Aircraft Sales Insights

A Service of Dallas Jet International

Our Aircraft Pricing Strategy

September 11th, 2014 Posted in Aircraft Cost, Aircraft Sales, Brad Harris
Sep , 11 20 14
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By Brad Harris

Aircraft pricing is a complex process that can seem mysterious to aircraft buyers and sellers. It can be particularly frustrating for those who don’t work in the aircraft market daily.

There are many disparate pieces of information that factor into the aircraft pricing strategy. DJI has a uniquely thorough process that provides for more accurate and credible pricing. Our reputation for following a detailed process often avoids delays and surprises in the negotiation stage. Our first-hand, accurate information also ensures we have better control throughout the sales process.

The Pricing Procedure

This is the process DJI follows to obtain the best possible price for an aircraft we sell for a client:

  • We consult with the seller regarding his priorities, including timing required for the sale and any other factors.
  • We perform a very detailed history of the aircraft, including equipment, maintenance cycles, engine status and so on.
  • We go on site and take “amateur” digital photos, looking for specific technical details.
  • We engage a professional photographer to do more aesthetic photos that showcase the interior and exterior of the aircraft.
  • We analyze the logbooks and equipment documentation, compiling a complete history and marketing package.
  • We research specific major repairs and alterations (Form FAA 337) and STCs (Supplemental Type Certificates) that may be required for specific equipment.

After evaluating the specific aircraft on-site, we use the data and photos we have collected for market research. We look at every similar aircraft that has been sold in the previous 12 months for sold comparisons.

We subscribe to several services, which provide pricing data for recently sold aircraft of a similar type, age and condition. In addition to this reported data (these are the figures they call “comps” in the real estate industry) we call other brokers to determine the actual sales price and any other circumstances related to the sale.

For every aircraft we sell, someone on our team (Shawn Dinning, Ralph Crosby, or I) have personally touched the aircraft and reviewed the logbooks and records. Many times, those on-site, hands-on analysis provide great opportunities to tell the deeper story of an aircraft and find opportunities and factors that can showcase the real value of the aircraft.

the Aircraft Pricing Strategy is part of the Due Diligence Process.

The Price is Often In the Details

In these comparisons, there are many apparently small factors that can have a large impact on pricing.

Some of these factors might include:

  • Serial number
  • Specific manufacture date
  • Amount of time an aircraft model has spent on the market
  • Number and nature of previous owners
  • Inspection dates
  • Aircraft usage (FAA Part 91 or Part 135 have different operational rules)
  • Where the aircraft is currently located
  • Where the aircraft has been flown
  • Where the galley is located
  • Where the lavatory is located, and if it’s externally serviceable
  • Condition of external paint
  • Type and condition of the entertainment system
  • Avionics factors like a “heads up” display or synthetic vision
  • Cabin management system
  • Condition and type of Auxiliary Power Unit (APU)

The Client’s Objectives

Of course, we share this data and our recommended pricing with our client, and work toward pricing that will balance their need for a timely sale with the objective of selling the aircraft for the highest legitimate price under the circumstances.

The Advantage of DJI’s Pricing Procedure

Our use of this consistent, detailed process contributes substantially to DJI’s credibility in the marketplace. Other professionals understand that what we say about an aircraft comes from our experience as pilots and aircraft owners, and from having personally seen the aircraft and verified the relevant facts.

We won’t be surprised during negotiation with something we should have researched in our Due Diligence. We also won’t be surprised by the revelation of market data. We can speak to the concerns of the buyers and the stakeholders on his team, whether they are pilots or mechanics, or legal or accounting professionals.

This offers our sellers significant peace of mind, knowing the transaction will take advantage of every favorable factor the circumstances provide.

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Gulfstream IV SP Aircraft Renovation – Before and After

July 5th, 2013 Posted in Aircraft Cost, Aircraft Sales, Brad Harris, Planes for Sale
Jul , 05 20 13
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Dallas Jet International (DJI) is considered a “stocking dealer.”  This means that we are  able to purchase and take possession of aircraft, and hold them in inventory. Aircraft renovation projects are ideally suited to this business model.

GIVSP Renovated by Dallas Jet International

GIV SP Aircraft Renovation by DJI

This gives us the opportunity to assist customers whose aircraft need some work to make them more attractive in the current market. Also, some financial institutions and other aircraft owners may have accounting rules that keep separate funds for operations costs and upgrade costs.

DJI does not have these restrictions. We can do an overall financial analysis and market analysis, determine our opportunity cost, and purchase the aircraft with the intention of remodeling it and subsequently sell it.

This creates a win/win scenario. Our client is able to have immediate use of funds from the sale without spending cash from other funds, or taking additional risk of managing a project that’s simply not in their realm of expertise.

Experienced aviation professionals are well aware that an error in calculation or a mistake during the renovation process can be an expensive proposition; and are very insistent that only experienced experts are involved in financing aviation renovation projects.

The client who eventually purchases this aircraft will enjoy a lower cost because of DJI’s efficient management of the process, along with peace of mind knowing that the renovation was overseen by experts with end-to-end knowledge of each step in the process.

As an example, this  Gulfstream GIV SP needed work to make it airworthy, and needed interior and paint work to make it more marketable. DJI purchased the aircraft outright from the financial institution.

DJI completed the financial analysis and prebuy inspections.   We closed on the purchase, and took the airplane to a maintenance facility.

We  had the engines removed, crated, shipped, overhauled, reshipped and reinstalled.

Meanwhile, the interior, paint, and other maintenance was being completed.

Of course, the sooner we are able to get the aircraft ready for a new client, the better from a financial perspective; and we can pass those savings on to the new client who purchases the aircraft from us.

Here is the completed GIV SP with new paint, updated interior, electronics and appliances.

If you are considering selling an aircraft and wonder if an aircraft renovation would improve its market positioning, give us a call at 817-520-4009 and let’s talk about the options!

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The Aircraft Ownership Life Cycle

June 21st, 2013 Posted in Aircraft Cost, Aircraft Sales, Brad Harris, Planes for Sale
Jun , 21 20 13
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ChallengerA good aircraft ownership experience is when the airplane serves the transportation needs of the client cost effectively for a number of years, and then has a “good exit” when sold or traded.

The goal is a good value to the client throughout the entire process.

Aircraft ownership involves great rewards, and like any rewarding endeavor, it also involves some risk. It’s our job to help you manage that risk to your level of comfort.  It’s also our job to help balance your preferences on other factors such as convenience, comfort and economy.

If we’ve done our job correctly, we create the ideal entry strategy AND exit strategy for your situation.  The result is a successful ownership experience that provides maximum benefit with no surprises.

Aircraft Ownership – Entry Strategy

The first step DJI will take to reduce your risk is to perform a thorough needs analysis.

We will need to know your typical “mission profile.”  Our initial conversations will include questions such as:

“Where do most of your trips take you?”

“How frequent are your trips?”

“How many people will be traveling?”

“Is there any special baggage requirements?”

And so on . . .

We will also want to know your financial strategy and objectives.  Would you prefer to purchase a more expensive airplane that has lower operating costs; or would it be better for your position to conserve your capital on a less expensive aircraft that will have higher maintenance costs scheduled further down the road?

From an insurance perspective, we’ll discuss the options. Most aircraft insurance carriers insure for “hull value” plus liability exposure.   In layman’s terms, in the very unlikely event of an incident, what are you worth? What is the company worth?

Will you employ your own crew or do you prefer to have that managed for you?   Your flight crew will need to set up an appropriate operations manual, standard operating procedures (SOPS), an RVSM manual (RVSM stands for Reduced Vertical Separation Minimums) and other documentation and policies for overseas flights such as MNPS, (Minimum Navigation Performance Specification) and policies for RMP5 and RMP10 airspaces over the North Atlantic and Pacific; based on your preferences for balancing convenience, speed and risk tolerance.

DJI understands the aircraft on the market that can meet your travel needs and financial strategy, maintenance costs, fuel costs, insurance requirements, and crew requirements.  We balance these and many other factors that play into the choice of aircraft type.

Individual aircraft of the same type can vary a great deal in performance. It is vital to select an appropriate aircraft with pedigree, maintenance history, and documentation.

Of course, getting into the perfect aircraft is only half of the story of a successful aircraft ownership experience.

Aircraft Ownership – Exit Strategy

Many things can change over the course of three to five years (the average aircraft ownership time frame) but a planned exit strategy at purchase provides several advantages.

If we know the approximate ideal “exit date” based on your strategy, the growth projections of your company, and the maintenance cycles of your particular aircraft, we have the option to manage risk toward the end of your ownership time frame.

We can advise you on the resale value versus ongoing cost of your aircraft. Factors can include the number of engine cycles, maintenance cycles, paint and interior time, major events that have taken place during your ownership, and the market fluctuations that affect the value of your aircraft (and the one you may want to move into!)

Conclusion

It’s our objective to ensure that every aircraft owner has a successful ownership experience. As you can see, success involves far more than the initial purchase.  Our process ensures the best results over the entire ownership cycle with each successive aircraft you own.

Some aircraft brokers are concerned with your needs at the time of the transaction, but DJI’s focus is relationships with our clients over a lifetime.

Challenger

Brad Harris

FOUNDER AND CEO
As founder of Dallas Jet International, Mr. Harris has established an esteemed 23-year aviation career.  He holds of Bachelor of Science Degree in Professional Aviation and Airway Science and and a Masters Degree in INdustrial Organization Psychology from Louisiana Tech University.   Mr. Harris entered the aviation industry in 1992 as a corporate pilot for a Fortune 500 corporation and soon started a successful aircraft leasing and renting company.

In 1993, Mr. Harris began his aircraft sales career and became one of the most highly respected aircraft brokers in the world. In 2002, Dallas Jet International began offering aircraft sales, consulting, and brokerage services. Mr. Harris is a current airline transport pilot who is type-­rated in ten (10) different jet aircraft including the Gulfstream 550, 450, 350, GV, GIV, GIII, GII, Hawker, Falcon, Citation, Beechjet, Lockheed JetStar II, Diamond Jet and King Air 300 / 350. Mr. Harris parlays extensive hands-­on knowledge and experience into clear results for his clientele. His firm has set up flight departments, consisting of aircraft crewing, aircraft management, aircraft maintenance and aircraft operating budgets, for several clients. Mr. Harris also possesses significant entrepreneurial experience in real estate and commercial insurance. This knowledge, combined with unparalleled experience in all facets of corporate aviation, is the foundation of success for Dallas Jet International. He often speaks to groups of aviation professionals, publishes monthly blog articles and sits on the Advisory Board for GE Capital Corporate Aircraft and Finance, and CAE Simulflite. He currently sits on the board of Directors at NARA (National Aircraft Resale Association) as President.

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Selling a Jet in a “Buyer’s Market”

March 29th, 2012 Posted in Aircraft Cost, Aircraft Sales, Brad Harris
Mar , 29 20 12
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Selling a jet? Is it a "good" or "bad" time to buy a sell? By Brad Harris, Dallas Jet International

Clients are often concerned that selling a jet in a “buyer’s market” or a “bad time to sell” may not be profitable.

There are several things to consider when we look at sales of a particular aircraft at a particular time.  First of all, generalizations that the market is “good” or “bad” are usually just that, generalizations.   There are opportunities in every market. We never jump to conclusions about the timing or pricing without actually doing the research and coming up with well-thought-out plan.

Regardless of the general trends or feelings about the market, we follow a precise and methodical process.

Our prospective customers, especially those who have experience with us, know that we list good equipment that is priced properly.  That credibility is based on many years of following this precise and methodical process, rather than reacting to emotions inspired by the market.

When we are engaged to sell an aircraft, we travel to see it in person.

We look at all of the records.  We inspect the aircraft and verify the equipment installed. We look at the complete aircraft.   We look at where the aircraft has been historically based and review the records of  how and where it has been maintained.

Based on all of this information, and our experience as pilots and as representatives who have been trusted with the sale of hundreds of other aircraft, DJI provides an assessment and summary with specifications.

Establishing the Correct Price

We have an in-house research department.

The objective for the team is to determine where this particular aircraft fits into the current market. We look at historical “sold” data – what the aircraft was listed for, what price it actually sold for, how much time elapsed between the listing and the sale. Our team reaches out to all aircraft owners about their aircraft on or off  the market and determine what the asking price and “take” price would be.

Once we have all of the data, we talk with our client about what all that means and how we should price their aircraft.  We explain our recommendations and the reasons for them.

Obviously, the aircraft needs to compete in the market.   We create a pricing strategy that includes the fair market value for listing and for selling.

Marketing Your Aircraft

Once we have an agreement with our client about appropriate pricing, we begin professionally marketing the aircraft.

We engage a professional photographer to create images that will make the aircraft stand out from a potentially crowded market.  We create very professional documents and print advertisements for all of the usual outlets.  We list the aircraft in all of the appropriate directories.  We list it on our website, where we have the ability to really tell the story of each aircraft with text, images and documents.   We advertise the aircraft to our proprietary email list and use specific targeting technology. We also market the aircraft to all of the OEMs, corporations, current aircraft owners, broker/dealers, pilots, aviation managers, Directors of Maintenance and company owners who may want to purchase this aircraft for their fleet(s).

The more people we get the aircraft in front of, the more quickly we’ll find the perfect opportunity to sell.

If you do the homework, selling a jet can be profitable, even in a “bad” market.

Regardless of the sometimes fickle market, we’ve proven over and over again that the secret of a profitable sale lies in getting the basics right.

  • Knowing the aircraft
  • Pricing appropriately
  • Marketing aggressively

In our years of experience, we’ve always found that if we do the homework, the aircraft will sell.

Of course, once we have an offer tendered, the hard work begins.  See our Anatomy of an Aircraft Sale for the details.

 

Brad Harris

Brad Harris is founder and CEO of Dallas Jet International. Mr. Harris holds a Bachelor of Science Degree in Professional Aviation and Airway Science and a Masters Degree in human resources from Louisiana Tech University. Mr. Harris entered the aviation industry in 1989 as a corporate pilot for a Fortune 500 corporation. In 1993, he started a successful aircraft leasing and renting company which expanded to a successful aircraft management company in 1995. In 1993, Mr. Harris began his aircraft sales career and, in a very rapid fashion, became one of the most highly respected aircraft brokers in the World. In 1998, Mr. Harris started an aircraft sales, consulting, and brokerage company that is known today as Dallas Jet International. Mr. Harris is a current airline transport pilot who is type-rated in ten (10) different jet aircraft including the Gulfstream 550, 450, 350, GV, GIV, GIII, GII, Hawker 125, Falcon 10, Citation 550/500, Beechjet 400, 400A, Lockheed Jetstar II, Diamond Jet and King Air 300/350. In the many different aircraft markets, Mr. Harris parlays extensive hands-on knowledge and experience into clear results for his clientele. In addition to Mr. Harris maintaining a career focus on aircraft sales, he also has extensive experience in aviation consulting and management. Included on his client list are several clients for whom Mr. Harris and his firm have set up flight departments, consisting of aircraft crewing, aircraft management, aircraft maintenance and aircraft operating budgets. He and the firm are currently managing a Gulfstream V, a Gulfstream IV, a Falcon 50, a Citation II, a Citation ISP, a Citation Mustang, a Hawker 400XP, and two King Air 350’s.What most people do not know about Mr. Harris is that he possesses significant entrepreneurial experience in real estate and commercial insurance. This business experience, combined with his unparalleled experience in all facets of corporate aviation, has been the foundation of success for Dallas Jet International and its clients.

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Fact or Fiction – You have to be a Fortune 500 Company to Afford a Business Aircraft

January 19th, 2012 Posted in Aircraft Cost, Shawn Dinning
Jan , 19 20 12
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Business aircraft are not just for the Fortune 500By Shawn Dinning, Dallas Jet International (DJI)

The vast majority of companies using business aviation–85%–are small and mid-size businesses and other entities, including nonprofit organizations. For every Fortune 500 company that relies on business aviation, there are several small businesses that also need their airplane. Our typical client range includes companies with revenues of $20 million annually up to over a billion, but some individuals and companies have far less than that.  The notion that only publicly traded companies own airplanes is very much a myth.  In some ways, owning an aircraft provides smaller companies more of a competitive advantage than the larger companies. They are differentiating themselves from their competitors by providing faster and more personalized service to their customers. Companies that own a private aircraft are more nimble, more responsive, and better able to take advantage of opportunities and respond to risks by ensuring their people are where they need to be, when they need to be there.  Studies show business use of general aviation adds value to a company’s bottom line.

 

But, let me change gears and caution prospective aircraft owners.  I see many companies and organizations realize the benefits of business aviation, at which point they become highly motivated to purchase a private aircraft.  While this is a successful revelation in every sense, I have seen these same individuals, companies, and organizations act in haste and become embroiled in a less-than-ideal ownership situation.  Examples of this scenario include acquisition of the wrong type of aircraft, purchasing an aircraft with poor pedigree and maintenance history, or having paid entirely too much for the aircraft.  In the aircraft business, whether you buy new or pre-owned, a seven figure blunder can happen in the blink of an eye.

 

Dallas Jet International is your partner in aircraft research, acquisition and all components of aircraft transactions.  We will help you acquire an aircraft that meets your travel requirements cost-effectively. We help you balance the initial investment with operating costs. We also provide options for reducing your cost, such as remote management and staffing using our alliances with major providers of those services.  Contact us to find out how we can assist with your situation.

 

Shawn Dinning, Director of Sales & Acquisitions

Mr. Dinning acquired his formal education at the United States Air Force Academy in Colorado Springs, Colorado, in the areas of Operations Research and Management Science and also holds a degree in Aeronautical Science from Embry-Riddle Aeronautical University. Mr. Dinning brings 16 years of aviation experience from a variety of aviation disciplines, including FAR 91, FAR 121, FAR 135, defense, and shared ownership sectors. A former full-time professional pilot, Mr. Dinning holds a current Airline Transport Pilot (ATP) certificate, and is type-rated in the Gulfstream V/G550/G500/G450/G400/G350/G300, Bombardier CRJ-200, and Citation 510 Mustang. He has logged over 5500 flight hours, with 3500 of those hours in corporate turbine aircraft. Mr. Dinning has been consulted in publications such as Business & Commercial Aviation on various issues related to turbine aircraft transactions.

Mr. Dinning brings to Dallas Jet International a rare and highly valuable skill set of operational and business acumen, and has become a leader in the professional marketing and procurement of corporate turbine aircraft all around the globe. He also specializes in aircraft mission analysis, aircraft valuation, and cash flow and operating cost analysis for private aircraft owners. Mr. Dinning has a track record of successful transactions that is well known amongst his clients and colleagues. His reputation for intelligent and meticulous management of aircraft transactions have made him one of the most respected aircraft brokers in the industry.

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Market Volatility and Your Aircraft Purchase Decisions

August 15th, 2011 Posted in Aircraft Cost, Aircraft Sales, Background/Industry, Shawn Dinning
Aug , 15 20 11
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With the last week of market volatility in Wall Street and across the globe, I have been asked where the aircraft market is going, and what aircraft buyers and sellers should be considering as we approach the home stretch of this year.  While I don’t ever say I can predict the future, my response to my clients’ inquiries on the future involves a major discussion of market volatility, including where we are and where we’ve been.

Market Volatility in The Last Three Years

The height of the bubble that was the aircraft market was reached in early 2008.  Since early 2008, most markets have been in a steady, and sometimes rapid, decline.  While there is frequent discussion on the major causes of this market decline, allow me to review some raw numbers with you.  Below are average aircraft “Basic Selling Prices” as recorded in Q1 of 2008 and then in Q2 of 2011.  These prices are average, and I must advise you that aircraft were selling at higher and lower prices than the averages listed here, but these numbers are certainly good reference points.

Q1 2008  Q2 2011 % Change
1998 Gulfstream V $40,750,000 $22,000,000 -46%
2002 Gulfstream V $45,500,000 $26,000,000 -43%
2004 G550 $54,000,000 $37,000,000 -31%
2007 G550 $58,000,000 $41,000,000 -29%
2001 Falcon 900EX $34,800,000 $19,500,000 -44%
2007 Falcon 900EX $42,900,000 $28,000,000 -35%
2001 Falcon 2000 $22,200,000 $11,000,000 -50%
2007 Falcon 2000EX EASy $34,000,000 $20,000,000 -41%
2001 Bombardier Global $45,000,000 $25,000,000 -44%
2007 Bombardier Global XRS $60,000,000 $39,000,000 -35%
2001 Hawker 800XP $8,900,000 $4,000,000 -55%
2007 Hawker 850XP $13,300,000 $7,000,000 -47%
2001 Lear 60 $8,100,000 $4,100,000 -49%
2007 Lear 60XR $12,500,000 $6,900,000 -45%
2001 Citation Excel $8,500,000 $4,000,000 -53%
2007 Citation XLS $12,200,000 $6,900,000 -43%
2005 Citation CJ3 $7,200,000 $4,600,000 -36%
2008 Citation CJ3 $8,000,000 $5,700,000 -29%

 

As you can see, aircraft values have dropped dramatically over the last 3 years.  In some cases, values have dropped over 50% from their 2008 highs.  “Market Correction” is an understatement.

When people see these numbers, they are often shocked.  Aircraft owners and aircraft lenders have been hurt significantly by these value decreases.  Aircraft buyers, especially first time buyers who do not currently own an aircraft, are almost giddy about buying an aircraft that is 40%  cheaper than it was three years ago.

Are We At the Bottom?

A very common question for me is whether we are at the bottom of the market.  The question is difficult for me to answer, as the market has segmented itself.  Markets with the most momentum are 5 year old and younger large cabin aircraft such as the Gulfstream G550 and the Bombardier Global XRS.   These markets have shown a clear bottom, mostly in the latter part of 2009, and have stabilized at prices above the 2009 bottoms.  Markets that are still in a decline are all of the aircraft that are 20 years and older.  Even in markets such as the Lear 60 and Hawker 800XP, significant oversupply is making it difficult for prices to show any signs of appreciation in the near future.

Taking a Step Back – Looking At the Market Opportunity

In particular, aircraft buyers should take a look at this market from a broader historical perspective.  Are prices going to go lower?  In some markets, there is clear data that prices hit bottom over a year ago.  In other markets, they may.  But, in ALL markets, prices have made a major correction, in some cases over a 50% correction.  If anyone is seriously in the market, this could be just the right opportunity to secure a tremendous deal within the historical context of the market.  Moreover, the quality aircraft will always sell first. So, this could very well be the time to take the “pick of the litter” in many depressed aircraft markets.

In future articles, I will take some time and look at individual aircraft markets, showing you how a particular market is behaving in the context of the broader market.

Shawn Dinning, Director of Sales & Acquisitions

Mr. Dinning acquired his formal education at the United States Air Force Academy in Colorado Springs, Colorado, in the areas of Operations Research and Management Science and also holds a degree in Aeronautical Science from Embry-Riddle Aeronautical University. Mr. Dinning brings 16 years of aviation experience from a variety of aviation disciplines, including FAR 91, FAR 121, FAR 135, defense, and shared ownership sectors. A former full-time professional pilot, Mr. Dinning holds a current Airline Transport Pilot (ATP) certificate, and is type-rated in the Gulfstream V/G550/G500/G450/G400/G350/G300, Bombardier CRJ-200, and Citation 510 Mustang. He has logged over 5500 flight hours, with 3500 of those hours in corporate turbine aircraft. Mr. Dinning has been consulted in publications such as Business & Commercial Aviation on various issues related to turbine aircraft transactions.

Mr. Dinning brings to Dallas Jet International a rare and highly valuable skill set of operational and business acumen, and has become a leader in the professional marketing and procurement of corporate turbine aircraft all around the globe. He also specializes in aircraft mission analysis, aircraft valuation, and cash flow and operating cost analysis for private aircraft owners. Mr. Dinning has a track record of successful transactions that is well known amongst his clients and colleagues. His reputation for intelligent and meticulous management of aircraft transactions have made him one of the most respected aircraft brokers in the industry.

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Aircraft Finance Update – Availability of Funds Increasing in International Markets, Lenders Still Want “Skin in the Game”

May 12th, 2011 Posted in Aircraft Cost, Background/Industry, Shawn Dinning
May , 12 20 11
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aircraft financeI just returned from  Fort Lauderdale, Florida, where DJI attended the annual National Aircraft Finance Association (NAFA) meeting and conference.  Here’s what I observed this year.

 

As one might expect, the core attendance of this conference includes most of the major players in the aircraft finance arena.   Banks, capital companies, private equity firms, and finance brokers were all in strong attendance.   Some people asked me why an aircraft broker/dealer would go to a finance conference.  The answer is that the two specialties are highly reliant upon each other.  The availability and adaptability of aircraft lending makes such a significant impact on the transactions of which I am a part.  Part of the value that DJI adds to the transaction process for our clients that we understand the options and the constraints of the aircraft finance space, so we found this conference highly valuable to our organization and our clients.

 

Having said all of that, these were some of my impressions from the recent event:

 

  • Appetite to Lend Money: Despite the fact that most of DJI’s transactions have had buyers who were paying cash, it was very evident to me that most of the aircraft lenders out there are looking for more business and looking to grow their portfolios.    This is good news for all involved in aviation.  As the supply of financing makes a comeback, aircraft prices will stabilize, and in certain markets, show signs of gradual increase.

 

  • Wide Scope of Lending Solutions:  While some lenders might suggest that they have a financing solution for almost everyone, one of the big themes of the conference was that, while no single lender can appeal to all aircraft buyers, there is enough variation between the focal points of the various lenders, that almost any reasonable financing need can be met.  In other words, whether your next planned transaction is a $50 million large cabin aircraft, or a $2 million turbo-prop finance lease, there are professionals in the lending space who focus on that area of aircraft finance and who want to earn your business, assuming that you are credit-worthy.  The one exception is that most lenders are still shying away from aircraft older than 25 years.

 

 

  • “Skin in the game” is essentially mandatory in this credit market.  In other words, most loan structures that lenders are comfortable with are going to require the borrower to advance 15% to 30% of the transaction value, and in some unique cases, 50%.  Keep in mind that back in 2007, some lenders were advancing 110% of the transaction value so that buyers could take the excess advance and apply it to aircraft improvements!

 

  • International Market: Most of the lenders are focused on the international marketplace and are vocal about the fact that the international marketplace is where much of the growth is going to happen in the business aircraft segment.  Here in the US, this is important to the sellers, as many of the future buyers on DJI’s US listings are going to be from another country, and many of them are going to need financing to make the deal happen.  Brazil, China, India, and Russia are all showing signs of significant growth in their appetites for business aircraft.

 

Overall, the conference was an excellent event, and one which left the DJI team  cautiously optimistic.  If any of you out there have questions about financing as it relates to the purchase or sale of a business aircraft, please do not hesitate to call me.  I would enjoy the opportunity to chat with you.

 

Shawn Dinning, Director of Sales & Acquisitions

Mr. Dinning acquired his formal education at the United States Air Force Academy in Colorado Springs, Colorado, in the areas of Operations Research and Management Science and also holds a degree in Aeronautical Science from Embry-Riddle Aeronautical University. Mr. Dinning brings 16 years of aviation experience from a variety of aviation disciplines, including FAR 91, FAR 121, FAR 135, defense, and shared ownership sectors. A former full-time professional pilot, Mr. Dinning holds a current Airline Transport Pilot (ATP) certificate, and is type-rated in the Gulfstream V/G550/G500/G450/G400/G350/G300, Bombardier CRJ-200, and Citation 510 Mustang. He has logged over 5500 flight hours, with 3500 of those hours in corporate turbine aircraft. Mr. Dinning has been consulted in publications such as Business & Commercial Aviation on various issues related to turbine aircraft transactions.

Mr. Dinning brings to Dallas Jet International a rare and highly valuable skill set of operational and business acumen, and has become a leader in the professional marketing and procurement of corporate turbine aircraft all around the globe. He also specializes in aircraft mission analysis, aircraft valuation, and cash flow and operating cost analysis for private aircraft owners. Mr. Dinning has a track record of successful transactions that is well known amongst his clients and colleagues. His reputation for intelligent and meticulous management of aircraft transactions have made him one of the most respected aircraft brokers in the industry.

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The (Air)Speed of Business

March 14th, 2011 Posted in Aircraft Cost, Aircraft Leasing, Aircraft Sales, Shawn Dinning
Mar , 14 20 11
1 Comment »
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Most people are surprised when they hear me say that the airplane business often moves at lightning speed.  In one of the worst down markets since the inception of business aviation, it would seem logical that everything moves with the speed of a tortoise.  When you analyze the aggregate numbers of the current market and the rate and volume of transactions, it truly is moving slower than normal.  Values are at record lows, with some markets continuing subtle descents.  So, how can our current business environment be associated with speed?

Speed will get you the very best airplanes.  What we are seeing today is that most airplanes that are transacting are on the market for a very brief period of time, as compared to the airplanes that are not transacting.   I’ve seen airplanes last as little as 2 days on the market, even in this environment.  Quality always goes first.  It is the broker’s job to get our clients first in line to this quality, “best deal” airplane.  We do this by being nimble, quick, decisive, and proactive.  Each day we study and research the various business aircraft markets, and  educate our clients on the statistics of the markets as well as past and predicted trends.   By providing that “market intelligence”, we give our clients the confidence they need to act swiftly when the right deal presents itself.

How does the best deal present itself?  My experience indicates that it presents itself in one of 3 ways:

  • Unannounced, aggressive price reduction. A seller makes the decision to aggressively reduce their price after watching their aircraft sit on the market for months with little to no interest.  The reasons for the price reduction could be many, but the bottom line is that there is a sudden price reduction.  The relationships that DJI has with all of the various brokerage firms who, like us, represent sellers, prove invaluable here.  Guess who the seller’s broker is going to call before they announce the price reduction to the retail open market?  They are going to call me and many of my peers first.  Because of these relationships DJI will always have news of a price reduction before the open market hears about it.  By capturing that information early, we can position our clients first in line to the deal.
  • A transaction falls through, suddenly making a quality airplane available again. There is always a relatively high chance that an aircraft deal can fall through.  Our motto is to never give up on a good deal.  It’s not sold until it’s sold!  DJI’s staff tracks pending deals in the various business aircraft markets.  By doing this, we will know a deal is falling through before the open market.   Again, this knowledge allows us to act quickly and swiftly to get our buying clients first in line to the best values.
  • An airplane is being newly offered.  If you wonder how a $10 or $20 million airplane can sit on the market for only 3 days, wonder no more.  I can assure you that the buyer and the respective agent knew about that airplane well before it hit the market.  Again, the market intelligence that we provide will get our clients first in line to the deal.  A large number of the best value aircraft transactions are consummated before even being published on the open market.

The only way to acquire this solid market intelligence and capitalize on the best value aircraft is to retain the professional services of a broker such as DJI, that conducts this level of research.  Speed and market intelligence provide our buyers an unmatched competitive advantage over unrepresented buyers in this marketplace.  The best deals are won with quickness and confidence, even in a Buyer’s market.

As our readers may know, approximately 50% of DJI’s brokerage business is representing sellers.  In a future article, I will write on the importance of speed and market intelligence in the aircraft selling process.  The consequences for sellers are significant if they do not have the proper information to act swiftly and confidently in the marketing and pricing of their aircraft.

Shawn Dinning, Director of Sales & Acquisitions

Mr. Dinning acquired his formal education at the United States Air Force Academy in Colorado Springs, Colorado, in the areas of Operations Research and Management Science and also holds a degree in Aeronautical Science from Embry-Riddle Aeronautical University. Mr. Dinning brings 16 years of aviation experience from a variety of aviation disciplines, including FAR 91, FAR 121, FAR 135, defense, and shared ownership sectors. A former full-time professional pilot, Mr. Dinning holds a current Airline Transport Pilot (ATP) certificate, and is type-rated in the Gulfstream V/G550/G500/G450/G400/G350/G300, Bombardier CRJ-200, and Citation 510 Mustang. He has logged over 5500 flight hours, with 3500 of those hours in corporate turbine aircraft. Mr. Dinning has been consulted in publications such as Business & Commercial Aviation on various issues related to turbine aircraft transactions.

Mr. Dinning brings to Dallas Jet International a rare and highly valuable skill set of operational and business acumen, and has become a leader in the professional marketing and procurement of corporate turbine aircraft all around the globe. He also specializes in aircraft mission analysis, aircraft valuation, and cash flow and operating cost analysis for private aircraft owners. Mr. Dinning has a track record of successful transactions that is well known amongst his clients and colleagues. His reputation for intelligent and meticulous management of aircraft transactions have made him one of the most respected aircraft brokers in the industry.

 

 

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Aircraft Sales and Acquisitions in Today’s Market – A Conversation with DJI’s Shawn Dinning

February 3rd, 2011 Posted in Aircraft Cost, Aircraft Leasing, Aircraft Sales, Shawn Dinning
Feb , 03 20 11
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Shawn Dinning, Dallas Jet International’s Managing Director of Sales discusses his background and approach to aircraft sales.

Photo by Shawn Dinning, Dallas Jet international's Managing Director of Sales

As Brad Harris noted in his article, the primary asset Dallas Jet International brings to bear in an aircraft transaction is the experience and expertise of the  professionals assigned to our clients’ aircraft sales transactions.  So, this article will delve into the background and motivations of that other professional – namely, me.

My position at Dallas Jet International is Managing Director of Aircraft Sales and Acquisitions.  Aircraft transactions are my domain, and I manage the aircraft purchase and sale process comprehensively for my clients from beginning to end.  Usually, when a client begins the aircraft transaction process, we will assign the project to Brad or myself, usually (but not always) based on who has the relationship with the client.  In some cases, there may be an aircraft transaction  involving an aircraft with which one of us has significant expertise that would be useful in getting the best outcome for our client. From that point on, that “project manager” will lead the transaction through completion.   There are times when Brad and I feel that we can effect the best outcome for a particular client’s situation by working together.  The rest of our company team supports the transaction process.  Dallas Jets International  provides the very best aircraft transaction experience in the world, bar none, because our system is so comprehensive and holistic.

As an example, one of my clients called me last month to tell me that he bought a yacht and a high-end auction car at the end of the year.  He said the buying process was horrendous compared to his last aircraft purchase experience with Dallas Jet as his acquisition agent, and for equipment that was not nearly as complex or expensive as the aircraft he had purchased.  Maybe he will become our first client if DJI decides to get into the yacht brokerage business!

Finding My Calling

I didn’t always want to be an aircraft transaction specialist and consultant.  My entrance into aviation came from my goal to be a fighter pilot in the US military.  And that, really, came from my exposure to many of my parents’ pilot friends who had flown in the US military.  I am the son of an airline captain and flight attendant.  Obviously, my immediate family was steeped into the aviation tradition, and that’s how I caught the bug.

I figured out that the best chance I had to get into the cockpit of an F-15 in the Air Force was to apply to the United States Air Force Academy in Colorado Springs, Colorado.  Everybody told me I was crazy because they only accepted people who had 1600 SAT scores and who were in the Boy Scouts since birth, neither of which described my credentials.  Nevertheless, I applied through the recommended channels for a Congressional Nomination and for an Appointment to the Air Force Academy and the Naval Academy at Annapolis.  The Naval Academy was my backup, and I would have gone there in a heartbeat.  I received the letter confirming my congressional nomination from the U.S.  House of Representatives and the letter confirming my appointment to the Air Force Academy within 1 day of each other.  The appointment letter arrived on Christmas Eve!

In a bad stroke of luck, a medical ruling during my Junior Year (3rd year) at the Academy derailed me from pilot training.  In one 30 minute doctor’s visit, things changed dramatically for me.

Fast forward several years and economic cycles later, I pursued my dream to fly via the civilian world.  About 5000 hours into my flying career, I had the pleasure and fortune of meeting Mr. Brad Harris (CEO of Dallas Jet International) at a private airport in Fort Worth.  It was a random encounter, and nobody introduced us. We just started to talk.  He invited me to go sit with him in one of his client’s airplanes, as he told me about the business that he was running.  It sounded like a match made in heaven for me.  For the next 8 months, I followed up with more emails and phone calls than Brad knew what to do with.  He finally offered me a position to learn and eventually oversee the day-to-day transaction operation at Dallas Jet International.  He said that my academic, military, business, and flying backgrounds would be a perfect fit for the company’s vision of hiring the best people in the business and growing the list of satisfied airplane owners and clients.  Brad Harris has been one of the best mentors I could ask for, and has groomed me to contribute significantly to the success that our company currently enjoys.

My Favorite Part of the Profession

In its purest form, an aircraft broker and transaction consultant is all about obtaining the highest price in the minimum time for a selling client, and getting the best airplane for the best price for a buying client.  If we didn’t save a lot of money and heartache for our clients, we wouldn’t be in business.  And to be clear, we save our clients a lot of money and many hundreds of hours of wasted effort.  And, as much as I love saving other people’s money, I value the relationships more than anything.   Make no mistake that trust and relationships are at the heart of any successful aviation brokerage firm.  Trust is the number one reason I am hired to represent a client in his multi-million dollar aircraft transaction.  I wouldn’t want it any other way.

On Buying Aircraft

It is important to know that I truly get to represent the interests of the airplane buyer, and I don’t have to promote a bias toward a particular manufacturer or type of aircraft.  This is such a key aspect of the value that Dallas Jet brings to the aircraft transaction process.  So many people think that we represent a certain line of airplanes, or that we collect referral fees from sellers who want us to push an airplane on our buying clients.  Of course this doesn’t happen at Dallas Jet, but it has been known to happen in this very unregulated business in which we compete.  Every buying client’s situation is different, and it is my job to gain a very detailed understanding of the client’s needs before I recommend the type and serial number of airplane to pursue.  No client or transaction is the same, and I absolutely love that!  I’ve placed clients into Gulfstream, Bombardier Lear/Challenger/Global, Dassault Falcon, Cessna Citation, Hawker Beechcraft, Embraer, Pilatus, and Piaggio aircraft.  It all depends on the client’s particular requirements and mission, and it is really crucial for me to have the freedom to make the best recommendation for that situation.

On Selling Aircraft

Representing sellers is much more challenging in this market, but nonetheless enjoyable.  I particularly enjoy the opportunity to get to know that particular airplane and its attributes so well that I can represent the airplane as though I had been the owner for the last several years.  With this knowledge, I can represent the aircraft in its best light, because every airplane really is unique.  It is my job to spend several days with the aircraft to learn who maintained it, what post-delivery modifications have been done, the status of maintenance inspections, and what options that set it apart from other competing aircraft on the market.  In many cases, I already know the airplane very well because I have represented it in previous transactions.  In some cases, I’ve even flown the aircraft.  Next, I  get to know all of the competing airplanes of the same make/model that are also on the market.  And, I have to be able to explain the reasons why a prospective buyer should buy one type of airplane over the other, because buyers these days always seem to be considering multiple types of aircraft.  This is where our hands on knowledge of the various airplanes available pays dividends.  Between Brad and I, we’ve flown/managed/operated most of the business aircraft out there.  We have 12 jet type ratings and 14,000 hours between the two of us.  It is essential to know the pros/cons of every aircraft out there, without bias.

My Advice for Potential Sellers

The number one mistake that sellers make in today’s market is either overpricing or underpricing their aircraft.  Both mistakes can cost an airplane owner hundreds of thousands, if not millions, of dollars in lost sales proceeds or in extended holding costs.

The number one reason airplanes are incorrectly priced is either consultation with an inexperienced broker, or no broker consultation at all.  Our market research process at DJI provides our customers with the confidence they need to price the airplane to sell, with no money “left behind on the table.”   Secondly, the selling process can expose an aircraft owner to so much un-needed risk, and it is my job to protect and even “shepherd” my clients through that process, so that they are not taken advantage of.  Protecting my clients’ interest throughout the selling process and making it smoother than my client expected is certainly the most rewarding part of selling the aircraft.  My advice for prospective aircraft sellers and buyers?  Hire a good broker!  Better yet, hire DJI!

The Future of Aircraft Sales

As we all know, information is king in the 21st century.  The speed and availability of information has certainly transformed the world of aircraft transactions.  The internet revolution is the main contributor, and has made non-detailed market information available to the aircraft end user.  As we say in the business, it’s just enough information for the aircraft end user to be dangerous and really make a poor decision   One of the enormous emphasis points at Dallas Jet International is to stay ahead of the flow of information.  If you fall behind the leading edge of current market information, you lose significant negotiating power, and your clients lose on buying and selling opportunities.  We never let that happen at DJI.  Our clients are the best-informed in the business.  We are constantly developing techniques and systems to deliver information to our clients faster than the internet or our fiercest competitors.

And, despite all of the technology and information flow, buying and selling airplanes has become more complicated, particularly with a growing number of international buyers/sellers and various governing bodies throughout the world, all of which have something to say about buying and selling airplanes.

Technology is accelerating faster than ever.

However, it still takes old-fashioned values of attention to detail, valuable professional relationships, attentive customer service, and unparalleled expertise to move airplanes in today’s dynamic business environment.

Shawn Dinning, Director of Sales & Acquisitions

Mr. Dinning acquired his formal education at the United States Air Force Academy in Colorado Springs, Colorado, in the areas of Operations Research and Management Science and also holds a degree in Aeronautical Science from Embry-Riddle Aeronautical University. Mr. Dinning brings 16 years of aviation experience from a variety of aviation disciplines, including FAR 91, FAR 121, FAR 135, defense, and shared ownership sectors. A former full-time professional pilot, Mr. Dinning holds a current Airline Transport Pilot (ATP) certificate, and is type-rated in the Gulfstream V/G550/G500/G450/G400/G350/G300, Bombardier CRJ-200, and Citation 510 Mustang. He has logged over 5500 flight hours, with 3500 of those hours in corporate turbine aircraft. Mr. Dinning has been consulted in publications such as Business & Commercial Aviation on various issues related to turbine aircraft transactions.

Mr. Dinning brings to Dallas Jet International a rare and highly valuable skill set of operational and business acumen, and has become a leader in the professional marketing and procurement of corporate turbine aircraft all around the globe. He also specializes in aircraft mission analysis, aircraft valuation, and cash flow and operating cost analysis for private aircraft owners. Mr. Dinning has a track record of successful transactions that is well known amongst his clients and colleagues. His reputation for intelligent and meticulous management of aircraft transactions have made him one of the most respected aircraft brokers in the industry.

 

 

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