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The Aviation Spark

Nicole Lund

 

My sister, Lauren, in the pink and me in the blue.

 

The question I am asked most often is "how did you get involved in aviation?". Most student pilots have parents or relatives that are pilots who helped them get a foot in the door. However, I do not come from a family with a background in aviation. So, where did the spark to become a pilot come from?

The first time I flew on an airplane, I was four years old and on my way to the happiest place in the world, Walt Disney World. I remember boarding the plane and the captain giving me a pair of plastic pilot wings that I wore with a giant grin across my face. I was completely blown away by seeing the world from 35,000 feet. Growing up, my mom took me to a local airshow at Offutt Air Force Base. This sparked an interest in serving the country. There was a C-17 at the first Defenders of Freedom Air & Space Show that I went to. I could not fathom how a plane of that size could fly. I ended up touring the inside of the C-17 and that was when I realized that I wanted to be a pilot.

 
A photo I took of a C-17 from Travis AFB on an overnight at KOMA.
 
 

I felt embarrassed and ashamed for wanting to become a pilot. I had never met a female pilot. I did not start telling family and friends that this is what I wanted to do with my life until high school. I tried easing my family into the idea by mentioning how I wanted to join the Air Force. Then I slowly started bringing up the idea of wanting to fly. Needless to say, my family and friends thought it was just a phase. In high school, I was a 4.0 student as well as a varsity athlete in cross country, track and field, and trapshooting. I focused on my grades and extracurricular activities so that I would be competitive for an Air Force ROTC scholarship. My senior year of high school I was overjoyed by the news of receiving a Commander's Scholarship for the local detachment at the University of Nebraska Omaha (UNO). It was a full ride scholarship to study Aviation, I had my life planned out, so I thought.

My freshman year at UNO I juggled being a cadet and studying Aviation Management. At the end of my freshman year, I was crushed by the news that I had been medically disqualified from military service. That was a hard pill to swallow, but I knew I still wanted to fly. I ended up passing my first-class FAA medical and then began my private pilot training. I am now finishing up my commercial certificate with my eyes on a career in business aviation or with an airline.

Standing in front of a Citation Excel.

 

Pre-Owned Aircraft Market Stabilizes after Ten–Year Decline

A recovery is in progress in the pre-owned business jet market following what seemed to be an interminable downturn since 2008. Even though the U.S. market strengthened in recent years, weakness in other world-areas kept global inventories excessively high, providing downward pressure on aircraft values in all markets.

Now, as those international markets are returning to relative stability, surging demand in the U.S. is driving a new market dynamic.

Inventory of pre-owned airplanes for sale has declined on a quarter-over-quarter basis for the last two years, with much of what is remaining picked clean of the most desirable aircraft. Just a year ago, a buyer could enter the market for almost any model and be able to find an aircraft meeting its acquisition parameters. And because it was a buyer’s market, it could typically negotiate favorable pricing as well.

Well, that picture has changed considerably, especially for buyers targeting current or recent-production model aircraft with Next-Gen avionics updates, desirable cabin configurations, and reasonably strong paint and interior. Those buyers are finding themselves in competition, even bidding wars, to have a shot at that qualified aircraft. Buyers that are slow to make an offer on a strong candidate are often left behind, finding themselves starting their search anew, and hopefully wiser from the experience.


Falcon 7X

Following are examples from current and recent production models in mid-sized to large-cabin markets where inventory has taken a dramatic drop in the last 12 months:

Model

July 1, 2017

July 1, 2018

% Reduction

Falcon 7X

31

20

35%

Falcon 2000EX Series

25

14

44%

G450

31

18

42%

Challenger 605/650

16

8

50%

Challenger 300/350

34

21

38%

Citation Sovereign/+

34

21

38%

Even some older models have seen inventories drop over the last year, as buyers have recognized value opportunities in this category.

Model

July 1, 2017

July 1, 2018

% Reduction

Falcon 900B

21

11

48%

G200

31

21

32%

GIV-SP

39

26

33%

Challenger 604

32

20

38%

 

Where does the market go from here?
The aircraft market is, of course, driven by the global economy. And there’s also compelling data that suggests our market’s health is tied directly to price of oil, as countries whose economies are tied to oil, and companies whose profits rise and fall with the price of oil, are significant users of business aircraft. While it is beyond the scope of this article to predict the global economy and the price of oil in the long-term, the forecast for the pre-owned market for remainder of 2018 and into 2019 looks good.
- Confidence, a key psychological factor for business jet buyers, is strong that the economic outlook is positive.
- The U.S. tax environment is more favorable for the acquisition of aircraft.
- The number of very-high-net-worth individuals is growing globally.
- Demand for pre-owned aircraft, especially among U.S, buyers, has displayed sustained strength the last two years.
- Utilization of business aircraft, both in North America and Europe, are returning to pre-recession levels.
- Depreciation rates for many models are inching back to historic norms (3-5% annual depreciation), after several years of double digit value slides.

All of this points to a continuation of the current market environment, characterized by more buyers entering the market, and sellers of quality aircraft finding themselves in a stronger position than they have been in a decade. Prices will continue to stabilize, and even experience a slight uptick in some cases.

It should be noted that not all models will see this scenario. Those that are 25-30 years and older are still faced with bloated inventories. Many owners are trying to get out from underneath their aircraft before regulatory mandates take affect that require expensive avionics upgrades. In addition, as these older aircraft become more expensive to maintain and operate, demand for them diminishes. Sellers of aging aircraft will still experience long market times and value softness.


Challenger 605

Summary
Despite the challenges owners of older aircraft are facing, current market trends are positive for the entire industry. Sellers are entering the market with new-found confidence. Buyers are more optimistic that the value of the aircraft they acquire is not going to drop precipitously as soon as they close. OEM’s are getting calls from buyers who just a year ago would have been looking solely in the newer pre-owned market. Charter operators, service centers, and training providers are all enjoying healthy (and in some cases excessive!) demand. A sense of stability is taking hold which has been missing in our market for a decade. And though there always seems to be a storm cloud or two forming on the horizon, aircraft owners are seeing asset value retention finally returning to historic norms.

By Jim Donath

Jim Donath is President of Donath Aircraft Services, a Chicago-based aircraft brokerage firm focused on the mid-sized and large cabin markets for over 40 years.

 

 

The Good, the Bad, and the Ugly of Craigslist Aircraft Sales

One of the aircraft we considered listing for sale on Craigslist
One of the aircraft we considered listing for sale on Craigslist

Craigslist.com is a website for online classifieds where thousands of people post their items for sale, help wanted, or even go to search for a date. I have personally had success with the website by finding my current rental house advertised when I checked the site on a whim. However, there are hundreds of stories out there of people getting scammed and cheated by buyers and sellers on the site, including a story as recent as this week where a woman lost $1,550 in a Craigslist check fraud scheme.https://buffalonews.com/2018/01/20/woman-says-she-lost-1550-in-craigslist-check-fraud-scheme/

Hundreds of Aircraft For Sale On Craigslist

One might be surprised to learn that there are actually hundreds of aircraft advertised for sale on Craigslist as well. But is it really a good idea to search for such a valuable asset on a site that has had a fairly controversial history? I took a look into the world of buying an aircraft on Craigslist and I want to share the good, bad, and ugly of what I found. As always, common good aircraft buying practices should be followed, such as getting a pre-purchase inspection and a title search showing a clear title. If possible, purchasers should seek out a purchase agreement in order to protect both parties. Proceed with caution, but maybe don’t overlook Craigslist in your search for your dream airplane.

The Good

Unlike your regular aircraft for sale websites, Craigslist doesn’t have much of a filter for what aircraft related things people can post. Most searches lead to listings of aircraft parts, advertisements for flight schools, and even a few pilots looking to find others to start a “timeshare” type of deal with their existing planes. It should certainly be mentioned that these can be good opportunities, and you just might find a way to save money by sharing a great plane with other owners instead of buying one.

This is also one of the cheapest options for listing your plane, as it appears there are no listing fees for individual sellers. If you’re selling from a dealership you do incur some fees, but they’re only $5 per listing. You are able to reach a large audience with this website, because it has such a large following to begin with. https://www.craigslist.org/about/help/posting_fees

The Bad

One difficult thing about searching for an aircraft for sale on Craigslist is that the site is organized in a very specific way that does not encourage searching locations other than your own. Instead of simply searching “aircraft for sale” and seeing all aircraft listed on the site, you have to first drill into the Craigslist page for the area where you want to look. Most major cities and counties are included, but having to search through pages and pages of these just to find the aircraft in the first place is overwhelming. The idea behind Craigslist is that you’re buying from people in the local community, but a good deal on an aircraft that you’ve been looking for could very well be thousands of miles away. This isn’t a problem on other aircraft for sale sites, because they mostly list by aircraft category and rarely by location.

A big thing to keep in mind when buying or selling on Craigslist is that the website has no control over the transaction. They do not guarantee purchases, process payments, and there is certainly no Craigslist seller verification process. They have done a lot to cover their butts in case something goes wrong, so they will almost never be found liable for a purchase gone wrong.

The Ugly

During my research on the topic I did find a pretty hilarious article where someone was trying to sell their Cessna 172 H on Craigslist… Using a photograph of the plane lying upside-down on its back. Evidently the ’68 Cessna got flipped when a tornado went through town, but the owner was still asking for $16,500. It has since been flipped and sold, but I’m not sure I would purchase a 172 in that condition!

https://jalopnik.com/5941947/this-upside-down-airplane-is-for-sale-and-can-be-yours

Another notable “best of Craigslist” is the Corvette-Mooney hybrid that a man made in his backyard. By putting the fuselage of a 1963 Mooney on the frame of a 1984 Corvette, the seller has created the most hideous hybrid of car and airplane one could think of. Not even bothering to match the paint schemes, the red of the Corvette does little to blend with the white and blue of the Mooney. Perhaps intentionally colors of the USA? I hope this is a joke, but it has to be seen to be believed.

https://jalopnik.com/this-backyard-airplane-corvette-monster-is-pretty-much-1750179686

 

Perhaps a better use of Craigslist would be to search for aircraft parts or flight schools. In the end, Craigslist is little more than a community bulletin board where legitimate sellers and scammers alike can post whatever they please. Proceeding with caution is the best way to start your aircraft search on this site, but you just might find a treasure if you look hard enough and be patient.

One of the aircraft we considered listing for sale on Craigslist
One of the aircraft we considered listing for sale on Craigslist

What You Should Know About eBay Aircraft Sales

We considered listing this plane for sale on eBay
One of the aircraft we considered listing for sale on eBay

When it comes to making any large purchase, being thoughtful and thorough is of the upmost importance. This is true for homes, cars, and especially for airplanes. An airplane is an investment that will hopefully last you years, and absolutely must keep you safe to the best of its abilities when you fly it.

In general, people are wary of where their large ticket items come from. They like to have a full description of the item that is without any deception or misinformation. Typically it is preferred to have a way to inspect the purchase up close, but with aircraft and other online purchases this may be difficult because it is located far away.

One might be surprised to learn that in a Google search for “Aircraft for Sale,” eBay is one of the top results in the first page. Of course, when you search for any number of things followed by “for sale,” eBay also appears on the first page. They’ve been in the business of connecting sellers to buyers for 22 years now. While some may be quick to discount eBay as an unreliable or sketchy source for aircraft sales, there are certainly pros as well as cons to purchasing through their site.

After consulting a few industry experts, reading online forums, and browsing the selection of aircraft for myself, I have come to the conclusion that you just might find a perfectly good aircraft listed on eBay. However, you may have to proceed with more caution than on specific “aircraft for sale” websites. Let’s break it down into the pros and cons.

Pros and Cons of buying Airplanes of Ebay

For the Buyer

Con:

It may be difficult to inspect

As mentioned earlier, the perfect deal is likely not sitting in your backyard. Aircraft can be list a few states away, and without having the ease of heading over to inspect it up close, you may end up buying it sight unseen. eBay did think of this, and you can hire the people are We Go Look to inspect your purchase for you, typically for less than $100.

https://wegolook.com

Pro:

The bid is non-binding.

When you place a bid on eBay Motors, which includes all of their aircraft listings, the bid is non-binding. This simply means that your bid expresses interest in the airplane, but it is not a binding contract between you and the seller. That can be comforting when you want to get your foot in the door but you would still like to read over all the paperwork associated with the plane before you dive in with a purchase.

https://pages.ebay.com/help/policies/non-binding-bid.html#fineprint

For the Seller:

Con:

It may be expensive to list

The terms and conditions on eBay’s site says that there is an $125 fee on listings that are more than $5000 if you list less than 6 vehicles per calendar year. Additionally, the seller has to pay more to have extra photos, extend the listing for more than 7 days, to have their header in bold, and a few other extra features. These numbers can add up quickly, as compared to other aircraft for sale websites where the first listing is often free, and the following ones are at a steep discount. https://pages.ebay.com/help/sell/motorfees.html#volume

Pro:

Your plane is exposed to a larger audience

Although eBay is not as big as it used to be, it does still have a large following. Some old-school aircraft purchasers still check the site, as is evident by the aircraft buyer forums I browsed. Having extra exposure across multiple buying platforms can help your aircraft get noticed and sold, which is the ultimate goal.

Regardless of if you’re buying or selling, you must have your paperwork in order. Any purchase should still be contingent upon a title search showing clear title and a satisfactory pre-purchase inspection.  If you opt to purchase it without a pre-purchase inspection, you are taking a risk that may not be worth it. Some of the most repeated advice for aircraft purchases is to be patient. It may seem like your dream airplane but being thorough with paperwork and inspections is vital.

Another more practical way to utilize eBay is to purchase aircraft parts. You can find some pretty good deals on old parts that only need a little work to look new. If you look at the storefront for Universal Asset Management, you’ll be able to find authentic, rare parts from decommissioned commercial airliners. I found a Russian “EXIT” sign, a flight recorder, and a parking break panel. They have hundreds more treasures listed on their site that do not carry quite the amount of risk involved with purchasing an entire plane.

https://stores.ebay.com/Universal-Asset-Management/_i.html

One more thing:

You may find some hidden treasures.

During my browsing of the eBay airplane listings, I also happened upon an advertisement for 10 hours PIC of multi-engine time in a Piper PA 30 Twin Comanche. In this case the seller is using eBay as a sort of classifieds, reaching a whole new audience that may be thinking about getting their Multi-engine add-on. This is a clever tactic and could be capitalized on if it isn’t against eBay’s terms and conditions!


We ended up choosing not to sell this plane on eBay

What’s Good About Used Aircraft Sales? Market Changes Could Stimulate Used Jet Sales…

Article written by and with permission:
Michael D Chase
Principal
Chase & Associates
1628 Snowmass Place
Lewisville, TX 75077
www.mdchase.aero
Cell: 214-226-9882 • Office: +1.972-966-1440
services@mdchase.com

Questions about the Business Aviation recovery still linger as there has not been much market movement to date. With most of 2017 behind us, however, we may be on the ‘cusp of change’. ‘For Sale’ inventories are down and aircraft transactions are up, while business jet prices remain weak.

Real gross domestic product (GDP) increased at an annual rate of 3% percent in Q3 2017, according to the ‘advance’ estimate released by the Bureau of Economic Analysis. In Q2, real GDP increased 3.1%. This is welcome news because, as we have historically seen, when GDP is at the 3% growth mark (or higher) Business Aviation traditionally does well.

These quarterly GDP changes between 2009 and 2017 can be viewed in Table A. Highlighted in yellow are the quarters that GDP was 3% or higher. Historically, we have not seen two back-to-back quarterly GDP increases of 3% or more since Q2 and Q3 2014.

 

 

The ‘For Sale’ Inventory

Chart A illustrates that the ‘For Sale’ inventory of Business Jets has decreased steadily from a high-point in July 2009 (2,938) to 2,225 jets in September 2017. That’s a reduction in the percentage of the in-service fleet from 17.7% in July 2009 to 10.4% now. This is a positive sign as the inventory ‘For Sale’ is dropping, albeit slowly.

Today’s market remains good for buyers because the aircraft ‘For Sale’ inventory remains over 10%. If jet owners are retaining their business jets longer since the downturn began in 2008, perhaps that would help explain why the used business jets ‘For Sale’ inventory has remained at such high levels since the Great Recession.

The percentage ‘For Sale’ has dropped from 11.0% in January 2017 to 10.4% at the end of September 2017. Indeed, most aircraft business jet dealers and brokers today would tell you that the pristine used jets that were on the market a few years ago have become more challenging to locate.

 

 

Used Full Sale Transactions (Including Whole Sales & Leases)

Further analysis of January-September 2017 shows mixed results for the six segments reported by JETNET in the September 2017 YTD Market Information release that included full sale transactions increase for business jets (5.9%), turbine helicopters (5.7%) and Commercial Airliners (8.8%) in YTD numbers (YTD September 2017 versus YTD September 2016).

The remaining three segments reported double-digit decreases in transactions with piston helicopters (-14.1%) showing the largest drop in YTD 2017 vs 2016.

Charts B & C depict the 12-Month used business jet and turbine helicopter moving average, displayed for the full retail transactions from January 2012 to September 2017.

From January 2012, used business jet transactions steadily increased until 2014—from 2,300 to over 2,800. A leveling-off followed in 2015, and 2016 produced mixed activity (while remaining well above the 2,800 line of transactions).

Since dropping to 2,652 transactions in January 2017 the used business jet market segment has shown a sharp recovery through September 2017 (2,833). This could be a result of built-up demand in the US after the newly-elected government administration finds its footing and the stock market continues to climb to record highs.

 

 

Since reaching a low point in January 2017, the used turbine helicopter market segment has shown a very rapid recovery leading into September 2017 (see Chart C). This is great news, and could indicate better days ahead for the turbine helicopter market.

 

US Jet-A Fuel Price

As of November 6, 2017, US Jet-A average price was $4.76/gallon and appeared to be on the rise. This fuel cost increase could have a negative impact on some of the progress we have been making in business aircraft flight activity. Nevertheless, today’s price is still around $2.00 less than the 2012 record fuel price of $6.84/gallon, as shown in Chart D.

 

The past 12 months of flight operations from September 2017 have been running 2.3% ahead of last year. Flight operations have not reached the peak of 2007 yet, but the trend is a positive sign nonetheless.

 

 

In Summary

Historically, the fourth quarter of the year reflects the most sales growth over the other quarters. We expect to see further growth in Q4 2017 to round out a very good year for used business jets and turbine helicopters. ‘For Sale’ inventories are slowly coming down and sales transactions continue to trend in a positive direction. We keep our fingers crossed and will continue to monitor business aircraft activity through future articles.

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