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How jet brokers are helping jet buyers find good planes in a market where there are few

It's a jungle out there in the aircraft sales world, wilder than ever, and the ill-advised could become the prey. That's the message from some brokers who say 2022 has started off just as ferocious, if not more fierce, than 2021. Buyers not wanting to get stranded on an island are forced into a survival of the fittest offer. GlobalAir.com talked with several veteran aircraft brokers from across the U.S. to see how deals are getting done in this sellers' market. And none of those brokers expect anything to change anytime soon. Despite the lack of jets up for sale, especially for the premier aircraft models, the brokers interviewed said it does not necessarily mean that buyers are settling. But in an environment where there is little room to bargain, the bargaining might begin with bringing a client's high-altitude expectations back to the tarmac. Strategies that aircraft brokers are using in 2022 "What I'm trying to do is be ready differently," said Jay Mesinger, of Boulder, Colorado-based Mesinger Jet Sales. That means carefully navigating the waters for a client looking to buy, and making sure that things do not get too rushed in the final steps leading to closing, which Mesinger said can feel like an auction or the stretch run of a horse race. His company is being proactive to have clients ready to move forward before a plane is available to buy, even if it means getting a client to take a call in the middle of a round of golf. "Being ‘ready different' means we are the call they (the sellers) remember," he said. "It's got to be arresting enough that the few seconds you have, you get them to remember." The strategy for Mesinger also means being able to walk away from astronomical prices, "frenzy creates frenzy and the horse race gets too fast," he said. "We've got to be capable enough to say no." Tom Crowell, of Jetbrokers near St. Louis, said his brokerage is focusing on its networking and research. "Anything we can do to find an airplane for a customer," he said. "There's a limited supply and a lot of demand, and I don't know how we'll increase supply." Regardless of what's out there to buy, Bryan Comstock of Jeteffect in Long Beach, California, said past prices must be thrown out when trying to determine valuation because a sale price from six months ago is no longer relevant. "I think a lot of aircraft are now fairly priced," he said, with a caveat. "It's tough to say; there may only be one plane (of a particular model) in the market. It's worth what someone will pay." No shortage of wild transactions in the current bizjet market The present prices for preowned business jets would have been unimaginable just a year ago. Comstock said he talked with several brokers last year, floating the idea of asking more than $20 million for a Gulfstream G550 he was listing. Almost all of them thought he was crazy. "All we needed was one buyer to prove us right," he said. Comstock says the biggest challenge isn't necessarily finding a willing aircraft seller. It's that you also have to find their next plane. "We all thought COVID was going to put us all out of business," he said. "It did for like 60 days, and then we returned to the craziest market we've ever seen." For Mesinger Jet Sales, they are putting as many options on the table as they can, and sometimes their research leads to surprises. For one client, they looked at four planes capable of meeting the needs for that client's mission, budget, and year model. They ran projected flight plans against the planes' city pairs and then got proposals from aircraft management companies for annual-use estimates. They then aimed to cut the jet list down from four to two - using several metrics in their qualification criteria: The greatest capability to meet a mission with non-stop or one-stop flights, fuel burn, the number of units built, the locations in the world of where the aircraft are available, and operating cost. The list quickly went from four to two to one. "And the one wouldn't have been the one that we thought," Mesinger said, before agreeing to disclose the plane they chose: The Falcon 900EX. "If you don't use all these criteria to build your metrics, then you're just throwing spaghetti against the wall." Winners and losers in the current private jet sales market With aircraft prices breaking the sound barrier, Mesinger said things might be moving too quickly in some deals. "I think there will be some very disappointed buyers," he said, noting that the many first-time buyers have to rely heavily on the people in the industry that they choose to work with. "I think we're going to have a mess to clean up in our rearview mirrors, and moving forward you are going to deal with one plane at a time rather than a list of planes on the market." With agreements being made in some cases, without the normal review of records taking place, he said something overlooked could lead to some unwanted surprises in a buyer's next major inspection. Mesinger's brokerage is working with aviation attorneys to have a template for a letter of intent in place, something that should be easy to read for the principal without taking away the rights of the client. Comstock says the current market shows the importance of a buyer working with a broker that has deep relationships and experience in the business aviation industry. "The guy on his own, without a broker, is going to be empty all the time," he said, noting that younger brokers and foreign-based brokerages might be at a disadvantage, given how quickly planes are being sold. "I feel the information hasn't gotten through to some buyers out of the country." Crowell, of Jetbrokers, says demand seems to be picking up the pace even more since the end of the year. "It used to be that people wanted a particular model," he said, "Now they will take what they can get. Whatever they can buy they'll buy." So what could trigger the reverse thrusters on the market? By the end of the quarter, everyone will likely be watching the Federal Reserve for a widely anticipated hike of interest rates. "That could cool it down," Comstock said. "That would just add one more layer of crazy to it. ... I don't know how many levels of crazy we can rachet up to, but we're sure to hit them all."
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