September 29, 2015
Why the Internet Hasn’t Done for the Private Aircraft Market What it Did for Real Estate
Written by Scott Plumb, Jetcraft Senior Vice President of Sales
In the United States, “For Sale by Owner” (or FSBO) is a growing trend in residential real estate. Where the notion of buying or selling your own home without the use of a professional realtor or attorney would have been less common 20 years ago, these days as many as ten percent of US home sales are of the FSBO variety, according to the National Association of Realtors. The growth of the Internet as a powerful sales and listing tool are major drivers behind this trend in residential real estate, and in the purchase and sale of any goods or services, in the US and elsewhere. The Internet has made information more abundant, accessible, targetable and powerful for everyone, helping to foster the notion that anyone can be an educated buyer or a seller, and save the money otherwise paid for the guidance of experienced professionals.
Has the Internet done the same thing for the buying and selling of private aircraft?
Not really. Even with the Internet making ever-more information about the private jet market available, the intricacy of today’s private aircraft deals have not resulted in an appreciable market for “AFSBO” – a fictional acronym for “Aircraft For Sale by Owner.” That’s because today’s private aircraft transactions are more complex than ever before – making the need for specialized expertise more acute. It stands to reason that the more expensive the goods or services purchased or sold, the more a buyer and seller would want to have the assistance of an expert, to afford peace of mind.
Why Private Jet Transactions Today Are So Complex
When selecting a private aircraft, a buyer may have enough basic knowledge to identify certain aircraft types that fit business and lifestyle choices. However, that basic determination is just the first step. Most buyers, particularly first-timers, lack the know-how to accurately answer the next steps in the buying process:
- Can the aircraft selected perform my missions (is it too much or too little)?
- Can the aircraft meet my capital and operating cost budgets?
- Does the aircraft have the necessary equipment to be exported or imported?
- What condition is the aircraft in and how has it been maintained?
- How do I go see my “perfect plane,” which could be thousands of miles away?
Today’s private aircraft are technical and engineering marvels, harnessed only by the ability of the certification authorities to keep up with creative engineering. Aircraft today are much more advanced, specialized and capable. Each aircraft requires unique, distinct, highly trained and dedicated resources across the aircraft’s entire lifecycle, ecosystem and operation: R&D, engineering, manufacturing, completion, certification, registration, training, maintenance…the list goes on. More advanced elements such as fly-by-wire, fly-by-light, synthetic vision guidance, enhanced flight vision avionics systems, and in-cabin mobile offices are turning up in the modern private aircraft – all to keep up with the regulatory agencies around the world as well as the demands of business.
Today in order to responsibly serve as an expert consultant – as Jetcraft does – sitting between the buyer and seller in the transaction, we need to bring both a deeper and broader set of expertise to the transaction. We need to know not just the technical advancements of the aircraft available for sale, but how each aircraft can benefit each of our individual customers. We also must be comprehensively versed in the raft of supporting elements across the aviation ecosystem, in order to successfully conduct a deal and ensure a mutually beneficial ownership experience for our buyers and sellers.
A Global Financial World
Another key factor behind the complexity of deals is that today’s world is much more global. Buyers and sellers contemplate a global market, rather than a national or regional one. This requires a more sophisticated, integrated approach to conducting transactions, with insight into market conditions worldwide, together with cultures, laws, languages and traditions; not just in individual pockets. Further, because aircraft transactions often require financing, routine inspection, repair, registration and de-registration in two or three countries across continents, today’s deals require a deeper pool of knowledge, a wider network and experience in getting deals done across borders.
Like selling a house by FSBO, it’s easy for anyone with a little aviation knowledge, some marketing skill and a bit of search-engine optimization know-how to advertise aircraft for sale. More and more single-person shops and small companies of unknown origin are popping up every day listing aircraft for sale. But when there is more at risk, there is more reward when partnering with the seasoned expertise, the personal connections, the global reach and the local market knowledge of specialized experts like Jetcraft to successfully navigate today’s more complex private aviation transactions.