Hong Kong (Chek Lap Kok) Airport Private Jet Exodus

It looks like a few of the Hong Kong billionaire jet owners are about to be ‘homeless’, there’s simply ‘no room at the inn’ for all of those shiny new jets. We believe that at last count, only approximately seventeen of the hundred or so bizjets based in Hong Kong have a roof over their fuselages, when not flying their owners around the world and apparently no additional hangar builds will be permitted.

Gulfstream G550 at home on the ramp at Hong Kong Business Aviation Center
Gulfstream G550 at home on the ramp at Hong Kong Business Aviation Center

There’s always the other possible reason…perhaps the sight of so many Gulfstream G650’s, Falcon 8X’s, Global 6000’s etc., populating the ramp at Hong Kong Business Aviation Center (HKBAC) has got under someone’s skin.

The other end of the Hong Kong transportation options
The other end of the Hong Kong transportation options

Anyhow, we’ve heard that enough is enough and an edict has been issued to the effect that a large number of HK-based jets are being told to ‘move out‘…and that means find a hangar or parking spot outside of Hong Kong….before the end of September !

What is the immediate by-product of this edict ?…you guessed it, whopping increases in hangar and ground rent at the other likely locales…Taiwan, Philippines, Jakarta, Singapore, they are all getting in on the action.

Such a shame that no-one had the foresight to keep Kai Tak active, but ‘developers will be developers’…lol

We suggest that the billionaire’s club should adopt one of those ‘organic’ little islands that the region seems to be growing fond of, lay down a nice ten thousand foot strip (so that BBJ’s can get airborne safely)…they could then build hangars to their hearts content and protect their investments from the ravages of the local climate and the pollution spewing from the Pearl River Delta.

Plenty of room for a runway plus hangars on this little island
Plenty of room for a runway plus hangars on this little beauty

Come to think of it, this would also help with the ‘B-registration’ perennial resale problem. Buyers might actually be convinced that a few of the those big jets are not riddled with corrosion.

 

The Multi-Million Dollar Gulfstream Interior Floor Plan and (multi-million dollar) Mistakes

Screen Shot 2016-08-05 at 10.57.06 PM

Aviatrade is currently in the thick of the G650 market and discovering some remarkable facts about the planning and execution of the interior outfitting in these ultra-long-range jets.

Clearly, jet buyers at this level can indulge any amount of self-expression when designing interior floor plans for these luxury long range travel jets. Yet, somewhat curiously, there appears to be a less-than-sophisticated understanding of the long range travel functionality of the cabin layout.

This apparent naïveté extends to both crew needs, passenger comfort and cabin quietude enroute;

The most desirable and workable floor plan consists of a forward galley and forward crew rest compartment (crew rest ?…really ? why do they need it ?), coupled with a variable combination of dining area (otherwise known as a ‘conference group’) and single seats or divan/couch/credenza in the cabin mid-section, then in the aft of the cabin is a divided compartment (pocket door) leading to a dual couch, or single couch with two chairs…or perhaps a single chair opposite a desk or small credenza…are we confused yet ?

et voilá, the ideal floor plan.

Screen Shot 2016-08-05 at 10.57.37 PM…and a view of a very quiet and comfortable aft cabin that opens into an ensuite bathroom

Screen Shot 2016-08-05 at 10.59.13 PMScreen Shot 2016-08-05 at 11.10.57 PMThe forward cabin in this ‘ideal’ interior…

typical and optimized Gulfstream G650 forward cabin

So why are we emphasizing cabin layout ? Because, no matter how much money is spent on ‘creative’ designs for cabin layouts, there will be a time when the owner wants to sell.

Ahah ! This is when your favorite designer who designed your New York, Park Avenue, manse, or your Cap D’Antibes villa, will be busted by the people who live ‘next door’….because these same people are looking to buy a Gulfstream like yours…..BUT, not if the galley (kitchen) is in the back and there is nowhere for the third crew member to sleep and the interior looks like it was designed for your kids’ slumber parties.

This, below, is an example of ‘how not to do it‘…whilst this G650 layout does have a forward galley, there is no crew rest and some of the couch seats are not certified for take-off and landing (a whole other issue !).

Screen Shot 2016-08-05 at 11.25.10 PMSo now we come to the critical factor….resale.

When times are good in the bizjet world (which they’re not, at present) and sellers have the upper-hand, otherwise known as a sellers’ market, then sellers can command premium prices, no matter what the interior configuration of their pride and joy. Unfortunately we have been in a buyers’ market environment for quite some time, therefore, buyers can afford to be choosy and this ‘selective’ approach, coupled with depressed prices, means trouble for sellers.

Aviatrade is witnessing astonishing price drops in the G650 and G650ER markets that would have been unheard of eighteen-twenty months ago. Buyers are looking to buy their ideal floor plan at a discount price or, buy a slightly less desirable floor plan, at an unbelievable discount to asking price. The G650’s with less than ideal floor plan are being discounted by up to seven/eight million dollars.

Of course, the key is to know who is selling and why. Owners of Gulfstream G650’s with non-standard floor plans or unique interior designs (read…funky) are seeing their aircraft languish in the marketplace until a buyer comes along with a low-ball price….a price that an owner has no option but to consider because the alternative is to follow the market slide, continue to support the operating/ownership cost of the aircraft and eventually sell for an even lower price.

This aircraft resale and outfitting dichotomy is not limited to the Gulfstream models. Bombardier and Falconjet are experiencing even greater market turbulence with aircraft such as the Global 6000 and Falcon 7X languishing on the market for even longer periods than Gulfstreams. The same outfitting and resale issues are reflected in the aircraft with quirky interiors and unusual cosmetics.

It should probably come as no surprise that the uber-wealthy are not thinking about resale when they ‘spec-out’ their dream machines. The OEM’s are only too happy to indulge their clients and pile-on the options, custom materials and less-than-functional floor plans.

However….when the proverbial hits the proverbial, it’s too late to change-out that leopard-print carpet and the puce-tinged burled walnut veneer.

Forward planning is probably the only solution when attempting to accommodate unpredictable jet resale market conditions, coupled with some restraint and independent advice during the design and completion phase.

Happy landings !

 

 

 

 

 

 

The Best Deal on a Gulfstream G650

Screen Shot 2016-07-06 at 2.01.44 PMThere are G650’s for sale….and then there is the best deal on a G650 !

This is a very low time (and even lower cycles ) 2013 model G650 that is still under manufacturer warranty and is also charter certified.

Any Gulfstream G650 prospective owner will appreciate the custom-long-range, sixteen-seat, floor plan and forward galley with dedicated crew rest area.

Screen Shot 2016-07-10 at 7.57.27 PMScreen Shot 2016-07-10 at 7.59.24 PM

The owner will deliver this G650 anywhere in the world and also cover the cost of registration in the buyer’s country (subject to purchase agreement terms).

Please call 1-908-696-1174 or visit www.aviatrade.aero for full details and pricing.

Gulfstream G650 pre-owned pricing enters new territory

It hasn’t taken very long this year…the latest on pricing from the pre-owned G650 market is that it is now starting ‘below $50MM’.

G650 ext

There are at least three G650 sellers that will entertain offers below the $50MM mark and very few other offerings, whether straight 650’s or 650ER’s, will come within a few million of their current asking prices.

One particular G650 owner is asking over $60MM (officially)…the acceptable price is around $55MM (unofficially).

Gulfstream is not alone in this seemingly never-ending downward price spiral. Given that Gulfstream is the gold-standard in the bizjet world, the other brands at this level…Falconjet and Bombardier are experiencing even greater value destruction.

Nothing is going to change for the rest of this year and our opinion is that the current pricing environment will continue to deteriorate.

EBACE Geneva 2016

EBACE 2016
DFJ’s 8X, with all sixteen windows per side, nose-to-nose with the Boeing heavy-iron

 

The bizjet world is not exactly a hive of industry at present and the recent EBACE show was but one example  of an industry under stress….attendance and booths were down…..the static display was bustling (with jets begging for buyers).

Other international shows are suffering greater downturns…LABACE in Brazil and Jet Expo in Russia are two of the casualties of these regional economic meltdowns that will hinder any global resurgence in bizjet activity, including pre-owned sales.

However, there was still enough show-sizzle to entertain those of us that came from far and wide to experience Geneva’s exorbitant hotel rates and UN-style restaurant pricing.

Pilatus flew their newest fleet addition to the static. The Pilatus PC-24 cut a dashing figure in its experimental colours and eye-catching exterior signage. The pilot can get out in a hurry courtesy of a rapid egress seat (a sort of ejection seat)..the seat slides back on rails and the pilot is punched out through an exploding main door…(we hope the new James Bond can find a cameo-role for this jet in his next movie). There is also a tail-mounted drogue chute in case the PC-24 experiences any ‘unusual attitudes’. I suggested to the sales-chappy that Pilatus should retain this chute into production…sort of a Cirrus on steroids ! One can only imagine the looks when it lands at St Barth’s or Saba….however, take-off may need a slight rocket-assist !)

Pilatus 24The other very interesting appearance on the static display was a mysterious-looking Dreamliner. There is apparently only half a mystery because the seller of this VVIP Dreamliner was Michael Dell…the buyer was an as-yet-to-be-named (soon will be) Chinese buyer. The price tag is rumoured to be in the four hundred million (dollars) range. The buyer is supposedly in the internet and banking businesses…both of which are clearly doing well in China, no matter what the real price.

 

Boeing 787 VVIP
Boeing 787 VVIP in Geneva

VVIP 787

Falcon had its 8X at the static following a much-vaunted around the world tour. However, we’re not sure how long the three-engined ruse will continue to work. Has anyone seen a new commercial three-engined jet come into service in the past twenty years ? The 8X has more range than its predecessor (naturally) but will still fall short of the G650/ER and Bombardier’s 7000/8000….when these two Globals eventually join the bizjet force.

One thing is pretty obvious though, at least Dassault knows how to build a wing.

All-in all, a fun show in Geneva and as always, a great locale for networking and fine dining …with a terrific view….!

the blogger's favorite photo...Jet D'Eau and rainbow, Geneva
the blogger’s favorite photo…Jet D’Eau and rainbow, Geneva

 

 

 

 

The Roaring Silence….ABACE 2016, Shanghai

IMG_1487
Ed Bolen, NBAA president, only slightly off-duty, at the Rolls Royce reception

 

The loudest noise at the ABACE show in Shanghai this year wasn’t the applause for the usual show-piece announcements of Gulfstream, Bombardier and Falconjet orders from the major Chinese financial institutions….it was the jet noise emanating from the commercial airlines lining up for take-off clearance outside the ABACE wire perimeter , (probably all were delayed departures).

Despite the (as usual) very efficient organization by our NBAA staffers in coordination with their Chinese counterparts and the Hawker Pacific people, this show was clearly lacking the usual deal-buzz and high-profile delegations being carefully shepherded from OEM chalet to airstair steps. That said, our magazine, Bizjet Advisor (www.bizjetadvisor.com) was grabbed by almost every show attendee (so it seemed) and we ran out of even the re-stock copies.

We’re all pretty much aware of the unspoken reasons for this ‘shrinkage’ of the OEM order books in China, but nevertheless, the impact of the current policies, economic slowdown and pragmatism inside China can best be described as ‘sobering’.

What was interesting was the number of local Chinese vendors attempting to get ‘in on the act’. Given that the current total China-based bizjet population is probably less than the daily bizjet movements at Teterboro airport, these are indeed brave souls. Some, of course, are state-backed and therefore will weather any downturn. Others will be left to wonder what happened to the pot of gold at the end of the rainbow, at least in the short term.

IMG_0986
Bizjet Advisor magazine in good hands; Jet Aviation’s SVP Group Marketing & Communications, Heinz Aebi

Best and biggest news at this show….Uber ! For those of us that prefer traveling in taxis (thereby risking our lives) to the hotel shuttle (I’ve heard some weird ‘phone conversations on those shuttles), Uber and its Chinese imitator, DiDi, were a godsend. No more suicide missions and smoke-fogged backseats sans air-conditioning…every Uber ride was sheer bliss. Polite/prompt/safe drivers and every car was in the class of Audi/BMW/Lexus…the only catch, you need a China bank account to hail the Uber cars (clearly, that key factor was not understood by the various westerners that we witnessed stabbing at their smartphones in the hotel lobby).

As one of our aviation news-reporter friends commented after the show…”let’s hope it’s better next year”.

 

 

 

 

 

Aviatrade and Bizjet Advisor selling “Underwater Assets” in China

Aviatrade and Bizjet Advisor have been awarded exclusive rights to sell  DeepFlight personal submersibles in China.

The oceans are limitless….so are the possibilities with DeepFlight and Aviatrade….the thrill quotient is bottomless !

This is a unique opportunity for the underwater jet set to experience the ultimate in submersible excitement.

Find out more by contacting;

In USA: Aviatrade, Philip Rushton, 1-908-696-1174 or philiprushton@aviatrade.aero

In China: Aviatrade Asia, Gui Yue, 86-134-8017-1090 or gui@aasia.cn

 

Super Falcon
Super Falcon in action
Dragon
Dragon diving deep

Offshore Registry

This article was written quite recently for Aviatrade’s “Bizjet Advisor” magazine in China. The content is also mostly relevant to any bizjet owner who wants to investigate this ownership/operating option

OFFSHORE AIRCRAFT REGISTRY…..WHAT IS IT ?

Nowadays, one of the first questions that seems to be asked when we are contacted for aircraft acquisition is “can I register my aircraft offshore ?”

The answer is not quite a short as the question, but the options can be explored if a prospective aircraft owner wishes to own and operate an aircraft through an offshore company and registry.

Evaluating the Offshore Registry Options

There are numerous reasons why an owner might want to create an offshore ownership for an aircraft, but the primary reasons seems to be for privacy and confidentiality. This, in turn, creates an added level of security and removes any transparency from the trail of ownership.

Many offshore entities (countries, island groups) offer these registry services and most all require little else apart from the beneficial owner (the real owner) setting up a ‘shell’ company, otherwise know as an SPV (Special Purpose Vehicle) for the purpose of providing a ‘home’ for the aircraft. In some cases, the offshore registry does not require a company formation.

Where The Registries Are Located

Such better known offshore registries are Bermuda, British Virgin Islands (BVI), Aruba, Cayman Islands and the Isle of Man. Latterly, other countries such as Malta, Cyprus and San Marino have offered similar services. We should point out that although an aircraft may be registered in one of these offshore locations, there is no requirement for the aircraft to be physically based at that location. There will be nominal administrative oversight of the aircraft by the local authorities, but everything is accomplished in complete anonymity, with adherence to external regulatory bodies such as FAA or ICAO being among the limited requirements..

These registries are allocated distinctive one or two letter prefixes (or a combination of letters/numbers for the registration (tail) numbers. For example, Isle of Man is “M”, Malta is “9H” etc. It should be noted also that some jurisdictions are easier to navigate in terms of compliance and assistance with complex tax and other structural issues. An aviation consultant or aviation attorney can advise on the most appropriate or convenient registry….a word of warning here, some registries are much better than others.

Practical Considerations

There are some limitations on the use of certain registries; for example, an aircraft placed on the Isle of Man registry cannot fly on charter. This limitation is apparently designed to reduce risk for insurers when their clients’ aircraft are flying on the “M” registry.

The operation and maintenance of the aircraft, when offshore, are exactly as they would be for any aircraft on the US or any other international registry. This simplifies the control of the aircraft for the owner and for the offshore registry. However, there may be some rules that require technical changes and these will be notified to an owner prior to the aircraft being accepted onto a registry and before the aircraft is authorized to fly. These changes can be as minor as changing placards (labels) inside the aircraft which relate to safety equipment.

For China buyers who might be considering this offshore registry option, the operator (management company) will advise that this offshore arrangement will affect the duration of stays inside China. In other words, the owner cannot leave the aircraft in China for extended periods. This is because the aircraft will not have paid China import duty and sales tax and therefore the China authorities will consider an offshore-registered aircraft (with China owner) as being in violation of the importation regulations if the stay in China is longer than a few days. Of course, multiple re-entries are allowed.

Aviatrade Asia knows of one China owner who was investigated for overstaying in China and the owner’s aircraft was stuck in China for many months. It so happens that this particular aircraft was on the “N” (USA) registry. The authorities insisted that the owner import the aircraft (thereby incurring the tax and duty of 22%), but the problem was not the monetary aspect….the problem was that none of the various authorities, nor the OEM could agree on the proper solution. This was generally considered to be because the expertise required to interpret the international regulations was available, but not considered properly, therefore, the ensuing confusion created a delay of more than one year.

Trust and/or SPV Formation

Another pre-condition of offshore registry (for China owners, especially) is that the aircraft be owned by a ‘trust’ or special purpose vehicle (SPV)…this is really a term for ‘shell’ company. This arrangement can be organized by an experienced aviation law firm (or an internationally experienced management company, such as Jet Aviation in Hong Kong). Such companies are familiar with the set-up and administration of these ‘trusts’ or SPV’s. Great care must be exercised to ensure that the structure conforms to the registry of choice and with the appropriate international regulations. There are liability and insurance considerations that must be correctly addressed.

Timing

The process for forming the required entities and processing the documentation does not take too long, provided that a capable aviation law firm or consultant is involved. Selection of offshore company names is entirely at the buyer’s discretion and the registration for the aircraft can be selected from an available list, which is held by the offshore registry. The entire process can take perhaps two-three weeks and ideally should be completed before the acquisition begins, this is because the names selected for the offshore company and the trust will be incorporated into the acquisition documentation.

Personal (Vanity) Registration Marks

However, we should caution prospective owners with regard to one risk when selecting a registration; just as with automobiles, owners sometimes like to boast their ownership by personalizing the license plate. This is quite common among aircraft owners also. However, if the intent of offshore ownership is to disguise the owner and enhance confidentiality, then personalizing the registration can result in the anonymity of offshore ownership being compromised.

As an example; Aviatrade Asia conducted an aircraft acquisition for a Beijing client. The seller was an offshore company, owned by a Russian. The Russian seller was having problems, but he had also personalized his registration.
Aviatrade Asia was able to decipher the real owner’s name and discover his entire identity. This helped Aviatrade Asia to negotiate a better price for our Beijing client.
Therefore, we recommend that offshore aircraft owners do not attempt to create ‘vanity’ registration marks.

Conclusion

One of the most tangible benefits of offshore registry is the dual effect on aircraft resale. Not only will offshore registry make it much easier for a China owner to sell the aircraft in the international marketplace, the offshore registry will also increase the resale value compared to the resale of an aircraft registered in China.

Therefore, provided that a China owner pays close attention to the operation of an offshore registered aircraft, the benefits of this structure far outweigh the minor inconveniences during operations in and around China

Milestones in the Eight-Mile-High Club

Gulfstream’s pursuit of perfection continues unabated with the recent announcement that the G600 ‘iron-bird’ has ‘flown’ successfully for the first time…up to max. altitude (FL 510) and max. speed (mach number. .925)

The G600 is the designated successor to the G550 and will enter service a year after its junior, the G500. Both jets will embody fly-by-wire, side-stick control and touch-sensitive cockpit displays…none of this is particularly new technology…. However, when embraced by Gulfstream, it reminds me of the old Esso tag line at petrol stations in the UK “put a tiger in your tank“…grrrrrrr !

Gulfstream’s predicted entry-to-service dates for both jets will possibly beat the competition’s much-delayed Global 7000 and tempt yet more potential Global buyers onto the wait-list for G500/G600. This could put all four of Gulfstream’s industry-leading jets (assuming that the G650 is still in production alongside the G650ER) at the forefront of ultra-long-range jet travel.

Bombardier wakes up and smells the roses

So, there was an announcement yesterday re. proposed layoffs at Bombardier.

This is most unfortunate for the 11% of the workforce that will see ‘pink slips’ over the next couple of years. However, we can’t help wondering if the millions of dollars (Canadian or otherwise) in bizjet sales commissions paid to the somewhat loose network of Bombardier’s ‘agents’ and ‘authorized sellers’ might have been better deployed and thereby possibly averting such a dramatic cutback in payroll.

A workforce reduction of this magnitude, coupled with major bizjet program delays (the Global 7000) and past problems with the Global XRS do not exactly imbue your clients and potential clients with a sense of “all is well”…no wonder Gulfstream recently announced a strong order book for its G650 and ER.