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THE SOUTH AMERICAN BIZAV MARKET
How does the South American bizav market compare with the Rest of the World


The economy in most of the countries in South America has been referred to as relatively resilient when compared to other nations during the recent worldwide economic crisis of 2008-2009. With a rapidly developing economy- the rate of recovery in South America is projected to be significant in 2010 as trade with China and the US is expected to reach large proportions.

From an aviation perspective- Brazil is home to Empresa Brasileiria de Aeronautica S.A. (Embraer)- one of the largest aircraft manufacturers in the world- and continues to grow and expand in the business aviation sector. Last year- the Olympic committee announced that the 2016 Olympics would be held in Rio de Janeiro and Brazil has also secured the 2014 FIFA World Cup that will surely boost its local economy.

So with the positive economic outlook- and as the Latin America Business Aviation Conference LABACE is being held in Sao Paulo- Brazil this month- we will look at how the current business aircraft market in South America compares to the rest of the world (R.O.W.).

First we look at how the distribution of business jets and turboprops compare to the rest of the world by continent (represented in Tables A and B) using information from JETNET. Also- included are the number of aircraft ‘For Sale’ and percentages. The worldwide total of Business Jets in operation includes only wholly-owned aircraft.

As expected the South American Business aircraft fleet ranked behind North America for both Business Jets and Turboprops. However- its global ranking is split with Europe for 2nd and 3rd place. South American operators exceed the Europeans in turboprops by 256 airframes but lag them in jets by 1-685 airframes. Perhaps more compelling is the near 2 to 1 ratio of turboprops (1-462 airframes) to jets (933 airframes) within the entire South American continent. One can surmise that the more utilitarian nature of turboprops remains appealing to many South American operators.

As a side note- it is interesting that both South America and Asia have nearly the same number of Business Jets- each with a relatively small 900+ airframes or 6% of the global fleet. Certainly the MRO community must be looking at both of these emerging economies as likely sources for future and substantial jet market growth.

The South American region’s Business Jets ‘For Sale’ account for only 3.1% (79 / 2-527) of the entire fleet currently on the market- while the Turboprops ’For Sale’ account for just 3.7% (50 / 1-347). Currently the combined total of the Business Jets and Turboprops in South America ranks as the third largest market in the world.

With regards to the resale markets South America is today the strongest “seller’s market” to be found. Wherein 10% or more of a given fleet marks a “Buyer’s Market” the South American continent now boasts just 8.5% of its jets and a paltry 3.4% of its turboprops now offered for sale. This stands in sharp contrast to the rest of the world whose aircraft markets still struggle to recovery from the global economic crisis. Consider North America at 16.8% jets- Europe at 16.8%- and Australia & Oceania at 13.8% - all still well past the threshold denoting Buyer’s Markets.

Table C represents a breakdown of aircraft For Sale by South American country. Here again the relatively small numbers demonstrate the overall Seller’s Market advantage of South America. Brazil leads all countries in South America in both Business Jets (49) and Business Turboprops (22) “For Sale”. Table D- meanwhile- lists the “For Sale” aircraft in South America by Make.

Remarkably- Table D shows that nearly three quarters of all the Pre-owned business jets offered For Sale in South America are now either Citations (30) or Learjets (28). For the turboprop segment King Airs (20)- Cheyennes (10)- and Turbo Commanders (10) account for 80% of the current resale market as reported by JETNET.

FULL SALE TRANSACTIONS
Full Sale Transactions by aircraft make are displayed in Table E. Here the Jet resale market shows a brisk pace to recovery. During the first six months of 2010- ten jet sales in South America were recorded by JETNET marking a substantial 250% increase from the same period in 2009 when just four occurred. This is excellent news as 2010 appears to be rebounding for Business Jets in South America from the difficult market conditions recorded in 2009. However- Pre-owned Business Turboprops sales transactions were the same in the comparative periods of the first six months of 2010 and 2009.

Finally in Table F are Sale Transactions by South American country. Venezuela led all the countries in pre-owned business jet sales- while Brazil led all countries in pre-owned business turboprop sales.

SUMMARY
South America’s resiliency through the recent global downturn is a good sign for business aviation. We expect to see further growth that will coincide with their economic expansion- and naturally we will continue to monitor this continent’s business aircraft activity through future articles.

For more information:
Michael Chase is president of Chase & Associates- and can be contacted at 1628 Snowmass Place- Lewisville- TX 75077; Tel: 214-226-9882; Web:
www.mdchase.aero.

Marj DeLong is president of MarketLift- Inc. and can be contacted at P.O. Box 595036 Dallas- TX 75359; Mob: 214-862-8992- Web:
www.market-lift.com.

JETNET can be contacted at 101 First Street- Utica- NY 13501; Tel: 800-400-2298; Web:
www.jetnet.com or www.avdatainc.com

You can now follow JETNET on Twitter at
www.twitter.com/JETNETLLC


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