Download - The Only Way is Up… - Corporate Jet Investor
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Where are we in the Business Jet Cycle?
a.k.a.
The Only Way is Up…
Eddy Pieniazek Ascend
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Business Jets - 2011
The Build up to 2010
How does the market look for 2011?
Which Markets will drive recovery?
The role of BRIC Countries
China’s Potential
Up and only up, or double dip?
Questions
Content
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Our role in this market sector Ascend
provides data,
analytics and
advice to
help investors
finance aircraft
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The Build-up to 2010 The Outlook for 2011
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7,781 delivered
since 2000
17,711 Total now
In service
2008 Peak year
1,224 deliveries
2003 Low point
505 deliveries
Last Ten Years – Business Jet Deliveries 2001-2010
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Last Ten Years – Business Jet Deliveries
North America dominated the past
Where did they go?
0
200
400
600
800
1000
1200
1400
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Unknown area
Australasia
Africa
Middle East
Asia
Latin America and Caribbean
Europe
North America
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Last Ten Years – Business Jet Deliveries
Rest of World (ROW) growth from 25% to >50% share
The Market is shifting
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Unknown area
Australasia
Africa
Middle East
Asia
Latin America and Caribbean
Europe
North America
North America
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Market Shifts – the trend continues
current fleet (17,711) on order (2,480 known)
Asia AustralasiaEurope Latin America and CaribbeanMiddle East North AmericaTBD
AsiaAustralasia
Europe
Latin
America and
Caribbean
Middle East
North
America
TBD
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Market Shifts – Value Changes Since 2008
Long Range example – Global Express Family
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Market Shifts – Value Changes Since 2008
Mid Range examples – Falcon 900 Family
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Market Shifts – Value Changes Since 2008 Medium range example – Challenger 300
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Market Shifts – Value Changes Since 2008 Light-Medium range example – Citation Excel/XLS
11.50
9.10
12.25
7.20
11.55
6.20
10.55
5.20
9.00
5.05
7.45
2.80
2.50
5.00
7.50
10.00
12.50
Sep-08 Dec-08 Mar-09 Jul-09 Oct-09 Mar-10 Dec-10
Mark
et
Valu
e (
US
$m
)
MARKET VALUE TRENDS — CITATION EXCEL/XLS FAMILY
2009 XLS+
2008 XLS
2006 XLS
2004 XLS
2003 Excel
1998 Excel
Source: Ascend Online Values (V1)Source: Ascend Online Values (V1)
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Driving the Recovery The role of BRIC countries China’s Potential
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Source: IATA
Recovery in Global Economy is present in all regions but US and Europe are underperforming
-6
-4
-2
0
2
4
6
8
10
12
14
2000 2002 2004 2006 2008 2010 2012
Real GDP Growth by Key Regions
2000 – 2012
China (RPC): 9%
Asia Pacific: 5.6%
Middle East: 4%
North America: 1.7%
Europe: 0.7%
Markets looking to Asia-Pac (esp. China) and Middle East
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Driving the Recovery - Deliveries to the BRIC
Which Markets?
0
5
10
15
20
25
30
35
40
45
50
55
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
BrazilRussia
IndiaChinaMiddle East
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Driving the Recovery – Deliveries in 2010
Brazil – small is beautiful - 36 of 57 deliveries were Phenoms, 3
Mustangs, 4 CJ2/3s
Russia – only five but they’re all for the long haul – Falcon 7X,
Global Express and Challengers
India – remains a mixed promise…10 aircraft from G550, Falcon
7X and Global Express to Lear 60s and Phenom 100s
China – Distance is key: 22 aircraft of which 7 Gulfstream 450/550,
3 Falcon 7X, 2 Challengers, 4 Hawker 4000s
Middle East – Bigger is better again: 21 aircraft of which 4 were
Gulfstream 450/550, 5 Challengers, 4 Falcon 7X, 3 Globals
The BRIC Collective – not the answer – not just yet
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Driving the Recovery
Business Aircraft fleet is growing
China displays Potential
0
20
40
60
80
100
120
140
160
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
LoI
Ordered
In Storage
In Service
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Let’s go shopping!
“ The average wealth of the 1,000 wealthiest Chinese grew 26% in the
last year. This year there are 1,363 Chinese individuals with 1 billion
RMB (US$150 million), compared to 1,000 individual last year and only
24 ten years ago”
Editorial from China International Business, November 2010
According to the 2010 Hurun Rich List, one-sixth of the
2,000 richest in China have plans to buy private aircraft.
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Hurdles to Overcome for BA / GA in China
Airports & Aerodromes
The lack of airport infrastructure in China has limited the development of
BA / GA activities in China. China is building more
The lack of the BA / GA Professional
Ranging from flight instructors to FBO managers, engineers and maintenance facilities,
BA / GA brokers, Air traffic controllers. Recruiting & building is underway
High Import taxes
Import tax can be more than 20% of the aircraft purchase price in many cases
Airspace
+ The Government has started to look at the issue
- how the Government / Military will change their attitudes is very uncertain
…but moves are underway to meet the challenge
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Airspace Issues in China
Altimetry (use of m
instead of ft, affects
IFR flights more)
No airspace for GA activities in general
(no class G airspace),
Uneven concentration
of air traffic
over China
Growing commercial, business
and GA fleet, all fighting for
access to limited airspace Only 20-30% upper airspace
is for civilian usage
Long application process
in applying for private
flights in China
Insufficient
well-trained ATC
professionals
Airspace is owned and
controlled
by military, not CAAC
Affects IFR (commercial, business flights)
Affects VFR (private and GA flights)
Affects both
Chinese airlines tend to
get better routing and quicker
clearance approval
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China Airspace Reform
Lower airspace in China will be divided by three sections:
1. Areas under control 2. Areas under surveillance and 3. Areas where aircraft can fly freely after reporting their flight plan in advance
Original test points were Pearl River Delta (Southern China), Northeast China, and the GA Industrial Park in Xian.
The open airspace reform will be trialed in Changchun and Guangzhou first in 2011 and includes the setting up of lower airspace in controlled airspace (CTA) that is different to the one which covers the majority of China.
Other areas are also now being tested, such as the tropical island of Hainan
China’s State Council and Central Military Commission issued a joint
circular before the Zhuhai Airshow 2010 (Titled ‘Opinions About Resolving
and Deeper Understanding of Domestic Lower Airspace Management’)
China will open parts of its low-altitude airspace to promote the country’s
GA sector. Lower airspace in China = below 4,000 m. (where GA aircraft
operate)
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AVIC CAIGA has established core bases in five cities for
GA development
Zhuhai AVIC CAIGA development heart of China,
aftermarket support, maintenance
and manufacturing
Shijiazhuang
Agriculture-used aircraft,
sports aircraft
Guizhou Aircraft and automotive
parts
Jingmen lighter-than-air vehicles
manufacturing
Shenzhen Aerospace & non-aerospace
materials R&D
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China already in Action
Beijing Capital Airlines – 50 aircraft now, 24 are business aircraft.
By 2015 “the fleet will be 270”, of which 141 will be business aircraft.
China First Mandarin Group (CFMG) and TAG to manage 20-30
aircraft in 2-3 years
Minsheng Financial Leasing – building a leasing fleet of 30 for 2011,
expects to have ordered 100 by 2014.
AVIC CAIGA looking to build a suite of light general and business
aircraft
China to supply, as well as fly
Ten Year Projection 2011-2020
China Business Jet Fleet to grow x 7 to 700
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Where to from here?
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2011 Deliveries Anticipated Deliveries (approx 730)
VLJ/Entry Level
29%
Long Range
25%
Light
11%
Light Medium
14%
Medium
21%
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2011 Deliveries Value of Anticipated Deliveries (US$bn)
Long Range,
$8.5b, 46%
Light, $0.6b, 3%VLJ/Entry
Level, $0.7b,
4%
Light Medium,
$4.6b, 24%
Medium, $4.4b,
23%
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