Reflections on NBAA 2008
Another NBAA is in the books. I’m writing this report while flying home in a Citation Encore+ with a very generous client, getting a jump on all those schmos who are shuffling through security over at Orlando International Airport. A perfect example of the benefits of corporate travel. I will get home fresh and ready to follow up on all those leads I generated at the show, while most of my competitors will be worn out and ineffective the rest of the week. Oh, wait; I didn’t generate any leads at the show this year! Well at least I won’t be too worn out to wrestle with my kids and give them all the trinkets I picked up on the show room floor. Vendors should take comfort in the fact that, although they might not have sold any product at NBAA this year, their freebies will be enjoyed by children all over the world for the next few days.
The show had a different feel this year. No one seemed to have any expectations of selling an airplane, and many just used the time to speculate on just how long this down turn might last and how low prices might drop over the next few months. Rumors swirled of aircraft that could be bought for rock bottom prices, but even those low prices do not seem to be generating any real interest. I think Ray Brown of Charlotte Jet Sales (a friendly competitor of mine) said it best, “Price will not change a non-price objection.”
The headlines of the B/CA Show News on Monday & Tuesday pointed to the struggles the U.S. & the world is facing in today’s economy. “India’s Tata Buys Piaggio”, “Emivest buys Sino Swearingen”, “Grob Rescue Not done till it’s done”. Wall Street headlines were even more frightening with the Dow dropping over 1,000 points from 10,325 at close of business Friday afternoon before the show to 9,258 at close of business on Wednesday, October 8th.
A NARA (National Aircraft Resale Association) meeting on Saturday revealed that all us sales guys seem to be in the same boat. All attending NARA members reported very low incoming call volume despite various levels of print or electronic advertising. Unanimous consensus of the membership pointed to only a handful of calls coming in per week, despite huge inventories and significant price adjustments.
So what do we do? How do we generate offers for our clients who want to sell in this market? Do we drop our price every week until an offer comes in? Do we take our listings on a world tour trying to get as many potential buyers in front of the airplane as possible?
These uncertain times are when a trusted & reputable agent becomes a vital asset to buyers and sellers. The days of posting one’s aircraft online and waiting for the phone to ring are long gone. Instead of relying solely on passive advertising in this market, active and targeted promotion of our listings proves to be much more effective. Active methods include frequent communication with other reputable brokers & dealers, networking with customers and other vendors in the industry (lenders, insurance agents, management companies, etc.), personal visits with corporate operators, and good old fashioned warm & cold calling. These methods don’t have the flash of a 3 page ad in a glossy magazine, but they yield much higher return on investment when supply is high and demand is low.
Today is when the relationships we have developed over the last 34 years of operation prove to be more fruitful then ever. Travel will undoubtedly increase for us, because a phone call just won’t sell an airplane today. Face to face communication leads to more effective promotion and better negotiations. The length of time required to sell an airplane will take longer, and consequently, you can expect to see a higher cost associated with selling an aircraft. Fewer sales means more time invested in each transaction and a higher cost of doing business.
Times have been good in the business jet resale market for some time now. If you bought an airplane in the last 5 years, with few exceptions, your asset has appreciated in value while providing efficient transportation for your business needs, allowing you to be a more profitable company. As we found out AGAIN in the real estate market recently, nothing appreciates forever, and what goes up must come down. We are now experiencing that correction in the aircraft marketplace and only time will tell how long this one lasts. In the mean time, it’s business at usual for JBA Aviation, Inc. We will continue to help clients buy and sell their aircraft, keep them up to date on the rapidly changing values and walk them through every phase of the transaction.
If we can help you in anyway, please let us know. Our seven sales associates across the country look forward to working with our customers more closely than ever over the next year.
Toby J. Smith
JBA Aviation, Inc.