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04 Aug 2021, 22:34 [ UTC - 5; DST ]


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 Post subject: Turbine Market Update
PostPosted: 26 May 2021, 19:32 
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Unprecedented is the only word I can think of... I've been in aviation for over 20 years and I've never seen it like this. I get asked almost daily if it is a bubble... and the truth is I don't know, it feels like a bubble. BUT... the airlines suck and flying commercial has never been more miserable, so I don't see anything changing in the aircraft market until the airlines decide we are customers traveling and not prisoners being transported or the economy gets so bad that those "who can afford to fly private" can no longer afford to fly private.

It has certainly been a blessing and a curse to our business, it's a curse because everything about buying an airplane is harder. We have a great team and I'm thankful because it takes a lot more time and effort to handle an acquisition today than it did just a year ago.

It's a blessing because we have a full load of clients, and as soon as we complete an acquisition there's someone else ready to get started. The wins are huge now! Just finding an airplane is a big deal, most of our current clients are coming to us after giving up finding anything on their own. So far we've still been able to find really good buys, I would say our last three have been EXCELLENT buys! In the past we were about 50 / 50 advertised vs. off market... now it's all off market. We've only acquired one aircraft this year that was advertised.

There's situations out there where people don't want to hire a broker, pay their listing fee, have the airplane advertized, etc. We find those airplanes and make it easy for the seller, heck sometimes the sellers call us... just happened a month ago. If you're in the market, don't give up and don't overpay! Just because there's a feeding frenzy it doesn't mean you have to participate, there are still good buying opportunities you just have to work a lot harder to find them than you did a year ago.

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Chip McClure
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We have access to off-market turbine aircraft!


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 Post subject: Re: Turbine Market Update
PostPosted: 26 May 2021, 21:51 
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Good info. Thanks Chip.

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 Post subject: Re: Turbine Market Update
PostPosted: 26 May 2021, 23:31 
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Can you quantify what you’re seeing on pricing?


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 Post subject: Re: Turbine Market Update
PostPosted: 26 May 2021, 23:52 
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Chip, I think it’s a mini-bubble. (guessing some here) It will settle some, but it shouldn’t go back to pre-pandemic days unless the aviation segment blows it, and admittedly we are more than capable of that.

I say that because too many companies in this segment are run by pilots and not business professionals. Pilots think like pilots and have little (or zero) business acumen.

The “vacation 121’s” are coming back hard. The Spirits and Southwest’s and Frontier’s and such. They are already flying full busses.

The majors who are used to charging $1,500 for a ticket for the business traveler? It may not happen to the same extent. Yes, I know what the hiring trends are, thank you. The pandemic was long enough that us gray haired guys learned how to Zoom. The easy and convenient business trips aren’t going to go back to pre-pandemic days – not at $1,500 a tik and $300 a night for the room. We will Zoom. The Tide Pod / “which restroom do I use” kids are fine with Zoom and have no desire to travel.

Now to close a deal or conduct business where a handshake is “required”? Yes (says the gray hairs). And here is the opportunity for this (your) segment because we're still the decision makers and the younger generation is "still" trying to figure out what restroom to use.

The airlines suck. I only fly 121 if my airplane can’t make the trip. A recent trip to Peru was in that bucket. I flew a AA 777 from Lima to Dallas - golly that is a beautiful plane. There was a full crew on board but only 40 pax (max) and the service still sucked sweaty donkey b@lls. I used to love AA, but damn...

Your segment has an opportunity with the “heavy decision makers.” Previously many were programmed to fly the airlines. That may have changed with the pandemic and crappy service and now crappier schedules. 91 and 135 can really benefit here…

There’s a real opportunity here. I hope we don’t blow it.

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I'm a great believer in luck, and I find the harder I work, the more I have of it...Thomas Jefferson


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 Post subject: Re: Turbine Market Update
PostPosted: 27 May 2021, 01:06 
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It’s supply and demand. The demand has increased to the point that it’s over-stressed the supply. Buyers are really competing to buy airplanes. Beats the hell out of a dead market. Cool stuff if you ask me.

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 Post subject: Re: Turbine Market Update
PostPosted: 27 May 2021, 07:52 
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Username Protected wrote:
It’s supply and demand. The demand has increased to the point that it’s over-stressed the supply. Buyers are really competing to buy airplanes. Beats the hell out of a dead market. Cool stuff if you ask me.


I agree 100%! This is challenging, but fun. I actually talked to a friend yesterday that has a Mustang, we were talking about values and the market. He made the statement that airplanes are currently a great place to tie up cash as a hedge against inflation. It’s been a long time since I’ve said airplanes were a good investment!

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Jet Acquisitions
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We have access to off-market turbine aircraft!


Last edited on 27 May 2021, 13:06, edited 1 time in total.

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 Post subject: Re: Turbine Market Update
PostPosted: 27 May 2021, 10:42 
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Username Protected wrote:
...airplanes are currently a great place to tie up cash as a hedge against inflation.

Only a pilot would say that.

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 Post subject: Re: Turbine Market Update
PostPosted: 27 May 2021, 13:51 
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Username Protected wrote:
...airplanes are currently a great place to tie up cash as a hedge against inflation.

Only a pilot would say that.

Shhhhhh!!!!! This is one of my talking points to my SO about buying an airplane! It's an inflation hedge that we can actually enjoy while we own it. :thumbup:

Last edited on 27 May 2021, 18:13, edited 1 time in total.

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 Post subject: Re: Turbine Market Update
PostPosted: 27 May 2021, 14:07 
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It is (potentially) a thing, no one knows what the aircraft market will do any better than they do the stock market and let's be real, they're toys... useful toys... but toys, not long term investments. Having said that, most people are anticipating a weakness in the dollar brought on by all of the debt we have incurred recently. So, while not technically a "good investment" you could certainly say that airplanes are a good hedge against potential inflation.

My wife and I were talking about the devaluation of the dollar last year during the lockdown, stimulus, craziness... so I asked her a rhetorical question; "if we had an extra $10k laying around what would we buy?"

She rolled her eyes and said "gold"

"That's right, what if we had $100k laying around?"

She says "gold"

I replied; "wrong answer! AN AIRPLANE! It's as good of a hedge against inflation as gold and you can fly it"

Man... do I wish I would taken my own advice and bought a $100k Cessna 182!

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Chip McClure
Jet Acquisitions
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We have access to off-market turbine aircraft!


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 Post subject: Re: Turbine Market Update
PostPosted: 27 May 2021, 23:09 
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Well I’m one who said why not and stepped up from an A36 to a SETP (meridian) one month ago, I already have 30 hours in it including initial school. I was fortunate thanks to this website to buy at the right price. I wish I would have done it a few years ago. I use the plane in my business, think tax deduction and may even hold onto the A36 until after December 31st. The airplane is so much more capable than the Bonanza, I’m based in Minnesota.

In the first two months of ownership it will have been Florida-Minnesota, Minnesota-Georgia and possibly Minnesota-Alaska or to California and back.

Yes it cost more to operate but it so much more of a useful tool than the Bonanza ever was


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 Post subject: Re: Turbine Market Update
PostPosted: 28 May 2021, 01:23 
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Username Protected wrote:
Man... do I wish I would taken my own advice and bought a $100k Cessna 182!


Seriously. I bought one last year. It was very difficult to find one, but now I see lesser airplanes listed at twice the price. I think 182's bought last year outperformed almost everything.

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 Post subject: Re: Turbine Market Update
PostPosted: 28 May 2021, 08:22 
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Company: Plane Data, Inc.
Location: North Carolina
Aircraft: Cessna Cardinal RG
One of the things I have noticed recently in the appraising environment is more and more "problems". I saw the post about NOT buying aircraft without a prebuy and that is good advice. I did not think it was the appropriate place in that thread but not knowing or understanding what you are buying (the mechanical issues aside) and/or what it is worth is equally important.

My observation has been that the ones coming across my desk now, when financing is involved, have more issues than in the past. In one instance, a guy thought he should be paying top dollar for a King Air 200 that was missing several thousand hours of AFTT and years of maintenance entries. Another guy recently purchased a 421 and "believed" he had all the logbooks going back to day 1. Big surprise, he did not AND he claims he was unaware that those records were missing. Frankly, I believed him and that situation is common. Buyers generally do not read or review the logbooks for the aircraft they are buying.

As the good ones are going under contract, what remains is less than what most are looking for. Damage history, missing logs, etc. do not mean that the aircraft is unairworthy but it also does not mean that you should be paying top dollar for those aircraft either. Knowledge is power!

Good luck.

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 Post subject: Re: Turbine Market Update
PostPosted: 28 May 2021, 13:43 
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Maybe it's not a bubble, but it's at least a little crazy. Crazy can last, but it's discouraging when you're on the buying end! I actually did drop some cash on a plane last year (not quite as a hedge against inflation, but cuz I like planes and wanted a twin :shrug: ). Fast forward to this year and I (shocker) realized that I REALLY like planes and started looking at METP's. Even put a bid in on a sweet one...

Buuuut, between the oh-so-permissive insurance market for a relatively low time pilot (that is, me - ~700TT, 100ME, commercial/instrument ASEL/AMEL) and what feels like some crazy pricing and sellers' being very firm on those prices (cuz they can be), I'm increasingly likely to sit this cycle out.

Years past, when I'd almost scratched this same itch, I think I'd probably have already been in a new-to-me plane (maybe a SETP rather than METP, but still burning kerosene). Now, despite making what seemed a reasonable (meaning, higher than I thought I would) cash offer, I suspect we won't get to a zone of overlap, and my ins. broker still hasn't gotten someone to quote (even with committing to lots of dual, etc.).

So, the good news is that the many, many (many) AMU I've dropped on the 310 to make is "just so" will now be amortized over my enjoyment of this plane - which is fine (and I get that it's a rounding error compared to METP costs). I'll fly 121 for biz and any longer family fun trips, and just use our current one for "local" trips (which from south central Texas is like 600-800 miles!).

But, man, do I want a METP... Soon, perhaps, but this market is making it feel more like a beat down than fun. So, Ima spectate (not my usual approach) for a bit and hope for at least an easing of the market in the next year or two. :whiteflag:

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 Post subject: Re: Turbine Market Update
PostPosted: 28 May 2021, 18:23 
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Username Protected wrote:
Can you quantify what you’re seeing on pricing?


Hi Carl,

It's unquantifiable, and this isn't just my opinion, I talk to folks involved in the sell of aircraft on a daily basis, especially stocking dealers (we buy trade-ins from them) and everyone says the same thing... "it's crazy."

I see airplanes sell for what they would have sold for a year ago and I see airplanes sell 20% more than they would have a year ago.

It's a feeding frenzy, demand is outpacing supply and once a buyer misses a couple of deals and gets desperate they make a much higher offer on the next airplane.

My advice is to proceed with caution and not get emotional about it. Plus, you have to really understand the market and what a good buy is, if it's a deal you must be prepared to act immediately or someone will beat you to it.

We're seeing a lot of as-is deals, I started another thread about not doing that. It just isn't worth the exposure, but the stocking aircraft dealers I mentioned are both buying as-is and paying premiums to get inventory. They don't worry as much about the as-is because in most cases they are going to sell the airplane as-is or with a minimal prebuy.

I'm standing by the position that we'll let our clients pay up to what I consider fair market value, but I can't see paying over retail for an airplane, I tell everyone that if I let them do that, in five years they won't remember the market they'll only remember that I let them pay too much for an airplane.

It's hard to find the deals, and it takes some time, but when you are talking that kind of spread it is worth the effort.

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Chip McClure
Jet Acquisitions
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We have access to off-market turbine aircraft!


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 Post subject: Re: Turbine Market Update
PostPosted: 28 May 2021, 18:27 
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As the good ones are going under contract, what remains is less than what most are looking for. Damage history, missing logs, etc. do not mean that the aircraft is unairworthy but it also does not mean that you should be paying top dollar for those aircraft either. Knowledge is power!


Exactly!

These are the times when the guy who thought he could never unload his airplane throws it on Controller and crosses his fingers!

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Chip McClure
Jet Acquisitions
chip@jetacq.com

We have access to off-market turbine aircraft!


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