The Floridian sun, the Miami heat, the beautiful beach and over 400 business aviation professionals at the Fontainebleau – November 2023 saw another brilliant CJI Miami. These are my 5 key takeaways from the conference.
Consolidation: from FBO’s, to charter operators, to brokers; acquisition and consolidation was a hot topic. A fascinating overview of the market from the aircraft brokers’ panel set the scene describing that even the largest brokerage firm world wide only had 2.5% of the market in aircraft sales. The result is a segment of the industry ripe for consolidation. Many speakers provided their words of advice on this subject and for any business who wish to acquire for growth:
– understand your goals and plan your strategy, and structure with this in mind;
– ensure your finance and cashflow are sufficient and there is wiggle room;
– integration of people and teams must be front and centre with the transaction; and
– efficiencies must go hand and hand with consolidation.
Uncertainty: with high interest rates, high cost of capital, geopolitical unrest and the US election in 2024, there were mixed feeling regarding predictability of the market in the short and medium term. Many in the room did not see an easing of high interest rates in the next 24 months and wondered whether a possible upcoming recession would be soft or hard. Furthermore, it was unclear what new regulations may be brought in by the FAA regarding privacy and whether existing rules will be more forcefully implemented increasing the feelings of uncertainty.
Supply chain and shortages: the pilot shortage has not abated. Combined with high interest rates, there was an estimated 35% increase in the expense of owning and operating an aircraft compared to previous years. Supply chain issues have also struggled to recover following the pandemic with labour shortages being a primary factor. Geopolitical events have exacerbated the issues of transport, delays and getting raw materials. Lastly, many suppliers were feeling the strain, especially larger businesses who had put in place 120-day payment terms which threatened smaller businesses’ cashflow and outlook.
The Easterly breeze: there was a general agreement amongst participants and panellists that the rules in Europe regarding transparency, client due diligence and KYC were arriving in America. The Corporate Transparency Act coming into force in January 2024 was just one example of this and was causing much discussion and concern. Further, public emotion regarding sustainability and the environment was also increasing and was likely to see similar rules and regulations being debated as Europe has seen over the last 5 years.
Outlook for 2024: the resounding opinion from CJI Miami 2023 was that the first quarter of 2024 would be strong, primarily because of a backlog of deals flowing from 2023. Following this strong opening to the year, the consensus was that business would tail off and the remaining quarters (Q2-Q4) would be quieter than previous years as the US elections go into full swing.
