Musical Chairs

For every jet that rises into the U.S. skies, U.S. airlines will have to find a way to sell two or three of their piston planes. Last week a young (31), gangling (6 ft. 1/2 in.), onetime hedgehopper named Frederick Ayer showed how the trick can be done--with a tidy profit for himself. From his 24-room office suite in Manhattan, Fred Ayer announced the purchase of 45 Douglas DC-6s (value $30 million) from American Airlines, plus first refusal rights on the $23 million worth of DC-6s left in American's fleet.

The sale puts American Airlines a big jump ahead of its competitors in disposing of its piston fleet (now more than half sold); it also makes Fred Ayer, president and sole owner of his firm, easily the world's biggest aircraft dealer, puts him in a commanding position to cash in on the used-plane market. Since September, he has bought 80 big planes (47 DC-6s, 33 Convairs) from jet-converting U.S. airlines. He has sold or leased ten of the eleven Convairs that have already been delivered, has buyers from small airlines or corporations for 40 more planes. His main problem, says Ayer, is not selling the planes, but getting them from the airlines fast enough to please his customers.

"It's all a game of musical chairs," he says. "The jet age is going to move everybody up a notch. There's a place for every plane at a price, but it's not all going to happen overnight. The phasing in and out all along the line will take two to five years."

Bars & Hi-Fis. Ayer's company is very largely Ayer himself. He studied to be a physician at Harvard, gave it up after two years, bought an Ercoupe and began flying. He became an airplane broker to satisfy other flyers' needs for planes, soon switched to being a dealer (adding five years to his age to impress customers). He got his first big chance after World War II when the Air Force decided to bypass preliminary trainers and begin fledgling flyers in North American AT-6s (advanced trainers). When other countries followed the U.S., a shortage developed, since North American had stopped making the planes. Ayer scoured the world for the ATs (he found 15 on an abandoned British airstrip in Southern Rhodesia), sold 252. plus another 380 small planes. Last year he broke into the big-plane market with the purchase of 24 Convair 2405 from American Airlines.

In the U.S., Ayer expects to sell his new purchases to charter and cargo lines, will keep some planes himself and lease them to carriers for peak seasonal loads. For corporations, he will do a Convair over completely (bar, hifi, etc.), raise its fuel capacity to give it 50% greater range, put it in anyone's hangar for $385,000. Abroad, he is counting heavily on regional lines that cannot yet afford jets, but need better planes than they now have.

Trade-Ins. The key to Ayer's success is the way he sells. He does not merely dump airplanes for a price, but first makes sure that they can be used and comfortably paid for. For small lines, which do not always know what is best for them, he sends in men to analyze routes, cargo business and profits. Since his credit is better than that of many small lines, and "he can pay off his big purchases as he receives payments for his sales, he can give airlines credit terms that many would not get themselves. Equally important, he is willing to accept almost anything that flies as a trade-in.

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