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Plan for Successful Aircraft Acquisition

“Does strategic planning assist a potential buyer to develop perspectives that will be needed when it comes time to affect a transaction involving business aircraft?” Jay Mesinger discusses...

Jay Mesinger   |   1st January 2014
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Jay Mesinger Jay Mesinger

Jay Mesinger is the CEO and Founder of Mesinger Jet Sales. With over 40 years’ experience in the...
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...A Resounding ‘Yes!’
“Does strategic planning assist a potential buyer to develop perspectives that will be needed when it comes time to affect a transaction involving business aircraft?” Jay Mesinger discusses...

Safe- effective and efficient transportation of personnel is an essential element of running a successful enterprise. Thus it is critical to look closely at business needs- mission profile- business competition- current market conditions and future plans for expansion when considering buying a jet or a replacement or a divestiture of a business aircraft. (Strategic decisions affecting Business Aviation also include charter- card programs- fractional ownership and dry lease situations.) Independent of the delivery system- business aircraft give the user the advantages of private air transportation.

We have spoken often about the challenges of when to enter into aircraft ownership or other forms of Business Aviation during uncertain times. The latest aviation transaction guides report a 26th consecutive quarter of declining aircraft sales. What should a governance body do with this information? Might it keep a company from entering this marketplace? Might it at least delay the entry point?

Transactional activity has picked up in spite of the pricing trends- and this fact is significant. So far that increase has only slowed- not stopped the downward trend in pricing. How should a Board interpret this imbalance? The answer is clear. There is still too much inventory remaining unsold regardless of the increase in activity.

Such news is actually more good than bad- because in the very recent past activity remained slow and prices were still falling. Now the marketplace is experiencing increased demand. So- as a Board Member- how do you vote with respect to entering a marketplace whose bottom is not yet clearly defined?

I recommend focusing on the side of need. If the company can put a business aircraft to work and its benefits are clear- the few points remaining in downward pricing will easily be overcome by having access to this powerful tool sooner- rather than later.

Internal drivers within the company should be watched closely. Develop a metric that can be adjusted regularly and can be applied to track missed sales or service opportunities that could have been accomplished had you had the ability to get to the customer or prospect quicker than your competition.

Are you starting to see a pattern of missed sales and service outcomes? Do you hear more and more frequently that your competition is breaking ground in new service areas that your company is slated to enter? Do you see new product offerings that you want to make not being embraced by the customer because the needed method of face-to-face selling is just too hard to complete?

If the answer to any of these questions is ‘yes’- the instability still remaining in the Business Aircraft marketplace is small compared with the instability being created in your market for your company’s products.a It is worth asking if there are aspects of long-range planning for acquisitions that differ from planning for replacement or divestiture. The answer is ‘yes and no’. Knowing the marketplace and understanding the trends both from an activity standpoint as well as from a pricing standpoint are important external drivers regardless of whether you are a buyer or seller. When to say ‘yes’ to a buyer that is trying to purchase your aircraft is as important as when to say ‘yes’ to your own purchase of an aircraft. One must be keenly aware of the drivers.

Strategic planning will give the Board its tools to evaluate the missed opportunities as well as a means for placing a cost on those missed opportunities. In the next several articles we will delve deeper into the internal and external drivers affecting jet purchase decisions and the balance needed to make the right decisions. A message will emerge. Plan early- assemble your sources of information and cadre of trusted advisors- rethink often- and have confidence in a well-orchestrated plan.

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