As usual, many things are happening in the aviation world. Take a minute to catch up on some of the biggest stories of the week.
Super Bowl XLVI
Flying to Indianapolis on Sunday will be challenging indeed. The FAA expects a record number of private flights in the area that day, and three temporary towers have been erected to deal with traffic. The National Business Aviation Association has all the resources you need to plan your private flight to the Super Bowl. Take care of the details so you can enjoy the game! Go Patriots! Go Giants!
Honda to Release Bizjet Next Year
Boasting operational costs as low as $1,000-$1,200 per hour, the HondaJet will be released in 2013. Honda began taking orders for the quiet, economical aircraft in 2006, and the automaker-turned-jetmaker plans to roll out 80 within the first half of 2013. The company fully expects to see a profit by 2018.
Do you think Honda will be profitable in five years? What if American carmakers started turning their attention to jets — would we all be flying everywhere individually, like the Jetsons?
Oklahoma Governor Opposes $100-Per-Flight Fee
The White House has declined a petition that calls for the abandonment of the plan to institute a $100-per–flight fee for general aviation. This fee would be used to pay for air traffic control; the Obama administration maintains that the current fuel tax does not bring in sufficient funds. Some legislators and governors, including Gov. Mary Fallin of Oklahoma, are speaking out against the fee. They point to recent tough economic times for general aviation as well as its significance to the economy as reasons to protest the proposed fee.
General Aviation in California Threatened by Avgas Suit
The Center for Environmental Health (CEH) has brought a lawsuit against suppliers and producers of 100-low-lead fuel, or avgas, used by piston-engine airplanes. The organization claims that the public was not warned about exposure to the leaded fuel, and this omission constitutes a violation of California law. Ostensibly, the suit is being brought in an attempt to hurry the process of finding an alternative, lead-free fuel to replace avgas.
Imagine you’re visiting a foreign locale where the culture and currency are very different from your native country. You hire a local guide for the day and ask him to help you navigate a large open-air market. As you wind through the crowd, merchants call out to you in an unfamiliar language, urging you to buy. Your head spins in confusion as your stomach churns with hunger.
A nearby stall is displaying an assortment of unfamiliar edibles which look fresh enough. Your guide, however, shakes his head and leads you to another vendor. After some haggling, you’re feasting on a special local delicacy of the freshest quality at a surprisingly reasonable price.
The critical role of the broker
This scenario is not very different from the challenges of purchasing a private aircraft. Yes, you can explore the market on your own, but a local guide — in this case, your broker — can help you avoid the traps and pitfalls you might never see coming.
Aoife O’Sullivan, partner at London-based Gates and Partners and author of the industry white paper The Gold Standard in Private and Corporate Jet Sales, cautions that “buying a business or private jet for the uninitiated (and, indeed, even for those familiar with the industry) is a complicated, expensive and potentially hazardous jaunt into the unknown.”
Don’t be fooled by that new-plane smell
Most private jet purchasers are surprised at how complicated the buying process can be, even for a new plane available directly from the manufacturer. Says O’Sullivan, “Manufacturers can have a soft side, and the good brokers know how to negotiate a better deal for buyers whether in the form of price, elevated delivery date, and additional perks for credits such as additional training or increased warranty periods.”
In other words, a trusted broker knows the manufacturer’s pressure points and how to leverage them to maximize every dollar spent on a new aircraft.
The pre-owned advantage
In the pre-owned market, an experienced, professional broker has the inside track on available inventory and pricing fluctuations. Plus, your broker is familiar with lesser-known sources of quality aircraft — often tapping into those channels before the product becomes widely available for sale on the Internet or through other public means.
O’Sullivan adds that “the broker who has a long-term relationship with the buyer or seller will also have an in-depth knowledge of the history of the aircraft and can be a valuable source of information when researching title, whether there has been any damage to the aircraft, etc.”
Very few decisions are as significant and weighty as choosing a private aircraft, but it doesn’t have to be daunting, frustrating or risky. Partner with the right broker and along with the thrill of owning a private aircraft, you’ll uncover the best value for every dollar you spend.
Contact L & L International if you need assistance in purchasing or selling a private jet. You can reach our sales specialists today at sales@L-Lint.com, call us any time at 877-453-8276 (+1.305.754.3313) or visit us online.
Much has been made of the Obama administration’s plan to reorganize funding for air traffic control. General aviation has always paid for air traffic control through a fuel tax. Now, Obama plans to change that to a flat fee — $100 per flight.
This proposed fee, projected to raise $11 billion before 2022, was unveiled Sept.19, 2011. Every flight within controlled air space will be required to pay the fee, with the following exceptions:
- Recreational piston aircraft
Immediately after the proposed fee was announced, general aviation groups cried foul. The backlash comprises a few major arguments:
- General aviation already pays for air traffic control with fuel tax.
- Government should encourage general aviation as an economy-builder rather than adding fees.
- More bureaucracy would be needed to collect the fee.
Some 9,000 individual opponents to the suggested $100-per-flight fee signed a petition demanding the White House drop the proposal. They received their answer on Friday, Jan. 13, 2011, when the associate director of general governmental programs, Dana Hyde, repeated the White House opinion that the fee is necessary for air traffic control.
What do you think? Does the fee level the playing field or unfairly target business aviation? Does the current fuel-tax system work?
The media and general public may not understand the value of private aircraft, but successful businesses do. Private jets are not for show and comfort. Rather, they are an important — often indispensable — tool in the battle for business, especially as many companies are fighting their way out of recession.
Frequent business travelers say private aircraft offer several advantages.
- Provide more time to spend with family
- Reach numerous destinations quickly
- Eliminate common safety issues associated with commercial flights
Better efficiency, better business
Even beyond these practical advantages, private aircraft deliver measurable ROI for the businesses that use them. According to the study Business Aviation: An Enterprise Value Perspective — The S&P 500 from 2003-2009, private airplane users outperform non-users in revenue growth, profit growth and asset efficiency.
The study demonstrates that, compared to non-users, private aircraft users
- see 116 percent higher average annual revenue growth
- realize 434 percent higher annual earnings growth
- average 81 percent higher annual earnings before interest and taxes
- see 496 percent higher market capitalization growth
Whether before, during or after the significant decline in the business aviation market in 2008, business jet users substantially outperform non-users in nearly every analyzed financial category.
Jet market continues to rebound
Business executives who understand these advantages continue to invest in private aircraft. The private jet industry has certainly experienced its share of turbulent weather during the recession and the slow, ongoing recovery. However, many experts believe the worst is behind it, according to a May 2011 New York Times report.
In the report, Richard Aboulafia, an aviation analyst at the Teal Group in Fairfax, Va., says, “The overall market has stopped falling, and 2011 deliveries are likely to be about level with last year. For next year, leading indicators are pointing to renewed growth, with the pool of available aircraft in the used jet market shrinking, although prices for used planes are still soft.”
The New York Times report also notes that typically, as recovery sets in, returning buyers first hunt for bargains on pre-owned planes and then start to look at new models. Experts at L&L suggest that if you will be in the market for a pre-owned jet soon, you might begin looking now.
Several lengthy reports and laundry lists of expectations for the state of the business aviation market have been released over the past couple of months and weeks. Corporate Jet Insider took some time to compile the data into a quickly accessible, easy-to-digest format. Thanks to the good people at Conklin & deDecker and Aviation International News for doing the heavy lifting.
The forecast for 2012 is mixed: growth in some areas and decline in others. Overall, expect more growth, but slower than was anticipated in 2009.
Contributing Factors
- Slowing growth in BRIC countries
- Sputtering growth of U.S. economy
Sales forecast by aircraft type
- Large cabin jets — increase in sales (funded by the corporate profits)
- Small and medium cabin jets — flat
- Piston market — last to recover
- Helicopters — largely dependent on oil prices (which are expected to be stable)
Honeywell’s predictions
New jets: Expect 11 percent decline in new jet deliveries in 2012
Used jets: Prices still below 2008 levels, but uptick in demand through 2017
You can read the FAA Aerospace Forecasts FY 2011-2031 for more in-depth analysis for the coming decades.
All in all, a mixed bag for business aviation continues. It is still a buyer’s market, but as long as the U.S. economy s l o w l y improves, the aviation market will demonstrate very modest gains. The European debt situation may also significantly affect growth stateside.
Most people don’t think twice about taking a breath — but breathing is nothing to take for granted on an aircraft.
Too close for breathing comfort
The close quarters of a private jet — with limited breathing room — can increase the risk of catching an infection. In addition, pollutants such as engine fumes leaking into the cabin may pose a threat to the health of crew and passengers alike.
An aircraft cabin exposes occupants to outside and recirculated air, just like a home or office. On an aircraft, however, people are much closer together. Also, occupants can’t leave at will, and the aircraft interior must be pressurized.
Without ozone converters, elevated concentrations of ozone occur on aircraft, causing airway irritation and reduced lung function.
Technologies are available to address the issue of infections, contaminants and pollutants. AirManager, an air-sanitizing system adapted from one used in hospitals and nursing homes, can eliminate bacteria, viruses and other biohazards. It also destroys chemical pollutants and removes unpleasant smells.
Pressure rises
Pressure is also a breathing issue on aircraft. At 8,000 feet, a passenger’s oxygen intake is reduced by about 4 percent — not enough to cause harm, but enough to make passengers feel fatigue. Small children and people with cardio or pulmonary ailments may experience serious health effects.
But some aircraft manufacturers are working to combat the effects of pressurization. Some 2012 Gulfstream models, for example, will include technology that keeps cabin pressure equivalent to 2,800 feet, even when the aircraft is cruising at 41,000 feet.
If you require specific equipment or accommodations in your private aircraft, you can breathe easier with the help of a private jet broker. A professional broker can quickly locate the aircraft with just the features you need.
When it’s time to sell your aircraft, reaching out to and working with several agents means more promotional opportunities for your jet, which results in more prospects, and a faster sale — right?
Not necessarily. Although it may seem counterintuitive, listing your aircraft with multiple brokers doesn’t speed up the sales cycle, and in fact, there are potential risks involved in doing so.
Why less is more
The best brokers in the industry have the most experience and the most valuable contacts. They also rarely participate in multi-broker listings. It just doesn’t make sense to invest time and energy into a sale without the guarantee of a commission.
When you enter into an exclusive arrangement with a single, well-established broker, the agent then becomes committed to the sales process and will devote the marketing resources needed to ensure the aircraft finds a buyer quickly. A good agent has a reputation to maintain and relies heavily on repeat business and positive word-of-mouth in the close-knit aviation community.
Controlling the flow of information
Working with multiple brokers can also create overexposure for the aircraft, possibly diluting its perceived value in the market. In addition, when multiple brokers become involved in the sale of the aircraft, the information and details about the plane can become distorted or just plain inaccurate, creating uncertainty and confusion in the minds of interested buyers.
An individual broker will provide consistently reliable information to potential buyers, reducing the possibility for unanticipated concerns or objections that may rise late in the sales process.
An experienced broker also has well-grounded knowledge of current selling conditions, including product demand, available inventory and price fluctuations. This expertise translates into a deep understanding of the overall value of your aircraft that can be communicated to the market.
Seller beware
Because there are no industry regulations or licensing requirements for the sellers of aircraft, virtually anyone can establish himself as an agent. Because of this, it’s extremely important to review the broker’s website and ask for specifics about how the sale of your aircraft will be handled. Be sure to also request references and speak directly with the firm’s previous clients.
The right broker will have an established client base, a global marketing reach, and the experience necessary to ensure the sale of your pre-owned aircraft goes as quickly and smoothly as possible.
The year-end holidays are often a busy and hectic time. Whereas many people have the luxury of taking vacation or simply cutting back on work hours at the end of the year, most executives must continue to see to the demands of running their businesses while trying to carve out precious hours for family and friends.
Add to this mix the pressures of commuting by air during one of the busiest times of the year, and you’ve got a recipe for a holiday season that feels anything but peaceful or festive.
Security! Bah!
For travelers within easy driving distance of a major airport, private air travel eliminates the most common headaches at large airports during the holidays. They no longer have to suffer through long security lines and cancelled, delayed or overbooked flights.
For those who face a lengthy commute by car or shuttle to or from a major hub, private air travel supplies the alternative option of flying from a nearby regional airport which can recover several hours per trip. And, in most cases, private plane passengers need only be at the terminal 15 minutes before the flight’s scheduled departure.
Lifestyles of the relaxed and productive
Private business aviation is not about lavish private planes that cater to rock stars, professional athletes and other celebrities. Traveling by corporate jet is infinitely more practical, with simple luxuries like working without interruption from a fully equipped, portable office.
Securing a private jet also provides control and flexibility around the flight’s departure times. Do you need to book a last-minute flight during the holidays? Instead of being forced to choose among limited seats on commercial flights (and paying a steep last-minute fare), you can book a private flight that works around your schedule. Did your late-day meeting run longer than expected? No problem — your private aircraft doesn’t leave until you arrive at the terminal.
Best of all, by eliminating the wasted hours and stress that comes with traditional airline travel, private planes can deliver you safely on the ground with more energy to devote to the people you care about most. And isn’t that something we can all put on our wish list this holiday season?
If the need for a private jet in the day-to-day operations of your business is obvious, the next step is determining whether you should buy one outright or invest in fractional ownership.
Your course of action ought to depend upon how frequently you would use the aircraft, your corporate budget and the available aircraft.
Full jet ownership
Many think that full jet ownership is the only possibility when it comes to using and depending on private air travel. Obviously, if you or your company has full jet ownership, then it is yours, much like a car or house. Full responsibility for all aspects of the jet is yours, but you also enjoy having a private jet at your disposal anytime.
Fractional jet ownership
A condominium time-share agreement is fairly similar to fractional jet ownership. With this system, an individual or company pays a set amount and is then guaranteed a certain number of hours of use over a year or five years. In order to use the jet, fractional owners must confer with the other owners to be sure it is available.
Unlike owning a jet, having access to a private plane through fractional ownership doesn’t mean you can go anywhere in the world; not all programs offer international service beyond the Caribbean and Mexico. And if they do, some programs are so cost prohibitive that travelers often opt to fly overseas commercially in first class and then work with a charter if they want to fly to their final destinations.
Despite these limitations, the National Business Aviation Association reports that nation’s fractional aircraft market has made a turn toward what appears to be a period of sustained growth.
Several factors contribute to the increased interest in fractional ownership:
- Commercial airlines are offering fewer flights to smaller markets.
- Businesspeople consider the time savings of a private jet a great value.
- Companies that offer fractional ownership are sweetening the deal with perks like rollover hours.
- Creative membership programs increase availability to new parties.
Professional guide
A jet broker can walk you through the advantages and disadvantages of full or partial ownership of a private jet. Experienced private jet brokers can provide you with information regarding all of your options, as well as provide information about available aircraft, specifications and maintenance costs to help you make the best decision for your lifestyle or company.
Average jet prices are down and planes are on the market for shorter periods, so it may be a difficult time to find the right plane and the best price. A broker is in constant contact with the market and will be able to get the deal you need.
It’s always fun to think about the innovations and advances that will happen in the aviation industry. Especially in the design of corporate jets.
In November, Jeff Burger wrote a compelling commentary that practically begs for a reinvention of the corporate jet. He was opining about how the creativity and vision of the late Steve Jobs at Apple could do wonders for the jet industry. Instead of asking frequent travelers and industry insiders what they want, perhaps airplane designers should be proactive and show business travelers what they have been missing.
So much is made about the incredibly luxurious, world-class flying castles. Transparent floors, in-flight concerts, spiral staircases and fern-lined walls are simply not typical (or feasible) for the vast majority of private and corporate aircraft.
Instead of concentrating on over-the-top interiors that only a handful of billionaires will enjoy, remember how the simple things are often better. Steve Jobs planned his airplane to the most minute detail — famously replacing separate open and close buttons with a single toggle switch. It’s that attention to detail on the typical corporate jets that will be truly innovative.
