RETURNING TO A RATIONAL MARKET
Being relatively new to Business Aviation- and having read ‘Dynamic’ by any other name means ‘Cyclical’ in the September issue- how does someone like me assess market movement? What trends does Mr. Mesinger see that should be followed closely by Boards considering Business Aviation policy?
- Interested Director
JAY MESINGER RESPONDS:
An interesting phenomenon is taking place right now- providing some stability and new elements of rationality to a dynamic market noted for its cyclical nature. Let’s consider the reason for such movement and the opportunities it portends.
In last month’s Business Aviation and The Boardroom we discussed the cyclical nature of the marketplace for buying and selling business aircraft. Some stability is slowly returning. The ups and downs- the sideway movements (and in some cases stagnation) are starting to subside. The marketplace is becoming more rational for a good reason- and Directors considering how best to manage their company’s needs for air transportation should take notice.
When companies of all sizes begin to return to the idea that Business Aviation can trump many of the outside forces of the economy and provide clear and undeniable shareholder value to the bottom line- the marketplace begins to recover. If decisions were made solely on stock market closings on any particular day- corporate management might decide to fold up their respective tents and go home- or simply move to the sidelines as many did between 2009 and just recently.
Even though we are not yet out of the economic woods- there is slight expansion taking place. Companies appear to have an appetite for continuing with the growth plans that were sidelined. Businesses are deciding to move forward with acquisitions and transitions. Proactive planning is coming back into Boardroom discussions- and Business Aviation is once again being recognized for its intrinsic value.
For far too long- companies sold off business aircraft or put off buying and using business aircraft due to the poor optics surrounding these important tools. Today- rational thinking prevails. The use of business aircraft is back in vogue because value has won over optics. It is no longer perceived as wasteful to move key people around the world in business aircraft- to provide opportunities for executives to see more customers- provide more service- meet more prospective clients and do more business.
Of course- this idea is not new; it has simply returned to its rightful place in Boardroom planning. Business aircraft - whether jets or turboprops - are indeed useful tools of modern business. When TARP money recipients- large corporations and many high net-worth individuals had to defend the use of their business aircraft- this created such a distraction to businesses that simply not using- not modernizing and not expanding business aircraft fleets were easier alternatives. Today’s economic problems are very real and should not be minimized- but these business tools are undeniably once again providing the needed benefits that businesses are recognizing.
Municipalities- cites- states and our entire society nationwide also benefit from the use of business aircraft. Make no mistake- the use of these important tools help industry grow - and growing industries in all segments of the economy mean more people working.
There is no way to minimize the impact of using these aircraft. No longer should we- as Business Aviation users- as an industry and as a community- be made to feel ostentatious or indulgent because shareholders are benefiting from the efficiency and productivity that these business tools bring to the bottom line. Bottom line benefits grow shareholder equity. They grow businesses. They grow our economy.
In a struggling global economy- positive stabilization can be achieved through belief in- and use of business aircraft. Active involvement with customers will not only be good for the global economy at large- but also be good for companies using Business Aviation. The window of opportunity (of low prices for pre-owned business aircraft) however- will slowly but surely start to close.
The more companies that realign their thinking to the value of business aircraft- the faster aircraft prices will begin to firm across the board. The time to act is now- before the cyclical nature of our dynamic market for business aircraft stabilizes- dampening opportunities for buyers.
Jay Mesinger is the CEO and Founder of J. Mesinger Corporate Jet Sales- Inc. For more information visit www.jetsales.com