IADA Executive Director Wayne Starling: All right. Let’s get started. Thank you very much for attending this morning. We are excited to be here, especially to share the 3rd Quarter Market Report with you. Before we get into that, I want to tell you a little bit about IADA.We are currently made up of 52 Dealers and 130 Certified Brokers. And the dealers are 100 percent accredited. In fact, we’re the only accrediting organization in the aircraft sales industry. And we also represent eight of the OEMs as members. And then we have 80 Product and Service providers.These are the people that support the dealers in the transactions as well as an owner over the life of the aircraft. So, the nice part about that is when you look at us, we represent and sell around the world.This chart here shows you, for example, 56 percent of our dealers do business in Europe. Obviously, U.S. you can see (99 percent), 39 percent in the Middle East. So, we are truly a worldwide organization, and we are excited to continue to grow. We announced just today our new leadership for the association for the next year. IADA Chair Zipporah Marmor is from ACASS, which is out of Montreal, Canada. She is Vice President of Aircraft Transactions. IADA Vice Chair Phil Winters, VP of Sales & Aircrraft Management/Charter at Western Aircraft out of Boise, Idaho, and we are excited about our new leadership going forward. We are going to be issuing a new press release which will be coming out shortly.We announced to our members yesterday that we have partnered with 4Air on a carbon offset program, and we’re really excited about that because we know that that is our future, and we need to be supportive and be involved and be a leader in that segment of the industry. For the 3rd Quarter Market Report, if you don’t have it, you can shoot the QR code and you can get it on a quarterly basis. There is material on the back table also. But sign up for it and you’ll get it every quarter it comes out and you’ll find it very interesting. The nice thing about this report is it represents people that are making things happen.Our dealers, while we only represent about 15 percent of the dealers worldwide, we actually do about 46-50 percent of all the transactions worldwide. So, they really are the people that are in the know because they are the ones that are making things happen. So, thissurvey goes out to over 900 of our individual members, and it gives youthe information directly from the people that are involved. And you’ll hear a lot more about that. And our speakers today, as I introduce IADA Chair Zipporah Marmor as well as my good friend IADA Vice Chair Phil Winters. And I’m going to turn it over to them. Thank you.
2021 Record Year, 2022 Going Strong IADA Chair Zipporah Marmor: Good morning, everybody. Thank you for being here. I think on behalf of all of us, we’re happy to be here as well. So, we just want to share some of the key highlights of the Market Report. This is the 7th edition of the Market Report that we’ve produced at IADA. It is very informative and shows you where the market is. I think all of us can agree and we know that2021 was a record year. We’re still going strong in 2022. The sentiment of the brokers and dealers, of the people getting the business done, is that we’re still in a very positive position, although it is normalizing a little bit when compared to last year. IADA Vice Chair Phil Winters: And that’s what we want, right? That’s the good part when you look at inventory and pricing in Q4, and more specifically December of 2021. In the month of December last year there were twice as many transactions on average, by segment, than all the previous months in 2021. So, we had that big spike at the end of 2021 which certainly drove pricing, certainly drove availability, and really an unsustainable Q4 in December of last year.So, we’re happy to see the pricing stabilize and the inventory come in check a little bit. IADA Chair Zipporah Marmor: Yes. Stabilized. Still positive. Still optimistic. Still above – you’ll see from the graphs – above what would be considered a midpoint or an average, but not quite as dramatic as last year.
Classic Law of Supply and Demand IADA Vice Chair Phil Winters: And so, part of the drivers of this that our members are speaking of, is a really out of balance supply-demand equation that has existed – and frankly I don’t think any of us saw this coming when the pandemic began. It’s really gone on since mid-2020 and the supply-demand has been driven by things like our members reporting 40-50 percent of transactions in 2021 were first time buyers.This is really unprecedented historically. So that’s being driven by of course the commercial airlines and the unreliability that they’re providing both in scheduling, number of flights, and then the service that comes with that. And these first-time buyers have the higher demand to travel. Couple that with the charter business. There’s very little capacity. Prices are going up. It’s hard to get charter flights, jet cards, fractional ownerships. All of those segments are reporting at or near capacity. IADA Chair Zipporah Marmor: And the same with new aircraft deliveries. The OEMs had to reduce production at the start of the pandemic. It’s not been increased yet due to issues with supply chains, due to issues with workforce. That’s all having an effect on our markets, on the pre-owned markets, and driving some of the demands in our markets. IADA Vice Chair Phil Winters: Yes, and to take that even a step further, when we look back at OEMs, business turbine OEMs, up until 2008 they were on a steep incline of production to the peak which was in 2008, of 1,851 airplanes that business turbine manufacturers made in 2008. In the past 10 years, they’ve been on average around 1,100 airplanes per year. And in 2021 they were just over 1,000.The supply-demand balance – when it’s in balance fills both sides of the equation – the supply side has been hurt quite a bit by the manufacturers kind of right-sizing their production, as you all recall post-2008. Enter the great recession. OEMs had excess inventory, which of course hurts pricing and hurts their balance sheets.
Interest Rates Up, No Problem, Cash is King
IADA Chair Zipporah Marmor: I think it’s important to note as well, our survey did also cover financing and interest rates going up.From the sentiments of the products and service members and the dealer members who were surveyed, our buyers are not very much affected by those increased interest rates. 60 percent of our transactions are done in cash, and it’s still going strong despite a rate increase. What we’re seeing in this slide – there’s a lot of really good information – we’re seeing is 2021, an incredible year. But the New Acquisition Agreements outpaced the Exclusive Listings to Sell. Now there’s been a normalization, a reverse of that trend to a more kind of standard market where one would expect more listings rather than acquisition agreements. And that’s what we’re seeing so far this year. We are also seeing our closed deals on pace with where we were last year. Again, with a banner year last year, that’s a really strong indicator that we’re going into a very strong year end for 2022 with a focus on getting those deals closed. IADA Vice Chair Phil Winters: I think it’s interesting, also, with the fell apart question here that we asked our members. It’s remained constant. If you go through the report, there are some other charts that kind of show quarter by quarter. But there’s been a real stability in the fell apart segment, around 18 percent, which when we see a market turn like we did in 2009-2010, we see that number spike up. Inventories spike up. Pricing plummet. We’re not seeing any of those things as you read through the report, as reported by our members.So, the stability and the kind of plateauing that’s occurred over the course of the last couple of quarters has been welcome and shows a good solid market as we look forward. IADA Chair Zipporah Marmor: As well as price stability. You know, the question was asked, how many deals have you lowered the price on, or how many listings? And it’s been relatively stable, which is good news for all of us.
Unicorn Pricing IADA Vice Chair Phil Winters: And keeping in mind that toward the end of last year, a lot of those prices got to an unsustainable amount to where sellers were not really necessarily interested in selling. But let’s put a price on this airplane and if somebody will pay it then I may be interested, right? So, we have this kind of unicorn pricing that, if it can happen, we’ll take it.And so, when those then don’t sell, they either come off the market or they adjust the price. So, I think that the fact that we still see a little bit of that is carryover.But we’re seeing that the pricing in the market is actually stabilizing to where – a lot of the brokers in our organization and dealers don’t want to try and sell an airplane at an unrealistic price. That’s a waste of everyone’s time, including our seller. So, there’s a lot of good professional conversations that happen within the organization to find that balance with a seller before an IADA broker/dealer will even accept the exclusive listing. So that’s the professionalism that we like to see. And our group really wraps their arms around as opposed to taking any listing and hoping that we can get a crazy number.So that’s the professionalism that comes within this organization. IADA Chair Zipporah Marmor: Exactly. Thank you, IADA Vice Chair Phil Winters, We are focused on selling aircraft either by inventory or by exclusively listed airplanes. And the fact that that number is also increasing, the number of exclusively listed aircraft, shows that people realize the value of brokers and of IADA brokers. Things are taking a little bit longer to sell, and that’s reflective as well in the exclusive listings going up. But I think they realize the value of having a good strong broker behind them. I think we’ve covered the market sentiments a little bit. I don’t know if any of you have anything to add here, but we’re open to questions. Question 1: What’s the impact of the load in the shops doing pre-buys for the next two months? My understanding is the shops are pretty fully loaded and the pressure with 100 percent depreciation going away is causing some problems. IADA Chair Zipporah Marmor: At our firm, I work for ACASS which is based out of Montreal and works internationally. We’ve been finding some good solutions around that, either looking early or looking a little bit further afield. So, a lot of shops in the last months, let’s say, with sanctions, etc., weren’t able to work on certain aircraft and it freed up space. So, we’ve done a few deals this past quarter where we brought the aircraft to Europe for pre-buy regardless of where it was based or who was the buyer or the seller. It was just worth our while to go a little further to bring the slot earlier. IADA Executive Director Wayne Starling: Yes, our members, most of them say that there is still capacity, you just have to find it. The major ones, the ones that are the most popular that we all know about, they’re booked.But if you look, they say that capacity is still there and you can still find it. It might not be where you want to do it, but it’s available. IADA Vice Chair Phil Winters: All subject, of course, to the next three months. IADA Executive Director Wayne Starling: Additional questions? Question 2: What’s the average split between brokerage and acquisitions for the dealers overall? IADA Vice Chair Phil Winters: For the entire organization? Question 2a: Yes. As an average for all members. IADA Vice Chair Phil Winters: That’s a good question. IADA Chair Zipporah Marmor: It is a good question. I don’t know that we’ve looked at it that way. I think there’s certain firms that are obviously more specialized in one or the other. But from our firm it’s about two-thirds/one-third on the listing side. And I would think that’s a pretty good average. But it depends who we’re … IADA Vice Chair Phil Winters: Yes, firm-by-firm we’re probably a little lower than that. We’re probably more of the three-quarters/one quarter.But looking at the breadth of the organization and the different types of businesses that are in there, I’d guess on average, two-thirds/one-third.
Why Do Deals Fall Apart Question 3: What’s the biggest cause (of deals falling apart)? IADA Chair Zipporah Marmor: That’s a good question.We’ve been experiencing in this very hot market that buyers are putting in offers and then doing their due diligence afterwards. They want to lock in the airplane and then start digging and doing their homework, and then might realize that this doesn’t fit because of whatever reason. From my experience, that’s the biggest reason. IADA Vice Chair Phil Winters: Yes, there is a rush to get an LOI in place, to get in line, to get an agreed upon price, or at least an offered price. And then they keep looking, right? The buyers keep looking. And it’s like, well we’re locked in here, but what else is out there. So, I think by and large that’s the biggest thing. At this stage it’s kind of that fast and fury, and certainly the end of last year that was a driving factor along with the availability for pre-buys at the end of last year it was tough. But people were still transacting on airplanes without pre-buys, which is not something that is good for…. IADA Chair Zipporah Marmor: Or post-closing pre-buys. I mean, we did a lot of deals where the airplane was sold, closed, and then a hold back in escrow, and they did the pre-buy after closing, which a few years ago would have been unheard of, and kind of became almost common place at the end of last year. IADA Executive Director Wayne Starling: There have been some reports that the markets bailed. A number of the dealers shared with me that instead of getting eight offers on a plane, they’re now getting three to four. So, I would say that’s not down too much. Question 4: What is the percentage now of first-time buyers across your dealers? IADA Vice Chair Phil Winters: So, they’ve reported 40-50 percent [of the total transactions] yes. Question 5: I was just going to ask about that. How would you characterize the level of understanding of these first-time buyers on an (…) basis with – I see he’s laughing. IADA Chair Zipporah Marmor: That’s why they need a broker. Question 6: In terms of, how do you strategize mission identification, basically educating people so that they don’t wind up with something that’s not working for them. IADA Vice Chair Phil Winters: Yes, I’ll start with the level of professionalism that we have in this organization, right? So, a lot of times the folks that come to us as first-time buyers have experiences with their friends, with charter, with other airplanes that they’ve been in. So, they know that they want to be in the space, right? This isn’t a Cessna 172 type, “hey I want to buy an airplane and learn to fly” crowd. So, they typically have the experience to some degree. But the disciplined dealers and brokers in IADA – our whole objective is not to get them in the wrong airplane. Or said differently, to get them in the right airplane. And so, in order to do that, it’s an interview process.Now, sometimes the needs and wants don’t match the budget, don’t match the market. Sometimes the budget drives an airplane that doesn’t fit the mission exactly. So, I mean, it’s important to have that thorough interview process in the beginning. When somebody says, “I want a Falcon 2000.” Well, why? Why do you want that? What are you doing with it? How many people are you taking? “Well, I go to Europe once a year.” So, it’s the disciplined process of the types of organizations that we have in this organization that allow for the professionalism to happen. IADA Chair Zipporah Marmor: I would very much agree. I mean, there is a process to acquiring an airplane and we follow that process strictly.The difference between a first time buyer and a more experienced buyer is the amount of time spent on each step of the process. The process itself doesn’t change. It’s how much detail you need to put into each step with a less educated buyer. IADA Executive Director Wayne Starling: Yes, we’ve heard of some sad cases out there with some very unhappy buyers, and it’s because they get an inexperienced or unknowledgeable person, or somebody that’s really not working for the client, maybe working more for themselves.And with the IADA organization, everybody signs an ethical agreement. And it’s not that there’s not a lot of ethical brokers out there that are non-members, but one thing’s for sure, if they’re dealing with an IADA member, they can be assured that there’s an ethical standard there that’s met and maintained. IADA Chair Zipporah Marmor: And looking, you have to think long term. None of us in the organization are out to make a quick buck, or just do a fast deal.We want long term clients. We recognize that most of our business is repeat business or referrals. So, we’re in it for the long game and that means doing right by your clients, taking the time. Question 7: How many brokers are in your network now, and how does that change? Is it increasing? Decreasing? IADA Executive Director Wayne Starling: W e currently – I think I put it up there before –we have 52 dealers that are accredited, and they do business around the world. That represents a number, large number of actual brokers. Right now, we have 130 that are actually going through the certification. We have another 30 that took tests this week here at NBAA to become certified that will take us up to about 160. And that probably right now represents somewhere around 50-60 percent of all of the brokers that are members, or work with an accredited dealer. Anything else? Well, we want to thank you very much. And we’ll remind you, if you go to the QR you’ll be able to sign up to receive this on a quarterly basis. And the report goes into a lot more detail than we shared here. The numbers are verified. They come directly from actually what our dealers and brokers are doing. And then the thoughts are from the members and their perspectives on what they think is gonna be happening over the next three to six months. So, you’ll find it very interesting. And if there’s nothing else then I want to say thank you. If you have additional questions, we’ll be around. Stop by our booth. You’ll find us there. Our booth is located right beside Textron. It’s easy to find. But thank you very much for your time and have a great day. IADA Chair Zipporah Marmor: Thank you. About AircraftExchange IADA'sAircraftExchange marketing search portal is the only site where every aircraft listed for sale is represented by an accredited dealer. AircraftExchange enables users to create a confidential dashboard of business jets for sale, filtered based on their features and amenities, class size, age, and price. Users can browse through data-rich listings for available business aircraft. For more info go tohttps://www.AircraftExchange.com. Aboutthe International Aircraft Dealers Association IADA is a professional trade association formed more than 30 years ago, promoting the growth and public understanding of the aircraft resale industry. IADA's dealers consist of the top 12 percent of the world's experts who handle 46 percent of used business aircraft sales.IADA accredited dealers buy and sell more aircraft by dollar volume than the rest of the world’s dealers combined, annually averaging over 1,100 transactions and $10 billion in volume.
IADA offers the world's only accreditation program for dealer organizations and the only certification program for individual brokers. The process delivers lofty standards of ethical business practices and transparency in aircraft transactions, leading to a more efficient and reliable marketplace.IADA members participate in a program of ongoing education to remain current on best practices and new developments in acquiring and selling business aircraft.
To earn accreditation, IADA dealers must meet tough accreditation standards, receive sponsorship from current IADA-accredited aircraft dealers and undergo a formal review process. IADA-accredited aircraft dealers agree to adhere toa strict code of ethics that ensures fully transparent transactions between IADA dealers and aircraft buyers. IADA also represents a variety of IADA-verified product and aviation services that operate with the highest professional standards in the industry. For more info go to https://www.iada.aero. | 
