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.

 

As go jet prices…As goes the (global) economy

We have seen this cycle and its ominous indicators many times since 1988…

Jet buyers are reluctant to step in and sellers are equally reluctant to reduce asking prices….then…boom !

We are seeing dramatic price reductions across the board…especially the weaker names such as Falconjet and Bombardier. Still, buyers want more blood shed on the hangar floor. There is apparently no bottom as yet…despite the vast amounts of cool aid being consumed by the jet broker community.

The Gulfstream G650 slippery price slide…(and others)

Adding to our recent post re. G650 prices….

There appears to be something of a ‘panic’ mode among Gulfstream G650 sellers (and their respective agents)….furtive ‘phone calls…”have you heard what serial number bla bla is selling for ?” is a very frequent question to our offices these days.

G650ER’s are now below $70MM…and all G650 prices will continue to slide.

Not to be outdone, FalconJet is fast approaching Salton Sea status….(for those unaware, Salton Sea used to be a fairly robust salt lake phenomenon…now almost irreversibly drying-up as a result of the everlasting California drought and other man-made blight).

Bombardier is looking forward to 2018, or thereabouts, for any real news in the ultra-long-range category…. if it can resuscitate its sales force (to date, the very definition of ‘eating one’s young’) and beg enough money from the ‘big house in Ottawa’ to stay afloat.

Embraer seems to have a bright spot in its new line of jets (450/500)…a good thing, because the Legacy 650/Lineage models are a little embarrassing.

BTW…can’t any OEM come up with something more imaginative than 450/500/550/600/650/6000/7000/8000/2000/7X/8X ?….and don’t get us started on the Cessna Citation line up !

Overall, the best chance at retaining any residual value is with Gulfstream…..a tried and tested resale market with no more than the usual deference to the global economy and its ebb and flow…right now…it’s ebbing !

Gulfstream buyers should call Aviatrade for the latest in non-public market intelligence, 1-908-696-1174

 

Concorde…en passant

We noted the sad passing of Andre Turcat, the French chief test pilot for the Concorde (Aerospatiale).

Around the time of the Concorde test program, I had the privilege to meet and fly with BAC’s chief test pilot, Brian Trubshaw ( personally, I think Brian should have been knighted for his test pilot prowess during those early supersonic commercial jet days).

On another note; whilst flying a long-ago transatlantic flight in a Gulfstream from the east coast US to London, we were experiencing some severe turbulence. Our pampered passengers were not too happy and my copilot asked “Gander” if we could have a different flight level and at the same time, he essentially broadcast our plea for ‘smoother air’.

As I remember, we were at about FL370 and trying to get higher.

After a few staccato conversations about the turbulence at various flight levels in the upper 30’s/low 40’s…and after a long pause, we heard a British voice on the radio….deadpanning “it’s smooth at ‘five nine o’, old chap”

……yeah, right…Go Concorde !

Gulfstream G650 market observations

Whereas most of 2014’s G650 sales scraped by at above $70MM.The recent year’s few post-closing (and some unauthorized pre-closing) G650 sales are beginning to look like coal in a Christmas stocking.

This year’s crop of G650 sales, including some immediate post-delivery sales (a windfall for Charleston SC FBO’s and other local low tax/tax free states and their FBO’s) have left those early buyers with an instant multi-million dollar depreciation….Although, a few mill. here and there is probably chump change to the G650 ‘club’.

Aviatrade can now report the first ever sub-$60MM sale of a G650…albeit a relatively high-time former G650 demonstrator. Self-evidently, not even the queen of the skies is immune to the overall depressed market for pre-owned bizjets.

Any owner currently trying to sell an ‘exotic’ G650 (read..mostly non-European/US owners) will suffer at the hands of the bargain-hunters. One such G650 currently for sale has a bedroom and shower in the aft cabin…(hmmm…did I hear payload/weight and balance issues ?)….this one will clearly be sold to a soapy OCD/narcoleptic.

There are some bargains among the 650’s…but as usual, it’s caveat emptor and just like the new international money transfer/banking protocol…KYC !

Alibaba in the news, no Yahoo Spin Off

Interesting to see Alibaba in the news; Aviatrade recently completed the acquisition of a Gulfstream G550 for the newly appointed president of Alibaba.
The G550 is now the best value in the ultra-long-range jet category and of course benefits from the Gulfstream reputation for reliability and service.
There are still bargains to be had amongst the thirty-or-so available G550’s…the key is to understand and be aware of recent sales figures. These numbers are closely guarded secrets. The delta between asking price and eventual agreed sale price can be significant. As usual, the devil is in the details and Aviatrade can provide a comprehensive picture to interested buyers.

Las Vegas NBAA

….recovering after the NBAA convention….AKA ‘Bunfight at the Bizjet Corral’
This time I was there primarily as the publisher of Bizjet Advisor magazine…www.bizjetadvisor.com ….enough shameless self-promotion (did someone mention a certain jet broker in Colorado ?…lol)

As we all know, there are any number of conflicting aphorisms and… “bigger isn’t always better” / “size matters” come to mind when describing the annual NBAA convention.
All of the big boys were there…Gulfstream, Boeing, Bombardier, FalconJet etc….yet there seems to have been a lot of hustle and bustle, but not much else, attendance and booth occupancy numbers notwithstanding.

A sassy press conference featuring a fractional provider announcing a ‘firm order’ for an as yet to be comprehensively-designed and in-production/revolutionary natural laminar flow-winged (phew !) supersonic bizjet only points to the shallow reserves of headline grabbing events at the show.

Let’s face it, the only ‘economic (turbine) engine’ that’s firing on more than a couple of burner cans at present, is the USA…..this is not saying too much about the health of the bizjet industry in general.

I must say, I was really impressed by the quality and quantity of the show-side afternoon alcohol-fueled events. These bashes are taking on more of the carnival-type atmosphere usually associated with LABACE (or Louisiana..bring back NBAA New Orleans !!!)…..speaking of which, I dropped by the Aruba Registry booth on the second day…an absolute gas !…I had my photo taken with Elvis (yes, he is still alive and, big scoop…. Elvis has just ordered a fractional supersonic share from the natural laminar flow crowd) and another photo with a curvy and voluptuous (is that redundant ?) carnival dancer, whose smile and entreaty had me believe that I was the only special fossil at the show.

….On to a more serious topic that I hope generates some feedback on other blogs and in the mainstream; In addition to the aphorisms atop this blog article, I have had numerous conversations with equally bizjet-convention-exhausted individuals…and even some (who cannot be named) OEM senior bods who all seem to be “singin’ the same refrain”….”stop this carnival !!!”.

The frequency of the ‘annual’ NBAA Convention needs to be re-evaluated. We used to endure/enjoy a couple of such shows per year…now it seems as though every PT Barnum-in-training wants to conjure up a bizjet show…all in the name of promoting ‘business jet use’ around the world…a bizjet show in Morocco ?…okay okay, I’m sure I’ll hear it from the AfBAA, but that part of the world has yet to learn the root of the word ‘transparency’ and is presently busy off-loading large-cabin (and other) jets, primarily as a result of the newly incumbent Nigerian president’s ‘oversight’ of the bizjet sector…(much like a similar situation, in the Orient).

This US NBAA bizjet lovefest needs to be trimmed back, much like California poppies, to a biennial event. The sheer logistical challenges and calendar-conflict amongst regional bizjet events points to a more favorable timing that would improve advance planning and allow for more frequent appearances by far-flung vendors….and greater attendance numbers…not to mention reduced “show-fatigue”.

Obviously, there is a stakeholder in this present setup that would not take too kindly to the above-suggested scenario. It’s probably about time to engage an outside audit of this entity and request an independent evaluation of the efficacy of the bizjet world’s “annual” event.

Do I hear a drumbeat ?