Last week I made the trip to Dallas for the NBAA regional forum held at Love Field. I don’t typically make it to many of these forums, but I had not had many opportunities to network lately and wanted to hear some fresh perspectives on the state of things from some of my compatriots. The forum was well worth the trip this year.
I was pleasantly surprised to hear that both the indoor exhibit space and static display of aircraft were sold out for this event. I had thought that many vendors might be scaling back in this economy, but obviously many felt the expense of displaying was worth it for this event. I will say a couple of OEM’s seemed to be missing from the show – Dassault had a 900EX, Bombardier had a Challenger 300, Hawker Beech had a Premier 1A, Embraer had a Legacy & Phenom 100, but I did not see any aircraft from Cessna or Gulfstream. Also, I only noticed one or two used dealers with inventory on display.
The indoor exhibitors were a pretty typical mix of bankers, insurance providers, avionics and parts dealers and other service providers to our industry. There were several speakers lined up to discuss various topics. The only session I was able to make was the session presented by Ed Bolen entitled Challenges and Opportunities for Business Aviation. I was hoping to get some good bullet points from Mr. Bolen to provide to my customers, but didn’t take home much new information. His primary focus was on the “new” NBAA ad campaign of No Plane, No gain.
NBAA has brought back this tag line in order to help business aviation overcome some of its current publicity problems. The campaign focuses on four key areas: 1. Business aviation means jobs (1.2 Million jobs according to NBAA). 2. Business aviation is a lifeline to communities with little or no airline service. 3. Business aviation enhances the productivity and efficiency of the businesses that use it. 4. Business aviation provides life saving services to our communities. In my opinion, unless we can prove item 3 with hard & concise facts, items 1, 2 & 4 won’t be taken very seriously.
I came away from this forum with some very encouraging news from the other dealers and brokers I visited with. We all seem to be facing a different problem today than the one we have been fighting since last summer. Buyers have finally starting making realistic offers on aircraft. Most of the brokers I spoke with all talked of receiving realistic offers from buyers over the last few weeks, mainly concentrated in the long range aircraft manufactured over the last 5-10 years. The problem many of us now face is sellers digging their heels in.
This is a good sign. Many sellers seem to have drawn a line in the sand. They have been beaten up so badly over the last 6 months, that they have decided they would rather not sell their aircraft that be forced to meet current market pricing as dictated by the buyers. If all sellers were to agree to this, pricing would not drop any further. Barring some new unforeseen financial crisis in the financial markets, I think we might just have hit bottom on the new heavy iron. However, I am afraid that the owners of those 15+ year old aircraft can expect further erosion in pricing as lack of interest and the difficulty of financing will continue to hurt their bottom line.
So, we have your basic “good news, bad news” situation. The good news is that buyers seem to finally be buying again. The bad news, we still can’t put deals together because price expectations between buyer and seller remain around 10% apart. One step at a time.
Toby J. Smith
Vice President
JBA JETS, Inc.
918-834-9100
toby.smith@jba.aero