Dec. 02--Business jet broker and New Jersey native Janine Iannarelli, who founded Houston-based Par Avion Ltd. 13 years ago, plans to expand its Bergen County sales office within the next few months, even as the aviation industry has struggled to recover after the recession. Iannarelli talked Tuesday to The Record about her company and the challenges it faces.
Q. You grew up in Fair Lawn?
Yes, I did. I'm a product of the entire New Jersey school system, public schools in Fair Lawn and then Montclair State University. Of course, at the time it was Montclair College.
Q. Why did you set up your business in Houston?
I was working with an aviation-related business in northern New Jersey and I was meeting people from around the country. So at a very young age I had opportunities to see a lot of places to live and different lifestyles. Texas to me was always kind of appealing, and there was a company in Houston [aircraft dealer AeroSmith/Penny] that gave me an opportunity to learn the aircraft sales business. They were the ideal group to join.
Q. What does Par Avion do?
We exclusively represent buyers and sellers of business jets and business turboprops. Used aircraft is the bulk of our business.
Q. How many employees?
Three. Two full time and one part time, all in Texas. I have an office in North Jersey, in Ridgewood, that was staffed until a year ago. I am looking to hire a salesperson for that office. It's an important marketplace with Teterboro Airport, Morristown not far, and Westchester Airport up the road.
Q. Why the French name?
Well, I kind of fell in love with the product line produced by Dassault Aviation, the Falcon jet, and a lot of that business revolves around France. I had formed ties with Dassault employees and satellite companies that support Dassault, and, hey, I want to go to Paris, too, just like everyone else. I started going there around 1990 and started to build business internationally and become very well-known for selling pre-owned Falcons.
I liked it because of the double entendre. The direct translation is "By Plane."
Q. How much of a commission do jet brokers charge?
They've changed a lot in recent years. Everyone has discounted. They run anywhere from 1 percent to 5 percent.
Q. What has been the sales trend since, say, after the collapse of Lehman Brothers in 2008?
Business [jet] sales ground to a halt. Unless you had a deal in the pipeline that you could continue to hold together, nothing was happening.
When the initial shock subsided, we realized we're looking at five to seven years before we would see a return to levels we'd seen prior to the economic debacle.
But there are opportunities in down markets. In early 2009 a number of people I had been speaking with over the years, entrepreneurs who were sitting on strong cash positions, started discussing the acquisition of an airplane because they recognized that values dropped sometimes as much as 50 percent, I would say on average 35 percent to 40 percent, and there were opportunities to be had. To some degree those opportunities continue today, but I would say the best of the market has been picked over.
Q. Have your sales improved year over year?
2010 was a better year than '09. We are posting about the same sort of numbers as last year in terms of units. Profits have improved slightly but overall are down compared with 2008 and 2007.
Q. How many deals have you closed?
The year's not over yet. We still have a couple in the pipeline. I think six.
Q. What kind of aircraft are buyers most interested in?
The vast majority want large cabin intercontinental-range aircraft, super-midsize or midsize aircraft. Most of the interest has been in aircraft 10 years old or newer.
Q. Can you give an example of a good deal out there?
The Falcon 2000, that airplane's value has been literally cut in half in two years' time. I sold a Falcon 2000 in the first half of 2008 for over $20 million and that same airplane today is probably worth between $10 million and $11 million.
Q. Is demand for business jets greater in other parts of the world?
South America has been a bright spot, Brazil especially. They, too, are becoming a global empire and they need airplanes.
Q. What has to happen for business jet sales to improve in America?
We need credit to free up. We need an overall sign of improvement in the economy. Maybe the holiday spending will be a good indicator of things to come.