ISTAT Jetrader - Spring 2020 - 14

PERSPECTIVES

Jetrader: Do you see the business of
new aircraft orders being more of a
commodity over time?
AP: Airplanes by their nature are
different. Different manufacturers
produce different airplanes. You can
have an airplane that will carry more
people or fly further distances or be
more fuel-efficient. There are trade-

are talking about very, very expensive
products. You are spending hundreds
of millions or billions of dollars, so it's
kind of important that you know you
can trust the people you buy the plane
from. This is why, for years when the
Soviet Union was producing planes and
their salespeople were saying, "We
have a plane that is basically the same

I am different from many other people in
aviation who love aviation and love flying. They
are really interested in the technical aspects. I couldn't
care less. I never wanted to be a pilot. But I got into
aviation at McDonnell Douglas and stayed with it and
enjoyed every moment of it.
offs, but you go to an airline and you
try to sell it. All manufacturers do it. So
people go in and say "If you will take
my planes, this will make you the most
money." But airlines can easily figure
out the differences. So, even if it kind
of is a commodity, you still have variety.
Each manufacturer can always lower
the price and say "Yeah, even if this is
not perfect for you, we can give it to
you at a great price."
Jetrader: Do you think personal
relationships are becoming less
important in aircraft buying
and selling?
AP: The industry is quite different from
others; you develop a lot of personal
relationships that are really important.
To some degree, yes, all the planes
are different. Cars are different. You
can have a Tesla, a Mercedes, a Ford,
a Toyota. But the salesperson who
sold you the car is not that critical,
because there are millions of them sold.
Airplanes are a different product. You
14

* T H E O F F I C I A L P U B L I C AT I O N O F I S TAT

as the 757, but it is much cheaper,
so you should buy from us. People
don't trust our Russian engines, but if
we put Rolls-Royce engines on, we'll
sell a lot. We are selling our plane at
a price of 30% below the 757s. It's a
similar product. Why wouldn't you buy
it?" Well, nobody bought it, because
that is not how it works. You have
to convince people to trust you with
such an expensive product. You have
to bring data and know how to write
contracts so that if things don't work
out, they are protected. You want to
know that if you're buying a product,
it will be efficient. The Soviets didn't
think in these terms, so they weren't
very successful. It's all related to
personal relationships.
Jetrader: I'd like to talk about the
role ISTAT has played in your career.
What has your level of involvement
been, and what do you see as
ISTAT's role in the industry?
AP: ISTAT is a big part of this

community where people know
each other, trust each other, share
information and so on. ISTAT is super
wonderful. It's a nice organization
where people can learn, where people
can interact, where people can
schmooze and form relationships. ISTAT
is very critical in the industry. You have
people who build the planes, design
the planes, design the engines, build
the engines, traders and analysts like
myself who try to predict the future,
and lawyers, and so on. The board
members who have been elected are
wonderful. They work very hard, and
they try to do good things for aviation.
I personally am not productive. I do not
create physical output; I just talk. But
we have many people in aviation who
actually work, and I admire them. I give
presentations and, a few times, I was
lucky to have the right prediction. When
oil prices were $150 a barrel, I said
that in a few years the price will come
down to $40. Many people then told me
"Adam you shouldn't discontinue taking
medication, you are hallucinating." But,
I actually used academic techniques to
come up with my forecasts. I try to help
people think about life and the future.
If they have any special questions, as
an economist, maybe I can provide
then some insight that they did not
think about.
Jetrader: How do you see the world
of aircraft trading changing over
time, and what can ISTAT do to best
keep up?
AP: The world is continuously changing.
Right now nobody knows what's
happening. It's kind of unnerving, and
it's good to get together with people
who can talk to you and form some
opinions with so you don't screw up
too badly in the future. Economic
power has been moving more to Asia,
and a lot is related to demographic
changes. In another 20-30 years, Africa
will be a super important part of the
industry because they have the highest
population growth rates now.
ISTAT Jetrader - Spring 2020

Table of Contents for the Digital Edition of ISTAT Jetrader - Spring 2020
