September 1, 1999

Buying with Bower
by Ron Bower

Acquiring Perfection

WITH THE ADVENT OF THE Internet, the helicopter industry, like most other industries, has entered a period of transition that’s changing how products and services are advertised, marketed and sold.

Because helicopters are moveable international commodities, the Internet has aided the helicopter marketplace in going global.

Just a few years ago, most buyers of used helicopters went to dealers or brokers to buy a helicopter. Now, many buyers and sellers are using the Internet to bypass these middlemen. This is similar to what’s happening with the sale of books, cars and stocks, just to name a few.

At first glance, this direct marketing approach benefits helicopter buyers, as they try to reduce their acquisition costs, and many sellers, who are trying to increase their profits.

However, I think the independent mindset of today’s "cyber-buyer" can significantly increase the risk to consumers. A buyer-centered market places a much higher burden of responsibility on the skill and knowledge of the buyer when making a transaction. "Caveat emptor" (let the buyer beware) is good advice anytime, but when a consumer buys on the Internet, it’s even more crucial.

Making the right decision

Buying a new or used helicopter is a complex, sometimes overwhelming task, particularly for the first-time buyer. There are literally hundreds of decisions that you must make in the process.

A good working definition of a decision is "What you have to do when you lack all the information." If you had all the information you needed, the answer would simply present itself -- no decision would be necessary.

The reality is that you will never have all the information in a helicopter acquisition. You’ll need to decide on issues of safety, value, aesthetics, legality, and performance. You’ll have to look into the future as well, taking into consideration such items as resale value, manufacturer support, parts availability, direct and indirect operating costs, and mission suitability.

While you will never have all the relevant information, it is certain that the more information you have, the more likely you are to make the right decision.

The perfect helicopter?

After piloting 600 to 700 helicopters during the past 35 years (mostly in pre-purchase inspections), I have yet to see the perfect helicopter -- one that has all the equipment, power, room, reliability, speed, and features that I want. Tradeoffs abound. Using a logical approach to work through these tradeoffs on the front end of the buying process can alleviate some heartache and regret on the back end, when buyers find that what they bought wasn’t really what they wanted or needed.

Except for brand-new helicopters at the factory, I have never seen two helicopters that are exactly the same. Even if two helicopters look the same, they may differ in flight hours, damage history, use, performance, and maintenance records and background. To make the best selection decision from a choice of potentially suitable helicopters, a buyer must have some quantitative method of reducing the helicopters’ value to an "apples-to-apples" comparison.

Many -- maybe most -- helicopter buying decisions are made with considerable emotion. This is most noticeable in first-time buyers who lack the technical and market knowledge to evaluate the available alternatives.

I recall an incident several years ago when a buyer looked at a technically solid helicopter I was selling, but instead bought a far less valuable helicopter from a competitor because it had "prettier paint." After that, I repainted nearly every helicopter I had for sale.

In another situation, I lost a sale to a buyer who said he had an "urgent" need: he wanted to fly someone to a golf game in 10 days. Again, his emotions cost him dearly -- he bought a far less valuable helicopter at a higher price.

Nearly all of us allow emotions to enter into our decision making to a certain extent, but the most successful helicopter dealers take a far more logical approach when they buy.

Using all their accumulated technical experience and knowledge of the market, dealers take into account their overhead costs and profit margin on resale. They must buy at wholesale prices and sell at retail prices to stay in business.

The exact opposite is true for the retail buyer. Consider the sage’s advice: "You make your money when you buy the helicopter, not when you sell it." This also is true for the first-time buyer.

Getting answers

I hope this column provides helpful information on issues that you may be facing. If you have any questions you’d like answered, send me an e-mail at ron@bowerhelicopter.com or fax me your question at 512-345-5071. I’ll try to help you. I’ll also be posting the Q&As on my website at www.bowerhelicopter.com .

Over time, the accumulated questions and answers may become an information resource for future helicopter buyers. I don’t pretend to have all the answers, but I’ll do my best, based on my involvement in 325 helicopter acquisitions, to give you a frank answer or direct you to the appropriate resource.