Jay Mesinger

Questions & Answers

December 12, 2005:

Q: I recently attended the NBAA Convention in Orlando. During the show, many of the daily publications spoke of upcoming issues that could negatively affect our industry.

User fees and legislative proposals to greatly expand the limitations on entertainment and personal use of business aircraft were mentioned. What can operators and owners do to get involved?

A: To be honest, you have already taken the biggest step just by being aware and asking questions. The issues you have mentioned are very real and could be onerous in their current discussed state.

The FAA is examining ways to fund the future and business aviation is in its sights!

In the current incarnation, the user fee imposed on our operations could be very expensive and not thoughtful in its application. Without a doubt there will be some type of cost passed on to us, however, we as owners and operators should be very vocal to be sure it is not applied indiscriminately and is commensurate with our use and type of aircraft.

The IRS is also weighing in on ways to increase the federal tax revenues. They are eyeing the aviation industry as a place to seize huge sums by literally choking us into submission! The proposed and actual new laws will dramatically change the way business aircraft will be depreciated based on personal use by executives and their families. It looks like we won't catch a break this time.

I urge all who are impacted by these changes to contact their congressman and senators to let them know where you stand and the importance of general and business aviation to the economy.

NBAA has made this communication easy for us all. Visit hyperlink: http://www.nbaa.org and click on the 'Contact Congress' button on the upper right side of the home page. This will redirect you to a brief description of the issues and then allow you to find the representatives in your area and build a letter to be sent directly to them.

This is a simple, yet powerful way to get involved and help shape the future for us all.

Q: One would think that the unbridled rise in preowned aircraft prices cannot continue. What are you seeing from your perspective?

A: You are correct that in certain areas of the market, prices just continue to rise, as supply remains low. It is generally the upper end of all markets, the like-new, low-time aircraft that are rising so steadily.

This is created by a combination of low supply and manufacturer backlogs. Most of the major manufacturers are running on a 12 to 24 month backlog for new deliveries and interim lift while waiting for a new delivery is often sourced from that particular segment of the market.

This situation is what makes those like-new planes so valuable. You will find that as you move into the older, higher-time aircraft, the supply is greater and prices are not so unpredictable. That is the real news - the good news is that if you are patient and skilled in your process, you will still find good choices and great buys.

Remember that the sheer number of transactions fuels the high prices on one end, but they also create opportunities as the owners begin to relinquish current aircraft for new deliveries.

- Jay Mesinger