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Asia Pacific Round-Up

Much is happening in the region in-spite of the global financial mess.

Despite the world’s financial woes that led to the surprise cancellation of ABACE in Hong Kong later this month- so much has happened on the business aviation front in this region over the last three months that it’s difficult to know where to start.

Asia Pacific leaders- who are responsible for half the world’s economy- are trying to keep an up-beat attitude on the global financial crisis- and at the recent Asia Pacific Economic Cooperation forum (APEC)- agreed on quick and decisive actions to prevent a global depression.

The biggest and most trumpeted business aircraft delivery to the region this quarter is also the first to be registered in the People’s Republic of China- a VVIP Airbus A318 Elite- which is being managed by BAA Jet Management of Hong Kong. The eighteen seat- airliner-sized- aircraft is based at Shenzen and available for VVIP charter.

“Asia has long been an important market for Airbus – it’s where we won our first airliner sale outside Europe – so it’s great to see BAA becoming our first operator in the region for our modern A318 Elite+ corporate jet-” commented Airbus COO- Customers- John Leahy. “The longer you fly- the more important your comfort becomes- so the A318 Elite really does have a lot to offer-” he added.

The Airbus Elite+ joins two Gulfstream G200s and a Falcon 2000 already based in Shenzhen- and registered in China with BAA Jet Management Ltd.’s parent- Asia United Business Aviation (AUBA). BAA also manages a fleet of US registered aircraft in Hong Kong and Taiwan. The Hong Kong fleet includes a Gulfstream G200- a G450 and a GV. Another Gulfstream G200 is based in Taichung- Taiwan.

In the first quarter this year BAA will take delivery of its first Falcon 900EX EASy- which joins its Shenzhen fleet in February- while the company’s first Gulfstream G550 was due to be based in Hong Kong from last month (January). This will bring the total managed fleet in Asia to ten aircraft.

But that’s not the end of BAA’s remarkable expansion- it also has three client Airbus ACJs (two due in 2011- the third in 2012) on order and two Airbus A350-900XWB Prestiges due for green delivery in 2014-2015. The ultra wide body R.R. Trent powered A350s will each then spend 18 months in Jet Aviation’s Basel completions center before becoming the first A350s available for charter anywhere in the world says BAA.

AUSTRALIA
Australia-headquartered Hawker Pacific has announced that it is to sell off its piston engined overhaul arm to help finance expansion of its Asia Pacific FBO/MRO network. With updated facilities in Sydney- Brisbane and Cairns- the company has recently opened in partnership with ExecuJet at Malaysia’s dedicated business compound at Subang Airport’s Skypark. It has a long established operation at Singapore’s Seletar Aerospace Park- and is to move into brand new premises there this year. However- China has been the company’s major breakthrough so far- with the company already in position in an FBO/MRO joint venture with the Shanghai Airport Authority at the city’s Hongqiao Airport where they have recently broken ground on a brand new corporate aviation center.

Although this project is running late- its first phase- the MRO hangar operation- should be ready by August this year while the FBO building is earmarked for completion later in 2009.

The MRO hangar is designed to accommodate a BBJ sized aircraft- plus a Gulfstream/Global Express sized aircraft- as well as smaller aircraft at the same time. The facility will initially handle heavy maintenance for Dassault Falcons and Hawker Beechcraft aircraft- but plans are afoot to widen the offering to include Bombardier- Embraer and Gulfstream business jets. It is as yet not clear whether Hawker Pacific will gain the necessary licenses to handle all of the aircraft types- or whether competing MRO companies will be invited in to offer heavy maintenance for Bombardier and Gulfstream business jets.

Australian Business Aviation Association’s David Bell says that Australia-based business jet aircraft have increased from about 80 in 2004 to 140 in 2008. “One hundred and forty business jet aircraft were based in Australia as of 1st November 2008. The annual rate of increase is expected to slow a bit in the next few years due to current economic circumstances-” he said- adding that 115 are on Australia’s ‘VH’ Register- 20 are ‘N’ Registered and five are on the Australian Military Register as VIP Squadron aircraft.

A snapshot of the current economic situation down-under is nothing like as bad as for most other regions outside of Asia Pacific says Brisbane-based Steve Padgett- the MD of Aeromil Pacific a Cessna dealership for Australia- New Zealand- and parts of the Pacific region. His company is also involved in flight operations- business aviation charter- maintenance- spare parts and support.

He commented- “We haven’t seen any cancellation of orders at all- but we are seeing a couple of people maybe deferring their Mustang orders for a little while. We have a forward order book of 10-11 Citations and probably five Caravans with Cessna singles pretty well sold out.”

According to Padgett- the Australian general economy is in better shape than that of the U.S. and Europe because the Australian banking sector is strong. “We’ve no problem getting finance for our airplanes-” he said. “This is probably because the banks have been financing aircraft for our customers for over 20 years- but someone coming off the street and asking to borrow a lot of money would probably have to get in a queue.” Most of his clients don’t need funding anyway- as they have their own financing sources or cash. “I guess the biggest thing at the moment is that people are just sitting back and waiting- which I guess is the same all around the world.”

He’s got more optimistic over the last couple of weeks though (this interview took place just before Christmas) as he says he is seeing people ‘starting to lift their heads again’. The reason could be that the Australian Dollar has regained ten cents on the U.S. Dollar recently (after a drop of 30 cents) and interest rates have dropped two percent. “This has improved confidence especially as aircraft are bought in U.S. Dollars.”

Possibly another reason for Padgett’s optimism is that his company is in advanced discussions for ‘a large Australian fleet order of Cessna business jets’. He also has three proposals out at the moment for potential sales of Cessna 172s to flight academies whose business is supplying flight training for Asian airlines- particularly those of India and China.

“We are seeing some of the older used aircraft becoming less popular- but that is usually the case when you get these financial situations and customers want newer airplanes. Blue Book prices have gone down- but they never go down as much in Australia as elsewhere because aircraft have localized registration of equipment for Australia. As aircraft have to be ferried a long way to get here- it means that once aircraft are in-country they will always achieve a higher value. Prices here haven’t dropped anything like as much as they have in other parts of the world-” he emphasized.

Padgett’s Aeromil company is famed for opening its Aviation Store (The Cessna Store – Aviation by Aeromil Pacific) in Sydney’s down-town area last year. Was this a good idea just before a world financial crisis World Aircraft Sales Magazine asked? “Yes”- he said emphatically. “We’re still getting a lot of walk-ins and we’re using it to promote charter- even if people are not buying aircraft.

“The general idea behind the store was to promote aviation and so what better time than when times are tough. We’ve got street exposure which gives us contact with the public who are asking- ‘How’s the aviation business affected?’ They are surprised when we tell them that although people are selling their boats- they’re not selling their airplanes.”

He explained that newer aircraft in particular are retaining their value ‘reasonably well’ against some prime site real estate price drops of 20-25 percent in Sydney. “The drop in real estate is much higher than in the price of an airplane-” he added.

INDIA
Remember the story that World Aircraft Sales Magazine carried last quarter about India’s Commissionerate of Delhi Customs impounding more than six business jets and helicopters? This happened mid-year 2008 because of changes to the Non-Scheduled Operator (NSOP) (passenger) category brought in last February. According to insiders the debacle seems to be over now- and those who fell into the net had their aircraft released after they paid import duty and taxes of between 25%-27%.

Every owner/operator has been checked out now according to an insider at India’s Taj Air who’s operation was declared ‘clean’. “Our records were handed over- scrutinized and were given a clean bill of health - we didn’t even lose one flying day.”

Meantime- Deccan Aviation’s VIP Skylimo helicopter shuttle service connecting Bangalore’s International Airport to city center landing points- which started operations in July- has been so successful that the company is to start a similar operation in Mumbai. The underlying reasons are the same; long congested road journeys of up to two hours between airport and city- which can be handled in minutes by the helicopter service. The cost of a one way flight is a modest 4000 Rupees which is around US$85.00.

And India’s Tata Group announcement that it had bought a one third share in Piaggio Aero (announced at NBAA in October) has started to bear fruit. Taj Air – Tata’s in-house business aviation charter arm has become the exclusive distributor of the P.180 Avanti IIs for India- Nepal- Bhutan- Sri Lanka- Pakistan- Maldives and Mauritius. Taj Air will also be responsible for marketing Avanti IIs in the region and will become India’s first authorized service center for the aircraft.

The service center will be at the Taj Air main facility at Mumbai International Airport. As part of the agreement- Taj Air personnel will attend recurring annual training courses at Piaggio Aero in Genoa (Italy) and Flight Safety’s West Palm Beach (FL) maintenance training centers.

Taj Air has also ordered India’s first Avanti II- which from February will be operated in conjunction with two Falcon 2000s for use by its huge parent group (which owns Jaguar and Land Rover in the UK). It will also be available for third party charter. A second Avanti II is on order for an undisclosed Indian operator- while another Falcon- a 2000EX EASy- should have been delivered by the time you read this.

It was rumored that the company was contemplating buying a Falcon 7X- but as Taj Air is planning on operating a Mumbai-based Gulfstream G550 from this month- the previous plan now seems to be on the back-burner.

Taj Air sees the Avanti II as an ideal business aircraft connecting major Indian cities to smaller towns. Mr. M. Kapadia- Chairman of Taj Air- says- “We are also convinced that by taking the distributorship… Avanti II operators will have a one stop shop for all their requirements… from buying- to maintaining the plane within India and neighboring countries.”

Taj Air is registered with the Indian Directorate General of Civil Aviation as a non-scheduled operator. The company says that it is the only Indian business air charter company to own and operate a state-of-the-art hangar and an exclusive passenger lounge in Mumbai- and is also the only air charter company to manage passenger and baggage screening at Mumbai Chatrapati Shivaji International Airport for all nonscheduled and private operators.


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