The Shanghai Bizav Show 27-29 March 2012

Anyone know the Mandarin for “Cool Aid” ?

Shanghai ABACE show-goers and exhibitors can now breath a sigh of relief….the weather did cooperate and the show was a success.

Predictions for cold temperatures and rain (think English summer) did not materialize and in fact, the weather was perfect for strolling the static display and marveling at Jackie Chan’s paint job on his (is it really his ?) Legacy 650. As if Embraer Legacy re-sale values aren’t bad enough, his paint job will be top of the ‘hit-list’ for potential buyers come disposal time (but then again, this will probably be Embraer’s problem, not Jackie’s.).

We counted multiple Legacy 650 photo-ops in multiple aviation magazines during the show and ‘leaping Jackie Chans’ in almost every image, Jackie must have been a very tired celebrity after the show…..it was almost as if Jackie had invented aviation, however, we all know that either a Frenchman or an American were responsible for the mass of shiny and painted metal on the Hongqiao ramp area at Hawker Pacific.

The show was extremely well organized, even judged against US standards and we noticed very few hiccups. ‘Hats-off’ to NBAA for this and for clearly having learned some lessons from last year’s SIBAS-sponsored event.

The biggest ‘gotcha’ was the lines at security …. A few thousand visitors being shepherded through two screening portals led to some tiresome and annoying  (not to mention lengthy) delays at peak times of entry. Even at non-peak times the wait was ‘testing’. At least the serious-looking security-screeners were a lot more courteous and less intrusive than most of their TSA counterparts in the US. Perhaps there’s a cottage industry opportunity there for the taking….security-screening charm school ?

One other noteworthy observation….we tried to feed our starving masses (booth personnel) on the first day….not only  did the food line rival the security line at the entrance, but the price of a sandwich (actually a slice of a sandwich) was an astonishing 240RMB. The Ritzy sandwich stall ran out half way through what should have been ‘lunch break’, but not before hiking the price a further 60RMB to make it an almost even $50 (yes, you read that correctly…fifty US dollars !) for a lousy sandwich slice. We were saved by a savvy Ukrainian jet broker friend of mine who directed us to a noodle joint off the premises, about a ten minute walk from the rip-off Ritzy sandwich stall. Four of us (VIP show guest included) dined on four courses for 50RMB)…..the VIP noodle joint had obviously never had it so good and the food was delicious !

We discovered that press conferences in China are probably more popular than anywhere else on earth and are dutifully attended by anyone willing to drink the various flavors of cool aid on offer from the OEM’s and other spinmeisters.

Orders and commitments and cooperations and joint-ventures and MOU’s were being announced like bans being read for a wedding. Whether or not any of this will eventually bode well for extra-China participants remains to be seen.

Hawker is still trying to flog the Horizon (oops, sorry, the 4000) and is claiming that this jet is very popular amongst Chinese buyers because of its “strong brand name”……hmmmm….that must be “strong” as in “indestructible” because I do seem to remember an HS 800 landing minus an engine that was taken out by a SAM in Africa a few years ago. Whether or not Hawker will be in business much longer to deliver on that “strong brand” remains to be seen.

The other OEM’s seemed to be ‘entertaining’ at pre-2008 US financial meltdown levels, but then again, this is the same environment that spawned the plethora of orders at the Vegas NBAA show last October.

Support vendors are starting to gain a toehold in Asia in general and China in particular, but again, even though foot-binding is now outlawed in most of China, don’t expect to see unfettered access to this fertile territory. These are the aviation niches that are easiest to assimilate and replicate in China. One support services vendor has just announced an interior refurbishment facility in Hong Kong and mainland China is hot on its heels.

Training is assuming a “front and center” focus for the region, western expertise will be required to boost the core understanding and guidance of the training curriculums. Given that most of the indigenous talent will be starting from ab initio level, there’s a fairly long lead into the upper levels of experience and professionalism required to provide adequate safety margins in the cockpit and maintenance disciplines.

Manpower availability goes hand-in-hand with the above training issue. Given the non-aviation journalist descriptions of vast numbers of Chinese college students migrating overseas for their educations, it is not going to be easy to attract the quality of student required to enter the highly-skilled arenas of airline and private jet flying and maintenance.

There has been no formal indication as yet that China is willing to relax licensing rules so as to encourage and allow foreign pilots and mechanics to participate at a meaningful level in their nascent system. This does not even take into consideration the considerable language hurdle (written and spoken) that is probably the biggest natural barrier that can be invoked by China so as to protect its employment in the airline and private jet industries.

These manpower and training issues will constrain growth to a far greater extent than the much ballyhooed “airspace and airport access liberalization” program in China.

Onwards and Upwards…..!

Gulfstream G550

Since 2003, Gulfstream’s G550 has been the ne-plus-ultra of the private jet world. Conceived as a stretched and more versatile version of its slightly less illustrious sibling, the G450, the G550 has set the standard for all others to strive for.

The technology in the Gulfstream G550 cockpit borders on Star Wars ‘sans weaponry’. It boasts the symbologically-generated Heads-Up Display coupled with an Enhanced Vision System (this basically facilitates forward vision in low light conditions and through water-vapor). An option in the G550 cockpit (icing on the cake you might say) is the Synthetic Vision System……something that you might expect to see from Pixar’s studio. This system recreates the outside world in 3D color relief on a cockpit flatscreen …..(something we could have used whilst “mud-moving” our ground attack fighters in the Royal Air Force a few light years ago).

The Gulfstream G550 is full of nifty little safety features; for example, this jet can cruise at flight level 510 (over eight nautical miles above terra firma). The air is pretty thin up there…..if, what we pilots call a ‘rapid decomp.’ occurs, everyone falls asleep pretty fast…(something like 6 seconds of useful consciousness at that altitude). If something like that happens, the G550 will courteously throttle back, bank over to drop a wing and descend to a level where everyone wakes up and things get somewhat back to normal…..all without the pilots touching as much as one knurled knob…..magic huh ?

The range on this jet is also pretty impressive and when ‘maxed-out’ to thirteen-plus hours, requires additional crew on board. Unlike some in its peer group, the Gulfstream G550 will actually fly the city-pairs ‘as advertised’….Hong Kong to London or Beijing to New York…or even New York to Delhi.

Buying jets of the G550 caliber no longer requires a Google-founder bank balance. Although the new Gulfstream G550’s are up in the low $50MM’s, we’ve just seen the first advertised asking price of a pre-owned G550 down at $29.95MM…..now that’s a lot of ultra-long-range flying rivets for $30MM ! There will more than likely be additional downward pressure on 550 prices because we have seen a sizable uptick in G550 inventory over the past six months….around twenty available at present.

Gulfstream has ‘hedged its bets’ when asked if the 550 will be produced alongside the new G650….the probable answer is that it may survive in production if the price point can be kept at a significant ‘delta’ to the G650 price (circa $70MM in 2017 dollars for the next readily available G650 from Gulfstream). Gulfstream is also offering G650 interior outfitting in future G550’s…..something that may be attractive if the ‘value-added’ is recognized by buyers.

Otherwise, it will be “move over G550”…..the G650 will assume the ‘mantle of magnificence’ this year and nothing in the wings (excuse the pun) from any other manufacturer will match it.

R. Allen Stanford suffers same fate as one of his previously-owned Gulfstream IV’s

Apparently Allen Stanford will not be needing any private jet transportation in the foreseeable future (he was recently convicted in $7BB ponzi scheme). Coincidentally, one of the two GIV’s that he acquired in late 2004 also suffered a ‘crash and burn‘ last month in the D.R. Congo.

Back in 2005, Aviatrade was supervising an interior refit for a client’s recently acquired Gulfstream IV in Dallas at Akridge Aircraft Interiors. When I asked about the two additional GIV’s in the Akridge hangar, Leo Akridge (owner) commented that they belonged to a “bank guy named Allen Stanford and money is no object on these interiors”…..I thought about this strange juxtaposition for a second and said to Leo “this guy is stealing money…there’s no way he’s legit”. To this day Leo Akfridge recalls that conversation …..and lo and behold, here we are seven years later.

My suspicion was confirmed on a trip to Antigua in 2007….Stanford Financial had a bank headquarters building on the Antigua airport perimeter road which put the Holmby Hills Spelling mansion to shame for its pure unadulterated ostentation……”bank” ?…..more like “piggy bank” !

As for the demise of the Gulfstream IV….apparently no-one told this crew that you can’t land a GIV when there’s only 33% of a 2000m strip remaining ahead the jet….as we said in the fighter jet world “there’s nothing more useless than fuel used, air above you and runway behind you“.

Late Model Gulfstream availability

Aviatrade has been offered quite a number of off-market, nearly new G450′s in the past few weeks. Some brokers have seen deals ‘blow-up’….thereby creating opportunities for quick access to this still-hot sector. Apparently even a couple of Russian buyers got cold feet.

Two 2011 models with very low hours can be bought in the low-$30MM’s…both forward and aft galley are available.

There’s even a brand new 2012 model that can be bought in the mid $30MM’s…….whilst this is the same price as a new factory G450, clearly the immediate access and instant operation are worth a premium, provided that the interior is attractive (and this can quickly be remedied if anything is not quite right).

Similarly, a couple of “hot-ticket” G550′s have come our way…one is a September/October brand new delivery. Natrually, calls to the Gulfstream factory in Georgia will not uncover this opportunity because position owners do not want ‘Savannah’ to know their business. The same goes for a Gulfsteam G650 position that we can offer directly from a cooperative seller.

There are still plenty of Gulfstreams available in the pre-owned publicly available listings.

Gulfstream IV/IVSP are feeling lots of market pressure and prices show no signs of improving. This is definitely a market where a discerning buyer will score a big hit in terms of value for money. However, these jets must be carefully evaluated, but some forensic records work and a tightly focused pre purchase inspection will pretty much guarantee that a “discount Rolls-Royce” will be available in the hangar.

The Gulfstream GV is also feeling some pain, whereas only a few months ago, brokers were licking their chops over the selling possibilities……demanding silly high $20MM prices  for nearly twenty year old jets.

More on the other brands shortly, meanwhile we’d like to hear from anyone who is eager to buy any of the aforementioned jets.

A Snapshot of Chinese Life

….Right here in Los Angeles one can catch a glimpse of what to expect upon visiting China.

I was recently paying my annual visit to the China Consulate on Shatto Place, downtown LA, for visa renewal.

Previous visits have been pretty much routine with the occasional bureaucratic sideswipe. However, this visit was quite the circus;

The usual LED notice board that alerts waiting visa applicants to their turn at the counter windows was broken. This meant that instead of a quiet few minutes sitting on one of the arena-like bench seats, every applicant had to stand in line with a numbered admission ticket given to us by the very pleasant security guys at the front door.

This line extended around the entire waiting area like some sort of homage to the Year of the Dragon. So, instead of being able to sit and contemplate the upcoming noodles and Baijiu consumption, we all shuffled along for a good hour (threading our way between the seats) with nothing to do except stare at the CCTV news show that was silently portraying life in China as it will be when we get there.

The simple interim solution (who knows just how interim?) would have been to have one of the counter staff call out numbers (in Chinese and English) and the rest of us could have waited on the benches for our turn…..this was apparently too logical for this office…when I suggested the ‘improvement’ to the girl behind my counter window wearing the blue surgical gloves, she stared at me as if I’d just asked her to marry me.

Based on my many visits to China over the past few years, this is pretty much the existence that the locals are subjected to…not a lot of lateral thinking and absolutely zero idea about customer service. However, China is never dull and the further west one travels, the more interesting life gets.

Jet Fuel Prices Threaten Gulfstream, Bombardier and Falcon Pre-Owned Sales

Here we go again……a ruckus in the Middle East and already creeping jet fuel prices….!

It’s no surprise to any Gulfstream, Challenger or Falcon owner/operator that these sudden, steep jet fuel price increases can take forever to subside and are never fully reversed.

This time around, the price increases will weaken already moribund pre-owned aircraft sales activity and will, more than likely, pile more inventory on top of the pre-existing and mostly stagnant stockpile of most makes/models…including the ever-vulnerable Spey-engined Gufstreams and vintage Falcons/Challengers/Hawkers.

The usual suspects are forecasting up to a 20% increase in the price of jet fuel over the next few months, this increase includes what might be termed a “war-risk premium”…..anyone in the aircraft broker business may as well take a long summer vacation.

However, anyone sitting on a different pile (of money) can be assured of plenty of leverage if any of the segments such as Gulfstream IV, IVSP, V or Global Express…or maybe even Falcon 900B/EX are under consideration. Aviatrade is aware of plenty of tailwind in this case.

…….stay tuned for pre-owned Gulfstream, Bombardier, Falcon etc., sales forecast “adjustments”.

Gulfstream Aerospace to feed at the aircraft brokerage trough

An interesting announcement from Gulfstream recently;

Essentially, Gulfstream will be offering brokerage services to any Gulfstream owner who will let GAC list their Gulfstream aircraft for sale.

This is no doubt an effort to give GAC’s pre-owned sales people something to do. Gulfstream ended 2011 in the remarkable position of having no pre-owned aircraft for sale……this is both a testament to the pre-owned sales department skills and the strength of the product line. However, the fact there are still some hundred plus (discounting the Spey-engined jets) Gulfstreams for sale indicates that there is a lot of competition in the brokerage arena (not so much in Aviatrade’s consulting arena)

Don’t get me wrong here, I know most of the pre-owned sales chaps (and chapette) quite well, but this new development does sort of present a conflict of interest for Gulfstream…..to wit; if and when Gulfstream ‘bulks-up’ on pre-owned offerings, the sales people will theoretically be pitting their own inventory against the ‘allcomers’.

Incidentally, this is akin to the legerdemain that some in the aircraft dealer network have been known to indulge in when performing a ‘bait and switch’…. by advertising a customer’s jet for sale, then telling serious enquirers that ‘we may be able to offer a better deal on a different jet‘…..(ie., one from their own inventory). I will stress that I am by no means inferring that Gulfstream pre-owned sales would ever indulge in such antics.

Nevertheless, picture this hypothetical scenario…..Gulfstream pre-owned has three G550′s in inventory in the near future as a result of G650 delivery trade-ins. Obviously Gulfstream’s ‘delta’ will be built in to any trade-in. This then potentially allows Guflstream to offer their inventoried G550′s at a lower price than any other G550 that they may be brokering for an ‘external’ customer…..a little tough on the ‘ethics committee‘ side of things, (any assurances re.transparency and market comps/summaries notwithstanding)…..It’s pretty hard to argue that any perceived advantage of Gulfstream proprietary customer-base/product knowledge etc., etc., outweighs the potential for bias (no matter how innocuous) in GAC’s pre-owned Gulfstream transactions. This will be especially tricky if we see another marked economic downturn and accompanying flood of distressed sales.

In any event, we’re pretty confident that Aviatrade’s almost thirty year affiliation with the Gulfstream brand coupled with our competitive fees will offer a persuasive case for retaining Aviatrade when the Gulfstream buyers and sellers “come a knockin’ on our door”.

Hawker Beechcraft Woes

"Hawking Beechcraft"

…..There’s nothing wrong with HB that a change in top (very top) management wouldn’t help.
Who else is a little tired of hearing Boisture blame everything in sight except the ivory tower occupant ?
Re. a partial comment from Boisture someway down this article “deceleration in China’s economy hampering growth”….say what ?
…And interestingly perhaps, the commentary continues with “His (Boisture’s) cautious outlook contrasts with more optimistic views elsewhere”…..when will his ‘Goldman’ masters (who apparently put Boisture in HB’s corner office in the first place) finally “get it” and move him on to his next plum assignment ?
Boisture, it is alleged, left Gulfstream under a cloud (no pun intended) some years ago and was apparently only at Netjets and Carlyle Group until his ‘sell by” date came and went at both companies.
It doesn’t help matters that the Hawker line is now seemingly moribund (sad to say) and distinctly unexciting…but this will be the challenge for the next CEO, who surely can’t be too far over the artificial horizon now that a downgrade has occurred. But will it happen soon enough to avoid the B-word ???

Aviatrade announces supersonic market entrant

the competition....

HyperMach Now Aiming for Mach 4 Bizjet…….

So, fellow cloud-stabbers, we now have ‘Hyper Mach’ or whatever the latest hyperbole-laced earth-bending starship is called……Rising to this latest challenge, Aviatrade is not going to stand on the sidelines (or in any hangar bathroom stall) while some johnny-come-quickly outflanks us with some tricky wicker-basket-based technology.

Therefore, we are announcing, with some fanfare (and jet-engine-money-sucking noises), our breakthrough market-stomping jet….the MegaHypaZoom(Mach) bizplane.

This unbelievable (sic) pocket rocket will travel at many many times (so many we’ve lost count already) the speed of light. In fact, it will be so quick, it will arrive before it departs…..brilliant huh ??? This of course means that we will save lots of fuel and passengers will actually look younger as they slide down the escape chutes after the botched landing by our incapable crews (did I mention that it only needs a forty-thousand foot airstrip for landing and take-off).

Speaking of fuel, we have secretly developed (in a deep disused Minuteman silo littered with defunct taxpayer-funded top secret plans for Armageddon) a tree-burning ultra-high-reverse-bypass engine….therefore the MegaHypaZoom(Mach) will be congruent with present-day ‘green’ fuel fakers and carbon-footprint collectors etc etc…..and, (wait for it), we intend to burn only trees dredged from submerged ancient forests and thereby re-inject good old H2O back into the edge of the atmosphere…….ingenious plan is it not ? (and oh, I forgot to mention, there will be a solar-powered log-splitter that will be installed in the space where the cabin crew would normally sit and read the free newspapers and eat passenger leftovers….aka the “galley”).

Of course, we’re not putting up any of our own money for this little jape, (we’re not stupid)….instead, we’re desperately hoping to bamboozle an unsuspecting OEM and suck up some of that there ‘gomment’ (aka tax payer) moola that seems to perennially disappear down these whizzbang jet transport concept black holes. Actually, as previously stated, there won’t be any black holes with the MegaHypaZoom(Mach) …..because it’ll be too bloody quick !

We know that all of you aircraft spotters will be very excited to hear about the MHZ(M) and we are cautiously optimistic about our chances of fooling everyone that we come into contact with in the aviation world and beyond (……Mars ?).
However, as with all such wildly ambitious and foolish designs, we are taking some precautions with regard to testing market acceptance….to this end, we are going to ask one of our dogs (the chocolate Havanese) to give it the ‘sniff test’….because as we all know, it takes one dog to know another !

Pre-owned aircraft market and new aircraft positions

Last Fall we acquired a Gulfstream G550 for a client. This was, (by necessity) an off-market transaction….(the seller was the daughter of one or another of the Russian oligarchs).
Since that time we’ve watched the uptick of G550 availability and almost across the board in the ultra-long-range aircraft category.
G550, Global Express and Falcon 900EX have all become more plentiful on the pre-owned market (fifteen G550′s at last count) and this of course means good deals for buyers. We are seeing early-model G550′s that can be acquired for less than what appears to be the top of the pre-owned G450 market.
Gulfstream GIV’s and GIVSP’s are plentiful and very much in a buyers’ market, but with not too many good GIV/SP’s in the mix. GIVSP’s have trebled in availability since last Fall. Some of this availability is probably due to anticipated owner replacement/upgrade aircraft but we doubt that fifteen G550 sellers are all moving up to G650 or across to Global Express XRS’s.
Other segments of the market have shown similar increases in availability with Challenger 604′s and 605′s also very soft. Same goes for Challenger 300 and thereon down the cabin size/performance chain.
Falcons (2000′s/900B’s) are in a buyers’ market and will stay there for the foreseeable future.
Many older models have reached the point where the mantra is “buy it, fly it, scrap it”….all Spey-engined Gulfstreams, early Lears, early Challengers etc will all be retired as they reach critical inspections and engine limits.

Aviatrade has good access to numerous positions for Gulfstream G650, G550, G450, Global XRS, Global 5000 and Falcon 7X, Falcon 2000LX and Challenger 605, but as always, these positions are in demand and buyers should be prepared to act quickly and decisively in order to be the early-bird catching the worm.
So let’s go hunting…..for aircraft !