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used aircraft sales

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What do airplane buyer's look for?

Do you know what the #1 thing savvy buyers look for when they’re searching for a used airplane?

It’s not all the bells and whistles.  

It’s not over-hyped sales speak.  

It’s not even the lowest price.

It’s consistent and honest communications.  That’s right, they want straightforward answers and they want them quickly.  If the buyer senses that the seller -- whether a individual or a broker -- is glossing over important items, paints the rosiest picture possible, only provides positive information, shows the best pictures or those that have been photoshopped, or in an other way isn't forthright, they will move on...quickly.

Consistency in communications is paramount and that consistency is usually not developed after just one or two aircraft sales, but after dozens, or hundreds.  It takes time and effort.

I can't even begin to think how many buyers have told me stories of planes they went to go see only to find them to be horribly misrepresented.  The owner either didn't disclose pertinent information or glossed over it hoping the buyer wouldn't notice.  Unfortunately, I've heard those same stories about other brokers in the busines.  That’s why so many aircraft owners hire WildBlue to help them sell their airplanes.  We go the extra mile to develop reliable listing information, place ads, answer phones, and interact on social media…so you don’t have to.  We talk with buyers over and over again…sometimes year after year…and give them the time they want…so you don’t have to.  We help them figure out which type of airplane is the best fit for them…so you don’t have to.  And we qualify them, lead them through the negotiation process, prepare paperwork, help them with pre-purchase inspections, and make sure all of the I’s are dotted and the T’s are crossed…just so you don’t have to.  

So, whether you hire a broker to help you with the sale (and we do hope you'll hire WildBlue) or if you choose to do it yourself, know that consistent, reliable, and honest communication is what buyers expect.  Without that foundation you can rest assured they will look elsewhere.
 

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The Negative Impact of the Strong US Dollar on General Aviation Aircraft Sales

If you are an owner of a later model general aviation aircraft, you have multiple forces at play which impact the overall valuation of your asset.   Items within your control include how well you maintain the airplane, whether or not you have damaged it, upgrades and modifications that may have been done, and so forth.  Outside your control include the supply of new and used aircraft, the number of new pilots and potential buyers entering the buyers pool, the economic outlook, fuel prices, and world currency fluctuations, among others.

Specifically, I’m going to address how the strong dollar has impacted aircraft values and marketability.  Since our clientele consists primarily of those who own and operate modern aircraft (post-1984, by our definition) valued at over $100,000, my comments will focus on that market segment.  To set the stage, I will not be focusing on the dollar’s average strength as measured against multiple currencies, but rather its position as it relates to just one currency, the Brazilian real.  Brazil, like several other emerging economies, has seen an increase in demand for quality general aviation aircraft and has fueled a number of exports for us (and many other aircraft resellers) over the last decade.

In 2008, the real/dollar exchange rate bottomed out around 1.56 reals per dollar. At the end of 2008 that number peaked at 2.51 but quickly dropped again and remained under 2.50 until 2014.  During this period, it was not uncommon for us to sell nearly half of our inventory outside the US (the highest percentage of which went to Brazil).  Today the exchange rate sits at 3.51 but has peaked at just over 4.00 in the last 8 months. Now, a Brazilian buyer would have to pay nearly two-and-a-half times the amount he did in 2008 for the same piece of equipment.  That assumes, of course, all other factors remain equal and ignores internal economic pressures on the real, but you get the picture.  It costs a lot more for a foreign buyer today than it did 3 just years ago.  Given that it will cost a buyer in that part of the world $12,000 to $15,000 just to have the aircraft delivered to their location you can quickly see that they need a sizeable exchange rate advantage before it makes sense for them to consider importing an airplane.  Buyers also have to include the cost of repairs and maintenance their country may mandate, tariffs, taxes, permits, and other bureaucratic inefficiencies.

So, what does this mean to you as an aircraft owner and potential seller?  First, because of a smaller buyer’s pool for your aircraft, it likely means a longer sales cycle (i.e., it will take you longer to sell your plane than you anticipated).  And second, because of reduced competition from foreign buyers your incoming offers may be lower.  (As a side note – before the dollar’s current strengthening cycle, I used to chuckle at US buyers who would low-ball an offer only to be quickly beaten out on a good airplane by a foreign buyer who could take advantage of exchange rate economics.  Alas, such is not the case today.).  Fortunately, lower oil prices, reduced insurance rates, reduced production of new airplanes, and strong business travel demand have combined to keep values steady.

In all likelihood however, it will take a weakening of the dollar to the 2.50 mark (or a strong signal that it’s headed in that direction and will stay there) before we see renewed interest from Brazilian buyer’s and a potential increase in the valuation of high-quality, late-model, US general aviation aircraft.  In this contemporary cycle time almost always favors the buyer over the seller when physical depreciation, the fixed costs of aircraft ownership, and debt service are considered.

I’m looking forward to the return of a weaker dollar but, until that time, will continue to guard my client’s economic interests based on current realities.  Here’s the bottom line -- If your intent is to sell, holding out for an above market offer will likely cost you far more than you anticipated in today’s environment.

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