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VREF President, Jason Zilberbrand - Changes in the used aircraft market - Airplane Intel Podcast | Aviation Podcast

by Adam Sipe
August 30th 2020
00:57:02
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In just a moment, we’re going to catch up with our guest, Jason Zilberbrand, President of VREF. For those that may be unfamiliar with VREF, VREF Aircraft Value Reference & Appraisal se... More

Airplane. Intel Podcast Episode 78 This week, we interview the president of the ref Jason Zilber. Brand, like now, is a perfect example. The marketplace is going through a tremendous amount of changes, sometimes so quickly that we have to sit back and really watch everything because, you know, knee jerk reactions could be a dangerous part of this business. Jason will share how the used airplane market has changed and what to expect in the months ahead as we patiently wait out the Kobe 19 pandemic. Are you an aircraft owner, pilot or mechanic? Do you want to learn how to increase safety, reduce risk and save money with your airplane thin? You are in the right place. Thistles. The Airplane Intel Podcast The only show that tells you how to make aircraft ownership. Simple, safe and cost effective. Featuring the pre bye guys and brought to you by co flight dot com. Way. Bring over 100 years combined experience flying, maintaining

and managing all types of aircraft. If you're ready to make smarter decisions and get more out of your airplane, stay tuned. Hello and welcome back to another installment of the airplane. Intel Podcast. If you're a longtime listener. Welcome back. It's really great to have you. And if you're new here, welcome aboard. This is the only aviation podcast that talks about the ins and outs of aircraft ownership. We compare airplanes, interview airplane owners and industry experts and, of course, share our real world insights as professional pilots, mechanics and inspectors working in the field where the airplane buyers and owners you can learn more about how we can help you through the aircraft ownership process. At airplane intel dot com. Today's episode is brought to you by our friends at co flight dot com and co flight is an innovative desktop and mobile app designed to make aircraft ownership simple and fun. You can manage virtually everything about your airplane so you don't miss a thing for maintenance and AIDS to scheduling and payments. The best part is that it's surprisingly

affordable. Unlike many other things in aviation, you can get a free 60 day trial of co flight by heading over to co flight dot com and entering the coupon code pre by at check out. That's Charlie Oscar Foxtrot, Lima, Yankee tango dot com and entering the code pre by now, I've been working on airplanes a long time. And trust me when I tell you once you start using co flight, you'll wonder how you ever owned and you're playing without it. Now, in just a moment, we're going to catch up with our guest, Jason Zilber, brand president of the Ref. Now, for those of you that may be unfamiliar with the ref, the ref is an aircraft value reference and appraisal service that delivers aircraft, avionics and engines. Valuation services for general aviation, business, aviation and even airliners through printed and online publications. Most notably, the era provides quarterly pricing guides in real time value data for aircraft owners, operators and aviation professionals. If you're in the market for an airplane, chances are you're very familiar with the ref as it is a trusted resource for a O. P A. Members. So whether you're looking to buy an airplane or sell your current one

v ref, it should be your first stop in determining what your airplane is worth or what to sell it for Our guest Jason is V. Rapps president and is an accredited senior aircraft appraiser with the American Society of Appraisers and an accredited member of the Appraisers National Association and an accredited member of the International Society of Appraisers. Jason is also an expert witness aircraft broker, inventorying dealer, acquisition agent, aircraft owner, aircraft operator, contract negotiator, consultant, teacher, conference speaker and author. In other words, Jason is the perfect person to talk to us about what's going on in the used aircraft markets. So without further ado, let's get right into it. Today we're speaking with Jason Zilber brand president of the Ref Aviation's most trusted valuation guide. Jason, welcome to the podcast. Thanks, Adam. Thanks for having me tell us a little

bit more about yourself and your career in aviation. Gosh, where do I start? So late eighties, my father started a pretty well known business aviation company called Jet Support Services, known as J S s. I. So I got to shadow him through the early days and then, gosh, 94. So I was about halfway through when my college experience and I decided to take the offer and go work for the family business. So I did that for about 10 years and then finished up college. Unfortunately, in the 45 4001 of my father's partners who was running the business got very sick and the decision was made to sell the company. So Jesse was put on the sales block and my dad and I left to pursue other interests, and eventually the company was sold in 2000 and eight. And then we started on aviation brokerage firm. I think doing power by the hour insurance. It was kind of, ah, bit of adult industry. Unfortunately, there a lot of

people call only when they have bad news. And so I know that we were dealing with all of the aviation brokers and dealers, and I think there was just a part of that side of the industry that he and I thought was very appealing. So we decided to pursue that we started Ah in aviation brokerage firm called the Jet Collection. We did that for Gush about 10 years as well. In the early days, it was buying up inventory, but it was pre delivery. So in the early two thousands, mid two thousands business jets had a huge backlog. With manufacturers. You could go by one on the pre owned market, but if you wanted to buy a new aircraft in those days. You could wait 567 years to take delivery of your airplane. So we leveraged the market and our network from Jesse and we went and bought a bunch of contracts for future delivered positions, and we were selling them before they actually physically delivered. So we're basically ah, holding portfolio of a lot of

paperwork. It was interesting because three emerging markets were going gangbusters and there were a lot of purchasers from Russia and India and China, and they had no direct access and they were fairly new aviation sectors. So we had a ton of demand. We bought and sold 28 positions over the course of four years and then 2008 happened. The great recession kind of threw the brakes on business aviation and and certainly, you know, it's timing the growth going forward. Still think we're feeling the impacts of that. But unfortunately, aircraft dropped substantially in value, basically overnight in our business model, unfortunately, was unable to sustain itself because we were really relying on that backlog to continue to appreciate our inventory, to make sense for us having to put so much money out, you know, is a down payment with the manufacturers. There's a ton of risk. Unfortunately, like I said, we were unable to continue that business model. So we started focusing on pre owned aircraft, basically reshuffled the deck, so to speak with inventory

. And we were buying. What I would say at those days was, you know, 2.5 to $5 million pre owned near 45 King airs Piaggio. Avanti is basically anything that would still require financing but wasn't going to be a tremendous challenge to find buyers, because one of the things that we're dealing with with the new aircraft is that they were all super mid size and larger cabins, and I think that demographic was starting to shrink. So the writing was on the wall and we started focusing more on pre owned aircraft. And then I took a project on 13 4014 to help basically liquidate a bunch of Russian owned assets. Some of them were state owned, some of them were airliners, but it wound up keeping me busy for about 3.5 4 years and then right into the trump election and then that whole mess started, so dealing with Russia became very difficult. It was a political nightmare, and I was kind of put in the middle. Is the American

trying to liquidate all these Russian don't assets? And and honestly, it was just It was a lot of headaches, so I could not wait to end that contract. The V ref deal kind of fell in our lap right about the same time. So I decided to focus my energy on the V ref acquisition. And so we took over 2.5 3 years ago now doing this full time since. But, you know, my background is certainly, you know, business Jets, engines, maintenance. I've been appraising aircraft for well over a decade, and I dio you know, as much as I can to support the aviation community in terms of speaking events or whatever it is that you know, that's required. But that's kind of the seven minute I think, uh, background as to how I got started certainly been around through the ups and downs more than once in this industry. Yeah, absolutely. And those ups and downs air certainly inevitable, unfortunately, but it kind of keeps things interesting and innovative on the business and at least of aviation, and your background is pretty extensive. Like said

, It comes from business, aviation with jets and turboprops and now v ref, which kind of covers everything. I think a lot of our listeners are familiar with the ref. Certainly our clients are. They use it for different things to help with asking prices and figure out what airplanes are worth. But there's a lot more to the V ref that most consumers use on, say they O. P. A site. Can you just tell us a little bit more about the features of the rough and why some owner operators would be interested in finding it useful? Absolutely. So we do have a going on a 17 year relationship with the O. P. A. And I think it's been fantastic. We are able to provide a open numbers with a tremendous amount of data that I don't think they would otherwise get access to. We did redo our platform back on last November. We launched it T O. P. A. Were probably about two thirds of the way through in terms off releases and bug fixes and features, and so probably by the end of the year it will be at the point where we'll be happy with it. But a lot of our feedback has come from AOPA

in terms of what the ref does. It's kind of interesting. So most buyers know what we do because they see our data similar toe, you know, like the Kellys Blue Book. And so they could go in and they could determine what an aircraft is worth based on its equipment. It's condition avionics, And I think a lot of people who have been around certainly before the Internet age are, you know, well aware that we publish a book and I think that that's a big deal because online software could be managed much differently than than, say, actually printing a book and putting it together and binding mailing it out. It's a massive undertaking. I think the book probably takes up a lot more of our time than people realize. But I also think it's what separates us from someone who claims that they're, you know, evaluation expert versus you know, a company that really is the expert, you know, because publishing a book and having it in writing. You know, there's a lot of things that that book is used for its used. Unfortunately, it's used by a lot of tax assessors, but it's also used by the I. R s. And it's also used by both the federal and most state

courts. It's in a lot of university libraries, you know. So it is a resource and because it is published and it has, you know, and I spn number, it's a legitimate source of information. You know, the online in the book kind of marry each other because the data is obviously the same, but they get put out at different times of the year. The book, because of the fact that we have to go through a printing process and we actually have toe have the physical copy, it tends to be, you know, 6 to 8 weeks ahead, you know, in terms of actually being ready to go in the online counterpart. So one of the big things that we were working on behind the scenes was making all of these aspects of the company worked together much more consistent. So we now have a virtual publisher on a virtual printer so we can drop ship from anywhere in the world. And then the data set that is current in the database is what's used for the book going forward. No longer do we have to rely on Emanuel Printing process, so that's been a big

transition. I think the first books that will be printing with the virtual publisher will start at either the fourth quarter or first quarter of 2021 and then the other thing that we do is we service so many different parts of the industry. So you know, the buyers and sellers will rely on us for data and, you know, able to look things up easily and kind of a check and balance both on what they're seeing in the market, but trying to figure out what they have so they can put it on the market with a better price. And then, you know, the professional side of the industry is really were You know, I've spent a ton of time making sure that they get the proper resource. Isas well so insurance companies and bankers and then people to buy and sell inventory. They rely on us heavily. A lot of the manufacturers rely on us, you know, we have a pretty big responsibility in terms off making sure that that data you know, is accurate. So one of the things that we did with the new platform is we gave those professionals the ability to get more data and get it quicker. We're doing the monthly

rollouts on data and weekly rollouts on data for Tier two and Tier three and Tier one is the same as it's always Been, which is quarterly. Which is also how are books were published but one of the things that will be doing early on next year's opening up the archives for the first time ever. So if you wanted to buy a book from 1995 you could. That's something that I'm pretty excited about because we have not had the ability to do that before. We actually had to print a whole bunch of extras every time we go through the printing process and then we store them is archive copies, and when they're gone, they're gone because we typically won't go back to the printer and redo a printing. But now, with the virtual print shop, it allows us to have all of our archive live, which is gonna be a huge tool. One of my favorite tools is the printed book, and I've been buying those every quarter for last few years since I've been doing this full time. And I think really people have been used to using the a p a version of the ref. I think they'd be pleasantly surprised as to the data that's really in the printed version and the ref online. Just

give us an idea of what kind of data are people able to find here And, of course, most of the day, like you said, it may be geared more toward the professional, but a lot of people in the market would also value from it. So it can you just tell us a little bit more about the data that people can find out in both the printed an online version of the ref. Yeah, so one of the most powerful tools that I rely on as what we call in our notes section and it really it's quite interesting because it will give you a detailed account of what's different between, you know, year to year models or when transition was for, you know, an engine type or, you know, wing change over or, you know, serious. Is there a great example because you've got the generation. So people are always constantly, you know, trying to figure out what serial numbers belong to, which generation. So that's all in there. What's really neat is that as time goes by, you forget that stuff that you commonly talk about you commonly know, and then it gets replaced with, you know, latest data, and your brain can only handle so much of this. But you know, when you got

to go back as a reference, it's there. And that's what's so amazing about it. We do a couple 1000 appraisals a year here, and it's a very big challenge to be bouncing back and forth between equipment type. So I'll do a business jet one day or, you know, single engine piston aircraft the next. And so having that data available is a huge, huge deal, and I don't think that our users necessarily are aware of it because they, you know, they see it every day. So it's become just, you know, something that it's available to him, but you know you can goto Wikipedia. You can try and figure it out, and then you don't know that the source of the data is accurate. So we come across this a lot. You know, I guess at the end of the day, you know his equipment ages. That's when this stuff is really critical toe have available to people because these aircraft don't just have 10 year shelf lives. No, I was talking to a gentleman this morning, and it's fascinating how a lot of these aircraft, especially in the G a side 40 50 years, is not uncommon, you know? So you've got a, you know

, a 1 72 and you're trying to figure out what separates it from, you know, different letter type. You come to the referent, we'd be able to tell you that another really cool tool or feature that we have is the historical pricing, you know? So not only do we know what the aircraft cost brand new from the factory, but we've been tracking it, you know, since it delivered so you can actually go in, start recognizing cycle, start recognizing when an aircraft is gonna plateau, or when it's you know, maybe it's already appreciate it so much and like now is a perfect example. The marketplace is going through a tremendous amount of changes, sometimes so quickly that we have to sit back and really watch everything because, you know, knee jerk reactions could be a dangerous part of this business. So but this helps, you know. So someone looking to buy their first airplane right now they could go in. They can see what the historical values were. They can compare similar, like kind aircraft from other manufacturers. They could build an index of all of those aircraft

and track them all for a period of time. That's what I like to dio. I like to track because especially once you get out of G A. The population numbers changed dramatically, right? So you could be looking at a 1 72 or ah, Piper era or Archer and there could be 20,000 of them. And then you switch over to a Oh, I don't know. Ah, challenge of 3 50 or challenge of 300 there's 400 of them on DSO. You have to get your arms around the fact that you're dealing with really small numbers, and therefore there's a fraction of the amount of transactions closing, and then it's really easy for data to get skewed. So I think you know the business aviation side. That's why it's It's so complicated because it's really hard to recognize those cycles. Sometimes, you know, you only recognize it when you're either going into it or coming out of it. I think it's just the lack of total population or fleet sizes that make it even more challenging. So in index allows you to include like, kind aircraft and get more data and more data points so that you can start trying to make sense out of some of this stuff

. But I think you know, for a O. P. A. Members or for a lot of first time G A buyers, you know, one of the most valuable tools. It's just simply being able to compare one aircraft type to the next. I think there's, you know, people that shop on performance and then they figure out their mission profile and figure out what kind of aircraft is going to meet those needs. Then the next step is what's it gonna cost? Operate and What's it gonna be worth? Right. And so you're trying to make sense of all this stuff, and that's really what we come in to do. We're not gonna tell you how much it costs to operate. There's other people that do that, you know. But our job is to tell you what it has been worth and what we think it's gonna be worth and what it should be worth today. And so, for people that are bombarded with so much data, especially on the Internet today, it's really hard toe a trust, the source and be know that it's consistent and accurate. And I think, um, it's pretty fascinating with as many appraisals as we dio. I'm constantly in and out of the market, and we're pretty spot on with just about every market that we track. And we do track everything

from, you know, light sports all the way through Boeing. So I mean, it's, you know, it takes a lot of people and just a lot of research hours, but that's the wild part of it. I'm like Johnny on the spot, Mr Wikipedia, every day, right by phone rings and Triple 71 minute and er 1 90 the next. And I did the Z plane appraisal. I don't remember. You're too young. Fantasy Island, Remember that. I have seen it. Yes. So I got a phone call, like, three months ago to appraise that actual aircraft. And I about fell off my chair growing up, that was a big deal, You know, so wild stuff like that. Yes. Well, I think that's partly what makes Vera such a great resource is the fact that you can learn about piss and g A. And you can learn about the business jets and you can learn about everything in between. And even airliners, like you say, a lot of data on avionics values and all kinds of various things that really are important to the buyer and also to the owner who may be getting ready to sell their plane. You kind of alluded to it. I mean, there are other

pricing guides out there. What makes V ref different? And where's the data coming from? I mean, you mentioned you do a lot of appraisals. Is that where the data is really coming from and you're tracking that we do a lot of research on our end for our clients. And I can only imagine the amount of time you guys must put in to get all this data together in an organized way. Gosh, when I first started, my head was spinning and it was through that spinning process that you try and figure out a you know, really good way of maintaining it. I mean, I just have to be incredibly organized. There's just not a lot of free time. My friends will tell you they rarely hear from me. I just don't take those calls because I've got too much to do. And you know, when you're in the middle of a project, you want to finish it. I think that's the real trick with. If you're dealing with data, you know, don't put it aside because that's when you don't remember all those details. You want to get it done, but in terms of our competitors, and we really only have one, which is Aircraft Blue Book and I think Aircraft Blue Book very similar in terms of how they tracked data toe what we dio, you know, there's a difference in the amount of aircraft that we both track. I

think there are right around 180 worried about 560 so there's a huge difference. I also think that, you know, in terms of our infrastructure and in the way that you access data through our platform that, you know, we provide a much more valuable report. But at the end of the day, you know there are competitors, and I think that there's certainly, you know, our numbers should be I would hope, anyway that our numbers air close. I will tell you that one of the big differences between us and the Blue Book is the fact that we do have to really big parts of our database. One is the modification and conversion side, and then the other one, which you spoke about a few minutes ago, is the avionics. You know, the modifications and the optional equipment list. That's really a substantial amount of time, you know, because as time goes by, there's equipment that you would say is valuable, that is, either obsolete B has been replaced 15 times over, right, So it's that bad data. It's that lack of relevant data that I think separates us from

the blue book because you know they're still tracking FMs is that nobody would purchase today, much less for the numbers that air in there. Same thing with engines. Same thing with overhauls, right? You wanna make sure that your current if you're quoting numbers that aren't accurate and it's impacting the value and then there's bankers that air trying to lend money on it right, you can see how this would all become a really nasty cycle to break. Our data comes from Theo EMS. So when they deliver, aircraft will tell us we get our serial numbers from the PM's. We usually have at least two calls or to formal meetings a year with every OM, and that's really so that they can inform us of what they're saying. Um, I think, you know, people would probably anticipate that we would be telling them, but we're not. Market makers were market reporters, and I think that's really important. You know, we're not sitting here going. How can we manipulate things? I mean, that's just like the furthest thing from the truth. We actually want the data to come in. We want to be ableto review it. We want to be able to sort it so

that we can prevent manipulation. So transparency, you know, obviously is going to do that. So our data comes from the manufacturers directly. It comes from brokers and dealers when they report, it comes from buyers and sellers when they purchase and sell. It also comes from all of our appraisal work, which means that we're dealing directly most of the time with financial institutions and banks. Some banks, some credit unions will allow buyers to hire their own appraiser. But for the most part, you know the banks air hiring us direct. So those numbers are incredibly important because, you know, we're getting the purchase agreements. We're seeing what the actual closings are, and then we're also really in the middle of the transaction to a point where I could tell you immediately if the database needs to be adjusted. And so I think that that's really important, because the database needs to be a tool that you can use to do a really appraisal, like the ones that we do or evaluation, like a buyer and seller would dio and the variance between that total or that end value should be your knowledge of both the market and the aircraft. And so

I would expect our numbers to be more accurate because we have a lot more knowledge about the equipment in the market. But that doesn't mean that the user doing it on their own should come up with some crazy number. It should be, you know, within a you know what I'd like to say, a reasonable margin of error of 3 to 5%. And I think that that's why it works so well. It's always wild toe have these conversations with people you know, the chicken or the egg. Do people put their aircraft on the market and then going to veer effort, they going into V ref and then figuring out what they should put him on the market for? And I think after doing this for a long time, it's pretty fascinating that people will actually adjust their asking prices based on what we're reporting. Despite what a lot of people think. Most transactions, actually that I see close. I don't see a lot of fighting between parties. I think the environment, even with Cove in 19, is big of a challenge is it's been it's still been relatively healthy, especially on the G a side. So transactions air Still there. Thanks. Air Still lending. You know, if anything, I think the business jet market is just kind of taking a breather, as you would expect

, You know, an election year and coming into the fourth quarter and summers air usually slow, right. So I think that that's to be expected. Yeah, absolutely. And, yeah, you kind of transition right into my next question. I mean, we are still in coma 19 and, like you mentioned the overall health of piston G A and even small turbine G A has been very, very healthy. I mean, we've been very busy doing pre buys and, ah, lot of consulting on those types of airplanes and overall, not seeing much difference other than kind of maybe some less inventory. And I think, like you said, it's a lot of people that own the airplane or taking a breather. But have you seen any significant changes in aircraft value since the start of the pandemic? Say, you know, from the first quarter of 2020 or fourth quarter of 19 toe now, have you seen any significant changes in aircraft values now that the supply and demand ratio is a little bit maybe off balance. Yeah, that's a great question. So really depends on what sector you're talking about. If we talk about the G a side first, I think that there's been some, you know, pleasant surprises

. I mean, I thought that there might be some interest, but I didn't think we would see this kind of aggressive behavior. And that's with a lot of the older twins. Uh, some of those markets have just been beaten down over the last decade to a point where they are incredibly appealing. I think there's, Ah, there's a lot of truth to a lot of people going. You know, I don't have to go back to the airlines. I can actually do this on my own, and I don't need a Lear jet to do it. I can actually do it in a piper, assessed a or, you know what have you That's been kind of fascinating because talking about it and then seeing it, there's a huge difference. The major factor you have between 0809 and today is that you know, the banks Aaron business, and they wanna lend Andi that compliance hasn't really changed and, you know, the loan to value ratios. While we might have seen, you know, some craziness back in March and April, things have settled down there, really back to where they were pre co vid, I think the biggest challenge for people's where do you go if you don't have anywhere to go, and it's just a recreational type situation. People are gonna buy and sell G

aircraft every day for those types of purposes. But what I think has been picking up some of the slack is the fact that now people, especially those that live in remote areas, I'm blessed. I'm 40 miles from downtown Chicago. I'm probably 18 from O'Hare. I have a major international airport right in my backyard. So for me, half hour drive, I'm in the parking lot 20 minutes. I'm at security and I'm done. There's so many people I know that that would be a five hour drive, then transferring to another you know, potential international airport so that they could actually go to where they needed to go. So I think with the airline shuffling their service and with everything that's happened on that side of the industry, which is almost in and of itself, a movie of the week. I mean, who would have thought that you would have seen 7. 37 is grounded Boeing almost teetering on the point where you don't know that they're gonna be able to make payroll, right? Combined with the biggest loss and air traffic in history, the whole thing is just crazy. And so we're sitting here now witnessing this whole thing. We

forget that there's people in remote locations that no longer have service. What are they supposed to dio? Ah, lot of people are not gonna get in their car and drive eight hours. They're just not going to do it. Do I think piloting skills are especially my generation, But my parents generation was all about, you know, becoming pilots and having those kind of skills trade skills, right? And my generation was less eager to develop, you know, trade skills. And I think my kids generation won't have them at all. And so we're losing people that want a pilot just for the sake of piloting. But it's been really neat to see that there's been a whole bunch of first time buyers that are they want to go see, the grandkids are the parents. You know, they don't want to sit in an airport with their little ones and force them to wear masks. So they're they're finding alternative ways of traveling. So that's picked up the dark side to this whole mess. As you would probably suspect. Business, aviation, personal travel. Whether you're high net worth, individual or a corporation, you gotta have somewhere to go and you

know the G a side. I'm sure you hear it all the time. There's a lot of $100 hamburgers being bought because people just want to fly, but with a business shit, that's not gonna happen now. People are exercising the aircraft, but you're not gonna just hop in it to go, you know, halfway across the country. So as the business environment changes and the needs of meeting people in person changes and certainly is the virus, I think has has forced a lot of people, unfortunately, to find alternative ways of conducting their businesses, staying productive, business jets, unfortunately just weren't being used as much, which I think is just caused a whole bunch of issues But it's my understanding that the fractions were busy. They're moving people. I actually was reading an article of three busiest destinations over the summer have been Aspen Vail in Jackson Hole, Wyoming. So I think everybody got the same idea, right? Let's go somewhere remote and get away from this thing. You know, the kids are gonna go back to school this week next week, right? So business travel should start picking up, and I'm not seeing it in the airline side. So what point

do people start flying these aircraft again? And we're dealing with a lot of restrictions in Europe to, and I know it's easy for us just to talk about what's going on in the U. S. Because that's where we are. But you're seeing this kind of mess everywhere, right? So businesses that you know had aircraft so that they could travel internationally. There's no international travel. I don't think it's a surprise that the larger business jets have really suffered the worst throughout this, And truth be told, they weren't having a great 2019 either. This has been going on for quite some time. We're trending, you know, towards smaller aircraft and I think when I got into the industry, and I think this is the big difference, it was business aviation. In the early nineties, people with high net worth did not by business jets. It just was unheard off. Of course there were, I mean, but they were very famous. And you, you know Hugh Hefner. They're all notables right today. It's not uncommon for people that have a high net worth to buy aircraft. And so in industry that was built on corporate travel is now having a, you know, rebuild its business

model to support high net worth individuals. And I think it's just a totally different Valleywag. Corporate aviation has flight departments and infrastructure and overhead high net worth individuals use management companies and other means of operating those aircraft. So you know, and then you're also dealing with a much less sophisticated batch of equipment, right? Most high net worth individuals aren't flying around and really large international cabin class style aircraft. They're flying, you know, smaller planes. So that's really what we've been saying. It's just to some degree, no surprise because it is an election year, and then the other side is, you know, it's still Ah, very robust industry. Things are still moving. I haven't talked about helicopters much because, unfortunately, there again, you've got the same kind of situation you do on the business jet side, where twin heavy is because of the oil and energy sector. The Kobe Bryant accident. I don't know. A lot of people are aware of what's going on in the insurance side with helicopters, but it's not uncommon to have your premiums double

every year. And I think there's a lot of people that are being forced toe get out of that side of the industry. So it's been unfortunate the helicopter industry really has taken it on the chin. It's probably the worst it's been in three decades, but you will always have search and rescue. You're always gonna have a huge demand free M s. As you know, helicopters air a big, important part of our industry. They could get the places that Fixed Wing can't. And so for that reason alone, they're never going to completely go out of the way when u A. V s, I think are able to pick up a lot of that slack. You'll probably start seeing a lot more of that. But you know, it's been a very dynamic past eight months. It really has. Yeah, totally. It's been, I guess, unexpected in a way, but also kind of predictable in another way, because, as you mentioned the fractional guys, they're pretty busy. But I know from working with a lot of folks that they're finding value in full ownership on their own or in a partnership or something like that, with maybe a small airplane say they're flying in a 5 60 Excel and they're buying a King Air because it still

meets the mission. And it's a lot cheaper for them with their annual budget and whatnot and these air folks that are high net worth or their flying corporate. So it's kind of interesting how that is being viewed now because, like you said, the remote areas are not being serviced and even being based near large airport. The travel day going from one city to another city could be much longer, depending on if you have to change airplanes or there's layovers and so on. It could be a pretty long day and even getting in your Cessna 206 or something could still save you a significant amount of time and travel. So people are seeing the value in that. I think as well as the additional security mawr convenience. I'm curious what your opinion is. There's so much going on. But what do you think? Overall, the future of business in general aviation are gonna be over the coming few years. I mean, what is the new normal going to be like for us? And how is that going to affect the pricing of airplanes? Because, you know, I kind of feel that private aviation is going to be in an upward trend here soon, and I think that's

gonna bring more people to the market and maybe bring the prices up. But anyway, that's my opinion. I would love to hear yours as you kind of deal with this more every day. I actually don't think you're wrong at all. I think that one of the really neat things over the past 10 years is that you know, we're giving access to a bigger cross section of a demographic that I don't think ever had access before on whether that's through a wheels up for a surf air or partnership in a smaller multi engine aircraft. I mean, I think that that's really the beautiful thing about our industry is that the equipment gets better, you know? So that's another really important point. Is that you know, 30 years ago, there were bad aircraft. Unfortunately, there were undependable aircraft. There were aircraft you didn't wanna own. There were aircraft that you would find out that you didn't wanna own after he owned it. Today, I can't think of one aircraft that's built today. That's a bad airplane. Are there expensive aircraft to operate? Yes, of course there are. But they're all safe. They're all dependable. There are aircraft that I think 10, 15 years ago that we're going down a road that I think a big chunk of the industry

thought it was a waste of time, which were, you know, the smaller what we used to call the lj's. But those light jets have been a tremendous asset to our industry because it helps, you know, helps grow, helps give more access to people that, you know typically would never be able to afford it. And you know it is wild. I am seeing people cancel or not renew fractional or some sort of contract because they could go and purchase, you know, 30 year old aircraft and operated for next to nothing under proper expectations, which I also think is really strange because, you know, that never happened in our industry. But people actually understand now that there's gonna be a day they're just gonna have to toss it. It's not gonna be scrapped. It's not gonna be salvaged. It's literally gonna be chopped up, and that's gonna be the end of it. And they're okay with it. It is still a piece of machinery, right? So I don't know the crystal ball. What do I think is gonna happen over the next five years? Unfortunately for a lot of people they're gonna be dealing with, you know, aging parents and obviously, you know, we're starting to see the baby boomers get up there. And I think that there's

a lot of people that right now are very myopically focused on health concerns, and I rightfully so and I think that that's going to dictate a lot of the trends going forward. Can the airlines figure out a way to effectively move all of us without you know, potentially killing my mom. That's the question. And so if we're not comfortable, we're not going back. And I think right now the general public is spoken there, not comfortable. How long is it gonna take until there's a vaccine? I mean, you would think in the next 12 months that we would be getting back to some sort of normal. But I think the longer it takes, there's less normal to go back. Teoh. Right? So I think we just have to accept the fact that we're gonna be going through some changes and that aircraft now we're gonna be, you know, Sina's another place where you can either isolated protect yourself or potentially expose yourself. And so from that aspect alone, I think people that have the disposable income at whatever level that maybe will probably seek, you know, to travel without going back to the airlines

if they can afford thio on. Like you said, there's gonna be a ton of partnerships and there's gonna be a ton of people looking, you know, to find alternative creative ways of flying. And I also think a lot of it's gonna be regionalized as well. You know, I think Florida, New York and those two markets. I think a really good example of, you know, shuttle services and being able to move that large groups of people, but smaller groups of people in a more controlled environment. And I think you're seeing this with the fractional and you're seeing it with the charter operators. I think they're all trying to figure out how they can, you know, not only protect their staff but protect the customer base so that they feel comfortable flying. If things continue with exactly the way they are right now, I would expect our industry as a whole to benefit because I don't think people are gonna wanna, you know, drive across the country. They'll probably seek to do it, you know, through aircraft. But I don't know. I mean, are we still gonna be dealing with this in 2021? Probably. I mean, I just can't imagine right that the end of the year is going to come and it's just gonna go away. I know there's a lot of people who think it's going to go away in November

with the election. I don't think that's gonna happen either. First, any bubbles, But But until we can get a better, you know, sense of, really? You know, the data on what we can trust? I think this is what we're gonna the only emotion. So I would expect that people's travel and where they're going to in those destinations are also gonna change. Um, it doesn't mean there's not gonna be a necessity for long range aircraft. Of course there will be. I just don't know that there will be a necessity for the amount that the manufacturers thought that there would be, if that makes any sense. Yeah, absolutely does. And I agree with you. And even if magically we have a vaccine and the pandemic goes away, the after effects will continue to be with us for a long time. That fear factor? I guess so. General aviation business aviation is going thio have a pretty bright future. Ultimately, which hopefully will help, you know, offset some of the other crazy stuff that we've seen. A question that we've been getting a lot lately from listeners and clients as well is Hey, is this a good time to buy an airplane

? And is it a good time to sell on airplane. There's so much going on, a lot of uncertainty, you know, Not a lot of movement in pricing. I mean, what is your opinion on that? Is it a good time to sell? Is it a good time to buy? But summer times air always slow in our industry. And I think you know, if you're in the G a side and you're looking to buy most buyers, they're gonna be looking toe by, you know, in the winter, right, So that they can start off this spring or the summer flying season with that aircraft and then, you know, they know they're gonna is gonna be a period of time. They're gonna work some of the kinks out, but they'll fly it all summer long in business, aviation, this summer's air so slow that, you know, and it's no surprise people with those kind of aircraft, that kind of disposable income, they're typically vacationing, so they don't wanna be hassled, especially Europeans There, you know, there's a lot of mandated time off, so it's a really I'd say summers air not the best time to try and sell a business yet, But I think coming into the fourth quarter September October tax season. It's It's always a very, very active

time of the year. It's when a lot of transactions happen and you're right. You know, there isn't a lot of inventory out there. It's amazing. 1 72 is a perfect example, right? I mean, how many have been built and there's nothing out there? And I think that's the call I get. It's the frustrated buyer. When am I gonna be able to buy an airplane? I've got several clients right now. They're so mad because every time they go to buy it, it's either sold or there's something so wrong with it because, you know, unfortunately, a lot of these aircraft don't fly. And so by the time the buyer finds out, you know what's been lurking, they've spent so much time, they've missed, you know, out another aircraft they could have focused in on. But I think it's always a good time to start looking at the G a side in those winter months, because that's when there's gonna be stuff out there that you can either, you know, fix up or do your project. And I think there's really two camps there right. Buyers either want something turnkey, ready to go, or they want to find something that they could go ahead and make it the way that they want it. And again, that has a lot to do with the buyer and how much experience they

have in aviation and whether or not they really know what they're looking for in terms of an aircraft. Right. But typically, you know, I would say summers air a bad time to try and sell aircraft. Just in general. I think you're always better off. Probably end a third quarter full fourth quarter, first quarter. That's when a tremendous amount of G A stuff is done in terms of values, right? This is the big one. So what markets are safe to buy what markets, you know, should you not be looking at? And I would say, you know, right now there really hasn't been anything with Sky's falling. I haven't seen any aircraft market. You know where things are just a complete, utter disaster, and I think a lot of markets that people you know, we're counting on appreciating for a really long time. I think that they're also slowing down a little bit because we don't know what the future has entailed for trainers, for example, right? So if a bunch of schools stopped buying aircraft or unfortunately can't keep the, you know, the student pilots coming in, you know you would expect to see some of those aircraft start to go on the market. But we haven't

seen that yet, and I think that's been really fascinating. I'm paying really close attention to the supply chain, and if anything, it's getting worse. There's fewer aircraft today than there was back in March. Eso go figure right? Everything's the whole world coming to an end. You still can't buy an airplane. That was my biggest shock. You know, I remember doing a podcast episode in March and, uh, stating the current inventory of total airplanes and that inventory has shrunk by, like, three or 400 airplanes. Yeah, and it's not because airplanes were being sold. I don't think so anyway. No, it's opposite. People are hanging onto the airplane, taking it off the market, which was actually kind of a surprise. I think that there were a lot of people that said, You know, now is not a good time. You know fielding calls from people. Because the only calls you're going to get if somebody looking to steal something, right, everybody that calls me Oh, people must be going broke left and right. Honestly, I'm not seeing it. You have seen one deal since March Crater because of Covina. Andi actually really wasn't even covert related. The truth was

, the aircraft just, you know, had some issues and that was that. Where do you go and find all of these airplanes to meet the demand? This is another famous subject matter, because I think there's a lot of people out there that are looking at aircraft right now, and they really don't know anything about it. And they're they're spending a ton of time on it and they believe everything that they're reading and owners like to be brutally candid hasn't flown in 10 years, and then the guy's gonna have 40 buyers for it. I just sit there and scratch my head. Those of the aircraft. I think that at some point it would be great if if somebody would just say anything that hasn't flown in this amount of time, can't be sold right without a complete ankle. or someone going through it. But that's the dark side to, you know, you just see a lot of equipment that I don't think it's necessarily misrepresented. I just think buyer is refused toe acknowledge the fact that you know, not flying isn't pampered. Not flying is bad news. You know, E had a guy who called me on a 1 52 and he was

just dying to buy this airplane. I mean, I basically is fighting with him not to do the appraisal because I knew he was going to spend more money on it than he was gonna be comfortable. And I said, Look, you know, plane hasn't flown in 15 years, you know, it's a $30,000 aircraft like, Oh, the guy just did a $22,000 annual E. I was like, Oh my God, I said, Please don't buy this airplane. He's like, why? I was like, look at everything. He fixed tires, brakes, anything that turned right, just a disaster waiting to happen. So he forced me to do the appraisal. By the time I got done with it, it was like $6000 airplane s. So there's the fight and I was like, You shouldn't You shouldn't buy it I was like, Nobody should be buying this thing. It was like, I need to go to the parts of it But you know, there are a lot of perspective buyers out there utilizing all the technology. I had a guy called me, and he's like, I search Google maps all the time and check which aircraft which airports by me, don't ever move. And those are the ones I go after. E thought it was great because, you know, here's a guy. He's getting creative. There's no supply out there. He's gonna go find it, you know

? But these aren't muscle cars. These aren't long lost vintage Ferraris. There's some truth to the fact that if it hasn't flown in that long, it probably shouldn't all right. And you probably see that more than ideo. Yeah, absolutely. And especially like you said, it's a machine. Machines are designed to be utilized and to be ran, and you know, you run into all kinds of problems, especially if it's in your the coast or something like that. I mean, even active airplanes congee get, you know, affected by some of these issues, But yeah, it's crazy what you find out there, and it's crazy how people are valuing the airplanes, and it's crazy what people are willing to pay for them. And, uh, you know, we had one of our clients looking at an airplane. It was a Cherokee variant. That was, by all accounts, was lipstick on a pig. Really? Right there. Plain was really expensive. And the bank was like, Whoa, you know, let Zillow down here because when we veer, eft it when When the bank, the raft, it they said, Yeah, it's maybe worth maybe 11 35 1 40. So now, in addition to

the deal, being kind of on hold for a minute while they figure out what the prices they had an appraiser come out. Buyer had to pay for the appraisal. And now, lo and behold, airplanes not worth nearly what they agreed to pay for it. So now everyone's unhappy about it and all this. It's crazy what you see out there, and we ended up walking away from the airplane for other reasons because it was kind of ah, disaster. But even doing all the due diligence if you don't know what the information is telling you and what the implications are of the various things that we learn about these airplanes. It's kind of useless, right? So that's why it's important for people to enlist teams of experts for assisting them through the buying and selling process of the airplane so that they are aware of what they're doing and what all the implications are. And so they don't make some costing missed aches. And so that would be everything from using online tools like the rough using your appraisal services using guys like us who do pre buys and your insurance broker and your banker and you're flying structure and it goes on and on. It's so important so that you don't make some costs a mistake's. And yes

, it's tough because a lot of airplanes aren't available right now, and it's hard to find a good airplane. But that's hopefully a temporary set it up, Adam. It's amazing because when markets air tight, that's when you need professionals. When markets aren't, it's really hard to explain to somebody who has never been in our industry before or they have, but they've been sheltered. What I mean by that is they haven't been dealing with all of these issues on a daily basis because they're either part of a big group or, you know, they've got a partner who's been dealing with it. But yeah, there's no substitute for a pre by. There's also an old adage in our industry, which I know you know really well, which I'm sure everybody has heard 100,000 times but still doesn't understand why it holds true even to this day. And that is, you know how you make a small fortune in aviation. Start with a large one, right? It's the famous last words. I mean, it should be on every pilots tombstone if you can walk away from a couple $1000 on a bad airplane deal and save yourself 200 100 whatever the number is on the backside of nightmares. But people just there

, like, uh, I spent so much money already, you know, I want to make it happen. I'm just like, why are you fighting to get this deal done? Why, I just don't understand. But it's human nature. I see it. Unfortunately, with a lot of reef eyes, you know where the owner of the aircraft, has this number in his head because he's been the one paying the bills. So of course, it's worth more than it should be or he so out of touch with the market. That value just doesn't even come into his head. It's like, Well, I just meant a half a million dollars on new avionics. Let's go get it, you know, refight. And then the banker has to deal with that, right? So these air very complex situations and even on a small, which seems to be a very simple aircraft. If it's your first one, absolutely pay for an expert. You gotta have someone to a pre, but you gotta have someone go through the log books. You got to physically, you know, put your hands on that piece of machinery and make sure that it's operating properly. But I guarantee you, there's somebody closing right now on a handshake with no bill of sale, much less a purchase agreement, and they're gonna put

you know a loved one in that airplane and start flying it, and I mean, I've seen it, you know, perfect airplanes just have a ton of issues, so it is machinery. It's really important that it gets, you know, taking care of its life. It's also important, you know, when you buy that aircraft, you've gotta understand you're just a custodian for a period of time. It's your job, right to protect that pedigree. It's your job. Thio. Organize those documents. It's your job to make it so that you can tell that story easily to the next owner with documentation so that they can take it and tell it to the next person. But people tend to forget that as well. I tell people, if you're going through a problem right now trying to buy an airplane, what are you gonna do in five years? We Now it's your problem, and you got to explain it to the next guy. And I just hear dead silence on the other side every single time. But like Oh my God, I never thought about that. It's like, Well, now that you know that it had a hard landing or prop strike or this happened or that happened, there's no logbook entry. Don't you think you should document it? You know, maybe it's not the airplane you wanna buy, then

, right? whether it like me or not, I'm not interested in the Christmas card. I'm interested in making sure that a that aircraft isn't gonna come back to bite him and be that if I knew something, that it was my duty to tell them. Okay? And if they want to make a decision on their own, they're entitled to think when enough people tell you it's a bad idea. You should probably listen. Yeah, absolutely. And it sounds like you and I, Jason, are having similar conversations with a lot of people when it comes to trying to guide them through making informed decisions on airplanes. Well, Jason, we learned a lot from you. We learned a lot about the ref. We learned a lot about the market. Is there anything else that you think people should know about right now in terms of cove it or the market or pricing or anything else related to buying and selling an airplane? I think it's gonna be a wild next couple months. I'm sure everybody is really looking forward to November so that we can get it behind us and have ah, holiday season. That might be one to remember instead of the past year to forget. But I also think, you know, look at what we've lived through the

last four or five months. So it just goes to show you how resilient we are that we can, you know, get through some pretty enormous obstacles even when we have no control. Talk about something that engineers and aviators can't stand right not being in control here. We all are dealing with this, and I think for most people I talked Thio. While it's been a major inconvenience, they're getting by just fine. So my advice is no knee jerk reactions. Vet the data. If it sounds too good to be true, it probably is. So just pay attention. Another thing I'd like to tell people to is, you know, photography, one of my favorite hobbies. It's also something that can be incredibly manipulative, and so when you see an airplane and it's from certain angles or you're not getting the whole picture asks for more photos, get time stamped photos before you invest your time and money into ah, piece of machinery. You want to get comfortable with it, and then you know if you can't get to it, if you guys can't get to it, we can get to it, You know, rely on people that air nearby that have the resource

is that you can trust. And And I think that will also save you a ton of frustration because one of the hardest things is, you know, is trying to buy an airplane that's halfway across the country. Who do you trust? And right now you're not gonna get on an airliner to go look at it. So right. I think you know, your group obviously has a tremendous amount of experience and provides. Have somebody go look at it. Save yourself the pain of finding out the hard way. I guess the only other thing I would say is, if you're struggling to figure out what's going on, call me. Email me. I'm happy to help. I probably get calls 24 7, but you know, Sunday mornings, right? And it's not a feeder ever. Not everything's feed driven. You know, if you genuinely need help, call me. I will help you. It's what we're here for. I want to make sure that people don't make the same mistakes that I've seen others make because they're avoidable. That's what gives our industry, I think, a bad name. And it's such a phenomenal industry, so right, and it relies on the future success of all the other owners and operators out there. So when people get burned by a bad deal or a bad airplane, it really puts a scar on

. Aviation is a whole. So the future of aviation relies on everyone else's success. And that's something I thoroughly believe in. I think, Jason, you're on the same page with that and people to kind of piggyback off what you were saying on the front end, should use V ref to help them figure out what the airplanes worth. So they get off on the right foot, learned about the value of the airplane, the history, the airplane, etcetera. Take a look at some of the tools available to you on the roof. And speaking of which, Jason, how can people learn more about the ref? Start subscribing to it and talk to you directly if they have any other questions. So our website is very rough dot com. We've been putting out a webinar every month so you can get access to that through our news on our website. They're all on YouTube. Subscription started $100 a month. They're good for 30 days. There's really no fine print. You can cancel whenever you want. You can go annual starting at 7 25. Crazy products for piston aircraft started 800 go up From there we do expert witness work, a lot of litigation, consulting a tremendous

amount of damage appraisal work. So if you're a Christian and an accident to your third party dispute with your insurance company, we can assist with that as well. We've got offices globally, so if you're dealing with an issue and it's in a foreign market or you don't know who to call, call us. We've got The resource is will point you in the right direction, even if it's not something that we do. And then everybody can reach me directly. Jason at the ref dot com and then my phone number is 3129610934 And if you call before 5 a.m. on a Sunday, you're not gonna get me. But after that, you probably will. Jason has been a real pleasure having you on the podcast. I really appreciate your time. We'll put all the links that you mentioned just now and your phone number and contact info into the show notes that airplane intel podcast dot com and Jason Thanks again for being on the podcast. We really enjoyed speaking with you. Thanks, Adam. I appreciate you having me in a very special thanks to Jason for spending so much time with us to explain the various

and announce of the used airplane market. I know I learned a lot from him and I hope you guys did to. It's certainly a complicated market out there giving all the variables and definitely one that requires the help of an expert to fully understand and be successful in. I put links to Jason's Contact Information and the Refs Official website in the show. Notes for this episode Number 78 at airplane intel podcast dot com. If you like to join the conversation, you know we love to hear from you. You can drop us a line by shooting an email to feedback at airplane intel podcast dot com, or head over to the show notes page and leave us a voice message using the voice mail app that covers it forced this week. Thank you so much for spending your time with us. You guys really make this podcast so much fun to produce, and we are very grateful to have you along while we talk about airplanes and aircraft ownership. Be sure to stay tuned for our next episode. What we're gonna hear from Don, to understand what you should be looking for in a pre by or pre purchase inspection, and why you should never get an annual inspection in place of a quality independent pre by So you won't want to miss that until next time. Stay safe and keep the dirty

side down. We'll see you. Thanks for listening to the airplane until podcast. If you liked what you just heard, we hope that you'll subscribe to our show and leave us a rating or review. You can also follow us on YouTube, Facebook, Instagram and Twitter by searching airplane Intel to access show notes, episode archives and other free resource is. Visit us at Airplane intel podcast dot com to get a 60 day free trial of co flight head over to co flight dot com and use the coupon code pre by. Also, if you'd like to support our show, visit us on patryan dot com. Forward slash pre bye guys. And remember, owning an airplane doesn't have to be hazardous to your wealth.

VREF President, Jason Zilberbrand - Changes in the used aircraft market - Airplane Intel Podcast | Aviation Podcast
VREF President, Jason Zilberbrand - Changes in the used aircraft market - Airplane Intel Podcast | Aviation Podcast
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