The Chinese business industry is continuing it meteoric rise and the numbers coming from China related to its business market can be staggering. This is good news for the likes of business jet sellers all over the world. The demand for business jets in the country are rising as fast as the business market itself. Recently in the world of business aviation it was announced that the trend continues. David Tang, the attorney and business aviation consultant for Minsheng Financial Leasing has announced the intention of the company to increase its fleet and its intent to purchase more jets for its fleet. At the end of the year in 2010, Minsheng Financial has placed orders of 17 business jets.
The jets that have been ordered include Gulfstream, Hawker Beechcraft, Cessna and Dassault Falcon. It is unclear what numbers are associated with each company however the company has already taken delivery of a Gulfstream 450. The company was formed under backing from a couple financial institutions in April 2008. The company is seeing its future rise and the needs for its business aircraft is increasing as well. This is indicative of the market in China and we will see many new companies formed and their needs for corporate jets rise throughout the coming years. My friends in China or those doing business with the country are all trying to keep up with demand. Business jet sellers and buyers might look to the country as a place to do further business.
I talked earlier about the fact that the holidays were over for charter jet companies, however, it does seem that at least one wholly owned company in the charter jet world is seeing growth over this time last year. XOJet, based out of Brisbane and California, is reporting that they are up 50% over the same time last year and in fact they are increasing their fleet to meet the demand. They are adding to their fleet to meet the demands of customers by adding a Bombardier Challenger 300 series and has added last month its first ever Challenger 605. The company is reporting that it plans to add additional jets in its fleet in the future in 2011.
As a company they have increased its numbers by 50% but in the large market cities of Los Angeles, New York and San Francisco it has seen larger numbers. The commercial operations leader of the company, Brad Stewart has stated:
“Our growth in New York, Los Angeles and San Francisco continues to accelerate, with all three markets growing more than 70 percent in recent months and exceeding 80 percent overall growth in November.”
I hope XOJet continues to see the growth in its industry and they continue to be a leader in chartered jets.
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
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.
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.
In light of the post yesterday where I pontificate about the recovery of the private jet industry, Marc Yahr of L&L International sends me another forecast that he recently read from GlobalAir.com. I love the ending paragraph of the post by David Wyndham:
I’ve seen Richard Aboulafia of the Teal Group present his firm’s aviation sales forecast on several occasions. As he said one time, “If you don’t like my forecast, feel free to make one up on your own.” So don’t worry so much about the future, but just take care of today. If you need a jet, go get one. If you need to sell your current jet, go get a good broker to represent you.
This is great advice from David and we all have our thoughts on the state of the aircraft industry. We are all making up our own forecasts, in some cases to ease our own fears and anxiety and in some cases we actually have some numbers and stats that back up our statements. Like an old lawyer friend of mine used to say, “92% of all stats are made up.” In my case my forecast was based on a gut feeling and the fact that it may be an old lawyer trick of making up the facts that you need in order to be persuasive. Take a moment and read through the post where Wyndham talks about his thoughts.
I don’t suppose we will see this headline in many of the experts’ outbox as they begin to look forward to 2011. In fact, I hesitated writing the title this way in case I might have a chance to jinx the possibility of it actually being the case. It appears that the slide has stopped on many fronts and we have been reporting all the probabilities and possibilities that many companies will begin to see a recovery. The thing about a slide stopping is there is only that next step, the process of recovery.
The probability of a recovery happening quickly is probably not the case here as we see the bottom of the economic woes. The likely scenario will be a plateau of the slide in many cases. Many companies will be taking 2011 to pick up the pieces and begin strategies for recovery. We see changes in the way that many people are traveling. It may be that the government will help with some type of economic stimulus and Wall Street will begin its own recovery. It may be 2012 before we see the real results of the beginning of the recovery, but we can set our sites on business aviation going to the next level.
In the United States this week we celebrate Thanksgiving. Perhaps my point is that if you have made it this far in business aviation, if your in the business of buying and selling private jets and you have made it this far through 2010 you might need to count your blessings and be thankful. In 2011 we have a fresh new year to see if we can begin the climb out of the economic problems we faced in 2010 and make 2011 the year of private jet recovery.
