JetNet provided some good news for those selling pre-owned business jets in recent time. According to their report, from January through October 31, business jet sales transactions climbed by 16 percent, followed by turbine helicopters (up 15.2 percent) and turboprops (up 4.5 percent). The report from JetNet went on to state that, pre-owned inventory went down over the same period last year for all but turbine helicopters, which rose slightly by 0.4 points, to 7.2 percent of the in-service fleet–but still below the 10-percent mark that delineates a seller’s market (inventory below 10 percent) from a buyer’s market (inventory above 10 percent).
Finally, pre-owned business jet inventory went down slowly but steadily to 15.2 percent at the end of last month, compared with 16.7 percent a year ago. Turboprop inventory decreased by 0.7 points, to 10.7 percent, edging closer to the 10-percent market equilibrium. Despite increased transactions and lower inventories as stated, the report from JetNet said aircraft are selling more slowly now than they did a year ago, ranging from 41 to 93 more days on the market, and in turn asking prices are down by double digits for jets and turbine helicopters–by -12.6 percent and -11.6 percent, respectively. JetNet reported that turboprop asking prices were 2.6 percent lower year-over-year.
These are numbers that might spell good news for corporate jet sales and will perhaps show the climb from current trends in the business aviation industry and private jets.
Inventory of used corporate jets is an indicator of the market and the inventories of used aircraft has fallen off last month which changes what the trend has been over the last three months. The demand for that used aircraft still remains low however. JPMorgan aerospace analyst Joseph Nadol III said in the monthly business jet report released last week that:
“While we expect gradual downward movement to remain the trend, it should be some time before enough used inventory clears to spark new demand if this pace does not pick up materially.”
The report went on to indicate that average asking prices decreased 1.1 percent, to $10.8 million, and that the new aircraft sales, the investment firm noted that third-quarter deliveries declined 32 percent from a year ago. Apparently, heavy jet indicators “remained strong,” with deliveries down only 5 percent. Light jet deliveries fell 54 percent, while midsize jets were down 41 percent. Cessna and Hawker were the hardest hit, with year-over-year deliveries down 62 and 60 percent, respectively, while Gulfstream was the only manufacturer to post an increase, with deliveries up 35 percent.
These indicators are not great news of the industry but they are well received as manufacturers and sellers and others are looking for any signs that the industry is looking to change its current slide and the trend of poor performance in business aviation sales.
Just following along with the news about Santa and his travels. The FAA released this information this week:
WASHINGTON – Federal Aviation Administration (FAA) safety inspectors at the North Pole certified Santa One, the reindeer-powered sleigh piloted by Santa Claus, for its Christmas Eve round-the-world delivery mission.
Santa One, led by Rudolph the Red-Nosed Reindeer, is outfitted with new satellite-based NextGen technology, which will allow Santa to deliver more toys to more children with improved safety and efficiency.
“Children around the world will get their gifts on time, regardless of the weather, thanks to NextGen,” said U.S. Transportation Secretary Ray LaHood. “We’re proud to say NextGen is bringing Santa Claus to town.”
Rudolph’s red nose has been outfitted with avionics that will broadcast Santa One’s position via satellites to air traffic controllers around the world with improved accuracy, integrity and reliability.
“Santa’s cockpit display will help improve his situational awareness by showing him and his reindeer flight crew their precise location in relation to other aircraft, bad weather and terrain,” said FAA Administrator Randy Babbitt. “NextGen will help make this an extra-safe Christmas Eve.”
The sleigh’s onboard systems have been upgraded with state-of-the-art, NextGen technology that will allow Santa One to maintain cruising altitude for as long as possible before making a continuous descent into cities and towns around the world. While maneuvering on rooftops, an advanced, onboard runway safety system will help reduce the risk of incursions between the sleigh and chimneys.
Santa’s reindeer-powered sleigh is already energy-efficient, but the NextGen technologies will further reduce Santa One’s carbon hoofprint. The shorter, faster routings means that Rudolph and the other reindeer will consume less hay, resulting in fewer greenhouse gases.
Unlike any other pilot, Santa has special permission from the FAA to fly thousands of domestic and international short-haul and long-range flights in one night. In keeping with the FAA’s science-based proposal to give pilots more rest, Santa will arrange his flight plan based on his circadian rhythm. Mrs. Claus also assured FAA safety inspectors that she’ll make sure he gets plenty of rest before the flight on Christmas Eve.
Follow Santa’s progress on Christmas Eve at the NORAD Tracks Santa website: www.noradsanta.org
See how NextGen is going to improve the safety and efficiency of Santa’s rooftop descents: http://www.faa.gov/go/santa
There has been a jump in the use of private jets in charter flights this holiday season according to reports. Charter flights are being booked at a higher rate. The prices for charter jet prices seems to be decreasing somewhat in the US and increasing in Europe. AIN reported the following numbers from Avinode:
An early takeoff for seasonal holiday-driven traffic provoked a steep spike in demand for private charter flights. According to the latest forward-looking index from online charter portal Avinode, projected demand for this month was more than 75 points up on the November 1 level at 167.35. The December 1 index was almost 80 points above that recorded on the same day last year. There was more continuity in Avinode’s price index, which shows rates marginally up globally and in Europe, and very slightly down in the U.S. market. In North America, the average flight hour price for a Cessna Citation Excel stood at €2,428 ($3,180); Hawker 800, €2,530 ($3,314); and Challenger 604, €3,753 ($4,916). In international markets, the average rates for these types were €2,749 ($3,601), €3,260 ($4,270) and €4,836 ($6,335), respectively.
This is a bit of good news for those in the charter business and those wanting to get home for the holidays and traveling safely and in style for the holiday season.
This last week the business aviation industry gathered in Dubai at MEBA 2010 to hear all the latest in the middle east and from the jet manufacturers. Jet manufacturer from France, Dassault Falcon, imparted some good news at the gathering. Dassault reported to AIN,
“The Middle East business environment still remains challenging, but confidence levels appear to be rising,” said Dassault Falcon president and CEO John Rosanvallon. “Dassault has seen much greater demand over the last two quarters of the current financial year, with larger cabin jet sales and prices holding up better than smaller jets.”
The report goes on to states that there are about 60 Dassault Falcons based in the Middle East. The company sold 14 aircraft in the region in the last two years and has a backlog of 16 to be delivered to regional buyers by 2013 with the manufacturers delivery of its tenth this month in December.
It is also indicated that hours being flown by business jet operators in the Middle East has been increasing, while the client base is evolving beyond a small group of users to include “corporate heads, entrepreneurs and other business leaders”. Other areas of the world that are also showing signs of increasing in the business aviation industry include; India, South America and Asia.
It was reported last month that the European Union has approved on a formal basis the company’s manufacturing campus in Portgual. The company has already begun construction earlier in the Summer of 2009 but it has now been blessed by the EU. The facility is going to be a very large 330,00 square foot facility in Evora, Portugal. The first part of the facility is now set to be complete at the end of 2011.
“This announcement is faithful to Embraer’s practices where all regional development projects have to be formally and properly approved. We’ve been waiting for the European Union to give us its final okay,” Luiz Fuchs, president of Embraer Aviation Europe, stated. The first part of the construction is for a manufacturing complex for airframe structures and components in composite materials. Fuchs went on to state, “The construction of the second unit, dedicated to the production of metallic airframe structures, will begin shortly. Meanwhile, we are progressing with the selection of suppliers.” Fuchs indicated that Embraer studied its globalization process and identified Portugal as the country offering the best resources. “The historical connection between the two countries was an important factor,” he indicated in his statements.
This is good news for EU and for the people that work at the Embraer complex. We look for good things coming from Embraer in the coming years.
In tough times leaders push through and set the bar for the rest of the industry. That seems to be the case for the people at Gulfstream. Gulfstream has announced that it will be expanding its headquarters in Savannah. This is good news for the people in Savannah and good news overall for the industry which shows some strength in the business aviation industry.
Apparently the project will include $500 Million in expansion which includes new construction, and renovation of current facilities. The expansion is also inclusive of office and lab facilities at the Gulfstream Research and Development Center in the Crossroads Business Park.
The good news for the local area is that it may create an additional 1,000 Gulfstream jobs. This increases the current workforce of about 5.500 jobs in the area.
Gulfstream President Joe Lombardo, states:
“This expansion is necessary to meet the projected increase for new business-jet aircraft production and the maintenance that will follow,” Lombardo said. “With our own sales trends and market forecasts suggesting an upturn over the next decade, we want to ensure Gulfstream is well positioned to meet the demand. We are already beginning to see signs of a modest recovery. In the third quarter of 2010, we booked more orders than we had in any quarter since the downturn began in mid-2008. Furthermore, as flying hours have increased, Gulfstream service centers have enjoyed a significant increase in service volume.”
Again this is great news for the industry as a whole as leaders begin to gear up for the recovery. Gulfstream has shown that it will continue to lead the industry in their efforts. It can be hoped that this marks the upturn for the remaining players in the market.
If you are selling a jet it a good practice to have a clear title. By title I don’t mean the name of your plane, the sign off of the CEO or other “titles” but your actual ownership documents. In real estate transactions we have different types of deeds and there may be different types of title to property you own. The same is true for your private aircraft. If you own your plan completely you may want to make that a part of your sales pitch that the jet is free from any issues related to encumbrances, or other legal title issues. If you have issues related to the title of your business aircraft or private jet, these may be red flags that make it difficult to sell. Recently, in the Corporate Jet Insider email newsletter, this very issue was discussed and it is an article that should be read by anyone buy and of course selling a private jet.
If you want to sign up to receive the Corporate Jet Insider email newsletter these and other great pieces of information can be found. I suggest you sign up and have it delivered right to your inbox.
I have been watching as people travel this holiday season. We are seeing the issues with the new TSA security measures causing numerous delays of people at airports all over the country. The TSA “pat down” is making news everywhere and it will get worse with the holidays and everyone traveling to get to their holiday destinations. Travel is up and it looks like it will continue to do so through the new year holiday.
Add into the security issues and the volume of travelers and the idea that weather at certain parts of the country will make it even more difficult and it makes private jet travel much more appealing. Think about that most important face-to-face business meeting not occurring as the TSA is making sure that you are safe to travel, or that family of 6 kids all needing special treatment to get through security and Grandma and Grandpa slowing up things as they get to their Christmas holiday party with the grand-kids. They are part of public transportation and could jeopardize your making that meeting. Holiday travel is brutal.
Think about not having to deal with the 2 hour long security line, that missed meeting or being stuck in an airport hoping to get that standby ticket out of an obscure airport because your plane is stuck 500 miles away in a northern city that is buried in snow. That is one of the best reasons I can think of using private aircraft to travel during the holidays. I hope all of you have a safe and fruitful holiday season.
Jet sales are down everywhere and we may have the reason why, jet financing has changed and it may be more difficult to be approved for loans. It was reported by AIN:
With the 2009 credit crisis now abated, banks claim that they’re ready to lend, but business aircraft brokers complain that their clients’ loans are not often approved, according to business aviation analyst Brian Foley. “What every buyer needs to understand,” he said, “is that loans are evaluated very differently now.” Residual values have plummeted, Foley said, “so today’s loans are based more on the borrower’s balance sheet and less on the repossessed asset value of the aircraft, although that continues to play some role. Most banks won’t finance jets more than 20 years old. For some, even 10 years is the cutoff point.” Down payments are also higher, he added. “Gone are the days when a buyer could borrow more than the aircraft’s price–say, 115 percent–with no money down and invest the difference in improvements. Today’s buyer can expect to pay 10 to 20 percent down.” As a result of this tighter lending situation, brokers have told Foley that more than 70 percent of their pre-owned aircraft sales this year have been all-cash, surpassing that of years past. “But with lending more restrictive now, the road to recovery feels like it’s paved with quicksand,” he noted. “Even so, as far as pre-owned buyers are concerned, there is still good financing available, but only to the best credit-risk operators seeking younger, better-quality airplanes.”
It’s good to know your financing arrangements going into the transaction and have a better picture.
