Small-ball mentality

Business Jet Traveler » October 2009
Thursday, October 1, 2009 - 5:00am

I recently was invited to the Los Angeles Dodgers' Sports Camp, or "fantasy camp" as some call it. Unlike most of the events I attend, this one was unique in that I was the only aircraft broker present. At lunchtime-after we'd spent the morning trying to look our best hacking at the fastballs and changeups that zipped our way-we were asked to recount our business experiences. It was a bit surprising to me that the stories I heard were mostly negative. I say surprising because, despite how badly corporate aviation has been hammered in the press and chided by the non-private-flying public, the preowned aircraft segment is showing vast improvement from a year ago.

The used jet market, however, can run counter-cyclical to new aircraft sales, which by most accounts have experienced a lingering falloff. Also, it's apparent that many customers who are in buying mode have been from outside the U.S. In fact, the few medium to large jet transactions I've been involved in recently included exports to Venezuela, Singapore and one earmarked for Nigeria. This is not to say the U.S. is without buyers, but the international nature of the business has become more noticeable of late.

The drastic across-the-board price drops for preowned airplanes over the past year is the reason for the sudden uptick amid the international players. Aircraft sales often lag both an economic downturn and an upturn, and so the fact that we are beginning to experience increased activity could support the predictions that the U.S. may emerge from recession this quarter. While some are questioning the speed and length of the recovery, the preowned market's thaw may be just one small indicator supporting the recovery hypothesis.

It's like my experience at baseball fantasy camp. We may all have been hoping to hit homeruns, but at the end of the day we were happy just to get a few base hits. The used jet market appears to be on the same path.

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Quote/Unquote

““I guess an airplane is pretty decadent, right? But if anyone has a problem with that, tell them to go f--k themselves, because I will live in that trailer [I own] in Alabama before I give up that f--kin’ airplane. That airplane is, hands down, the greatest luxury a human being could have. There’s nothing that f--king beats it. F--k a yacht.” —musician Kid Rock, when asked to name his most decadent purchase  Source: Rolling Stone   ”

-Kid Rock, musician