As Aviation Evolves, Brokers And Dealers Are More Valuable Than Ever

By Nick Cerretani
Cerretani Aviation Group

I was having a conversation with one of our sales people recently regarding the ways our business has evolved over the years, the exceptional rate of change since the market downturn in 2008, and the role of the Web and information technology in the process.
 
I have been in the business since 1975, when a friend and I started a part time flight school.  By around 1980, we were actively engaged in business aircraft sales.  At that time, outside the computer industry, Information Technology was a new term.   For our purposes, the Internet did not exist, nor did the abundance of web-based products that make it possible for end users to readily gather information about aircraft for sale. A broker could add value simply because he or she had information and accessibility to aircraft for sale, and indeed, some brokers were able to make a living on that basis alone.
 
But when other sources of information became available to buyers, there was a real concern in the aircraft sales industry that aircraft brokers would become obsolete because buyers could now find airplanes on their own. There was a great deal of resistance to services like Amstat and JetNet, which publish information on available airplanes, and to websites that advertise airplanes and are easily accessible to end users.  Many thought such proliferation of information would diminish the value of brokers in the sales and buying process. However, subsequent events would prove the opposite to be true. 
 
A New World
It was clear to me and many other forward thinking brokers that the proliferation of easily accessible and widely available information would change our world.  There would be no benefit in trying to resist this trend and we would have to adapt.  As it turned out, not only did the this trend not make brokers obsolete, it made actually enhanced our value, at least for those who had skills, judgment and aviation wisdom that extended beyond merely knowing where the planes were. 
 
Because end users were flooded with so much information, it became important they work with someone with the experience and expertise to help distill from a mass of data the important points on which they would base their purchase decision.  It was no longer a question of simply “which aircraft and how much.” In order to add value, brokers needed to be conversant on the technical aspects of the target aircraft, finance options, long term operating budgets, factors affecting the aircraft value, regulatory changes that would impact the fleet, management and in-service solutions, international operations and a host of other areas that would contribute to a successful ownership experience. 
 
In short, for highly skilled, professional aircraft brokers and dealers, the dramatic increase in easily accessible information served to increase our value to aircraft buyers. For the brokers that lacked analytical skills, it was a detriment.
 
The Great Recession
Around the second quarter of 2008, the aircraft sales industry experienced, at all levels, the most impactful event in memory.  This was the fourth market cycle of my career, and by far steepest and deepest decline I had experienced in my 35 plus years in the industry. Its effects were lasting, dramatic, and have persisted much longer than anyone, based on past experience, would have expected.
 
The market recession of 2008 fundamentally changed the economics of purchasing, and the primary points for consideration in making a decision to acquire and operate a business aircraft.  Clearly, it changed the way dealers and brokers give advice. Today, our clients require we examine airplane marketplace in terms of predicting future value and operating budgets more than ever before, as these factors have a much greater impact on the overall cost of ownership than at any time in the past. 
 
Never before has there been a time when, with a hypothetical budget of $5 million, you could purchase either a nearly new light jet or an older, heavier jet like a G-IV. Today, for the same money, you have the choice of a wide range of airplanes in terms of aircraft size and capability. For the buyer, the acquisition budget has become much less important than the total budget – that being the price to buy the airplane plus the cost of operating it over a period of time, less the sales price when re-sold.
 
A Sea Change
If you were to rely only on past experience to provide guidance to clients, it could lead to some very bad decisions. In order to remain successful, perceptive brokers have expended a great deal of effort to equip themselves with the skills and information to deal with the new market reality. All of our previous thinking having to do with residual values, the best airplane for the mission, the right time to change airplanes, the opportune time to step up a class and so forth, has been affected by this dramatic shift. 
 
The professional broker must have the ability to take experience and translate it into competent and reliable advice for the airplane buyer. At our best, we are in the unique position to analyze all available information, filter out the noise and provide market wisdom buyers need in a very volatile market. 

About Nick Cerretani & Cerretani Aviation Group – cerretaniaviation.com  
Nick Cerretani has been involved in the general aviation industry for over 35 years. At the age of 24, he co-founded Miller Aviation, which by 1985 was the largest dealer of Cessna propjets in the world and had expanded into charter, maintenance, parts and FBO operations. In 1998, Miller Aviation merged with Corporate Wings and the combined company formed Flight Options, where he was Executive Vice President responsible for the acquisition and refurbishment of over 80 aircraft, from Citation IIs to Gulfstream IVs. In 2001, he founded Cerretani Aviation Group, one of the leading dealer/brokers in the U.S. The company represents a wide variety of private clients, public companies and major lending institutions. An active pilot, he holds an Airline Transport Pilot’s license and has more than 5,000 hours flight time. Contact Cerretani Aviation at (303) 469-4114.

About NARA – NARAaircraft.com
NARA is a professional trade association comprised of selected aircraft sales and brokerage businesses that are NARA Certified, and aircraft product/services companies that adhere to the highest professional standards. Promoting the growth and public understanding of the aircraft resale industry, NARA’s members abide by an elite 14-point Code of Ethics that provides standards of business conduct regarding aircraft transactions.