I was reading recently in NorthJersey.com about the Teterboro Trade Show held by the National Business Aviation Association and the optimism that was garnered from that gathering last week. A good deal of the optimism that was garnered had to do with the fact that the turnout was a record breaking affair. The event had more than 1,600 people which was larger than the previous event held in 2008 in White Plains, New York which had a total of 1300 attendees according to Ed Bolen, President and CEO of the NBAA. Bolen went on to state as provided in the article:
The trade show’s record turnout suggests how eager charter operators, manufacturers and private aviation service providers are for a real recovery, said Ed Bolen, president and chief executive officer of the business aviation trade group. “We have been hit very, very hard, but things are looking better if you squint,” he said.
Apparently not everyone was in the same optimistic mood when it came to the news of the record breaking show. The report goes on to quote vice president of Global Aircraft Interiors, Inc., who stated:
“I haven’t seen a rebound yet,” said Robert Roth, vice president of Global Aircraft Interiors Inc. of Ronkonkoma, N.Y. He said some aircraft owners are renovating rather than buying new but price competition is fierce, with six or seven companies often competing for the same job, he said.
It is all coming together for the rebound both in sales of new aircraft and used aircraft and apparently the strongest of the aircraft renovation companies are getting busy with their own proposals. 2010 is perhaps shaping up to be the year of the comeback in the business aviation industry.
Talon Air is adding to its fleet of private jets by purchasing a new Hawker 4000 super midsized jet from Hawker Beechcraft Corporation. The release of June 8, 2010 indicates:
Talon Air Inc., a global leader in private jet charter and aircraft management, announced today that it has purchased a new Hawker 4000 super-mid size business jet from Hawker Beechcraft Corporation. The addition of this brand new Hawker 4000 private jet aircraft is part of the company’s continued expansion to serve its charter clients. With six Hawker 4000s based at Talon Air’s new 100,000-square-foot private aircraft facility located at New York’s Republic Airport (FRG), Talon remains the fleet leader and has the largest fleet of Hawker 4000 business jets in the world. The new aircraft will help Talon meet the overwhelming customer demand for this aircraft and offer a depth of products that are the most requested in the industry.
The Hawker 4000 is more fully described as:
This private jet is the most advanced and luxurious super-midsize business jet in the world. With its unique composite fuselage the aircraft boasts a six-foot high stand-up cabin from front to back offering the largest cabin in its class. The Hawker 4000 serves as the indispensable business tool, getting charter clients where they need to be with convenience, luxury and peace of mind. Hawker Beechcraft has designed a quiet, comfortable environment ideally suited for working or relaxing.
Of note is the ability for the hawker 4000 to be available to otherwise unreachable airports in places where private jets may frequent but cannot accommodate larger aircraft:
With a 99% dispatch reliability, this private jet stands above the rest of the super mid size business jets such as the Gulfstream 200 and Challenger 300. Its performance has allowed Talon Air to operate from airports that typically can not accommodate aircraft of this size. The Hawker 4000 has opened airports with short runways to Talon’s clients such as Ocean Reef, Florida (4500 feet), Hilton Head, South Carolina (4300 feet) and East Hampton, New York (4255 feet).
The President and CEO of Talon Air, Inc. is very optimistic about this aircraft stating, “In almost every airplane, something has been sacrificed,” said Adam Katz President and CEO. “There’s no compromise in this airplane. It’s very fast, comfortable and efficient.” Many companies are beginning to add to their fleets in this time of economic recovery in the market. Now is the best time to buy based on the market.
I have been immersing myself into some of the economic statements being made by a number of the business and executive jet manufacturers for their forecasts of 2010 and what they have experienced over the last three years since the slide of the market for corporate jets. Cessna seems to have been hit very hard and in 2009 they had a tough sales cycle. Their CEO Jack Pelton reflected on the last few years and Flight Global reported some of his statements to include:
“Last year was terribly rough for us,” says Cessna president Jack Pelton. “We delivered 275 aircraft compared with 340 the previous year, but our original projection for 2009 [before the downturn struck] was 525 aircraft.” Pelton blames the spending curb on the economic downturn and the destructive negative political and social rhetoric surrounding the use of business aircraft that surfaced in 2009.
“People simply stopped buying aircraft. We were forced to cut production rates across all our models to bring supply in line with demand, and cut 50% of the workforce,” he says.
The plummeting values of used aircraft – particularly in the light and mid-size sectors – also drove down sales. “The prices of pre-owned aircraft were terrible for us. People were asking ‘why buy new when I can get a two-year-old aircraft so much cheaper?”
He says that used inventories are shrinking and that prices are starting to stabilise. “Cessna will ride out 2010,” and will deliver around 225 Citations, Pelton says. “We hope to see recovery in 2011.”
Many of the Cessna peers are also looking ahead to 2011 as a turnaround year. I think the forecast is not that the market will be worse in 2010 and 2011, but remain stable as 2012 sees a turn around in the market to see increased sales. As we see the economy turn around so too will sales of corporate jets. This is a sales cycle that will see better times
It has been a little more than a month now since the EBACE 2010 show occurred last month in Geneva, Switzerland. It was the 10th anniversary of the European Business Aviation Convention & Exhibition, and it was a sold out affair that spanned three days. There were more than 11,000 attendees that showed up to see what was new in the world of business aviation. According to some reports, the exhibitors at the event as well as the attendees themselves were very enthusiastic about where the industry is headed.
Among the attendees at the event were Brian Humphries and Ed Bolen both heads of the European Business Aviation Association and the National Business Aviation Association respectively. They had this to say about the event:
“This was by any standard a very successful anniversary for EBACE and a tremendously successful Convention,” said Humphries. “On the heels of such a difficult period for the aviation industry, this year’s EBACE had a particular excitement surrounding it, and I am encouraged at the possible signs of our industry turning around.”
Bolen agreed, saying “This 10th EBACE was certainly a strong one in all respects. The level of Exhibitor and Attendee participation in this show was a welcome boost to our industry, and demonstrates that business aviation remains highly valued around the world.”
Many of the presenters at the event were also optimistic about the industry although in a cautious sense. The event had 436 exhibitors and 65 aircraft all being shown at the Geneva International Airport. This is the 10th anniversary of the two groups playing host to the event. Next year the event is scheduled to take place in Geneva on May 17-19 2011.
I had an opportunity to watch a You Tube video of President Ed Bolen’s discussion of the case for business aviation. This video was done last year on the Fox Business channel. Many corporations came under fire last year when government bailouts helped those companies continue to do business. The citizen auditors were out in full force calling for cutbacks and calling for “luxuries” such as corporate jets to be put aside and cut from the budgets of companies. As is always the case there is another side to the coin that many do not see and I think that this video gives us an idea of what that other side of the coin may look like.
I am going through a business jet report on the forecast of business jet sales and and state of the business put forth by the Teal Group and will be discussing some of the details of that report but this is perhaps a good place to start with reference to how the current state of business aviation has reached we hope the bottom. The No Plane No Gain program is a great source for business aviation industry information and is a good place to bookmark for those in the business of business aviation.
The National Business Aviation Association (NBAA) will be holding a tax seminar in Chicago tomorrow, June 4, 2010, at the Palmer House Hilton. The seminar is described as providing attendees with the following:
Attendees of this NBAA Business Aviation Taxes Seminar will learn how to:
- Maximize business aircraft tax planning while complying with the Federal Aviation Regulations.
- Understand the application of federal excise taxes on business aircraft operations.
- Learn how to deal with many of the unique accounting challenges facing business aviation departments.
- Understand how passive activity rules can limit the utility of aircraft-related deductions.
- Implement strategies for addressing state and local aviation taxes.
- Learn methods for coping with federal deduction disallowance rules.
- Avoid issues related to business aircraft ownership and operation that have arisen in business tax audits.
- Learn to plan ahead regarding tax issues in structuring the purchase and sale of business aircraft.
Knowledge of aviation tax issues is critical for owners and operators of business aircraft to ensure proper planning and compliance. The NBAA Business Aviation Taxes Seminar is designed to help accountants, attorneys, advisors and flight department personnel keep up with the latest tax and legal developments affecting business aviation. After an introduction to the aviation regulatory environment, knowledge of which is essential for proper tax planning, presenters will address a variety of current tax topics at an intermediate-to-advanced level. Ample time will be allowed for questions and answers following each presentation, and speakers will be available to answer additional questions at the end of the seminar.
As members of the NBAA, L&L International supports these initiatives by the organization and would love to know if anyone is attending and how well the seminar provided the above information.