NBAA News Hour - Barden, Mesigner, Bolen

NBAA president and CEO Ed Bolen kicked off Wednesday’s “NBAA News Hour” webinar on a 2022 business aviation outlook. He notes that leaders recognize that “our industry in many ways is being stretched to the limit” but yet has “a lot of exciting stuff ahead of us.”

This happens as NBAA celebrates its 75th anniversary.

Mesinger Jet Sales president and CEO Jay Mesinger moderated the panel, painting the picture of the current state of the market: “2021 was an unprecedented year for growth of our industry,” agreeing that, “a record number of first-time buyers is stretching all the limits.”

He pointed to pressures on supply, labor, and the “crazy” pricing that no longer has relationships to the market’s traditional evaluation tools. “It’s just ‘what do I have to pay to get into this game?’”

In March 2020, when the pandemic took root, the prevailing sentiment was aircraft values would go down a bit.

Mesinger added “We were looking at the wrong things. What we didn’t understand was the wealth that was going to be created during this pandemic or the absolute disdain of people to get on the airlines… and that they would turn that disdain and that wealth into the largest number of first-time buyers ever coming into our industry.”

The result has been a “complete depletion” of inventory, according to Mesinger. Further, some thought that as 2021 ended and the desire for bonus depreciation had been satisfied, the buying frenzy would ebb. “But, here we are a month and a half into 2022 and no less demand at all and no less frenzy.”

What’s been missing from all of this, he added, is the corporate operators that are just starting to fly again and consider their fleet needs. With first-time buyers, they come with no aircraft. Corporate operators can bring an airplane and put it back into the inventory pool, he said. “So, a little bit more supply, I think that would be a healthy way to create more balance in our market.”

The limited supply is permeating throughout the business, including the need to attract more labor and the upward pressure on salaries. Sheryl Barden, president and CEO of Aviation Personnel International, said compensation is continuing to go up dramatically across the board at every level.

“Across our country, we had the… great resignation across all staff. But in business aviation, it’s acute,” Barden professed.

The issue is not necessarily just the resignations, but also the steady decline of the pilot and maintenance technician pools that had been ongoing for years.

“We are now feeling the effect of that. It’s coming on like an avalanche. We do not have enough supply.”

Spooling up pilots is not a quick-turn proposition, she indicated. Business aviation needs to aggressively recruit, and it will become particularly important once airlines begin fully rehiring. Adding, the industry is collectively focused on the issue, looking at internships and other possibilities. She also stressed the need for good management and clear career paths to retain those already brought in, along with attractive compensation.

Jet Linx CEO Jamie Walker, meanwhile, remarked that while the market is bringing opportunity, it is important to have measured growth, and “quality is paramount for our brand.” Operators must be able to manage the growth. “It’s difficult in a market where we’ve been so aggressive to get the customers and never say no, to be on the other side of the table, to worry about quality, to worry about long-term relationships with our customers,” Walker stated. “It really is an unusual and different time.”

He spoke of the constraints about building up the fleet to have the additional capacity. Operating managed aircraft, Jet Linx did see “a little bit of an exodus” as owners took advantage of astronomical offers and sold their aircraft, but he said now there is a bit of an influx.

In December, he informed that his firm had more than two dozen airplanes go through conformity, but said, “we could easily have had another 25 to 30 going through conformity right now if there was availability on the supply side. Unfortunately, that has been hampering us.”

Duncan Aviation chairman Todd Duncan is seeing a wide issue with supply chain limitations. “It’s become more significant, unfortunately,” Duncan said. “And it is so broad.” These limitations are affecting things that had always been accessible, such as lubricants, to parts such as tires. In addition, it is affecting shipping.

But the market has provided opportunity for MROs as well as constraints, he said, noting there is a “tremendous amount of challenges on the MRO side, where our backlogs were typically 30 to 45 days, and are now six months and eight months. [This is] very difficult for flight departments to plan that— so unique challenges, but really outstanding ones. “

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