I hope that everyone had a nice holiday season this year and is enjoying the start to the New Year. I am sure that some of you are glad that 2010 is now behind us and are anxious to see what 2011 holds for our economy in general and the aviation industry in particular. Personally, I am excited about this next year and some of the opportunities that already seem to be surfacing in the pre-owned jet marketplace.
We are currently reviewing the numbers from 2010 and are starting to piece together our year end report. Be sure to watch out for that analysis that will be coming out in the next couple of weeks. Although the numbers might not be where some of you hoped they would be, I think you may be surprised at some of the gains we have made over the last 12 months. The Dow Jones Index is back at levels that we have not seen since September of 2008. Third quarter corporate profits hit record levels and all signs point to a strong fourth quarter for retailers. There are still some discouraging figures being discussed like the unemployment rate, but that rate tends to lag and really provides more information about where we were versus where we are headed. Companies have to make money before they start expanding their workforce, so hopefully we will see improvement in that statistic in the near future.
There are many different things I look at when attempting to get a feel for activity in the pre-owned jet market and, unfortunately, not all of them are as easy to track as the Dow Jones Industrial Average. Phone activity in recent weeks can be a very good indicator of how robust a market might be. Not only do I consider how often the phone rings, but what are the nature of the calls. Are the calls coming primarily from other dealers & brokers? Are they coming from corporate flight departments or individuals with an interest in purchasing immediately? Are more calls coming in from operators attempting to determine what the value of their current aircraft might be or is the caller really interested in purchasing an airplane? During the last several weeks of the year, I seemed to receive more calls from real buyers than I have in some time.
Leads that surface in the month of December can be tricky. If a buyer makes an offer during that month, it typically means he wants to close by year end. Unfortunately, the lead time required to close a transaction is usually too long to make that happen, as many of the decision makers for large companies are unavailable over the holidays. If an offer is not responded to in a timely manner, buyers will move to the next viable option rather quickly and may loose the desire to close by year end. Once that desire to close on an aircraft is replaced to thoughts of Christmas turkey, it can be very difficult to flip that switch back the other way.
Phone activity for the first week of the New Year has been strong, but actually getting the decision makers back into “make a deal mode” might take a little time. By the time we know who is going to be playing in this year’s Super Bowl; I would like to think things will be in full swing.
Stand by for our year end market report…..coming soon!
Toby J. Smith