Sounding Board: Five Minutes With Hunter Weiss, Welsch Aviation President
Hunter Weiss, Welsch Aviationʼs president.
Credit: Welsch Aviation
Hunter Weiss, Welsch Aviationʼs president, discusses a few key things that have kept the 75-year-old aircra broker in business, as well as trends he sees.
Q. Welsch Aviation is celebrating its 75th anniversary. What are some keys to your longevity?
A. We have always been a pure aircra broker, not a dealer. A lot of people assume the terms are interchangeable, and theyʼre not. Whereas a broker never inventories an airplane for its own account, a dealer controls a lot of its business by inventorying its own airplanes, and then they can also work as a broker. Welsch Aviation will only work as an exclusive acquisition agent or through an exclusive agreement to market an airplane for sale. We never inventory for our own account. That removes the conflict of interest. Letʼs say a dealer has a Gulfstream G550 in inventory and itʼs paying $100,000 in holding costs, and then it gets a listing for a G550. The logic is that theyʼre going to try to sell their airplane before the broker airplane.
One reason weʼve stayed in business for so long is repeat business. The easiest thing is to treat clients really, really well and have them call you back in two, four or six years. We have a number of clients who weʼve had for more than 30 years. One client has done 36 transactions with us.
Q. Who are you primary competitors?
A. In 1949, when Welsch Aviation began, there were none because we were the first aircra broker. Now there are 5,000 people that call themselves a broker in the United States.
Q. Going back to your fiduciary responsibility comment, can you elaborate? Can you walk me through a transaction?
A. We are not dealers, so we remove the fiduciary conflict of interest. We are hands on in what we do. Youʼd be shocked by how many people get an aircra listing or go to buy an airplane for a client and have never physically seen the airplane or gone through the logbooks.
We meet with the company that wants to sell an aircra . We give them market comps and then we physically meet them. We go to their hangar and look through the aircra and its logbooks, which tell the story of the airplane. The logbooks will show us what differentiates it.
Airplanes are not immune from issues. They have lightning strikes and other things that are potentially derogatory to the airplane. But we will know those issues and can discuss them with potential clients from the beginning, so you donʼt get to a letter of intent or contract and then find an issue like a lightning strike in the pre-buy inspection. Everyone spends a lot of time, money, energy and effort to get to that point.
Q. You fully disclose what you find in the logbooks?
A. Yes, the pros and the cons, because that mitigates risk for our clients. Itʼs a risk to get through that process and then get accused of not disclosing something. People could sue. We live in a litigious society.
Q. What market trends are you seeing? Will the fourth quarter be a frenzy?
A. From a macro view, there is a 12-month trend, a one-year trend, a five-year trend and a 10-year trend, with little baby trends in between.
The first quarter of every year is busy, because the Fortune companies are trying to use the budget le over from the previous calendar year. The second and third quarters slow down because the decision-makers, like others, are on vacation. Then the fourth quarter is a mad frenzy because they want to use the budget and maybe borrow a little bit from the first quarter of the following year.
Then thereʼs the five-year rise or fall in the industry, and thereʼs a 10-year rise and fall. Then there is the four-year political effect in the U.S., with presidential elections. People will be very tentative in the fourth quarter during presidential election years because of the unknown. But no matter what, business will move forward, and all those people that were sitting on the fence will move forward to stay competitive.
Q. Does the recent interest rate cut impact buyers?
A. Interest rates relative to people acquiring or selling aircra , in my opinion, is not as important as individuals getting a mortgage or house loan, because the vast majority of corporations, and even individuals, are paying cash. The only time interest rates are in play is if someoneʼs going to lease an aircra , but thatʼs probably only 5-10% of potential transactions.
Q. Are there any interesting market dynamics youʼre seeing or aircraft that are more in demand?
A. Sure. If you look at residual aircra value, you ask which ones are holding up the best. Itʼs really a tried-and-true story. Anything 10 years old or newer has a really strong demand, and anything five years old or newer is even stronger. There is a little bit of weakening in the Gulfstream G550 market because of the new G600 and G700 deliveries, but itʼs not free falling in pricing. In fact, the G550ʼs value is phenomenal compared to what that airplane can do for you. Itʼs an amazing airplane.
Q. Do you see an interior upgrades or modification trends based on client feedback?
A. Interiors typically include darker woods and lighter fabrics. And of course, satcom and Wi-fi. How do we live without Wi-fi?
Q. Are your clients typically staying in the same cabin size or upgrading?
A. The majority of our clients know what they want, but sometimes mission profiles change. Itʼs somewhat unusual that they change aircra brands. It does happen, but all of the brands—whether it be Gulfstream, Bombardier, Dassault etc.—have feeder lines and smaller jets. You can continue with the product line from one step to the next. We ask, what is your mission profile? What are your city pairs? How o en do you go? How many people go with you? Are there any specialized baggage needs? And we realize there is a difference between needs and wants.
