Trade Days International, Inc.

Tulsa World - Business Section Article - Saturday, June 20, 1998

Where buyers kick the tires Company's used-jet auctions meet market demand

By D. R. Stewart, World Staff Writer

Hal McClure would like to sell you an airplane.

"Oklahoma is a natural for airplanes," McClure said. "It's the center of the country, and all U.S. aircraft must be registered in Oklahoma City at the Federal Aviation Administration, so it's almost one-stop shopping. "

McClure, president of Trade Days International, Inc. 7136 S. Yale Ave., has conducted nine aircraft auctions during the past year in Tulsa and Fayetteville, Ark.

While aircraft auctions are not unusual, most of them involve small, one- and two-engine private airplanes.

Trade Days specializes in the sale of commercial passenger jets, from the McDonnell Douglas DC-8s, DC-9s and DC-10s to Boeing 727s, 737s and 747s.

"If you're in the area with a lot of cows, you need a sales barn," McClure said. "We're in the middle of an area with a lot of aviation activity, and we're trying to set up an airplane sales barn."

Roland Herwig, spokesman for the Federal Aviation Administration in Oklahoma City, said that used-aircraft market is where the airlines and some aircraft owners are looking for parts.

"You're not moving people like you would at an airline hub, you're selling airplanes," Herwig said. "With Oklahoma City, Tulsa and Wichita, we have kind of an aviation triangle, so why not Tulsa?"

"You certainly have the aviation facilities to handle an aircraft auction. If I was smart, I would be coming to Tulsa to do that sort of thing."

McClure began Trade Days a year ago as a way for people in the airline industry to gather once a month and trade ideas and equipment. The company receives airplanes, engines and accessories on consignment, and it takes a 1 percent to 2 percent commission from the seller after the sale. Dealers or brokers with exclusive listings pay no commission to sell their aircraft with Trade Days. Buyers, however, pay a 1 percent commission to the company.

Sellers can either sign a 30-day exclusive listing for a Trade Day s auction or advertise their plane in an aircraft publication at least two weeks prior to the auction date, indicating they are willing to accept a final sale and/or a six-day option to sell at their minimum price.

"We probably sell about 25 percent of the aircraft listed on the day of the auction," McClure said. "Those aircraft that don't draw the minimum price set by the seller then are re-auctioned for the six-day option."

The six-day option, which became a popular feature in oil-field equipment auctions 20 years ago, allows a potential buyer to hold a plane while engine and mechanical records are examined and financing is arranged.

McClure, a former corporate pilot for Cities Service and an aircraft broker for 20 years, said the option process reduces or eliminates expensive advance due diligence that is wasted when a buyer is outbid. The concept of putting down a small amount of cash in order to hold the exclusive opportunity to evaluate and make a purchase decision means a minimum risk for the buyer, McClure said.

Last week, McClure auctioned more than 20 aircraft -- including a $38 million Boeing 737-300, three DC-8-43s and a DC-8-72 -- worth $70 million at the Radisson Inn at Tulsa International Airport. Options were taken on most of the aircraft, and McClure said he expects to sell half the aircraft after the close of the options or extensions.

Mike Miller, director of consulting at Avitas Inc., a Reston, VA-based aviation consulting firm, said aircraft auctions like those of Trade Days are becoming more popular in the booming airline industry.

"Load factors (percentage of airline seats sold) are at 70 percent, which is the highest the industry has every seen," Miller said. "Right now the airline industry, which is operating 18,000 aircraft worldwide, has firm orders for 3,300 airplanes, the largest backlog in history. It's a pretty robust market, but there are warning signs, question marks and uncertainties about what the Asian situation could do to the world economy."

Miller said he expects continued strong demand for new and used aircraft for at least 18 months.

Please Note:

To avoid paying a registration fee at the auction, attendees and/or sellers of aircraft may run ads in newspapers which have Aviation Classified Sections, such as The Dallas Morning News, Charlotte Observer, and The Rocky Mountain News, and other aviation industry publications indicating in such ads that their aircraft will be in the Trade Days Auction in Oklahoma, and that they are willing to accept a final sale and/or a six-day option to sell at their minimum price.

Trade Days Aircraft Auctions are held the 2nd Thursday and 2nd Friday of each Month at the Four Points Sheraton Hotel, Oklahoma City, OK, Will Rogers International Airport. For hotel reservations, call (405) 681-3500.

Trade Days International, Inc.
P.O. Box 701226
Tulsa, OK 74136
Fax: 713-850-0672
Email: ajm@eeea.org