Transformative trends roil the brokerage field

Transformative trends toward digitization and vertical integration, which are sweeping the bizav charter and access-program sectors, appear likely to next impact aircraft brokerages. How and when this will affect the way you buy and sell business aircraft is unclear, but signs in recent news suggest that change is coming to this bastion of mom and pops and other independent horse-traders. 

For example, amidst a 2019 market of rising inventory and deflated expectations, Kansas-based brokerage JetAviva reported in April a more than 20 percent increase in year-over-year first-quarter sales and a 25 percent jump in revenues. The company, which did not disclose dollar figures, credits its recently expanded sales team, which now includes four analysts. 

“It is impossible for one person to do it all with maximum effectiveness for the client base,” says JetAviva CEO Tim White. “With the support from our newly appointed sales advisers, we have the ability to capture and analyze data with unmatched levels of quality and quantity.” 

The same month that JetAviva reported its first-quarter results, California-based charter and management company Jet Edge—fresh from receiving a $60 million investment—announced plans to expand aggressively into retail aircraft transactions. Fueled by a separate $50 million line of credit, Jet Edge is acquiring a yet-to-be-identified aircraft dealer with the goal of creating a network of affiliates on both the acquisitions and sales sides.

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“We want to be a resource to the broker community to buy, trade, and sell airplanes by utilizing our operational talents, maintenance talents, and capital,” says Jet Edge CEO Bill Papariella. 

Unlike recent activity in the charter space, where the Vista Group, Directional Aviation Capital, and others have set out to create a new world order of full-service providers, these brokerages don’t have a stated goal of reinventing the field. Jet Edge, for instance, says its foray into transactions is simply a way to add more long-term clients: it envisions selling airplanes to buyers who will then sign up for management services. But the field may be transformed anyway, as buyers and sellers seek objective, data-driven assurance that the aircraft they are purchasing or offering is at optimal value in the marketplace, says White.

The trend doesn’t automatically spell doom for independent brokers, but in a sign of the times, some smaller firms are reportedly touting their network of experts more than their past successes when pitching first-time clients. 

For its part, Jet Edge aims to grow its brokerage by bringing new aircraft owners into business aviation, rather than poaching clients from other firms, according to the company.

Meanwhile, the International Aircraft Dealers Association (formerly NARA) is promoting its in-development Dealer Accreditation Program, for which members are automatically qualified. However, dues for the association—whose members claim to handle 60 percent of all retail transactions—put joining out of reach of many smaller brokerages, according to these firms. That may serve to marginalize them in the future.

While these trends are certain to roil the brokerage community going forward, the view from here is that a greater reliance on analysis, qualified partner networks, and availability of capital to fuel transactions represent wins for you, whether you're a buyer or a seller.