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Jay Mesinger
Questions & Answers
October,
2006:
Q: I am involved in an aircraft transition, selling
my light jet for a mid-size. The cost of the replacement
aircraft seems to be going up right before my eyes, and the
aircraft I am trying to sell is getting very little market
activity. Could this really be happening? I thought the
whole market is "on fire!"
A: This must be very frustrating, but even in today's
robust market environment there are segments that still
languish. I, too, am involved in a few transitions that are
unbalanced, as you suggest. Without knowing the particular
types of planes involved in your contemplated transition, it
is hard to be market specific, but I would bet, however,
that the relinquished aircraft is either older than the
replacement or is an aircraft from a category that has a
very narrow market segment (meaning few aircraft in that
model were produced). The newer aircraft today are, as you
mentioned, mostly enjoying a robust market environment. The
Citation Excel and the Citation Sovereign are a couple that
come to mind because of their short supply and high demand.
In fact, in these two categories, the pre-owned planes are
selling for more than what the original purchaser paid new.
The real question is what to do about it. Do you take the
position that it is better to pull from the market and wait
until the market cools? My answer would be absolutely not!
This market is not a seller's or a buyer's market and it's
very efficient right now. Yes, some planes are selling
quicker for a higher price and some are selling slower for
less, but if you feel committed to the need for the
transition, stay in the process. A slower market environment
will not positively affect the difference you will pay in
the transition. It may, in fact, make the spread greater. In
a cool market, the plane you are trying to sell may even go
down at a faster rate than the one you are trying to buy.
Q:
I am buying a pre-owned aircraft and it's my first purchase.
What should I do for a pre-buy inspection?
A:
Just the fact that you ask the question tells me that you
are on the right track. I always suggest that unless the
aircraft is very new and under full warranty, it should
undergo the most invasive set of inspections that the
individual manufacturers recommend. Most service centers
today offer a simple technical survey, (which is often not
much more than a glorified pre-flight), all the way to a
chapter 5 maintenance manual invasive inspection. For
instance, in a Citation X, I always suggest an AH inspection
with several add-ons like log book research to 135
standards, (including a life limited components tag check),
engine and APU boroscopes, and window checks. Rather than
use this answer to define the scope, I would rather just
point you to the corresponding manufacturer's individual
facilities. Here a trained technical representative can
asses the most logical inspection based on the current
maintenance tracking report of the specific aircraft, as
well as the specific aircraft's age and proximity to recent
or near term maintenance events. The bottom line is that
this opportunity to inspect is the only time most buyers get
to reject an aircraft. Be thorough in your planning and
understanding of both what is and what is not going to be
looked at during the proposed inspection. Accept the plane
with caution, reject with confidence.
- Jay Mesinger
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