Mesinger Pulse: Is uncertainty playing an uncertain part in our market?

The NBAA Regional Forum in White Plains drew its largest ever crowd at over 3,300 attendees. Jay Mesinger revelled in the “smiles and the optimism”.

Everyone always says there is nothing more damaging to market conditions than uncertainty, writes Jay Mesinger, CEO, Mesinger Jet Sales. I am beginning to question the impactfulness of that logic in our current environment. Like you all, I keep watching and reading economic forecasts and then observing the behaviour of buyers and sellers in our industry.

I was just in New York for the NBAA Regional Forum in White Plains. Largest crowd ever, over 3,300 attendees. Lots of smiles and optimism. Then I spent three nights in the city and the streets and restaurants were packed with tourists. Honestly, there were no signs of economic slowdown. At Mesinger Jet Sales, we are not finding any slowdown in demand either. In fact, phone activity is up and prospects are moving ahead on projects.

There has also not been a frenzy of calls about 100% bonus depreciation. However, I am sure as more clarity forms around that tax benefit we will start to hear that at year-end.

So, what are the key factors we should be cautious about? Today, I am seeing an absolute focus on price. Gone are the days of throwing a dart at the wall as a seller and setting an asking price with no connection to the reality of comparable sales. We are seeing bigger price reductions driven by unguided or unbelieving sellers realising that the dart is old school. Sellers must listen to their trusted selling partners and take action on correct pricing sooner than later.

With higher numbers of inventory in almost all categories of planes, buyers have many choices, negotiating room in price, and the ability to demand the correct due diligence needed for buying such sophisticated assets as an aircraft. No longer is this a sellers’ market. This market is well balanced and settling into that for what looks like the long haul. Even the potential opportunity for the 100% bonus depreciation should not absorb big amounts of supply, leaving our market a healthy one.

So, as you have the chance to discuss the market with your prospects, it is of course important to guide those considering coming in to watch uncertainty, measure the implications against common sense, and be well guided in the market space.

Those buyers who believe they can accomplish this process with no professional guidance are only going to create uncertainty in their potential transaction. That is a bad recipe for success. Grab a partner and don’t be afraid of the added professional cost associated with that help. Instead, be more afraid of the cost of mistakes. See you on the field.