Avoid these mistakes when buying a jet.

Thinking that an activity that you do once in a while, using information from the internet and broker discussions when they are trying to sell you something, gives you enough knowledge to compete with professionals that do this for a living.  That is like playing golf with Tiger Woods and not asking for strokes.

Knowing what is a great deal.  I have heard from so many customers buying other products over the years telling me what a great deal they received, it was really something special and we just couldn’t turn it down.  You wouldn’t have been able to get any better.  How much money did they leave on the table?  They would have more than recuperated my fee.  

Missing a great deal because they did not realize the great opportunity then later getting a plane that was not as good a value.  Knowing and understanding the market is critical to making good choices.  Sometimes there is more to a great deal than just the apparent price.

A broker or sales person has a fiduciary responsibility to represent the seller.  He can not represent you both. Not having someone that is being paid directly by you going into the market place and thinking they are looking out after your best interests is like letting the fox into the hen house.  The most honest and trustworthy broker in the world has to represent the person who is paying him.  Good ones do that.

The largest and wealthiest individuals hire experts to help them gain a competitive edge.  Many of them hire an acquisition expert to buy their planes because they realize that hiring an expert reduces their risk and they more than save the fee.

Bottom line, when you consider buying a jet, don’t go into the project thinking you know as much as the professionals, hire an expert so you KNOW you know as much.  After all, it is not only your money you are saving but assurance that you are also getting the best value.

Hawkeye Aircraft Acquisitions is your professional expert.  For more information on our services please contact us.

Mike McCracken

President

Hawkeye Aircraft Acquisitions

Office 727.796.0903

info@hawkeye-aircraft.com

www.hawkeye-aircraft.com

"Jets Without Regrets"

It takes a brave man to choose freedom

This is a story that unfortunately I can not find the author for proper credit.  I think it has great meaning.

There was a King in a small country who was set to execute a prisoner.  Before the execution, a Prince from a nearby country was traveling through the area and the King invited him to observe the proceedings.

The next day the King faced the prisoner and told him his fate was behind the three doors in front of him and he could choose.  The King then ordered door #1 to be opened and there was a noose and hanging platform, he then ordered door #2 to be opened and there was a firing squad.   Door #3 will remain closed until your choice. 

The King then looked at the prisoner and said “choose one of the three. “ The prisoner chose # 2 and was placed in front of the firing squad and was shot.

The Prince looked at the King when it was over and asked does anyone choose the unknown door #3?  The King said “rarely.”  The Prince then asked, “what is behind door #3?”  The King signaled the guards to open door #3, the door opened to an open field and he said “Freedom, you see it takes a brave man to choose freedom.”

The path to freedom is full of unknowns.  It takes courage to choose and walk that path.

To our men and women in the armed services today, yesterday and tomorrow, thank you for choosing freedom and protecting our freedom.

Mike McCracken

NBAA 2014 Static Display

How to get the most out of your limited time at the NBAA static display.

The NBAA convention has so many things to see, break out sessions and people to see it can be hard to stay on track.  The static can even be more hectic with the many product offerings and often wait times to see aircraft.

If you are planning to go out to the static display and seriously thinking about upgrade options within the next couple of years, the static display can be one of the more helpful tools in winnowing the list of possible candidates.  After working the show for 30+ years, it can also be very confusing. 

Going from one plane to the next within a tight window of time sometimes leads to confusion and overlooking certain features.  I know as an industry professional, we used to purvey the competition and it was amazing what we would miss unless we all had a similar agenda, say check out window placement, or baggage door height etc.

I developed a very short checklist to help focus on key cabin areas to help compare the products and also a place to write key comments.  It isn’t magic, but it is a useful tool to help you get the most out of the static display and remember more two days later than the seats looked nice!

Email me at info@hawkeye-aircraft for your copy of the checklist.

Mike McCracken

President

Hawkeye Aircraft Acquisitions LLC

www.hawkeye-aircraft.com

info@hawkeye-aircraft.com

Office 727 796 0903

Aging Business Jets and the Value Problem

How old of a business jet aircraft is too old? 

Older business jet aircraft are an interesting value proposition.   It is important to understand a few terms to better understand values today, where they might go, and some background on the drivers.

Physical Life—The number of years that a new property will physically endure before it deteriorates or fatigues to the point of being unsuitable for its intended use.  i.e. Corrosion

Economic Obsolescence—Or external obsolescence, the loss in value or usefulness of the property caused by factors external to the property.  i.e.  New regulations

Functional Obsolescence—Depreciation in which the loss of value is due to factors inherent in the property itself, technology, operating costs, changes in design and lack of utility.  i.e. Examples are engine efficiency, avionics capability, lack of parts, downtime and operating costs.

The old straight pipe jets obsolescence was easy to recognize as the engines were loud and not fuel efficient.  Fan powered jets marked a new generation with greater range, lower sound levels and more thrust.  A layman could see the difference. 

We have entered into a phase of the market this time that is slightly different and more difficult to discern than in the previous example.  Engine technology has improved, however the delta is smaller.  Other factors are still in play with older airframes becoming increasingly more expensive to maintain, certain parts becoming more difficult to procure, increased maintenance downtime, corrosion issues, and avionics packages that are not only more expensive to maintain, in certain parts of the world the airspace is becoming more restrictive and the upgrades to fly in the airspace are expensive.

The results while not as easy to see, are just as real as before.  Simply put, these older planes still have physical life, however they have or in the short term will become either functionally obsolescent or economically obsolescent. 

The old adage you can buy a lot of maintenance for the cost of an upgraded plane needs to be carefully evaluated.  A plane is a capital investment and similar to other capital investments there is a point of diminishing returns where you really are putting good money after bad.  What is that point?  Performing a life cycle cost analysis complete with cost of capital is one of the better methods to understand if you are wasting money on the current aircraft.

This is the reason that when the aviation market is fully recovered we will not see a large uptick in the 20+ year old aircraft.   It will be cost prohibitive to spend the money to keep these planes flying when other viable options at much lower operating costs and a life cycle costs including cost of capital are available.

Whether you calculate these costs or not, the marketplace will, and often exaggerates the costs further decreasing values.   For planning purposes the goal should be to change to newer technology aircraft prior to the current aircraft’s functional or economic obsolescence and retain more value than waiting until salvage value.

Hawkeye Aircraft Acquisitions LLC can help with the analysis and acquisition.

Mike McCracken

President

Hawkeye Aircraft Acquisitions LLC

www.hawkeye-aircraft.com

info@hawkeye-aircraft.com

Office 727 796 0903

Where does the Embraer Legacy 500 fit in the market place?

Where is the Legacy 500 going to fit in the market place?  Embraer has done a good job of introducing new business jet aircraft in niches of the market.  However, the competition has not been sitting still.  In many cases the old classes have become more splitting of hairs than clear distinctions.

The Legacy 500 has a similar sized cabin as the Challenger 300/350 and a range of 3000NM which when the super mid size class was introduced was about the norm.  Now the super mid-size C-350 will have a 3,250NM range, the speed demon Citation X comes in at 3,295NM, the Falcon 2000S a 3,540NM range and the G-280 a 3,600NM range.   More range seems to be the trend in the traditional super mid-size class with varying cabin sizes.

The mid-size group has also added mileage from the old 2500NM standard to 2800 to 3000NM.  The new Sovereign+ and the smaller G-150  are examples that fit into this space and the Lear 85 when it arrives will also fit in the middle of this segment.  The old 2500NM standard is being filled in by the new Latitude and the Legacy 450.

The secret for all of the competitors will be the ability to offer planes that have operating efficiencies near the same as previous true mid–size aircraft and with comfort that the longer missions will require.  Technology, previously found in the large cabin planes, will continue to move into this category as large companies with a primarily domestic mission will still want all of the safety enhancements that EVS and HUD provide with the capability to still fly overseas. 

After many years of ho-hum competition in the mid-size and the super mid–size class buyers now will a variety of choices.  The class distinctions may be blurred, however it isn’t the class label as much as it is the mission they do.  Competition in this segment will continue to bring out the best.  There will be performance, technology, comfort and purchase price distinctions allowing customers to find the plane that best fits their individual mission and culture. 

Increased product offerings make it even more essential to have a good fleet plan and to understand both todays and tomorrows missions.  Hawkeye Aircraft Acquisitions can help you compare the apples and oranges to find the best fit for you.

Mike McCracken

President

Hawkeye Aircraft Acquisitions LLC

www.hawkeye-aircraft.com

info@hawkeye-aircraft.com

Office 727 796 0903