Asa Consulting: Consultancy Services in Executive Aviation in Brazil

Interview with Guilherme Machado, Aircraft Acquisition and Sales at Asa Consulting

Could you begin by giving us an overview of your evaluation of the Aircraft Consulting sector in Brazil at the moment?

The aircraft consulting service is relatively new to Brazil. I would say that the sector has only really become notable in the past 7 years when we opened Asa. In the past the aviation market in Brazil began with Lider, which was representing new aircraft and manufactures such as Learjet, Bombardier, Beechcraft, Hawker, Bell, etc. The other main company was TAM, which was representing Cessna aircraft. These companies worked for the manufacturers, selling the products made by these manufacturers. They were only focused in the sale of new aircraft.

Some years ago we decided to sit on the other side of the table and show the Brazilian business owners what their best options were and which were the best products for them to purchase. We showed them what the advantages were of one product over the other, etc. That is when consulting really began. It is a new idea here in Brazil.

And the aviation sector has always been favourable for consultancy services?

Since consultancy services began in the aviation sector, business people have begun to understand that an aircraft or a helicopter is not an asset that has a lot of liquidity. It is not a product you buy today and sell tomorrow. You have to make sure you make the correct purchase, that you buy what really suits your needs. That is why it is important to have a professional on your side. Most salespeople are just going to sell you what they have to sell. Salespeople have to meet their sales targets after all. A consultant doesn’t have this kind of pressure. The economic crisis of 2008 and its effects up until now really caused a fall in liquidity not only in Brazil but in the whole world. Therefore people that put aircraft up for sale have to be patient and wait a bit longer for a sale. At this moment, a professional with a vast experience in aircraft sales is also recommended to work in the sale or replacement of such aircraft. This is all helping to add value to consultancy services, that focus in the right and best acquisition or in the best possible sale.

How do you face competition on the market today?

One thing that we really look for is trust, our job is all about trust. We have to build up our reputation and we have been doing that since 1990 when we started working in executive aircraft sales and acquisition market. Even working several years for the manufacturers there was a really strong sense of involvement with the end user or client. There has always been that feeling and idea of going on to do a second and third deal. I think that this is one of the main reasons for our success. I have never made a sale that was not a good deal for the client. We never push a client to buy a product that they don’t need. The majority of our clients have been with us for a long time.

What kind of clients do you have?

The majority of our clients are business people and large companies such as Grupo Votorantim, Construtora Odebrecht, Construtora Andrade Gutierrez, Banco Alfa, Ambev, Laboratório Medley, Localiza, etc. They are all strong companies in Brazil that need aircraft to do their business. We do deal with a few individuals looking for aircraft for leisure purposes but that’s the minority of our work. Another company that we work for is Grendene in Porto Alegre. Some regions for example in the north east of Brazil, are not easily accessible by regular airlines and so there is a lack of executive transport for business people and we offer aircraft for these businesses to access these regions.

At the moment what would you say are the opportunities for investment?

At the moment we have some great aircraft on our books for sale and the market has never been so favourable to buyers. Prices are low. If you need an aircraft, there could not be a best time for acquisitions. We expect a 2014 full of opportunities to aircraft buyers not only in Brazil but all over the world. Economy in the US is showing signs of recovery. This is good for people who need to sell their aircraft. Most economists have projected that inflation will rise a bit and GDP will reduce a little bit in Brazil in 2014. So we know that there is likely to be a reduction in liquidity here in Brazil. On the other hand we foresee good opportunities in the acquisition side in our country in 2014. We do have a great portfolio of aircraft, opportunities and clients here in Brazil and we are working full steam ahead together with these companies and business people.

In that case, what is your strategy to open out onto these markets?

We are aspiring to launch more aircraft onto the international market. We are bringing some of our aircraft onto the international market, aircraft that in theory should be here in Brazil but we are bringing them out to a more “transparent window” so to speak. We have aircraft in the United States and we are taking two more over there in the next 30 to 60 days. These aircraft will stay there for exhibition. The market over there has currently a bit more liquidity than here.

So you are sensing interest from that market?

Yes we are sensing interest, and we are doing business. And in Brazil, we are also going to participate again this year in LABACE which is the largest exhibition fair airshow in Latin America. The event is going to be held in São Paulo in August. People and investors come from all over the world to visit this exhibition. We are going to have a plane or maybe also a helicopter on display.

Are you going to be looking for partners?

We work very closely with Axon Aviation, a very reputable company in London. We also have an Asa branch in Miami. Philipe Almeida runs the business there. He has a very high experience in acquisitions having bought aircraft recently in the US, Spain, Australia, Switzerland, etc.

What do you see for the future of your company over the next 5 years?

The business that we are in really depends on the state of the economy and on the optimism of our clients. We are growing faster than the country´s economy is growing shall we say. Today we have 13 aircraft on our portfolio for sale. When we began in 2007 we only had 3 or 4 aircraft for sale. We are growing and our aim for the next 5 years is to have about 25 aircraft on our portfolio permanently.

The aircraft that you have on your portfolio belong to your contacts that are selling those aircraft. Are you thinking of selling brand new aircraft?

No, we don’t want to sell for the manufacturers. We have been contacted by manufacturers to set up partnerships for us to help them selling new aircraft but we don’t want to do this. We want to make sure that we are working 100% on the same side as the business people, our clients. We don’t want to be working on the side of the manufacturers. We want to make sure we have excellent relationships with the manufacturers but only as buyers. Therefore, if a client wants us to purchase an aircraft for them from Embraer for example, then we shall do so. However I don’t want to feel like I have to sell them an Embraer aircraft. We are consultants, if we were to work directly with manufacturers we would lose our credibility as consultants.

We have specialised in nearly new aircraft, jets and bi-turbine helicopters. We don’t really work with older or antique models.

Is there anything else that you would like to add to this interview or a message for our readers?

What we really aim for as a company is that one day a foreign business person will feel the same confidence in our company as our Brazilian clients do today, and that he will hire us to sell his aircraft. This is a challenge that we are working on. One of our major challenges today is building up confidence with potential international clients.

We have set up our branch in Miami and we hope that satisfied customers will spread the word and we will build up confidence and a good reputation in that way etc. To begin with we would like a foreign client to contract us to sell their aircraft here in Brazil, then in the future we would like that to happen but with the idea of selling that aircraft anywhere in the world.

Why would an American client want to sell their aircraft specifically in Brazil? Are they really going to want to sell something to just one market?

No, they are going to try to sell the aircraft on the world market, the market is always going to be international. Brazil however is the second largest market in the world for executive aircraft after America. We have close to 1600 executive aircraft in Brazil and we are very close to operators and potential buyers here. We know the market very well.

Are you not losing your independence by having to sell someone else’s nearly new aircraft?

No, I am not losing my independence. What I want to make clear is that we work just for one side of the business deal. If one American client hires me to sell his aircraft, I will sell it on the world market if he gives me permission to do so, or if not on the Brazilian market where I can sell that aircraft to a Brazilian customer. So I can go to Votorantim and say “look I am selling this aircraft on behalf of this client, do you want to buy it?”

Today we have a contract with Votorantim to sell one of their aircraft, a Hawker 800 XP, so in that case I am working on their side. Once they have sold the aircraft and want to buy a new aircraft they have two options, either they can contract us to purchase an aircraft for them or someone can contact us to sell an aircraft and we can approach them. We always work with contracts and we always represent just one side of the deal. We never work for both sides, we work for whoever has contracted us. As I said before we don’t want to work for the manufacturers. We have worked for them in the past, we have worked for Gulfstream, Bombardier and Beech Hawker but we now defend the interests of people who buy from the manufacturers. Continue reading…

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