It's Not All About Price: Inside the World of an Airplane Broker11:02 AM
By Dan Pimentel,
For every airplane bought or sold in today's "previously-owned" market, there is a different set of circumstances behind every transaction, with each buyer bringing their own motivations to the deal. It's a pretty safe bet, says Chris Kirk, Owner/Principal of Kansas City-based WildBlue, LLC, that if there is one constant in the many deals his company closes, it's that there are no constants in the world of an Airplane Broker.
Kirk has been around flying all his life, and soloed at age 16 before earning his private ticket. But in his job of bringing buyers and sellers of airplanes together, he draws little from his time in the air. "Piloting ability, experience, and ratings don’t equate to business sense," he said, "dedication to customer service, or marketing and selling ability are the important factors for a broker. A friend once told me that having a driver's license doesn’t automatically qualify you for the Indy 500. There are lots of folks in this business with a lot of flying time that should probably go find something else to do and then there are others with not a great lot of flying experience that do a fantastic job."
That "job" is a very complex one too, because no two airplane deals are the same. Why Pilot "A" is buying, and what Pilot "B" wants to acquire can be at opposite ends of the single-engine spectrum. In Kirk's world, there are two main areas that he and WildBlue must handle with precision if they desire to close any deal. The first task is to locate high-quality airplanes to offer for sale, and the second and equally important task is to fully understand the mission that the buyer wants to accomplish with their purchased airplane.
Kirk and Wildblue handle that first task a bit differently than you might expect:
"We’re one of the few brokers that invests the time and money to personally travel to see each and every airplane we list for sale," Kirk explained. "We never ask our clients to send us pictures and log copies. We believe it’s important for us to be able to tell buyers that we’ve personally seen the airplane and then show them dozens upon dozens of pictures of what we saw (and not just the good points, either). This also gives us a chance to meet our clients first hand and show them our commitment to getting their plane sold. We’re located in Hangar 2 at Kansas City’s Charles B. Wheeler Downtown Airport. Regardless of our location, it’s important for sellers to understand that this is a global – not local – market. Our clients come from all over the country and their airplanes are sold all over the world."One mantra that Kirk lives by as a broker is to only bring high-quality, "modern" airplanes to market, because his firm offers what he says is the only 90-day/45 hour extended warranty offered to buyers of previously-owned airplanes. "We came up with this program," says Kirk, "and then enlisted AvGuard Insurance to support it. They had been doing one and two year programs, so we worked with them directly to do a 90-day program and we pay for this on every qualifying sale. We surveyed a lot of buyers and found out the #1 fear buyers have is of unexpected expense after purchase. Our goal is to help eliminate this major concern while providing a better service for our clients who are selling their planes."
Kirk limits his inventory to only high-quality airplanes, as this segment makes sense to his buyers on many levels:
"Buyers don’t want to get into a plane that, after they make upgrades, will be worth less than what they have invested. We bring high-quality airplanes to market – planes that have been pampered, updated, and aren’t 'projects.' Our marketing efforts actually focus on 1990 and later, but if an older plane fits our criteria we will consider listing it. We’re always looking for damage-free airplanes that have all logs and a good pedigree. We want to sell airplanes that people can be proud of and that they will feel comfortable putting their family, friends, and business colleagues in. And, there are simply too many good planes available for folks to have to settle on one with damage history. Sure, the repair may have been exceptional, but buyers don’t know that and aren’t willing to take the gamble when other offerings are available."
However, buying your own training airplane is not always a great deal for the buyer, says Kirk. "I’d say that it rarely makes sense. But, for those who have fallen in love with general aviation, have a business need for the airplane, and are getting some good counsel beyond their CFI, buying a plane to train in may make sense. For most however, I’d say to do your flying in a rental (it’s always cheaper to ding someone else’s plane up while you’re learning the basics than it is you own), get some experience under your belt to see what type of plane you’re most comfortable with, and then do some shopping once you’ve earned your license. We have, however, seen several folks lately buying high-performance planes like Saratogas and Bonanzas before they’ve earned their private ticket."
An important task that an airplane broker must perform during any transaction is to make sure the buyer looks at the deal from a financial and not emotional perspective. As pilots or flight students, the excitement of possibly owning a new (to you) airplane can be overwhelming and, says Kirk, can make a buyer's judgement cloudy:
"We’ve seen buyers finance the maximum amount possible from the bank and then even borrow from retirement savings, friends or family to make up the difference. I’m not suggesting this by any means. I think it’s always important to make a good solid business case for a plane before allowing emotions to take over. Otherwise – and we’ve seen this way too many times – the buyer finds that the plane he bought has depreciated in value quicker than anticipated and when the time comes to sell they’re holding on to negative equity."And quite possibly the toughest question for an airplane broker to answer, is "what kind of a market is this?" Whether it's a buyer's or seller's market depends on a number of factors, says Kirk. "For some planes it’s a sellers market, and for others, it’s a buyers market. It depends on the airplane and also on what the seller’s perception of reality is. Some owners – despite broader economic conditions – think that the value of their plane is at or above what they paid for it. This is rarely the case."
When you break down the job of an airplane broker, it's easy to see this is not a place for rookies. You need to know the idiosyncrasies of many makes and models of airplanes, and you also need to know the market for that ship. Price it too high, a buyer may never materialize. Price it too low and the seller will be less than amused. It's a precarious dance played many times in an airplane broker's day, and too many wrong moves can put your firm in the ground quickly.
But when you find a really high-quality flying machine, one that has been given the TLC it deserves, and can match that airplane to the exact mission of a buyer, life is good. And when you know you've hit that sweet spot on price and the paperwork gets signed and everyone is happy, you can sleep well knowing not only is your buyer and seller happy, but that you have personally given a new life to a great airplane.