As I’ve written before, a plane would come on the market in the morning and by lunchtime there would be five full price offers. Then the seller would revert to a bidding war. Not only for the highest price but also for how scaled back the due diligence was being discussed. I often said we should run an ad that says: ‘Hire Mesinger Jet Sales and let us manage your greed.’

We paired down significantly the number of transactions we would be involved in for the fourth quarter of 2021 and 2022 based on the frustration that our clients would suffer trying to keep up with a process that was so seller centric. It started to feel good in 2023 when the market began to shift back to more balance, with increased inventory and greater opportunity to negotiate a more usual and customary transaction.

As we make our way into the second half of 2024 and quickly Q4, I am starting to hear a familiar chant again. If we thought getting pre-buy slots was difficult during the pandemic, just hold on, it is beginning to look a lot like that again. We are getting back to needing a slot booked two and three months out.

This will initiate conversations from our clients of paired down due diligence that we must be very wary about. Don’t be fooled into contemplating a very scaled back pre-buy to allow for a better chance of completing a transaction in a shorter more predictable timeline for year-end tax purposes. There is no such thing given the continued supply chain issues and labour issues of a totally predictable timeline. What can be totally predictable is the expectation of a close within a reasonable period, but not a year-end close.

We are getting to that time of the year when we all are going to start getting calls from buyers who say they want to buy a plane and must close by year end. It might seem early enough for that call and the ability to get closed in time. However, one silly discrepancy – like a piece of skin for a repair that may take six months to manufacture – and the deal is stalled. That of course is an extreme case, which more than likely would hamper the transaction anyway, however, don’t underestimate the timing for rectification.

So, I am starting to hear the old mantra, let’s just pick a number that seems reasonable and reduce the price of the plane and perform very minor views then close. Seems simple but what if…?

We as an industry literally clawed our way back to the opportunity to perform the right, smart due diligence, let’s not slip backwards.

I wrote an article once about manufactured tensions. As if we don’t have enough tensions without manufactured tensions. As a good friend of mine who is a fellow sales professional said to me a few weeks ago: “We need to all work now to help our clients have the right adjusted expectations as we take them into the end-of-year transaction arena”.  Read the previous Mesinger Pulse article here.

The post Mesinger Pulse: Due diligence – we must never slip backwards appeared first on Corporate Jet Investor.

Textron will deliver the aircraft in 2025. The deal was signed between the two companies on the sidelines of the Farnborough International Airshow.

“By providing a wide range of essential healthcare services to regional, rural and remote communities, the mission scope of the Scottish Air Ambulance requires 24-hours-a-day, seven-days-a-week operational availability,” said Bob Gibbs, vice president, Special Mission Sales at Textron Aviation.

“Continuing to be the supplier of choice for emergency services in Scotland is a testament to the King Air’s performance when each second matters.”

The SAS operates the only fully publicly funded air ambulance service in the UK, catering to people across Scotland’s mainland and islands.

Gama Aviation has been a key partner to the SAS for over 30 years, supplying and managing the fixed-wing aircraft fleet, including the mainstay King Air model. Gama Aviation handles aircraft operations, maintenance, and pilot services.

“Our team worked closely with the experts at Textron Aviation to spec the Beechcraft King Air 360Cs for our recently awarded contract in Scotland,” said Marwan Khalek, Group CEO, Gama Aviation.

“Strategically the KA360C hits the mark, providing good, direct operating costs and flight performance with a highly scalable mission platform we will modify at Gama Aviation. The completed aircraft, on entry into service, will represent a substantial step-up in the provision of pre- and intra-hospital care for the people of Scotland.”

GAMA renews SAS air ambulance contract

SAS announced that the Gama Aviation’s contract for air ambulance services has been renewed.

The new contract is due to commence in 2026 and will see the introduction of brand new, more capable aircraft that will replace the existing fixed wing and rotary aircraft fleet based in Aberdeen, Glasgow and Inverness.

 “This has always been a strategically important contract for us, and we are immensely proud and delighted to have been chosen again for this critical task,” commented Gama CEO Khalek on renewing the contract.

“Over the last four years we have focused on developing our Air Ambulance capability and this award is another landmark in the maturity we have developed in this area, particularly in the development of our design capabilities. I would also like to thank Textron Aviation and Airbus for their support and patience during the later part of the procurement process.”

The post Gama Aviation to purchase three King Air 360Cs from Textron appeared first on Corporate Jet Investor.

In our cover story Echelon on top, Amod Kelkar, chief commercial officer, Honda Aircraft Company tells us how the new jet promises to take the company from “start-up to mainline player”. We trace the origins of the new aircraft, how it got its name, plus why the manufacturer has moved from its dealership model to direct sales in some regions. CJI also talks to Michelle Hoover, founder and president, Global Elite Aviation about how the new jet is likely to be received by the market.

From aircraft to the connectivity solutions that keep them linked in flight to the outside world. Our latest exclusive research, conducted in partnership with Viasat, revealed soaring expectations from on-board connectivity solutions. Kai Tang, head of Business Aviation, Viasat said: “Business aviation in-flight connectivity has always been a fast-changing market. If you look at the insights from CJI’s annual survey over the years, it’s clear the pace of change has accelerated.”

Our feature Top connectivity trends: More, more, more charts the pace of that change in six key questions.

We stay with expectations in our next feature, Business aviation: Going electric. Business aviation has always been a testbed for aerospace innovation, so how will the sector respond to the challenges and opportunities of eVTOL aircraft? Our special report seeks answers from: Chris Rocheleau, chief operating officer, National Business Aviation Association (NBAA), Scott Cutshall, senior vice president, Strategy and Sustainability at Clay Lacy and David Shilliday, vice president and general manager, Advanced Air Mobility at Honeywell plus others.

Two company profiles in the latest issue profile Wulf Aviation and Axis Aviation. Our feature Wulf Aviation: On the hunt for jet sales reports how the Mexico City-based company is using the latest AI technology to drive the sale of business aircraft. “We want to grow into becoming the number one broker in all Latin America,” says company co-founder Franco Curiel.

Axis Aviation has similarly bold ambitions. Niall Olver, the firm’s CEO explains in Axis Aviation: ‘On a mission to modernise’ how the business is on a quest to modernise what he describes as “an antiquated industry”.

The CJI events reported in this issue, located in London and Latin America, drew nearly 1,000 visitors. CJI London 2024 conference attracted more than 570 delegates to the heart of London. Top of the agenda was the importance of learning “new dance steps,” as US pre-owned aircraft sales returned to more normal trading conditions. “Sellers will need to dance again [with prospective buyers] to court them and be more fluid [to close sales],” said Matt Rosanvallon, director Sales and Acquisitions, Freestream Aircraft.

Speeding the supply of sustainable aviation fuel (SAF) was the focus of this conference of our SAF London conference.

Meanwhile, CJI Latin America drew nearly 300 business leaders in Latin American business aviation who shared their upbeat views on industry prospects for the region.

The last two sections deliver handy key information on modern business jets and asks Benoit Defforge seven key questions.

Jet Data delivers all the key numbers on the latest business jets. From price tags to performance metrics, our handy guide offers an at-a-glance summary of the market.

Finally, Benoit Defforge, CEO of private jet brokerage Stanton & Partners Aviation reveals how the Anglo French Concorde fired his passion for aviation. In Life in seven questions: Benoit Defforge, he explains how he got into business aviation, what was his best business decision and what advice he would give to his younger self.

Read the lastest version of Corporate Jet Investor Q2 2024, here. Also, you can sign up for your free print copy here.

The post CJIQ latest features HondaJet Echelon, Connectivity survey and more appeared first on Corporate Jet Investor.

Cover Story:

The post Q2 2024 appeared first on Corporate Jet Investor.

An equipment financing expert, Kacin will be pivotal in developing relationships and supporting clients across the Northeast and Midwest, according to the company. He will report to Mike Christie, who became head of Sales for the Americas in March.

Commenting on his new role Kacin said: “I’m looking forward to the opportunity to help both corporate and UHNWI [Ultra High Net Worth Individual] clients benefit from the innovative and customised financing solutions Global Jet Capital offers for the business aviation market.”

Before joining Global Jet Capital, Kacin served in sales leadership and management roles for Webster Capital Finance, Terex Financial Services, Citibank, and Wachovia.

Alongside the appointment, the company is reorganising its North American sales territories.

Hannah Davis, formerly vice president of Sales for the Eastern US, will now lead the newly-formed Southeastern US region. John Arlinghaus, formerly associate sales director of the central US region, will now oversee the Western US region and Latin America.

Christie welcomed Kacin to the team: “Tom’s passion for aviation and strong equipment finance background will help us continue to provide bespoke solutions to our clients,” he said. “The territory realignment will provide better coverage of key markets allowing our team to be closer to our key partners.”

Meanwhile, in May Vivek Kaushal, CEO, Global Jet Capital said: “The business jet market has never been in a better place.” 

Global Jet Capital territory re-organisation – at a glance

• Tom Kacin, vice president, Sales for the Northeastern and Midwest US region
• Hannah Davis leads the newly-formed Southeastern US region
• John Arlinghaus oversees the Western US region and Latin America.

The post Global Jet Capital appoints Tom Kacin vp Sales, Northeastern and Midwest US appeared first on Corporate Jet Investor.

They all felt that the industry was moving in a positive direction for themselves and their clients. Prices were holding in a way that, although down slightly and still moving incrementally in that direction, did not provoke anyone to fear that the bottom was dropping out. Each felt that the value their clients see in aircraft ownership was continuing, and demand was remaining strong. In talking to our clients, thinking about not having the private travel solution that they have, was not a serious contemplation.

Of course, there are always discussions taking place internally and externally amongst their clients’ companies, flight departments, or friends who are operating aircraft. Generally, the one topic that garners the most attention is operating costs. The salaries of flight department personnel have risen dramatically over the past few years. These people are vital to the safe, efficient and reliable operation of these assets.

However, the increase in their cost has created greater visibility, thus invigorating the discussions. Not sure these will ever change in a downward direction, as service providers can be one of the stickiest forms of inflation. Attrition, increased ownership, and usage, without a drastic increase in labour are just a few reasons this line item will likely not go down in the near term.

Subjects that make a few people say: stop the world I want to get off, centre around the disruption of use caused by the ever-present supply chain issues. Labour is top of that list. The shortages of experienced personnel at the manufacturers and MRO and maintenance facilities are continuing to cause serious discomfort for all. Just yesterday I had a client tell me about a six-week delay in the scheduled modernisation completion date for their aircraft. This will of course cause alternative lift costs to rise as well as scheduling headaches that will accompany this delay. Multiply this across the industry and you will see the dissatisfaction this causes.

Many of my friends I spoke with who are sales professionals shared a similar band-aid solution. Start by setting better expectations for their clients, beginning with the extended time it takes for the sale and purchase timeline. What used to be 30–45 days for a prebuy could easily now be a 60-day process. And that is just the timeline for the event and corrective action. This does not even speak to the lead time in finding a slot and starting this process, which we all understand takes as long as an additional 30 days tacked on.

So, to help the client or prospect ease their frustration, we are all being very careful with this delicate discussion of timing to adjust to a new norm of expectations. These strategies can only be band-aids simply due to the fact that we, as aircraft brokers, can have very little impact on a solution for supply chains and labour shortages.

By-and-large our collective constituents have been on the side of staying the course and enjoying the benefits of aircraft ownership and operation. They are feeling optimistic about owning and operating even in a world of added costs as well as timelines for maintenance and modernisation.

They are looking forward to many years of enjoyment. With respect to those saying: stop the world I want to get off, we are all seeing very very few people who feel as if they approached the ownership with not enough facts and must get out.

Thankfully, the vast majority of first-time buyers are enjoying the excitement of ownership. This all adds up to a sustainable world for our owners and all of us who service this distinctive group.

The post What makes your world go round? appeared first on Corporate Jet Investor.

Three Gulfstream deals hit the landmark for the company which was founded in 1989 by Joseph Carfgana Sr.

Sign up for the Corporate Jet Investor newsletter

“We have always prided ourselves as being one of the brokerage firms that’s been around the longest and this number is a testament to that,” Carfagna Jr. told Corporate Jet Investor.

“We realised 1,000 was probably something that was going to happen in the next few years so we made a big deal of it.

“It was exciting to count down as we got very close, but it was just business as usual.”

‘Can’t buy experience’

 The 998^th, 999^th and 1,000th transactions were for Gulfstream G450s for repeat clients.

“In 1994 when I came onboard, we were a very different company – there was no email or internet, so everything moved at a much slower pace, but the principles of what we do are still the same,” added Carfagna Jr, who is based in New Jersey, USA.

“We put a very high importance on making our clients so happy that they’re proud to refer us to their friends.”

Among the 1000 transactions, Leading Edge has completed deals on 242 Gulfstreams, 225 Cessna Citations, 131 Hawkers, 126 Bombardier Challenger and Globals and 121 Dassault Falcons.

“[The secret is] doing things methodically and having good people. You can’t buy experience,” said Carfgana Jr.

Jack Nicklaus

His father began his life in business aviation in 1967 when he joined Bill Lear to sell new airplanes in the north east of the US. One of his first sales was to the golfer Jack Nicklaus. Carfagna Sr. set up Executive Air Fleet (EAF) in 1970 and then Wings Aviation International in 1989, which eventually became Leading Edge Aviation Solutions.

Carfagna Jr. can still remember the first deal he did after joining his father in 1994.

“It was the sale of a Citation 3,” he says. “It was a moment that I won’t forget any time soon. The person we sold it to, we have sold several more airplanes to over the years.”

After all this time in the industry, Carfagna Jr. says he is rarely fazed by anything. “There really isn’t much we haven’t seen – we’ve bought and sold airplanes all over the world, of all different types and as a result when you’ve been around this long not much comes as a surprise,” he says.

‘Needs to be sold’

Of all the deals, though, one particular transaction sticks out. “We were negotiating a deal on the sale of an airplane in September 2008, right after the financial crash, and the parties were arguing over who was to get the china and flatware in the airplane,” he says.

“I advised the client to give them everything they wanted because it was going to be worth a lot less money in a week. I think we saved the client $8m over that. If they had deliberated another few days, it probably would have fallen apart. I just remember thinking, ‘This airplane needs to be sold, the money needs to be wired asap or this deal will never happen.’”

Carfagna Jr. is “fascinated” by the technological advancements in airplanes but after hanging some old sales posters at his offices he notes that manufacturers’ ambitions haven’t changed.

“The vintage ads for airplanes in the 60s and 70s all said the same thing, ‘We will fly you more efficiently, more quietly, at a cheaper cost and faster than our competitors and that’s still what they’re striving to do. They’re just getting better and better at it.”

 For Carfagna Jr., business aviation is in the blood but while he is proud of the legacy it is the future transactions that drive him.

 “Winning the next deal is something that motivates me, all of us, and creating a happy client,” said Carfagna Jr. “Those two things are the primary drivers of what makes me tick and keep doing this.”

The post Leading Edge ‘proud’ of 1,000 aircraft transactions appeared first on Corporate Jet Investor.

The user app experience does not differ from MRO Insider. The new Alpha Wingman (AW) app  will act as a one-stop solution, increasing convenience and streamlining the booking process by reducing administrative delays, said the firm.

“We are excited to introduce Alpha Wingman, which represents our continued growth and unwavering commitment to meeting the evolving needs of our expanding client base,” said Andy Nixon, president of Alpha Wingman. “Our change in identity will help us as we deliver greater access to a wider selection of vendors and services, making Alpha Wingman your go-to source for aviation products and services.”

Latest additions include:

• Catering Services: Providing gourmet catering to meet the diverse dietary needs of our customers.
• Car Services: Providing luxury ground transportation for passengers and crew members.
• FBO Services: Allowing our aircraft operators to request quotes for fuel, ramp fees, handling services and more.
• Pre-Purchase Inspections: Providing easy access to comprehensive aircraft evaluations prior to acquisitions.

“Alpha Wingman is not just a new name; it’s a new era for our company,” added Nixon. “We are constantly upgrading our platform to deliver a seamless experience, from booking maintenance and rapid AOG repairs, to arranging catering, booking an FBO or ground transportation services. Our objective is to be your trusted partner, providing access to anything you need for your flight operations.”

The post MRO Insider rebrands as Alpha Wingman, expands service offerings appeared first on Corporate Jet Investor.

It’s an approach designed to ensure that business aircraft owners really do have the perfect ownership experience. “We lead with that as a culture and a mantra,” said McReynolds of the MRO business. “We tell them [owners] what it’s [their aircraft] going to look like going out of the door [after aircraft maintenance]. And we tell them about surprises when they happen. It’s an expectation they really appreciate.”

Often aircraft maintenance is one of the last things new owners think about when closing a transaction. But, in reality, it’s one of the most important parts of the ownership experience, which often becomes an afterthought, said McReynolds of Weststar Aviation. “The complexity in this thing we call maintenance; most people don’t think about. But hiring a DoM [director of maintenance] to represent your best interest in a complex environment is a key part of ownership,” he added.

‘All on the first day’

Buying a business aircraft is a collaborative effort, according to speakers. Jay Mesinger, CEO/president, Mesinger Jet Sales, which sponsored the Town Hall had this advice for new buyers: “I tell people when they start to think about buying to talk to their lender, interview [prospective] management companies and your aviation attorney – all on the first day They are all parallel paths that you need to come together at one time to enjoy your asset from Day One.”

So much of the industry’s focus lies on the transactional side – the buying and selling. “But there’s so much that goes on in the middle and that is the ownership,” he added. “Operating your airplane is all part of getting ready to, one day, sell it and buy another one. But let’s not forget this place in the middle where the joy can come in.”

Welcoming new entrants to this industry effectively depended on understanding the perspective of where they come from, said Bob Marinace, chief experience officer with private jet charter and management company Solairus Aviation. 

Those who come from fractional and charter “know the acronyms” and the basics of scheduling and using an aircraft but they don’t understand the ownership experience, said Marinace. “What we are about is to help educate and to explain how this will differ from what they have experienced so far,” he added.

‘One of the first things you talk about’

Too often the selection of a management company is not prioritised, said Stewart Lapayowker, managing shareholder, Lapayowker Jet Counsel. “Unfortunately, for new aircraft owners, selection of a management company seemed to get overlooked and then it’s a scramble to fine one,” said Lapayowker. “But it should be one of the first things you talk about.”

Some of the key questions to answer, he said, are: Are you going to set up your own organic flight department; are you going to have a managed aircraft and if so, who will be the manager? It is important to engage a management company that understands the new owner’s preferred structure and can be flexible and deliver the services they are looking for.

“First-time buyers haven’t got the experience [to make informed decisions on their own],” said Lapayowker. “But they get a lot of free advice. Everybody at a cocktail party tells you how to do it right.”

You can watch the hour-long, free-to-view CJI Town Hall, Masterclass here. The next Masterclass – devoted to buying business aircraft – aganin sponsored by Mesinger Jet Sales, will take place on Wednesday, September 25th. These Town Halls complement CJI’s Aircraft Transaction Masterclass.

The post CJI Town Hall, Masterclass: ‘Safety, quality, honesty and transparency’ appeared first on Corporate Jet Investor.

He traces its origins to how new owners shaped the business jet market during the onset of Covid. The storm’s outcome may leave some struggling to recoup the value of their initial investment.

“At the onset of Covid, many factors collided to create the perfect opportunity for first-time buyers to enter the market,” Foster tells CJI. “Now, these same factors are creating a perfect storm, which potentially could prove disastrous to these same owners.”

Business aviation caught fire over the last two quarters of 2020, driven by the desire to travel but not via public transportation. Charter and fractional providers enjoyed this early burst. “The fractional segment sold right through their lift capacity but were contractually bound to still provide lift – so they turned to the charter market for supplemental lift,” explains Foster. “Now the charter market held a captive client (fractional) over a barrel. So, with unprecedented high demand, hourly prices sky-rocketed to two-or-three times pre-pandemic levels.”

Consequently, by the end of 2020, fractionals were largely sold-out and charter prices reached the “point of insanity” – again fuelled by both fractional contractual need and demand, he explains.

‘Point of insanity’

That prompted non-owners to turn to whole aircraft ownership. For many, this seemed the perfect opportunity. Market conditions created from the onset of Covid included “free” capital from government stimulus programmes, significant gains in equity markets and a desire to travel to new vacation homes and remote work destinations – but not via the airlines.

Further incentive was supplied by bonus depreciation and historically low interest rates. “Finally, there was the promise (or lie) from some management/charter companies they can fly enough charter to ‘make the plane pay for itself’,” Foster says.  All combined, the “perfect storm” was formed and first-time buyers raced to the market to purchase an aircraft.

Before the pandemic, the average market supply generally hovered around 10-12% of fleet, or roughly 2,500-3,000 aircraft available at any time. By mid-2022, market supply settled in at 3-4%, with some modern models seeing available supply at less than 1% – perhaps even just one unit available. Predictably, with low supply, prices surged – prompting many legacy models to move upwards of two to three times their pre-pandemic values.

“But the worst part (for these buyers) is the transaction pace changed to unimaginably short time frames,” says Foster. “Aircraft were transacted in a matter of days with little or no due diligence on the aircraft, its valuation, nor parties involved and a lot of bad behaviours by brokers/middlemen.”

The perfect storm

This year that perfect opportunity looks like heading towards the perfect storm, according to Foster. Here’s how the storm is building: while overall supply sits at only 6% or about half the pre-pandemic level, total supply is already two to three times the level in mid-2022.

Charter demand is also down significantly. “The promise (made by some) has now become a lie. Owners are not able to create significant returns by chartering and many are realising that fixed and variable costs are much higher than originally budgeted or sold to them, exacerbated by significantly higher crew salaries, supply chain issues, etc. Finally, with rising supply, slowing pace, and far less demand, prices are falling.”

Legacy aircraft hold the greatest exposure due first, to the rapid rise in values that are already retreating quickly. The second reason is the “almost complete lack of sophistication” of buyers and limited or no due diligence completed at the time of purchase. “These owners will face significant exposure when they elect to sell, and the buyer demands a typical pre-purchase inspection.”

What might happen

But it gets worse (in terms of what might happen). “A large majority of these first-time buyers financed 90-100% of their purchase and also took 100% bonus depreciation,” Foster, from OGARAJETS tells us. “For easy math, let’s say the principal reduction on a $5,000,000 at 18 months is $500,000 or $4,500,000 balance – but the aircraft is only worth $3,500,000 today – less than 30% [of its previous value].

“Plus, the seller will have to stand behind the airworthiness and corrective actions arising from the buyer inspection. So, perhaps the seller nets $3,200,000, which requires them to write a check at closing for $1,300,000.”

Then, worse again. Many first-time buyers depreciated the aircraft to $0 in year one which offset other gains in the purchase year. “Now they must recapture this loss as ordinary income. The simple math is $3,5000,000 at 40% or a $1,400,000 tax bill.”

All of this raises the uncomfortable question: how many of these owners can afford to sell their perfect opportunity aircraft? Also, delaying the sale only exacerbates the challenge. Prices will continue to fall on these legacy platforms, while maintenance will continue to accrue. “Potentially, this is not a pretty picture,” says Foster.

But what do you think? Is the outlook sunnier? Or are the storm clouds gathering for new entrant aircraft sales? Please let us know.

The post Stormy weather may be ahead for first-time jet buyers appeared first on Corporate Jet Investor.