Aircraft Sales Insights

By Brad Harris

Aircraft Market Update – Dallas Jet International (DJI) is enjoying its best year of business since 2007, and apparently, we’re not alone!

Business aviation leaders met at the JETNET iQ fourth annual Global Business Aviation Summit on June 3-4, 2014 at the W Hotel, in New York City. The theme of the conference was “Igniting Ideas. Provoking Change.”

. . Summit speakers and panelists represented a virtual “Who’s Who” of business aviation—
experts with unique perspectives on the industry’s present and future:
analysts, bankers, brokers, wealth consultants, attorneys, sales and marketing leaders, and C-level executives.

www.JetNet.com

When I spoke at the conference this year about the status of the business jet market, many heads in the audience were nodding in agreement. It seems that all of the major companies are active, all of our colleagues are very busy and have a lot of transactions in the works.

At Dallas Jet International (DJI,) we’re finding that this is easily our best year since 2007.

DJI currently has the following list of transactions in process:

• 3 transactions pending
• 3 aircraft sales in the last 2 weeks
• 8 acquisitions in process
• 14 aircraft for sale

The market is largely positive and inventories are getting smaller. At the same time, we’re still finding that pricing is stabilizing for newer aircraft, but can be sporadic or still declining, particularly for older and smaller aircraft.

A couple of specific bright spots –

• Owners of Hawker 900 XP and Challenger 604 aircraft are finding that the value of their aircraft have appreciated 1 million in the last 90 days.
• Values of Challenger 605s and Gulfstream V aircraft have continue to depreciate.

Total Aircraft Fleet Compared to Aircraft For Sale By Age

The market for the newest aircraft has been the most stable over time.  The market for 11-20 year old aircraft has grown significantly over the last four years, while the number of aircraft for sale in this category has stabilized.

Note– We consider 10% of aircraft on the market for sale as a “normal” market. While the total jets for sale (red line) is remaining stable, the total number of aircraft is growing slowly. The slow growth of the market is beginning to absorb excess inventory, but the number of jets for sale this year is still nearly twice what we would expect in a “normal” market. This excess inventory forces pricing for older aircraft to remain low.

Conclusion

Surplus inventory of the older aircraft is still causing prices to be somewhat depressed. Sales of average and newer aircraft are brisk. Prices for most aircraft remain stable. Values of a few specific models have appreciated dramatically.

Please note that the information in this article is general. Each aircraft transaction is unique, and a “successful transaction” depends on many factors, including the seller’s objectives, the features and history of the aircraft, and the unique opportunities presented by specific buyers.

To discuss your particular aircraft and objectives, please give us a call at our office at 817-520-4009.

To simplify the aircraft ownership experience, Dallas Jet International (DJI), together with several other aviation-related companies, has moved to a new 18,000 square foot building  in Colleyville Texas with several other aviation-related businesses.

There is a natural synergy that happens when companies share a building – especially one that has some common facilities like meeting areas.  Simply sharing a cup of coffee can lead to a productive working relationship or the solution to a complex problem.

“When a client has a question about helicopters, for example, we can simply walk down the hall with them and have a conversation with the experts on that topic.”

Here are some snapshots from the construction project:

Aircraft ownership is a complex experience that often requires expert assistance in a variety of fields. DJI has a long history of building trusted relationships among an extensive network of companies in aviation, finance, law, accounting, and other specialties that can assist their clients.

Our new address:

Dallas Jet International
97 Village Lane
Suite 200
Colleyville, TX 76034

Phone and fax are unchanged.
Office Phone: (817) 520-4009
Fax: (817) 520-4016

You can still find Dallas Jet  at these existing locations as well:

100 Crescent Court
Suite 700
Dallas, Texas 75201
Office Phone: (214) 459-3303
Fax: (214) 291-5425

or

2221 Alliance Boulevard
Suite 600
Fort Worth, TX 76177

or

7363 Cedar Springs Road
Dallas, TX 75235

NARA (National Aircraft Resale Association) 

Introduces Newly Elected Officers to Serve in 2013

The National Aircraft Resale Association (NARA) is pleased to introduce its new officers, who will serve terms in 2013. Officers were elected at the association’s annual membership meeting held in Orlando in October.

Outgoing NARA Chairman Paul Kirby, Managing Partner of Cerretani Aviation, LLC, says, “Integrity, knowledge and responsiveness are keys to surviving in a tough market. As an association, NARA’s members have banded together over the last several years and worked very hard to provide clients with the best possible solutions to their aircraft ownership needs. It has been a pleasure to serve the NARA membership as Chairman for the past year.”

“Over this time,” Kirby continues, “we have added a dozen new members, improved the content and networking opportunities at our spring and fall meetings, started an educational blog series at our website (www.nara-dealers.com/blog_nara) and expanded our Code of Ethics to better recognize the importance and value of NARA’s Associate Members. I am pleased that NARA continues to provide members with excellent networking opportunities, access to an immense collective knowledge and distinguishing ethical standards. NARA is well-positioned to continue to build on its success in 2013.”

Members elected to serve on NARA’s 2013 Board of Directors are:

Chairman:                          Brad Harris, Dallas Jet International, LP

Treasurer:                          Nick Schneider, Global Wings, LLC

Secretary:                           Jay Gantt, Gantt Aviation

Board Members:                Ben Murray, General Aviation Services

Paul Kirby,                           Cerretani Aviation, LLC

Members were also elected to serve on the organization’s Associate Member Advisory Council.  Associate Members elected to serve for 2013 are:

Chairman:                          Louis Seno, Jet Support Services, Inc. (JSSI)

1^st Vice Chairman:             Tracey L. Cheek, Aircraft Title Insurance Agency

2^nd Vice Chairman:            Anthony Kioussis, Asset Insight, Inc.

Secretary:                           Wayne Starling, PNC Aviation Finance

“I am looking forward to representing NARA as Chairman next year,” says Brad Harris, President and CEO of Dallas Jet International, LP. “With 78 member companies, all of whom are the best in their fields and are committed to NARA’s high ethical standards, NARA has the foremost collection of aircraft transaction and operation expertise in the industry. I am excited about continuing to make NARA membership more valuable for our members and our respective clients in the coming year.”

NARA is a professional trade association of businesses organized to promote the growth and public understanding of the aircraft resale industry. Its members abide by a 14-point Code of Ethics that provide standards of business conduct regarding aircraft transactions. For more information about NARA, its members and its code of ethics, visit the NARA website at www.nara-dealers.com or call Devri Pitts, Independent Association Director, at 866-284-4744.

P.O. Box 3860, Grapevine, TX 76099 ▪ Phone 866-284-4744 ▪ Fax 866-447-1777

www.nara-dealers.com  nara@nara-dealers.com

One of the benefits of owning an aircraft is the opportunity to select the flight crew and cabin staff for your aircraft.

“As a financial services company, we thoroughly vet all of our employees. Having our own aircraft allows us to extend that due diligence to the pilots and crew. We can confidently hold strategy meetings, discuss sensitive business, and have confidential documents in our briefcases and on our laptop computers just as we would in the office, since we know that everyone on board is a trusted team member. That’s a significant advantage since we spend a lot of time on the plane. In some of the places we travel, the airplane is the most secure, comfortable place to do business!” 

-Name Withheld

Purchasing an aircraft such as this 1994 Gulfstream GIVSP brings the option of hiring your own flight crew, which has some advantages and complexities. We’re here to help you work through the details.

This “comfort level” goes far beyond the reassurance of familiar faces. You can run background checks, execute confidentiality agreements, and use any of the other methods you would use to feel confident in hiring an employee.

Along with the advantages of hiring and managing your own flight crew, there is also complexity that few new or upgrading aircraft owners anticipate.

Example – Scheduling the Flight Crew for an International Mission

To illustrate how complex it can be to schedule a flight crew for typical operations, this is a glimpse into the high-level trip planning for a company that needs to send a project team abroad to support the launch of a new product on the international market.

The trip involves international travel to several cities, in an aircraft that requires two pilots.

Please note that it’s more efficient to fly from west to east, so a professional flight planner might make different recommendations, but we understand that our clients need to go where and when their business takes them.

So far so good, except that like many corporate flight crews, the company in our example is subject to the FAA requirements for unscheduled carriers.

The following excerpt is from the regulatory requirements for charter pilots and is regulated under the Federal Aviation Regulations  “Part 135.”

 

§ 135.267 Flight time limitations and rest requirements: Unscheduled one- and two-pilot crews.

(a) No certificate holder may assign any flight crewmember, and no flight crewmember may accept an assignment, for flight time as a member of a one- or two-pilot crew if that crewmember’s total flight time in all commercial flying will exceed—

. . .

during any 24 consecutive hours the total flight time of the assigned flight when added to any other commercial flying by that flight crewmember may not exceed—

(1) 8 hours for a flight crew consisting of one pilot; or

(2) 10 hours for a flight crew consisting of two pilots qualified under this part for the operation being conducted.

(c) A flight crewmember’s flight time may exceed the flight time limits of paragraph (b) of this section if the assigned flight time occurs during a regularly assigned duty period of no more than 14 hours and—

. . .

As you can imagine, it goes on and on . . .

(Click this link for the current regulation if you’re curious.)

Depending on your particular situation, the regulatory requirements may be somewhat less restrictive, yet still daunting. Of course all of these regulations are subject to change at any time, and it takes a professional to know when and how to apply them.

Imagine the difficulty of an aircraft owner attempting to determine how many pilots to hire, train, and pre-position or send on this trip to support the mission!

Depending on the needs of your organization, you can see how it would be beneficial to have DJI’s assistance to help you understand how to hire the right personnel that has the operational experience and flight experience to organize and perform the trip.

Options for Managing Your Flight Crew

DJI understands the advantages and complexities of managing a flight crew, and we provide an array of services to help our clients benefit from the advantages while managing much of the complexity for you.

Some of the options:

• Provide DJI with your requirements and DJI will do the recruiting and preliminary vetting of pilots and crew members for your company to hire and manage.
• We enter into an agreement and DJI hires and manages your flight crew to your specifications, including background checks, confidentiality agreements, and so on.
• Many other combinations are possible, based on your needs.

DJI’s goal is to ensure your aircraft ownership experience is a positive one especially with the crew.

Dallas Jet International (DJI) is a member of several professional and aviation associations.

We’ve heard the criticisms – some brokers are of the opinion that associations are a waste of time and money.  “Why would we spend money and time going to association meetings to share ideas with our competitors?”

We’ve found the exact opposite is the case – here’s why:

The Benefits of Aviation Associations

Transactions in the aviation industry depend on personal relationships and trust. DJI works with other brokers all the time; even our competitors are “friendly” competitors – we recognize the need for a healthy industry.   Every private aviation consumer that has a good experience, whether it’s with us or with our competitors, strengthens the industry. It is in our best interest to do what we can to improve the profession.

We’ve found that association meetings and conferences are a great use of our time.  As we may have the best intentions to go to lunch with associates, schedules intervene and we are rarely able to see even our local partners and associates in person on a regular basis.

However, when we’re all in the same city for the NBAA (National Business Aviation Association) conference, as an example, we can meet with several clients, prospective clients, partners, other brokers and other professionals.

NBAA also offers excellent resources, information and publications.

NARA (National Aircraft Resale Association) and NAFA (National Aircraft Finance Association) are smaller, more specific organizations, but in many ways they are equally valuable. NARA has 75+ member companies, 35-40 of which are broker/dealers and others, which are associate members.  I serve on the Board of Directors at NARA as  the treasurer.

Members of both associations provide services to broker/dealers such as financing and insurance, and it certainly pays us large dividends to spend time getting to know the players. Many relationships and friendships are solidified when we meet periodically during the year to spend time working on joint objectives; indeed, many times we are able to get to know one another’s families.  Building these strong friendships benefits our clients because we have a wide and varied network of people we can call on for different needs.

As an example, last Wednesday, we received a call from a potential client for a CJ3. This person was referred to us by an associate member that we met at an association event more than a year ago.   This potential client had questions about a 1031 Like Kind Exchange, which is a very specific transaction type with some TVPX) on the phone (who we also know through an association membership) and he was able to answer every one of our potential client’s questions about this exchange strategy.

These relationships not only brought us the potential customer, but also helped us be more helpful and valuable to this potential customer.

This one exchange involved two long-standing, trusted relationships that we would not have had the opportunity to develop without our participation in the industry’s associations; and it’s certainly not an isolated example.

Long-term relationships are worth the investment.   We spend time, work and capital on building relationships, and professional associations provide us with an invaluable means of doing exactly that.

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.