|Originally published as a blog for AINsight for Aviation International News on 3/5/21|
Every few years market events change, sometimes only slightly, and sometimes with greater velocity. When these events occur our industry often gets new players. I am speaking of a new crop of industry sales professionals hanging up shingles. I have often discussed how our segment of the industry, aircraft sales, can look sexy, lucrative, and easy from the outside. Believe me it is the hardest work any of us have done. It is a nice wage but hardly lucrative, and anything but sexy.
I believe that the COVID-19 Pandemic is causing some new faces to pop up. As I have written about before, the barrier to entry is fairly low for those people that want to cross over to brokerage. There are no licenses to qualify for; There are no state of federal tests to pass, or number of hours one must put in as an apprentice to qualify. Please do not mistake my comments as suggesting that all new faces will be unqualified or bad actors. This is, after all, not really an aircraft business it is a people business first. Like in any industry there will be a few bad apples.
My concerns as new people cross a very low bar to enter our profession are that they come in trying to attract business by quoting very low commissions, giving poor valuation information, and unqualified cost expectations. This combination of low-cost and high-value can attract clients for all the wrong reasons. I was on a webinar the other day and was a bit shocked hearing from some of the panelists who said they were already getting calls from recent first-time buyer clients that were talking about selling the planes they had just recently purchased. This can only mean a few things. The cost to operate the planes they had just purchased was possibly underestimated, and/or the complexity of aircraft ownership was not properly explained.
The outcome for these people will be terrible when they realize that not only will the cost to operate be higher than expected, but the cost to get out will be significant. With such a short ownership life the value of the asset may have gone down 10 to 20% or more. Given the poor information regarding operational costs or complexity, the person helping these first-time buyers buy may have also been flawed in the, what to pay for the aircraft equation.
This exercise will cause many to declare that this industry may be plagued with bad actors. All of you reading this article know for sure that is not the case. Though there may be a few, the vast majority of players in our business are great people, working for the good of the clients they are serving and not just working for a sale and a quick commission. Are you one of the people who are questioning a recent purchase? Before making a knee jerk reaction, perhaps the smarter approach would be to find a seasoned, well versed industry player and be sure there are not better methods to manage the asset, as well as better cost opportunities. Aircraft can be everything you hoped they would be. They are safe, efficient and can bring real joy!