist help weeks if not months before closing the deal.

Mesinger highlighted the need to seek specialist advice and for buyers to keep their advisers “in their own swim lane”. He told delegates: “To think your broker is going to be your tax consultant … is wrong and not a fair position for what should be a winning team.”

‘Eleventh-hour hold up’

Another plea for early action by first-time sellers came from Luci Johnson, operations, documentation and servicing manager with PNC Aviation Finance. “A lot of times when selling an aircraft, the lender is the last party that is brough to the table,” said Johnson. “But, in reality, we should be one of the first as soon as the seller is marketing the aircraft. Reach out to your lender with regard to what the pay off may be. There may be a shortfall that arises and we don’t want there to be an eleventh-hour hold up for the closing.”

As a regulated bank, PNC Aviation Finance has laws and regulations which it must adher to and protocols in place to ensure compliance. Providng PNC with the information it needs sooner rather than later is an important means of concluding a successful sale as soon as possible, said Johnson. “Do not reach out to your lender two days before closing. We need plenty of time,” she said. “We can respond very quickly but we want that to be the exception and not the norm.”

For Todd Duncan, chairman, Duncan Aviation, it is all about closing the deal and mitigating risks by bringing together a team of experts. That is particularly important with the recent shift in the balance of power in transactions. “This has gone from a sellers’ market to a much more balanced market in terms of aircraft sales,” said Duncan. “That’s why it’s especially important to talk about the team you [sellers] need and what their duties are.”

With specialist advice, sellers can gain true insight into the value of their assets and eliminate surprises within the pre-purchase inspection. PPIs are a critical part of aircraft transactions and one that has been overlooked in recent years, he said.

‘Difficult to schedule PPIs’

While finding slots had proved challenging, Duncan said availability had improved for some categories of aircraft. “For the past year, it’s been difficult to schedule PPIs,” he said. “We, and others, have tried to carve time out of our schedules. Within a two-to-four-week period we can take in small to medium-sized projects, depending on the scope of that pre-buy.” Larger aircraft are more difficult to get in and can take a month or two months.

His final advice to sellers, like his fellow speakers, was about the importance of planning. “The more they plan before hand, the better off they will be.”

Meanwhile, Mesinger, from Mesinger Jet Sales explained the need for the new Masterclass series like this: “What is usual and customary in aviation is always changing. What was usual and customary during the pandemic is not necessarily so today. So, we thought we would capture the new usual and customary in this new Masterclass series.”

The next free, one-hour CJI Masterclass – How to have the perfect ownership experience – takes place on May 22nd, 2024. You can listen to the first Masterclass here.

The more sellers plan their transactions, the more successful they will be, according to panelists.

The post CJI Masterclass: What first-time sellers need to know appeared first on Corporate Jet Investor.

New and not-so-new technology is enabling a fresh approach to generating leads and closing deals. So, is tech threatening to supersede the old dealmaking skills? We took the temperature of jet sales with three leading industry players.

Active in the 3D virtual world of the metaverse is Jetcraft. In mid-2022, it bought space in three-dimensional social networking platform Decentraland. Within that space, the aircraft sales, transactions and trades specialist built a virtual lounge linking to its virtual hangar and an immersive introduction to Jetcraft for those new to the company or business aviation.

But does it help to sell jets? “Initial feedback is positive, with visitors appreciating this as a first stop to understanding Jetcraft and being able to virtually explore different aircraft models, before investing time in real life viewings,” says Peter Antonenko, president, Jetcraft. “Our expansion into the virtual world reflects the evolution of our customer base, having seen a 20% increase in Jetcraft buyers under 45 in the past five years.”

Generation Z

Younger aircraft owners are often established metaverse and virtual reality users, he tells us. “A growing number of entrepreneurs from tech and finance are entering the world of business aviation and using our tech insight to support their aircraft needs.” Jetcraft says it is keen to stay ahead of its customers, particularly those who belong to Generation Z. “They are increasingly implementing technology into their day-to-day lives and putting more value on their online identities,” says Antonenko. “As these individuals move through the workplace, platforms such as the metaverse will become fundamental to how they conduct business.”

But Jetcraft’s adventures in Decentraland will not replace the personal contact that is so key to closing a deal, he adds. “While our presence in the virtual world serves as a swift and convenient way for customers to interact with Jetcraft, we firmly believe that face-to-face interactions remain integral to business aviation.” Its Decentraland Lounge and virtual reality hangar are designed to complement the company’s existing service, not to replace the in-person connection that clients value, particularly after Covid.

Jetcraft’s virtual sales lounge is evidence of changing buying habits, agrees Wayne Starling, executive director, International Aircraft Dealers Association (IADA). “We are seeing some changes reflected as follows: the showroom that The Jet Business in London has, Jetcraft’s virtual lounge and other dealers integrating new ideas into their business models,” he tells us.

‘Pulling the trigger’

During Covid some buyers transacted purchases without physically viewing the aircraft in person. That has all but stopped, says Starling. While younger buyers use virtual features in their decision-making and buying process, they want to see, touch the metal and smell the leather. “In most cases, they almost always want to see, touch and feel the aircraft before pulling the trigger. The older buyers are beginning to make use of some of the virtual capabilities but not at the pace of the younger buyers,” he says.

Despite experimenting with new sales models, IADA still believes that most dealers/brokers are still traditional when it comes to selling. As AI starts to play a role in all aspects of business, IADA expects it will influence how aircraft transactions are conducted. Change will happen, but it will take time, as most of the aircraft dealers and brokers are old school in the business jet transaction industry, says Starling.

Plus, buyers can have access to too much detail. “The aircraft owners have so much information available via the internet and publications that sometimes it creates more problems/confusion than help. A good aircraft broker must understand and use all the tools available and start preparing for the future.”

But Zoom (and other social networking platforms) are here to stay, according to IADA. Another fan is Jay Mesinger, founder and CEO, Mesinger Jet Sales. “Zoom and Teams are absolutely embedded in the sales process after Covid,” Mesinger tells us. “Sharing your screen is an important way to share information about a proposed business jet transaction.” But technology can never substitute for the traditional sales skills of understanding the buyer’s needs by listening (and then listening some more), says Mesinger. And not being afraid to ask for the sale sometimes gets overlooked.

‘Do less selling’

For Starling, at IADA, one of the fundamental recent changes in sales is not technology but supply. Gone are the days when all you needed to sell a jet was an available aircraft. “Times are changing and brokers must go back to using their selling skills. One thing I stress to brokers is to do less selling and more helping their clients buy what they need and want. We all like to buy versus being sold.” 

So, while new opportunities – like marketing in the metaverse and social media sales leads – are changing the way some buyers, particularly younger ones, acquire jets, fundamental principles still apply.

Back to some final sales advice from Blake in the 1990’s movie Glengarry Glen Ross: “Only one thing matters: Get them to sign on the line, which is dotted.” Was he right all along?

OMW Dashboard

Aircraft for sale

• 657 Light jets for sale/lease – two more than last week. This represents 6.93% of the total fleet. An absorption rate of 4.21 months. 
• 542 Medium jets for sale/lease – one fewer than last week. This represents 6.66% of the total fleet with an absorption rate of 5.07 months. 
• 452 Heavy jets for sale/lease – the same as last week. This represents 6.85% of the total fleet with an absorption rate of 5.13 months. 

Source: Amstat, March 1st 2024

Business jet flights – Week 8, ending February 25th, 2024

Global

Business jet activity was up 2% year-on-year (YOY). Scheduled airline sectors were 7% ahead of last year.

United States  
The 51,480 business jet sectors logged were 3% ahead of the previous week and 3% ahead of 2023.

Europe 
Business jet flights were 2% behind the previous week and level with last year.

Rest of World 
In the Middle East, business jet flights in the past four weeks fell 11% compared with last year. In Week 8 activity was 6% behind Week 8 in 2023.

Source: WINGX, February 29th, 2024.

The post The ABC of jet sales appeared first on Corporate Jet Investor.

The Colorado-based company has been operating for almost 50 years and its CEO and founder Jay Mesinger is a “dealer who leads our industry with integrity,” according to Wayne Starling, executive director, IADA.

Mesinger told Corporate Jet Investor (CJI): “Mesinger Jet Sales has been watching the development and maturation process of IADA. It was clear to us they have the critical mass as well as the ethical processes that made membership at this juncture a must for Mesinger. We are excited to be a part of this association and bring their benefits to the transactions we participate in.”

Starling said: “Jay has created a series of information tools, regularly speaks on important industry topics, and has penned articles in various aviation publications for decades. Most importantly Jay Mesinger has a global reputation for personalised, transparent service that is consistent with the best traits of IADA dealers everywhere.”

Mesinger said the company’s sales team sticks to “the highest standards of professionalism”. He said: “We support IADA’s continuous commitment to strengthening our industry’s focus on transparency and integrity in every deal.”

Last week, IADA implemented policy changes for its members, including tightening its accreditation standards, following its 2023 annual board meeting.

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Overall business aviation dropped 2% since November 2021. Among the top 10 airports in the US, only Teterboro and Dallas Love Field were busier this November. Alongside this, midsize jets saw the largest year-on-year decrease in sectors flown, with activity down 12% since last year, only up 1% in comparison with November three years ago.

It’s the same story in Europe too, with business jet demand in the continent “unambiguously sagging” according to WINGX. For the full month of November bizjet flights fell 15% compared with last year and Europe has now seen four consecutive months of decline against 2021. The busiest European airport, Paris-Le Bourget, France, saw the largest falls in activity, with the first few days of December 28% less busy than December 2021. The worst performers in Europe were large cabin jets, which had been an area of strength for many previous months. Argus’ Traqpak activity report noted a drop of almost 40% in Europe since November last year.

December is looking quieter on all fronts, with all bizjet aircraft types starting the month with fewer flights than last year. Charter traffic is tracking just over 10% lower than last year for the first seven days of December, according to a report by Tuvoli.

But the business jet bounce passing may not be the worst thing. It could bring the industry some much-needed relief, according to Tuvoli’s president and CEO, Greg Johnson.

“In an environment where regional airlines are offering $150k signing bonuses for pilots, where the supply chain is still extremely challenged and where FBOs are closing early due to staffing issues, a pullback in demand of 10 to 15%, which is what I think we’re looking at, feels more like a relief valve than a harbinger of doom,” he says.

Although he is cautious about companies relying on new clients. “If the ‘Covid flyers’ are a significant portion of a company’s business, that would be cause for concern, because the pullback is coming primarily from this segment.”

Jay Mesinger, CEO and president, Mesinger Jet Sales thinks a bit of a cooler market is actually the perfect temperature. “Let’s see what starts to happen next quarter,” he told CJI’s Miami conference. “The days on the market will lengthen some, we’ll get a little bit more supply and we’ll get back to a healthy centre line that’s balanced.”

He added: “We can’t forget that we’re a dynamic market so we’re always shifting, but it’s about how fast it shifts, how off-guard people are when it shifts, and how predictable the shift can be.”

What goes up, must come down. And fewer flights might offer the opportunity to reset after a hectic three years.

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