““When I made the film The Invention of Lying, they gave me a private jet for getting back and forth between New York and London. I thought, ‘I will never use it’ but I ended up using it every weekend. You turn up, right, and the airport is completely empty. I mean, there’s just someone at the desk and then the pilot, who says, ‘Are you ready to go?’ and you say, ‘Don’t you want to see my passport?’ and he goes, ‘Oh yeah, I suppose I’d better.’” ”
How to jump-start sales
When House Financial Services Committee chairman Barney Frank grilled bank CEOs in a recent televised hearing, I was surprised and even a little proud that my 10-year-old, Maddie, showed interest in the proceedings. Then she looked at me and asked excitedly, "Dad, does he do the voice of Tigger?" Rather than dismiss her question, I told her I was pretty sure he didn't but would check and get back to her.
Somehow, this exchange made me think of the polite yet vague responses that aircraft brokers often give to jet owners who inquire about market values. We know the correct answers but we also know owners might not be ready to hear them.
Though relatively few transactions are occurring now, mainstream brokers all know what an aircraft will sell for today-if there is a willing seller. In fact, the other day I was on a conference call when the question arose: "If I had to sell my aircraft today, how much would it bring?" Three brokers in three time zones answered instantly and virtually identically. So no mystery exists as to what aircraft will sell for. There is, however, resistance by many people to accepting realistic figures, which can cause inventory to build.
Consider the Gulfstream GV market of late. It stagnated for a while, much as the market for virtually every model did in the wake of the Lehman Brothers collapse. Then, late in the fourth quarter of last year, GVs began to move: first one sold, then another, then another. The prices were way down from where they had been just six months earlier, but the pivotal first sales allowed buyers and sellers to gauge what figure they should offer or accept. While the initial sales brought sequentially lower pricing, the most recent couple of GVs on the market traded or contracted above the lows. Now only 5 percent of the fleet is for sale, making the GV one of the few models whose inventory actually has been pared back since October's fall from the precipice.
This change is welcome but not surprising. Perhaps because GV sellers are more able to sustain a multimillion-dollar loss than some operators of smaller aircraft, they seem more willing to set realistic prices that will attract buyers. GV buyers, meanwhile, recognize their opportunity when it arrives. Clearly, no shortage of buyers exists when there is what the banking industry would refer to as a mark-to-market. Once sellers offer this type of pricing, we see not just one interested and qualified buyer, but many.
After several agonizing months during which used aircraft sales were hampered by headlines berating corporations for jet ownership, this greater price clarity has brought us to the intersection where opportunistic buyer meets highly motivated or distressed seller. Establishing price baselines for various models is the first important step toward improved sales activity.
By the way, I recently confirmed that ventriloquist Paul Winchell supplied the voice of Tigger. Winchell died in 2005, so I guess if Frank ever quits his day job...