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Asia-Pacific Round-Up
A brief review of a developing region.

Years of the global economy sliding back into recession might be premature- but as investors doubt the ability of major economies to sort out their fiscal problems nothing will bring back the pre-2008 confidence. China and parts of Asia-Pacific (although obviously worried about the knock-on effects of another potential western financial meltdown) are as yet showing little sign of lessening the boom in business jet orders- particularly to China. In fact orders and deliveries are positively booming.

THE ESTD (FORMERLY INTERGLOBE)
India’s industrialists and high net worth individuals have been hit by treble jitters though: they are naturally worried by the world economic situation- by India’s overheating economy and by its high profile corruption scandals. The aggregate effect has virtually snuffed out sales of large- long-range corporate jets for the time being. It’s so bad- says one insider- that “One representative for one of the large western OEMs hasn’t sold a single aircraft to India all year long.”

Indian Business and General Aviation movements fell to 63-000 in the second quarter of 2011 from 72-000 for the same period in 2010. The Airports Authority of India says the figures could be attributed to the economic downturn.

The Indian mid-size and small-end of the business jet market seem to be less affected though- according to Delhi-based Nigel Harwood (Managing Director of newly re-branded THE ESTD - The Established). Until March this year the company operated under the InterGlobe General Aviation Ltd brand. Its new name better reflects its expanded luxury offerings explains Harwood. These now number 26 and include luxury yachts- high-end sports cars- motorbikes and even 3-5 seat submersibles capable of diving to 100 meters.

“We decided to expand our portfolio about a year ago. We have one-on-one relationships with high net worth individuals who trust us to recommend new products to them-” said Harwood. The cost of the yachts vary from $1 million up to $80 million and are customized in the same manner as business aircraft. The Dutch built U-Boat Worx submersibles cost from $1 million to $2 million.

The company very much remains a Hawker Beechcraft sales and service center and this years’ sales are “slow but quite good- and by the end of September we are exactly where we predicted and are on budget-” Harwood remarks. He agrees there is a ‘slow down’ in the Indian economy but reckons this is mostly due to the conservative nature of Indian consumers who closely monitor financial events abroad.

Harwood expects that optimism will bounce back within six months. “The slowdown started towards the end of last year (2010) and has carried on. The first three months of the year are generally quiet but pick up by April - but that didn’t happen this year-” he observed.

Harwood is currently negotiating to represent another western OEM in India and although anxious not to give too much away added- it is hoped this would happen within the next few months for a higher seating capacity twin-engined aircraft. He says his company’s re-branding wasn’t a recession hedge. “Our thinking was that if a typical aircraft transaction is around six to nine months we could turn over high-end cars- boats and other luxury items on a much quicker basis which is good for cash flow and therefore good for our overall business.”

ESTD’s Hawker Beechcraft sales continue to be the mainstay of the company’s business aircraft portfolio as most of the models are well proven in India. “We do face fierce competition on pricing- with our competitors reducing their pricing to ridiculous levels-” Harwood reveals.

On the helicopter front- the company has sold a VIP Sikorsky S76C++ to the Maharashtra Government which is due to be delivered this month. According to Harwood- from now on all S76 orders will be for the S76D model which is currently in the final phases of certification in the U.S.

As if the company hadn’t got enough going on- it is also exploring the idea of offering aircraft charter in India by a London-based company. “The plan is that we would set up a company in India to run a charter operation using their experience and background. We would supply the Indian element-” Harwood explains. “Essentially we will be using a different model which will be quite unique and one that hasn’t been tried in India before.”

A formal announcement will occur later in the year. “We will be offering multiple aircraft sizes- from Beechcraft-range up to Gulfstream-sized aircraft-” he adds. “We are currently discussing whether the aircraft will be based in India. Discussions are very positive on both sides and it is going to be something different.”

ALSO IN INDIA…
Other news from India confirms that the Embraer Phenom 300 has been certificated there. With a range of just under 2-000nm the aircraft is capable of connecting the main hubs of Delhi and Mumbai with every major city in the sub-continent.

CHINA:
In China increasing business jet orders and deliveries continue to confound. Swiss-based ExecuJet says it has sold and delivered ten business jets to China over the last 18 months. “In two specific acquisition agreements- ExecuJet was trusted to find- refurbish and deliver aircraft without the principal seeing the aircraft prior to delivery-” said Andrew Hoy- Managing Director of ExecuJet Aviation Trading. “They climbed the air stairs- turned right and smiled.”

Surprisingly- Hoy says that a lot of the pre-owned aircraft deliveries are being achieved in six to eight weeks (from LOI signing to delivery) not six to eight months as quoted currently by many within the industry.

Until now industry observers have been quoting six-to-eight months to get an aircraft onto the China B-Register and citing the delay as a shortage of CAAC Inspectors who are required to physically inspect the aircraft wherever it is based. But according to Hoy- it’s not a shortage of inspectors that is causing delay- but the two-to-three weeks it takes to get Visas. “Applying for the inspectors’ visas early is the key-” he outlines. “Two of our earlier deliveries were delayed because of this.”

An unconfirmed- but reliable source says that up to 15 Citation business jets will be ordered by a group of Chinese businessmen by the end of this year- with most buyers seeking finance from Minsheng Financial Leasing (MSFL). Another un-confirmed report suggests that nine of these aircraft are Citation Sovereigns while a tenth aircraft is believed to be a Citation Ten.

London-based David Tang- Minsheng’s Aviation consultant- has already been approached to look at the leasing prospects. MSFL was having a very busy year even before this news broke in early October. It signed an MoU for up to 20 Embraer executive jets in July and for 50 Gulfstreams a couple of months before (it had a 40 aircraft backlog even before these announcements). Minsheng is also imminently planning to order its first batch of VIP equipped helicopters- a 20-ship order from (an) as yet undisclosed western manufacturer(s).

The Industrial and Commercial Bank of China (ICBC) threw its hat into the ring earlier this year through its ICBC Financial Leasing arm when it announced it had signed an $8 billion MoU general agreement with Bombardier Aerospace covering the Canadian company and its Business Aviation and commercial customers. Business Aviation executives are tearing up their business plans as more and more orders are announced. Even forecasts from last year proclaiming 400-500 aircraft on the combined registers within five years now appear to be conservative- with some within the industry saying the eventual number could be double.

INDEPENDENT AOCs
Enlightened Chinese Government legislation now allows private companies to apply independently for an Air Operator’s Certificate- and between five-to-10 could be issued annually - but industry observers say that over 30 companies are currently applying. Previously all PRC-registered business jets had to be operated through- or affiliated to- a mainland China airline’s AOC which slowed the effective use of business jets in the greater China region.

China and Asia’s largest and oldest business jet operator Deer Jet (affiliated to Hainan Airlines Group) continues to expand fast. It already owns 21 business jets and manages another 19. According to Boeing- Deer Jet took delivery of its third BBJ (of four on order) on July 15th. Last year Deer Jet signed a preferred charter partner agreement with Swiss based Fly Comlux (the largest operator of Airbus Corporate Jets).

Together they will develop VIP charter markets in Asia- Central Asia and Europe. Established mainland China business aircraft operators not affiliated to Chinese commercial airlines include Beijing Capital

Airport based CITIC General Aviation Co. Ltd. China First Mandarin Group (CFMG) of Shenyang gained one of the first non-affiliated airline AOCs- and recently announced it is forming a preliminary joint venture with TAG Aviation Asia Ltd covering charter- aircraft management and aircraft maintenance.

Another fledgling joint venture is between ExecuJet and Tianjin Haite. The new company ExecuJet Haite Aviation Services China Co. Ltd will offer full service business aircraft maintenance and eventually aircraft management and charter once it has gained its Chinese AOC. BAA Ltd was launched in 2006 and is a PRC-registered company holding a Chinese B-Register AOC. The company operates an all-managed fleet of 24 corporate jets for aircraft owners only.

Another ten aircraft are to be added to the fleet this year with commitments for an additional seven in 2012- making it the largest specialized business jet management company in China.

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