avbuyer magazine april 2016

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A V B UYER BUSINESS AVIATION INTELLIGENCE April 2016 Aircraft Comparative Analysis – Citation CJ2/CJ2+ New Series – Business Aviation Market Insight Plane Sense on Cabin Connectivity THIS MONTH www.AVBUYER.com 2016 BOMBARDIER GLOBAL 6000 Learn more about this and our other exceptional aircraft on pages 32 - 33 and the back cover.

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AvBuyer Magazine April 2016 edition

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  • AVBUYERB U S I N E S S A V I A T I O N I N T E L L I G E N C E

    April 2016

    Aircraft Comparative Analysis Citation CJ2/CJ2+

    New Series Business Aviation Market Insight

    Plane Sense on Cabin Connectivity

    THIS MONTH

    www.AVBUYER.com

    2016 BOMBARDIER GLOBAL 6000

    Learn more about this and our other exceptionalaircraft on pages 32 - 33 and the back cover.

    Jetcraft FC April 2016.qxp_FC December 06 30/03/2016 15:23 Page 1

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  • olitics is everywhere. The US is in themidst of volatile primary contests toselect the Republican and theDemocratic candidates to represent

    their respective parties in the nationspresidential election this fall. Citizens of the UKwill vote this June whether or not to remain inthe European Union.

    Throughout the globealmost everywhereAvBuyer has a presencepolitical opinions andemotions are swirling around at high speed. Itis tempting for AvBuyer or its manycontributors to be drawn into that vortex.

    AvBuyer should not and will not beinfluenced by such dynamics. There is no placefor politics per se within the pages and digitalcontent of this publication. Where we havestrayed unintentionally in the past, we will dobetter.

    AvBuyers Vision is to be the primus sourceof need-to-know intelligence for BusinessAviation professionalsthe men and womenwho seek the benefits of transportation usingbusiness aircraft or are engaged in providinggoods and services to owners of businessaircraft. We are committed to realize that Visionin all our editorial content.

    Our Mission is to address the questions andconcerns of corporate decision-makers andentrepreneurs who are engaged in orconsidering the use of Business Aviation, aswell as to provide relevant operational andmanagement information to Flight Departmentleaders and staff.

    Our editorial content is focused on BusinessAviation issues that are the most important andmeaningful to our readers, whether they areengaged in transactions involving pre-ownedor new aircraft, or are simply relying onAvBuyer to stay informed.

    The Values or Governing Principles ofAvBuyer are clear: we will only publish what webelieve is true, relevant and useful to AvBuyer

    readers. We are dedicated to earning andkeeping the trust of the thousands of BusinessAviation professionals who seek theinformation contained within the pages of thismagazine and also sent digitally via Internetand email.

    The measures of AvBuyers success are thetrust you extend us and the value you receivefrom spending time absorbing the material wepublish. Our agenda is straight forwardserving your informational needs.

    In This IssueAlong with Rolland Vincents regular MarketIndicators summary, beginning p16, be sure toread Richard Emery IIs (Mente Group) marketobservations in our new Business AviationMarket Insight feature (p50), both of whichform part of the BizAv Intelligence section thismonth.

    Within the Boardroom section of this issue,Rani Singh interviews Cody Diekroeger atPremier Bone & Joint Centre about how thecompany uses its fleet of King Airs to serve theneeds of its patients better (p52) while JessicaPownell continues her series on takingadvantage of a strong dollar and globaleconomies to import an aircraft into the US(p60).

    Specifically for the Flight Department, KenElliott, Dave Higdon and Brian Wilson offersome Plane Sense on Connectivity (beginningp68), while Cessnas Citation CJ2 and CJ2+feature in our Comparative Analysis. How willthey compare against the Beechcraft PremierI/IA? Find out on p104.

    We trust that these choice picks and farmore besides will serve your information needswithin the Business Aviation arena.

    Jack Olcott - Editorial Director & PublisherAvBuyer -Your source for Business Aviation Intelligence

    PAvoiding Political Temptations

    4 AVBUYER MAGAZINE April 2016 Aircraft Index see Page 153www.AVBUYER.com

    WelcomeEditorsEDITORIAL

    Editorial Director / PublisherJ.W. (Jack) Olcott1- 201 572 9284

    [email protected]

    Commissioning & Online EditorMatthew Harris1- 800 620 8801

    +44 (0)208391 6777 [email protected]

    Editorial Contributor (USA Office)Dave Higdon

    [email protected]

    Consulting Editor Sean OFarrell

    1- 800 620 8801+44 (0)20 8391 6779

    [email protected]

    ADVERTISINGLinda Blackburn (USA Sales)

    1- 614 418 [email protected]

    Lise Margin (USA Sales)1-703 818 1024

    [email protected]

    Maria Brabec (European Sales)+420 604 224 828

    [email protected]

    Karen Price1- 800 620 8801

    +44 (0) 208391 [email protected]

    STUDIO/PRODUCTIONHelen Cavalli / Mark Williams

    1- 800 620 8801+44 (0)208391 [email protected]@avbuyer.com

    CIRCULATIONBarry Carter

    1- 800 620 8801+44 (0)208391 [email protected]

    AVBUYER.COMMichael Myburgh

    [email protected]

    Emma Davey [email protected]

    MANAGING DIRECTORJohn Brennan

    1- 800 620 8801+44 (0)208391 [email protected]

    USA OFFICE1210 West 11th Street,

    Wichita, KS 67203-3517

    EUROPEAN OFFICETrident Court, 1 Oakcroft Road,

    Chessington, Surrey, KT9 1BD, UK+44 (0)20 8391 6770

    PRINTED BYFry Communications, Inc. 800 West Church Road,

    Mechanicsburg, PA 17055Mechanicsburg, PA 17055

    The best aircraft for sale searchanywhere, everywhere - on pc, smartphone and tablet. B U S I N E S S A V I A T I O N I N T E L L I G E N C E

    Editor Welcome Final.qxp_JMesingerNov06 22/03/2016 10:27 Page 1

  • Swiss Excellence in Business Aviation

    AMAC Aerospace Switzerland AG Henric Petri -Strasse 354051 Basel, Switzerland

    Telephone + 41 58 310 31 31 [email protected]

    The largest privately-owned facility in the world offering VIP, private and corporate aviation services.

    Three Core Services: Maintenance Completion and Refurbishment Charter / Aircraft Brokering

    ad_avbuyer_mar2016.indd 1 16.03.16 16:07

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  • Editorial Focus

    Dealer Broker Market Update: Differences exist between age, size and

    markets in early 2016, surmises Dave Higdonfrom used aircraft Dealer Broker discussions

    42

    8 AVBUYER MAGAZINE April 2016 Aircraft Index see Page 153www.AVBUYER.com

    High Flyers Interview:Chief Pilot Cody Diekroeger tells Rani Singh

    how BizAv helps Premier Bone & Joint beat afractured transportation system in Wyoming

    52

    104

    76From Connectivity to Entertainment:

    Aircraft Connectivity is no longer a novelty in BizAv, notes Brian Wilson. So how can

    you maximize passenger satisfaction?

    Comparative Analysis Citation CJ2/CJ2+:

    How does Cessnas Citation CJ2/CJ2+ square up against the Beechcraft

    Premier I/IA? Find out here

    Contents Layout April16.qxp 23/03/2016 12:54 Page 1

  • ContentsVolume 20,

    Issue 4April2016

    April 2016 AVBUYER MAGAZINE 9Advertising Enquiries see Page 4 www.AVBUYER.com

    B U S I N E S S A V I A T I O N I N T E L L I G E N C E

    BizAv Intelligence16 Business Aviation Market

    Summary: Market trends, indicators, assessments and forecasts, introduced by Rollie Vincent

    38 US Flight Activity Trends & Analysis: In their JETNET >>KNOW MORE analysis, MikeChase and Marj Rose assess current flight operations trends

    48 Pre-Owned Aircraft SalesTrends: With forecaster assess-ments all over the board,where will the market landnext? Vrefs Fletcher Aldredgeoffers a snapshot

    50 Business Aviation Market Insights: Discover Richard Emery, COO, Mente Groups perspectives and thoughts on the BizAv Market

    Boardroom56 Business Aviation Help is

    at Hand: David Wyndham highlights how to find value in, and work effectively with an Aviation Consultant

    60 Tips for Importing a Jet (2 of 3):Attorney Jessica Pownell continues her discussion of contractual issues involved whenimporting an aircraft to the US registry

    64 BizAvs Little Known, LittleUsed Coverage: Stuart Hopehighlights what you may nothave heard about lay-upinsurance

    Flight Department68 Aircraft Connectivity (Part 4):

    Ken Elliott continues a five-partseries, this month with a reviewof onboard connectivity

    84 In Flight Connectivity for All: Towhat extent is big jet connec-tivity spreading down to smalljets and turboprops? Dave Hig-don explores

    88 Buying a Jet Key PlanningTips: Fresh from accepting anew jet, Vice President forAviation, Johnsonville, AndreFodor highlights essential areasfor planning a purchase

    90 Assessing Safety Risks: A 2014 accident report revealed lack of risk planning as a basic issue. What happened, and how can you safeguard your flight department?

    92 Retail Price Guide: Turboprop price guide from The AircraftBluebook

    96 Specifications: Turboprop performance and specificationscomparisons

    Community142 BizAv Review: OEM Bites, Asso-

    ciation News, Arrivals & Events

    Next Month Aircraft Comparative Analysis

    Embraer Legacy 650 Aircraft Lease 101 European BizAv Fleet Review

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  • BIZAV INTELLIGENCE MARKET INDICATORS

    16 AVBUYER MAGAZINE April 2016 Aircraft Index see Page 153www.AVBUYER.com

    imply said, the residual value of aparticular aircraft is nothing more thanthe price that the market will bear tomove an aircraft (happily) from oneowner to the next in an unstressed

    exchange Today, across virtually all product linesand brands, the prices are consistently falling frommonth-to-month, and from year-to-year. For thoseexperienced enough to have seen this moviebefore, we know where this is headed in anover-supplied marketplace like we have today,prices and available inventory will decline to thepoint where supply and demand forces even outand the number of willing buyers and sellersreaches some sort of equilibrium.

    That is an almost magical point in time whenprices rather miraculously stabilize, where thewinds of change calm, and when we can all getback to the task of developing long-rangestrategic plans for our businesses.

    In our view, theres nothing residual about thevalue of an aircraft there is only value. It is easyto forget that values that may appear diminishedtoday can in fact be sustained or even increased over time. Dont believe it? Just look at thecurrent business turboprop market, where pricesfor Pilatus PC-12s, Cessna Caravans and otheraircraft are maintaining their values years andyears after initial factory delivery.

    More recently, market-leading models such asthe Challenger 300 and Gulfstream G650

    commanded price premiums at or even aboveinitial delivered prices for several years after entryin service.

    Supply & DemandFor the many amongst you who may remembersuffering through Economics 101, the laws ofsupply and demand are clearly hard at work inBusiness Aviation markets today. These forces areinevitably resulting in softened aircraft prices.

    It is already hard to imagine an industry withoutEmbraer, Pilatus, or now even Honda. But 15-20years ago, these OEMs were only just in theearliest stages of investing in BizAv. Compared to20 years ago, the number of distinct new businessjet models has almost doubled, while new jetdeliveries more than doubled.

    Incumbent aircraft manufacturers are faced withthe prospect of fighting for market share or optingto move aside (or often upwards) to growrevenues and margins. Twenty years ago, Cessnawas advertising the Citation VII as an aircraft thatsets the pace others can only try to follow. Well,try they did, and succeed they also did, with theMagnificent VII able to muster less than 50 moredeliveries until it was taken out of production inthe Year 2000.

    Truth be told, Cessnas Excel/XLS andeventually the Sovereign were as muchresponsible for the demise of the Citation VII asanything the competition created, but there was

    For many professionals involved in the buying or selling of business aircraft, the topic du jour (or perhaps of the entire year) is that of aircraft residual

    values, notes Market Indicators Editor, Rollie Vincent

    S

    Rollie Vincent is President ofRolland Vincent Associates.His aviation market analysis issecond to none, and he is the creator/director of theJETNET iQ program. With a solid background in marketresearch, economics andstatistics, he has more than 30years of experience in business,regional and internationalaviation, including positionswith Bombardier, Cessna,Learjet, Flexjet, and ICAO.Contact him [email protected]

    Business Aviation Market Summary

    MarketIndicators March16.qxp_Layout 1 22/03/2016 12:45 Page 1

  • no doubt that enhanced competition and the re-definition and replacement of mid-size jets withthose offering larger, stand-up cabins was anotherfactor at play.

    Prices for 20-year old traditional mid-size businessjets the Citation VII, Hawker 800, and Learjet 60 -are relatively stable, hovering around $1.75m (about16-18% of original asking prices), according to Vref.Similar vintage Pilatus PC-12s are also commandingabout $1.75m retail prices, but these represent closeto 70% of the aircrafts original value.

    Is there a lesson to be learned here in todaysseemingly unstable pricing market? Popular anduniquely capable aircraft that offer unmatched ordifficult-to-match mission capability (i.e. Falcon 900,Gulfstream G550, Challenger 300, Citation XLS,Phenom 300, King Air 350) are actually holding theirlong-term residual values fairly well, and above theirpeer groups.

    The Survey Says?So, what appears to be holding back potentialbuyers from purchasing a business aircraft over thenext 12 months? Not surprisingly, supply-and-demand forces are at the top of the list, at leastaccording to aircraft owners and operators.

    In the Q4 2015 JETNET iQ Survey, which includeda sample of more than 500 owner/operatorsworldwide:

    22% indicated they simply do not need anadditional aircraft at this time;

    ~21% expressed concern that purchase prices ortrade-up costs are too high, or that they wereexperiencing difficulty trading their currentaircraft at an acceptable price

    ~13% indicated that they are concerned aboutthe uncertain economic and regulatoryenvironment, a number that will likely risesignificantly with the looming Brexit vote, andthe US Presidential race.

    2016 Outlook?Four months into 2016, whats the outlook for theyear? As is apparent in a number of the followingMarket Indicator reports, overall aircraft utilizationrates remain relatively sluggish, and inventory ForSale has increased modestly as pre-ownedtransactions have slipped, ending 2015 down year-over-year.

    With the exception of Honda Aircraft, which is in

    production ramp-up mode, mostOEMs expect toship about thesame number ofaircraft in 2016 asthey did in 2015,with oneexceptionInresponse to intensecompetitivepressure, and arapidly reducingbacklog,Bombardier madethe prudentdecision to cutback 2016production by 28%from its investor-guided 210shipments last year.

    This shouldbegin to relievesome of theintense pressure todiscount newproduction aircraftthat has plaguedthe company andthe industry in theaftermath of the2008 global financial crisis. Nevertheless, the impactof higher production rates than the market wasprepared to sustain and their impact on residualvalues - is not a problem that will be resolved quickly.

    With more OEMs and more models competingfor the available market - about 700 new jet and2,300 pre-owned jet deals in 2015 and probablyabout the same this year selling prices will remainsoft for the foreseeable future.

    Were now expecting new business jet factoryshipments to be modestly down year-over-year in2016 to about 690 units, representing a market ofabout $20bn, with the US accounting for about two-thirds of the total market activity. For the time being,at least, the headlines about industry globalizationwill be overwritten by news reports highlightinglower residual values, higher US sales, andunpredictable US politics.MI www.rollandvincent.com !

    April 2016 AVBUYER MAGAZINE 17Advertising Enquiries see Page 4 www.AVBUYER.com

    CHART A: Aircraft Purchase Inhibitors, Next 12 Months (Q4 2015 JETNET iQ Survey)

    LOOMING LARGE, THE PC-12 IS THE VERITABLE SWISS ROCKSTAR SUGGESTING IT MIGHT HAVE BEEN A GOOD IDEA

    TO LINE UP AT EBACE2014 TO PUT MONEY DOWN ON AN ORDER POSITION FOR THE IN-DEVELOPMENT PC-24.

    MarketIndicators March16.qxp_Layout 1 22/03/2016 12:46 Page 2

  • BIZAV INTELLIGENCE MARKET INDICATORS

    Bombardier belatedly reported itsyear-end results to the General AviationManufacturers Association (GAMA), notesMike Potts, allowing him to make a finalassessment of the market for businessjets for the year 2015The Canadian jet maker had a strong Q4,delivering 64 business jets in the finalthree months of 2015, but that wasntstrong enough to match the 78 unitsreported by Bombardier in Q4 2014. Thefinal result pulled the whole industrydown from what GAMA had reported inJanuary, when they had to make dowithout the data from the industryslargest jet manufacturer.

    In the revised numbers, businessaircraft shipments totalled 2,331 units,down -5.0% from the 2,454 recorded in2014. The jet market was essentially flatat 718 aircraft, down a mere -0.6% from722 last year. This is somewhat below the730 to 740 units we predicted for the2015 jet market.

    Total billings were down 5.2% at$23.2bn for the year, compared with$24.5bn for 2014. While perhapsdisappointing, 2015 was still the thirdbest year for billings in the history ofGAMA, topped only by 2014s recordtotal and the 2013 result when billingswere $23.4bn.

    A little more than three years ago, inits annual Business Aviation Outlookissued in the autumn of 2012, Honeywelltold us that flat would be the newnormal for a while. These threeconsecutive years of tightly groupedbillings totals provide stark evidence ofjust how accurate Honeywells predictionhas proven to be.

    If we werent comparing it with theirresults in 2015, the 64 units worth $2.3bnthat Bombardier delivered in Q4 wouldlook very good. For Q1-Q3 the Canadiancompany had reported 135 units worth$5.06bn well ahead of the previousyears performance of 126, valuedat $4.9bn.

    Bombardiers billings through threequarters of 2015 were strong enough toput it in second place in billings for thewhole year, even if it had not delivered asingle unit in Q4. As it turned out,Bombardiers Q4 billings brought its totalto $7.36bn but still left the company insecond place behind Gulfstream ($8.2bn)

    in spite of the fact that Bombardiers Q4total of $2.3bn representedapproximately 10% of the total marketfor the entire year.

    These results are indicative of thedegree to which business jet billingshave come to dominate the market.Between the two OEMs, Gulfstream andBombardier accounted for more than$15.57bn, fully 64.23% of the industrystotal billings.

    Looking at unit deliveries,Bombardiers fourth quarter totalrepresented 32.16% of the 199 aircraft itreported for the whole of 2015. In termsof market performance, this is a classicQ4 surge (historically 30-33% of aircraftsales come in Q4).

    For the year Bombardiers deliverieswere down 2.45% from the 204 recordedin 2014. This shortfall pulled the total jetmarket into negative numbers, effectivelyerasing the lone positive in GAMAspreliminary report that showed jets up1.6% as opposed to the -0.6% reductionwe now know occurred.

    The good news is that we are nowmoving into the years when Honeywelland other forecasters project the marketshould start to pick upMI www.gama.aero

    GAMA 2015 Year-End Analysis Updated

    !

    18 AVBUYER MAGAZINE April 2016 Aircraft Index see Page 153www.AVBUYER.comcontinued on page 22

    BizAv Activity -EuropeThere were 52,184 Business Aviationdepartures in Europe in February 2016according to WINGX's latest BusinessAviation Monitor. The figure represents1,176 (2.3%) more departures than inFebruary 2015. Relative growth wasinflated by the Leap Year, but on a dailyactivity basis, flights in February declinedby -1%.For the full month, there were gains inbusiness jet, turboprop and piston fleetactivity, with total flight hours up 4%.Business jet activity growth was strongestfor AOC flights. YTD in 2016, business jetactivity is down -1% on 2015.

    Departures from France, UK andSwitzerland represented 42% of allactivity, and in each of these countriesthere were at least 200 additional flightsthis month. YTD, activity in France lags by-2%, Switzerland is flat, and departuresfrom UK are up 1.6%.

    The big decline came in Germany,which has 16% of total activity, andreceded 3% this month - the equivalent of263 flights. There were almost 200 fewerflights YOY in each of the other majordeclining markets, Russia and Turkey.

    Other countries with growth in flightactivity this month included Spain (+3%),Netherlands (+6%), Norway (+8%), CzechRepublic (+10%), Poland (+15%) andSweden (+18%). Two of the Top 5, and 11of the top 20 countries have YTD gains inactivity so far in 2016.

    The CIS region generated most flightsinto Europe, but was -9% this month andis -11% this year. Flights from Europe toAfrica were up 12% in February but still-10% YTD.

    The welcome news of +2% growth inflight activity in February belies theunderlying stagnation apparent if the YOYrecord takes account of the Leap Yeareffect, summarizes Richard Koe,Managing Director of WingX.

    All the same, there was substantialgrowth in February in a number ofcountries, notably in France, Switzerland,most of Scandinavia, and flights were up11% in Eastern Europe.MI www.wingx-advance.com

    GLOBAL 6000

    B U S I N E S S A V I A T I O N I N T E L L I G E N C E

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  • FREESTREAM AIRCRAFT LIMITED

    London+44 207 584 [email protected]

    FREESTREAM AIRCRAFT (BERMUDA)LIMITED

    Hamilton, Bermuda+441 505 [email protected]

    FREESTREAM AIRCRAFT (H.K.)LIMITED

    Hong Kong+852 2724 [email protected]

    FREESTREAM AIRCRAFT USA LIMITED

    New York+1 201 365 [email protected]

    1998 Boeing BBJ S/N: 29273 Price reduced to $21,950,000 Total Time Airframe: 3814.54 Hours Landings: 938 APU TT: 3552 Delivered with a Fresh A2 Check C1 check completed 2014 HUD (Heads Up Display) SATCOM Pats 9 Tank Fuel System Basic Operating Weight: 95,096 Lbs SFR88 Mod CVR/FDR Airshow Network 18 Place Interior One Owner Since New

    2015 Gulfstream G650 S/N: 6159 Make Offer Delivery hours only Freestream Supervised Completion Engines on Rolls Royce Corporate Care Part 135 and EASA Validated Enhanced Soundproofing Honeywell SwiftBroadband Data System ViaSat Ku-Band Broadband Data System Forward Galley and Crew Rest Available to View at Groton, CT (KGON)

    2014 Gulfstream G650 S/N: 6085 Price $66,950,000 Customized 15 Passenger Layout Honeywell L5Z-860 Lighting System Part 135 Certified Enhanced Soundproofing Secureplane 500 System 7220 CabinView Passenger Flight Information

    System 7720 Honeywell SwiftBroadband Data System External Color Camera System Forward Galley and Crew Rest Honeywell INMARSAT Satellite Communications

    System

    2007/2009 Boeing BBJ S/N: 36714 Reg: VP-BFT Make Offer Into Service 2009 Total Time Airframe: 2849 Hours Landings: 741 Fresh out of 6 year 2C check Basic Operating Weight: 101,611 Lbs Pats 6 Tanks, 5 aft, 1 fwd Airshow Network- Aero H+ Satcom

    Swiftbroadband- Iridium 5 external cameras - EFB 18 Passenger Interior/ Andrew Winch Design

    Freestream April.qxp 23/03/2016 12:45 Page 1

  • 2008 Gulfstream G550 S/N: 5176 Price reduced Total Time: 3483.5 hrs Landings: 964 Engines on RRCC APU on MSP Honeywell APP & Parts Programs Securaplane External Camera System Airshow 4000 18 passenger interior Forward crew rest Currently at Gulfstream Savannah Delivered with Fresh 12/24/36/48/96 Month

    inspection on the N Register

    2001 Falcon 900EX S/N: 87 New Asking Price $10,950,000 Aircraft to be delivered with engines on 100% JSSI TTAF: 5652.40 TTAC: 3079 Honeywell Avionics Protection Plan (HAPP) Engines & APU: JSSI All three Engines: 3000/6000 Fresh MPI Eng No. 2 New 3rd Stage high pressure turbine ENG No. 2 Fresh 2A, Fresh 2A+ Dual GPS Honeywell HG2021GD02 Airshow 400/Genesis Securaplane Back up Batteries

    2006/2007 Global Express XRS S/N: 9223 $23,950,000 JSSI Tip-to-Tail has $2.4M Total Time: 3658:07 hrs Landings: 1177 Engines on 100% JSSI Enrolled on JSSI Tip-to-Tail Triple FMS FANS 1/A+ and RNP 4 SBAS with LPV APRH Batch 3 ADS-B Forward and Aft lavs Fresh paint September 2015

    2011 Gulfstream G450 S/N: 4211 Total Time: 1040 hours Total Landings: 541 APU: 1535 hours 1515 cycles Delivered with fresh Savannah 5C Inspection on

    US FAA register Engines Enrolled on Rolls Royce Corporate Care Honeywell HD-710 High Speed Data System

    (Swift Broadband Capable) ADS-B 14 passenger aft galley interior

    Freestream April.qxp 23/03/2016 12:46 Page 2

  • FREESTREAM AIRCRAFT LIMITED

    London+44 207 584 [email protected]

    FREESTREAM AIRCRAFT (BERMUDA)LIMITED

    Hamilton, Bermuda+441 505 [email protected]

    FREESTREAM AIRCRAFT (H.K.)LIMITED

    Hong Kong+852 2724 [email protected]

    FREESTREAM AIRCRAFT USA LIMITED

    New York+1 201 365 [email protected]

    2001 Learjet 45 S/N: 167 Make Offer AFTT: 6763 hours. Landings: 5403 Engines on MSP Gold Smart Parts Plus APU on MSP Honeywell Primus 1000 TCAS II with Change 7 EGPWS Airshow 400 Forward and Aft Monitors

    2009 Sikorsky S-76C++ S/N: 760757 TTAF: 211.54 hours Lowest Time Pre-Owned S-76C++ On The Market Excellent Condition Single Pilot IFR EGPWS CVR & MPFR Emergency Float System TRADE-IN WELCOME (rotary or fixed-wing)

    2000 Eurocopter EC 135P2 S/N: 0193 Reg: ZK-HLH $2,295,000 USD Manufactured in 2000 and delivered in 2001 TTAF 527.4 Very Low Time 2000 EC-135P2 No Damage History Pop-out Floats Air Conditioning Dual Controls

    2009 Challenger 605 S/N: 5824 Reg: N304KR Price Reduced Total Time: 1847 Hours Landings: 762. TAPU: 1558 Engines on GE OnPoint Rockwell Collins Pro Line 21 Dual FMC-6000 flight management system

    w/ 3DMAP and long range cruise MNPS and RNP-5 navigation compliance Aircell ATG 5000 Aircell GoGo Biz wifi 11 Passenger Interior

    Freestream April.qxp 23/03/2016 12:46 Page 3

  • continued on page 26

    BIZAV INTELLIGENCE MARKET INDICATORS

    22 AVBUYER MAGAZINE April 2016 Aircraft Index see Page 153www.AVBUYER.com

    BizAv Activity - US & Canada

    !

    Large-Cabin Squeeze Hits ValuesThroughout 2015, the large-cabin and long-range business jetsegment showed some serious signs of weakness, notesFlightglobals Ascend consultancy. This triggered a slump in theresidual values of many established models in this niche sector....Ascend highlights a 16% YoY decline in the market value of theGulfstream G550, and a similar fall in value during the sameperiod of the G450. Models such as the G450 and G550 maymeet the so-called [historical] 10% for sale metric, notesAscend, but they are plagued by high absolute numbers ofaircraft for sale."

    Bombardiers top-of-the-range Global 6000 and 5000 faredbetter in 2015, says Ascends senior consultant and newsletterauthor Daniel Hall, but G650 prices took a 10% hit and theDassault Falcon 7X values are down 9%, YoY.

    A similar picture is emerging for 10-year-old, top-end jets. Forexample, a 2002-built Global Express, the first iteration of theGlobal 6000, would have been valued at $27.5m in 2012. Threeyears later, a comparable example was worth $18m. Likewise, themarket value for a 10-year-old Embraer Legacy 600 has fallen by40% over the same period, Hall reveals.MI www.ascendworldwide.com

    February Business Aviation flight activityposted its normal Month-over-Month(MoM) seasonal decline, down a marginal-0.5% from January. Year-over-Year (YoY)flight activity indicates a twelfthconsecutive increase, according toARGUS...Results by operational category weremixed for the month, with Part 91 andFractional operators finishing the periodup 0.5% and 1.3% respectively fromJanuary. The Part 135 market recorded amonthly drop of -2.6%.

    Looking at the aircraft categories, thelarge cabin market posted the largestmonthly increase from January, up 1.6%.The small and mid-size cabin marketsposted slight increases of 0.4% and 0.7%,in that order. Turboprops rounded out theaircraft categories with a monthly drop of-3.2%.

    The largest monthly gain for anindividual segment occurred in thefractional small cabin segment, up 7.4%from January.

    Year-Over-YearReviewing YoY flight activity (February2016 vs. February 2015); TRAQPak dataindicate that February 2016 posted anincrease of 6.9%, marking the twelfthstraight YoY increase. (Note - theadditional day due to leap-year helpedbolster Februarys increase. Adjusting to

    account for the additional flight activity forthe 29th, we saw a rise of 3.3%.

    Results by operational category sawsignificant increases across the board, ledby the Part 91 market which posted anincrease of 8.6%. The Part 135 marketfollowed with an increase of 6.0% fromFebruary 2015. The Fractional marketrebounded from a negative January topost a yearly increase of 2.4%.

    Flight activity by aircraft category was

    positive across the board as well, withturboprops leading the way, up 9.5%. Thejet categories fared well with large cabinaircraft posting an increase of 7.5%,followed by small cabin aircraft (up 7.2%)and mid-size aircraft (up 3.7%). The largestyear over year gain for an individualsegment occurred in the fractional smallcabin segment, which saw an increase of12.8%.MI www.argus.aero

    UBS BizJet Market IndexThe latest Business Jet Market Index tracking changes inmarket conditions through surveys of domestic and internationalbrokers/dealers, manufacturers, fractional providers, financiers was 11% lower than the previous survey, reaching a new post-crisis low, says UBS...Large-cabin jets showed the most weakness, followed by midsizejets and small-cabin jets. All index components declined.Inventory fell 21%, willingness to increase inventory declined 19%,the 12-month outlook fell 7%, and customer interest declined 4%.

    Customer interest remained strongest in North America,although it fell 13% from the previous survey and came throughbarely positive. All other regions of the world continue toindicate incrementally weaker conditions. About 65% of surveyrespondents cited weakness in emerging markets and currencydevaluation as having a significant negative impact, while 73%highlighted large-cabin jets as being most affected.MI www.ubs.com

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  • !

    continued on page 30

    BIZAV INTELLIGENCE MARKET INDICATORS

    26 AVBUYER MAGAZINE April 2016 Aircraft Index see Page 153www.AVBUYER.com

    BizAv Resales Underwhelm in 2015According to AMSTAT Resale Retail Transaction, activity in Q4 2015was largely flat versus Q3, down versus Q4 2014 and below 20-yearquarterly averages. Overall, global Resale Retail Transaction activitywas down for 2015 versus 2014Business Jets Resale Retail Transactions as a percentage of the activefleet were flat quarter-on-quarter (QoQ) at 2.5% (versus 2.6% in Q3),down YoY from 3.0% in Q4 2014 and below their 20 year quarterlyaverage of 2.8%. In 2015, 9.8% of the Business Jet population turnedover versus 10.8% in 2014.

    At the fixed wing segment, QoQ transaction performance was largelyflat. On a YoY basis, the Medium Jet market performed the best with10.8% of the fleet turning over in 2015. While down from 11.3% in 2014,this was the smallest decline in the fixed wing segments.

    By contrast 7.6% of the Heavy Jet fleet turned over in 2015 comparedto 8.5% in 2014. Similarly, 10.4% of the Light Jet fleet turned over versus12.0% in 2014. Turboprop Resale Retail Transactions were actually upquarter-on-quarter at 2.1% versus 1.9% in Q3, but down from 2.3% in Q42014. For 2015, Turboprop turnover was down at 7.7% versus 8.3% in2014.

    Upward Inventory TrendThe inventory of Business Jets for sale is currently up at 11.1% of theactive fleet versus 10.7% a year ago and below the 20 Year QuarterlyAverage of 12.6%.Heavy Jets: Inventories were flat QoQ, but up YoY to 10.4% from 9.8%.Inventory for this segment is above its 20-Year Quarterly Average level of10.2% and has been slowly increasing since early 2014.

    Average Asking Prices for Heavy Jets have been trending upwardssince mid-2011 and were up +1.9% between Q3 and Q4 2015. Perhapsreflecting recent transaction softness and a rise in inventory levels, HeavyJet Average Asking Prices fell YoY by -1.3%.Medium Jets: Inventories for Medium Jets were also up QoQ and YoY to11.2% from 10.9% but remain below their 20 Year Quarterly Average. TheMedium Jet inventory has been slowly increasing since early 2015.

    Average Asking Prices had a peak around the start of 2015 and thencontracted through the year. Medium Jet Average Asking Prices aredown -5.8% YoY.Light Jets: Inventories contracted QoQ, but were up YoY from 11.0% to11.5%. They remain below their 20-Year Quarterly Average of 14.3%.Light Jet inventories have been slowly increasing since early 2015.

    Average Asking Prices for this category have been trending upwardssince the start of 2015 and were up 11.2% YoY.Turboprops: Q4 2015 inventories were down over Q3 but up YoY to 8.2%from 7.6%, but these levels remain below this segments 20-YearQuarterly Average. Turboprop inventories have been slowly increasingsince early 2015.

    Turboprop Average Asking Prices have been trending up since thestart of 2015. Prices were up by 4.9% YoY.

    We are concerned by the drop in transaction activity especially inthose segments where 2015 represented the second consecutive year ofcontraction, summarized Andrew Young, General Manager, AMSTAT.The rising inventories are also of concern. While we know this is anuneven recovery and that some parts of the market are doing better thanothers, overall the market trends in 2015 were not as positive as thosein 2014.MI www.amstatcorp.com

    Double Digit Decline, Says RockwellRockwell Collins is forecasting a double digitdecline in its corporate jet business this fiscalyear as uncertainty in China, Russia and Brazilweighs on buyer confidence...Rockwell Collins Chairman, President and ChiefExecutive Kelly Ortberg told a Gulf Newsinterview, Were expecting our BusinessAviation production to be down for ourequipment by over 10% this fiscal. Ortberg didnot say how this would affect revenue but saidhe believed production would stay at modestlevels for at least a year or so.

    Until this year the global economicuncertainty had mostly affected sales of small-to-medium sized business jets, but Ortberg said it isnow reverberating in the larger aircraft market.Weve seen that this year, large jet productionhas reduced on the back of the slowdown inChina, the Russia situation as well as theeconomy in Brazil.

    Apart from positive signs in North America,he does not see the market rebounding in thenear-term. Nevertheless, with business jetowners becoming increasingly conservative withtheir spending there has been an upswing inRockwell Collins corporate jet retrofit businessupgrading aircraft with new avionics, adding in-flight internet connection and new audio andvisual systems. Were seeing that grow mid-to-high single digits this year, Ortberg concluded.MI www.rockwellcollins.com

    MarketIndicators March16.qxp_Layout 1 22/03/2016 14:16 Page 5

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  • Project1.qxp_Layout 1 30/03/2016 13:00 Page 1

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  • 30 AVBUYER MAGAZINE April 2016 Aircraft Index see Page 34www.AVBUYER.com

    BIZAV INTELLIGENCE MARKET INDICATORS

    Business Aircraft Financing World TourThe February edition of the CIT Business Aircraft Financenewsletter provided a state of the industry evaluation for themajor world markets.North America: By most estimates, North America stillconstitutes roughly two-thirds of the embedded business jetfleet. It appears that the US economy continues in slow-growthmode, and most industry observers cite corporationscontinued desire to refresh aging business jet fleets as apositive for our industry.

    Flight activity in the US is positive, but potentiallydecelerating. For the 12 months ended November 2015 flightactivity was up 1.25% YoY, but growth seems to be near flat-linerecently. For the three months ended November 2015, flightactivity was up only 0.4% versus the prior year.

    Broader economic indicators are also flashing yellow: Railcar loadings in the US and Canada, a good gauge of overalleconomic activity were down 6% in 2015 and durable goodsorders were also negative for 2015.

    CIT concludes that North America will muddle along withrespect to both new and used business jet activity. The wildcard to this conclusion is the 2016 presidential election: willpotential buyers sit on their wallets waiting for the outcome?

    Europe: At about 13% of the world fleet, the Eurozoneobviously has the potential to move the needle for our industry.Flight activity trends across Europe are a mixed bag: somewhatpositive in the UK, France and Germany, and soft virtuallyeverywhere else.

    This seems to track with projected economic growth too:The World Bank forecasts real GDP growth in the UK (2.4%),and at 1.7% for the rest of the Eurozone. Most of the demandfor business jets emanates from the North, where economies

    are relatively stronger. CIT concludes that Europe, like NorthAmerica, will be a modest add to 2016 activity.

    Latin America: As a whole, Latin America constitutes about 8% ofthe total business jet fleet. The two major markets for businessjets in Latin America are Mexico and Brazil. Both economies arefacing currency headwinds that make business jets very expensivecompared to historical norms. Compared to the USD, theMexican Peso has declined about 25% in the past 12 months andthe Brazilian Real has declined about 36%.

    With respect to economic growth, the World Bank forecasts2.5% growth for Mexico and -2.8% for Brazil, where heavy taxesalso weigh on the economics of purchasing jets. For the region as awhole, any contribution to industry activity with respect to new andused jets from Mexico will be more than offset by softness in Brazil.

    Middle East, Africa and India: Constituting a small percentage oftotal jets (probably about 2-3%), activity in the Gulf States inparticular can move the needle with respect to super-mid andlarger-cabin aircraft.

    Despite the large embedded wealth in the Middle East andmany African states, we believe that geopolitical issues as well asbudgetary concerns (caused by the steep drop in oil prices) willcontinue to weigh on confidence in this region, with negativeeffects for business jet demand. This region will struggle to be flatat best in 2016

    Asia/Pacific: Moderation in the business jet market in China andthe greater Asia/Pacific region as a whole should, in the long run,be constructive for the industry. In the short run, however,downshifting to a slower pace of new deliveries and used jetactivity will cause stress. MI www.cit.com

    continued on page 34

    Year-End 2015 AvionicsMarket ReportTotal worldwide Business and General Aviation avionics sales forthe year amounted to more than $2.4 billion, a 4.4% decrease insales compared to the previous year...Of the more than $2.4bn in sales in 2015, 50.9% ($1.2bn) camefrom forward-fit sales (avionics equipment installed by airframemanufacturers during original production). The forward-fitmarket accounted for 51.4% of total sales in 2014 and 54.1% oftotal sales in 2013.

    By contrast, the retrofit (avionics equipment installed afteroriginal production) market showed an increase in percentageof total sales for the third straight year, amounting to 49.1% in2015, while the retrofit market accounted for 48.6% of totalsales in 2014 and 45.9% of total sales in 2013.

    According to the companies that separated their total salesfigures between North America (US and Canada) and otherinternational markets, 64.2% of the 2015 sales volume occurredin North America and 35.8% took place internationally.

    "As noted earlier this year, the report showed some softnessin sales during the first nine months of 2015, as sales weredown 7.5% compared to the first nine months of 2014," said

    AEA President Paula Derks. "However, that trend reversed itselfduring the fourth quarter, as sales topped $653m, a 7.2%increase from the $609m in sales during the last three monthsof 2014.MI www.aea.net !

    MarketIndicators March16.qxp_Layout 1 22/03/2016 14:16 Page 6

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  • Project1.qxp_Layout 1 30/03/2016 15:11 Page 1

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  • BIZAV INTELLIGENCE MARKET INDICATORS

    34 AVBUYER MAGAZINE April 2016 Aircraft Index see Page 153www.AVBUYER.com

    In-Service AircraftMaintenanceCondition & PriceAn Asset Insight analysis conducted onFebruary 29th, 2016 covering 91 fixed-wing models and 1,915 aircraft listed forsale (58 more aircraft since last month)revealed an Excellent Asset QualityIn addition, an improvement in aircraftMaintenance Exposure; a nominal AskPrice increase; and, MaintenanceExposure to Ask Price Ratio (ETP Ratio)improvement were recorded.

    Asset Insight Quality Rating (AIQRating): The Asset Insight Quality Ratingimproved 5.1 AI2 basis points to 5.356(compared to last months 5.305), on theAIQ Rating scale of -2.5 to 10, achieving anew record best figure.

    Maintenance Exposure (ATFE Value):Maintenance Exposure (an aircraftsaccumulated maintenance financialexposure) improved by 2.0% over the pastmonth, falling by $28k to $1.399m from$1.427m, and posting the best figure forthe past 12 months. By aircraft group, theAsset Quality Rating and MaintenanceExposure figures were as follows:

    Large Jets: Outstanding assetquality best among the all groups and, at 5.525, posted this groups bestfigure for the past 12 months.Maintenance Exposure improved by$56k, and achieved the groups best12-month figure.

    Medium Jets: Excellent asset qualityat 5.326 (5.1 AI2 basis point better thanlast months figure and just below thisgroups best 12-month rating of 5.327),placed the group in third place.Maintenance Exposure improved by$24k compared to last month,registering the groups secondconsecutive 12-month low figure.

    Small Jets: Retained second placewith Excellent asset quality at 5.378,a 6.7 AI2 basis point improvement overJanuarys figure. MaintenanceExposure improved by $13k to $740k,only $6k worse than the groups 12-month best figure of $734k.

    Turboprops: Very Good asset qualityat 5.146, a 7.9 AI2 basis pointimprovement. Maintenance Exposureimproved by $5k, and at $524k postedthe groups best 12-month figure.

    Steady Demand for CivilHelicoptersIn its annual Turbine-Powered Civil Helicopter Purchasing Outlook, Honeywell expects4,750-5,250 civilian-use helicopters will be delivered during 2015-2019. Overall, five-year demand for these aircraft remains steady versus the 2014 forecastHoneywells forecast estimates the five-year share of demand from the US and Canadaat 34 percent, up nearly eight points on stronger North American buying plans. Whencombined with Latin America, the Western Hemisphere represents 53% of the five-yearglobal demand. Europe's share tallies 24%, with the Asia-Oceania region accountingfor 14%, and Africa and the Middle East contributing 9%.

    Operators intending to purchase a helicopter within the next five years noted thatthe age of their current aircraft (which includes factors such as maintenance costs,performance erosion and safety concerns), contracted replacement cycle and warrantyexpiration were all key reasons for their decision.

    For those surveyed, make and model choices for their new aircraft are stronglyinfluenced by range, cabin size, performance technology upgrades and brandexperience.

    "Near-term demand appears stable despite a pullback in 2014 deliveries andongoing concerns with the energy sector," said Mike Madsen, president, Defense andSpace, Honeywell Aerospace.

    "Purchase interest for helicopters in the training, tourism, fire fighting and lawenforcement categories is trending up, influenced by increased utilization rates andhelicopter replacement cycles. Interest across these mission sectors is helping to sustainnear-term demand. Looking ahead, several new platforms are scheduled to enterservice over the next few years, also bolstering overall helicopter demand."MI www.honeywell.com

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    MarketIndicators March16.qxp_Layout 1 22/03/2016 15:29 Page 7

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  • s we continue to be optimisticabout the slow but steady recoveryof the Business Aviation industry,we analyze the Total US Flight

    Operations to establish perspective on where themarket is today compared to before and after theGreat Recession.

    As illustrated in Chart A (left), the total USFlight Operations in 2015 increased by 49,000(+1.2%) compared to 2014 at 4.285m over4.236m. We can also see that US FlightOperations in 2015 matched the 2003 levelexactly to the rounded value.

    As illustrated, there was a drop of 1.376mflights (28.5%) over the two-year period between2007 and 2009. Since hitting the 2009 low pointof 3.449m flights in 2009, there has been asteady increase in US operations to 2015.Nevertheless, the 4.285m 2015 flights recordedwas still 11.2% below the peak level set in 2007.

    Number of US BizJet FlightsThe number of business jets in-operation in theUS at year-end 2015 was 12,301, as shown in Chart B (left). That number has increased steadilysince 2005 from 9,464. Interestingly, thepercentage split between US and Non-USbusiness jets in 2015 was 60% vs 40%, downfrom 71% vs 29% in 2005. The current US/Non-US fleet percentage has held steady since 2012.

    As shown by Chart A, however, thecompounded annual percentage growth (CAGR)for US Flight Operations from 2009 to 2015 hasincreased at a 5.6% CAGR (4.285/3.449)compared to the fleet growth of 3.3% CAGR ratein Chart B.

    Interestingly, non-US fleet CAGR rates haveexceeded the US in comparable periods by verysignificant percentage differences, pre-recession(2.7% vs 10.0%) and post-recession (3.3% vs6.9%), per Chart B.

    Number of US Business Jet Flights by MakeTable A (top, right) shows a selection of the mostpopular five business jet models groupedtogether under their respective Makes tocompare the total number of US flights amongthem in 2015 versus 2014. The findings show thetotal number of flights in the selected groupingswere down by -3.4% in 2015.

    Indeed, the top five Citation models showedthe largest number of flights compared to thoseof the remaining selected Makes represented.Interestingly, Embraer and Global were the onlytwo groups to show increases in the number offlights in 2015 compared with 2014.

    Top 10 Models, US FlightsTable B (center, right) shows the Top 10 businessjet models ranked by the number of US flights in

    38 AVBUYER MAGAZINE April 2016 Aircraft Index see Page 153www.AVBUYER.com

    BIZAV INTELLIGENCE JETNET >>KNOW MORE

    A

    CHART A - TOTAL US BASED BUSINESS JETS FLIGHT OPERATIONS*

    In this JETNET >>KNOW MORE analysis Mike Chase and Marj Rose assess the

    current US Flight Operations market trends.

    US Flight Activity MarketTrends and Analysis

    CHART B - BUSINESS JETS IN OPERATION US vs NON-US 2005 TO 2015

    Jetnet KnowMore.qxp_Layout 1 22/03/2016 15:20 Page 1

  • 2015, comparing them with 2014 activity. As depicted, theChallenger 300 and Citation CJ3 ranked first and second in 2015and 2014 based on the number of operations, but in thecomparison the number of 2015 flights decreased for both.

    In fact, only the Citation Excel and Gulfstream G550 hadmore flights in 2015 over 2014 within our Top 10, whichexperienced an overall decrease of over 14,558 (-4.1%) fewerflights in 2015 compared with 2014.

    In comparing the number of flights in 2015 vs 2014 by model,the majority are showing fewer flights. The Challenger 300 hadthe largest drop in the number of flights at -5,426 (-11.4%) in2015 versus 2014, followed by the Citation CJ3 at -2,929 (-7.2%).

    Among the models with the biggest increases in flightsduring 2015 versus 2014 (although not all within the Top 10)were the Phenom 300 with an increase of 3,130 (+23.7% moreflights); the Citation Excel (up 2,250); Gulfstream G450 (up1,382); Global 6000 (up 1,173); and the Hawker 800A (up 1,073).

    Cash vs Financed Transactions (New and Used)Cash is still king in the US marketplace! Tables C (new jettransactions) and D (used jet transactions) show the number offinanced vs cash transactions from 2005-2015. The percentageof cash purchases for new jets has remained in the 70% to 77%range from 2005 to 2015, although the number of transactionshas ranged wildly between a low of 359 units (2013) to a high of923 (2008). In 2015, the percentage is 74% cash transactionsacross a total of 424 transactions.

    The percentage of cash transactions in the used jetsmarketplace has risen from 51% in 2005 to as high as 76% andwas at 72% in 2015. Note, the number of used financed andcash transactions are four times the number of new transactions(111 vs 490 financed; 313 vs 1,238 cash; and 424 vs 1,728overall) in 2015.

    SummaryAs our industry evolves and the events of the Great Recessionbecome more of a distant memory, the story of the marketrecovery continues. Flight operations are improving and are nowback to 2003 levels. The share of business jets in operation in theUS are back to 60% of the world fleet, but the CAGR growthrates before and after the recession remain higher outside theUS.

    It may be a surprise to some that US business jet transactionscontinue with cash as the dominant method of payment, but weknow many businesses today are cash rich and continue torecord solid profits. We just hope that corporate success leads tomore business jet transactions in the near future.

    In future issues, well continue to explore US flight operationsdata to establish, for example, a breakdown by class (i.e. Heavy,Medium, Light, and VLJ) and determine which categories aregrowing in operations as we continue to move away from theGreat Recession. Stay tuned

    Mike Chase (president, Chase & Associates) and Marj Rose (president, MarketLift), offer highly sought-after aviation market research expertise. Contact them via [email protected] or [email protected]. JETNET, mean-while, the ultimate source for information& intelligence on business and commercialaircraft worldwide, can be contacted viawww.jetnet.com.

    April 2016 AVBUYER MAGAZINE 39Advertising Enquiries see Page 4 www.AVBUYER.com

    Jetnet KnowMore.qxp_Layout 1 22/03/2016 10:31 Page 2

  • lthough the current overall usedaircraft picture is neither consistentnor record-setting, make no mistakethe numbers are trending some,

    depending on what you want to sell, buy ortrade.

    Together the collective view of brokers,dealers and others engaged in aircrafttransactions seems to point toward a marketmore static than dynamic, with spotty growth andsporadic weak spots varying with region of theworld and the state of the economy in thoseregions.

    It's Good to be YoungPre-owned jet inventories began edging upwardat the turn of the year, slowly, progressivelyincreasing as January turned to February andthrough to March. Depending on the source, thepercentage of pre-owned business jets For Saleis up in the 10-12% range and varies somewhatwith age. But on the whole, inventory numbersremain relatively low compared to the historicalaverage of around 13%-plus.

    Age-wise, inventory of business jets between6-10 years leaped nearly 20% during 2015,pushing the total higher than the peak-of-

    Q1 Used Aircraft Market Summary

    42 AVBUYER MAGAZINE April 2016 Aircraft Index see Page 153www.AVBUYER.com

    A

    The differences between age groups, aircraft sizes and markets make for a collage of images across the used aircraft sales scene, Dave Higdon

    surmises from recent discussions with dealers and brokers.

    BIZAV INTELLIGENCE BUYING & SELLING

    BizAv Sales Are Up and Down, But Not All-Around

    Dealer Broker Market April16.qxp_Finance 22/03/2016 10:24 Page 1

  • recession set in 2009. Jets five years and neweralso continue to edge upward, leaving somemarket observers wondering whether the bonusdepreciation available in recent years might betrumping the normal depreciation-drivenownership average.

    According to UBS the young-aircraft marketsvary by global region, with the US seeing thesmallest percentage, but higher percentages inAsia and Europe.

    Economic Influences Ebb and FlowOf all the economies of the world, the USappears objectively the strongest-growing in aworld otherwise struggling to break out of apattern of less-than-robust gains.

    With China's overheated growth cooling, theripples traveling outward weaken with distance tothe point of little disruption. The US economycontinues to grow slowly. Its economy continues

    to add both jobs and workers, and wage gainscontinue to be more tepid than robust.Corporate profits remain solid for the most part,all in the face of a bruising presidential-electionyear that's showing small gains in businessaircraft use and travel.

    Interest rates remain on the low side, whilecommanding attractive returns thanks to lowfederal funds and overnight loan rates. Andmirroring what remains a competitive mortgageindustry, aircraft finance remains available withcompetitive terms even for older businessturbine aircraft. The result: Less-than-robust salesrates, at prices straddling the wire betweenbuyer's and seller's markets.

    ADS-B Impact?One broker in the Midwest believes somepotential transactions await resolution of theaircraft's need to equip with ADS-B Out by 2020.With ADS-B solutions finally beginning to tricklein for the business turbine fleet, he explained,we have a couple of prospects who put theirsearch on hold until they know they can upgradewith something that meets with FAA approval.

    At present, he said, even some relatively late-model business jets and turboprops are stillwithout an approved solution. It may help, heconceded, that an early March memorandumfrom the FAA should encourage the developmentof a first solution for older airframes.

    The memorandum signaled the FAA'swillingness to apply a prior approval directly toother applicable aircraft using the sameequipment, he explained. Before that memo,every individual aircraft faced the prospect ofneeding its own approval before the FAA wouldaccept it as compliant.

    But at the end of the day, it is need that drivesmost business aircraft purchases, and operatorsare making do with what they've got, to cointhe phrase of a Northeastern dealer The dropin fuel prices removed some incentive to moveinto a jet with greater fuel efficiency, and withmost other elements equal range, payload,panel and cabin amenities the benefits of arenewed depreciation schedule aren't alwaysenough to be an incentive.

    One customer didn't use the accelerateddepreciation available the last time theyupgraded their aircraft, the dealer added, sodepreciations not the incentive for them that it isfor others (and there are plenty of others ready totap that benefit). Just not this client at least notuntil the engines come due for overhaulThensomeone will get a deal!

    Where Size Matters...The Pacific-Rim region soaked up large andmedium-size jets at a healthy rate until the

    April 2016 AVBUYER MAGAZINE 43Advertising Enquiries see Page 4 www.AVBUYER.com

    Dave Higdon is a highly respectedaviation journalist whohas covered all aspects ofcivil aviation over thepast 35 years. Based inWichita, he has severalthousand flight hours,and has piloted prettymuch everything fromfoot-launched wings tocombat jets. Contact himvia [email protected]

    The result:Less-than-robust sales

    rates, atprices

    straddlingthe wirebetween

    buyer's andseller's

    markets.

    !

    Dealer Broker Market April16.qxp_Finance 22/03/2016 09:43 Page 2

  • 44 AVBUYER MAGAZINE April 2016 Aircraft Index see Page 153www.AVBUYER.com

    BIZAV INTELLIGENCE BUYING & SELLING

    All otherneeds beingmet, saving

    money isimportant particularlyfor operatorswho seldomtake a trip

    longer than90 minutes.

    Chinese market started cooling. Some rippleeffect spread through the region, but the marketsremain viable for pre-owned medium-cabinaircraft at the upper end of the range. Light jetshave also held some interest in the region,according to brokers on the West Coast.

    In more mature business aircraft markets thelarge jets so popular during and after the GreatRecession continue to suffer from reducedinterest, the Northeast dealer noted. Wheresmaller aircraft meet the dominant needs of anoperator, costs help push the prospect over thefinish line, he said. All other needs being met,saving money is important particularly foroperators who seldom take a trip longer than 90minutes.

    The slowdown in some quarters hasntcontributed to price deterioration, just as higherdemand in others hasn't served to push up askingprices. Time on market increased slightly, said severalof the brokers and dealers sampled. But the timesaircraft are sitting still remain well below thoserecorded at the peak of the recession.

    Modest Growth, Stable EnthusiasmA dealer in the Southeastern US noted that someof his prospects register their uncertainty aboutthe direction of the country. Business metricsaside they moan about the lousy economy butnone of them are cutting back, bailing out ormoving elsewhere, the dealer noted.Conversation reveals the source of theireconomic anxieties.

    The Southeast dealer and a Midwest brokeralso discussed clients who are upbeat about thefuture, making plans to invest in business

    expansion as the economy continues to add jobsand increase incomes. They're swimming aheadof their competition while others tread waterworried about stuff out of their control, theMidwest broker added.

    Stability Wins OutEarly in 2016 the markets reacted negatively tofears of an imminent recession...or anothermiddle-east war....or troubles with NorthKorea...or whatever. But while the markets tooksignificant hits in the early weeks of the year,businesses continued to produce and sell goods,face demand growth and hire more people.

    Multiple months of steady job growthultimately undercuts those recession fears.Except for those businesses and regions wherethe hit to crude oil prices had an early effect, theeconomy overall remains a growth engine,running neither too hot nor too cold.

    Could it be better in Business Aviation sales?When do we ever say, 'It can't get better' in thisbusiness, quipped a Southwest broker. Ofcourse it could. But going forward always beatssliding backward, and if the way forward doesn'tmake your ears pop from the climb, well, that'sjust fine. It beats having your ear drums achefrom a plunge that's too steep.

    Our Midwestern broker concluded that, havingfinished 2015 out with a rush of closings, asalways things slack off a bit in Q1 of a New Year.But judging by the calls we're getting, it's nothard to see this year closing out in a strongerposition than last and that isn't bad!

    Time - and three more quarters - will tell! Staytuned

    Dealer Broker Market April16.qxp_Finance 22/03/2016 10:25 Page 3

  • Charlie Bravo April.qxp_Layout 1 21/03/2016 12:53 Page 1

  • Aircraft Sales & Acquisitions

    member of

    803.822.4114South Carolina (CAE)

    Colorado (GJT) Texas

    [email protected]

    2003 Falcon 900C 197

    1991 Learjet 31ER 31-033

    2001 Falcon 2000 2000-128

    2000 Citation CJ2 525A-00071996 Citation Jet 525-0170

    1984 Westwind 1 411

  • member of

    Aircraft Sales & Acquisitions

    803.822.4114South Carolina (CAE)

    Colorado (GJT) Texas

    [email protected]

    1983 King Air F90-1 LA-205

    1978 Conquest II 441-0037

    1979 King Air A100 B-244

    1985 Cessna 414AW RAM V 414A-1211 2015 Bell 206L-4 52469

    1973 King Air #90 LW-60

  • he global economy overall is givingus mixed signals. We are constantlyreminded that there are many thingsin need of being propped up. The

    second largest economy in the world, China, isone of them. The biggest of all, the US, with itserratic stock market, could soon be one as well(although the situation shows signs of improve-ment lately). Japan, the third largest economy, isnow sitting with negative interest rates! The factis that GDP is projected at a weak 2%.

    Market volatility is happening all around us.The multi-million-dollar question is: Can the USeconomy withstand the gravitational pull of thebeyond-jittery, but downright daunting globalsituation?

    We all wish for THAT answer. My crystal ballalways looks hazy when I take a peek, and thefog I see doesnt appear to be lifting anytimesoon. So at best, we can expect some prices todecline, but by how much? And what about oilprices? Youd think low fuel costs would haveboosted consumer confidence and sales by now.

    All of the above, and a lot more marketdynamics than can be expressed within thesepages, are keeping downward pressure on muchof General Aviation.

    Market ReviewIn this buyers market some aircraft are holdingtheir own and some are suffering. See the table(opposite) for a sampling of percentage of

    Pre-Owned Aircraft Sales Trends

    48 AVBUYER MAGAZINE April 2016 Aircraft Index see Page 153www.AVBUYER.com

    T

    As Spring arrives, forecaster assessments are all over the board, notes Fletcher Aldredge.Some say the future aircraft market looks grim, and some say it looks bright because

    of retiring aircraft, among other things. So whats the picture from Vref?

    BIZAV INTELLIGENCE BUYING & SELLING

    Where Will the Aircraft Market Land Next?

    Pre-owned AC Sales.qxp_Finance 22/03/2016 10:26 Page 1

  • change in 2014 and 2015 (all aircraft representedare 2008 models). As you can see, some turbo-props and single pistons are hanging on to theirvalues relatively well.

    The Pilatus PC-12 tops Vrefs chart, jumpingup a huge 6.4% in 2015. What makes it jump uplike that? Simple! Its done well due to its KingAir 200 performance while sporting only oneengine and much lower overall operating cost.

    This Swiss-made aircraft has been flying offthe shelves, while grasping tightly to its value.The last dozen spots for 2015 are exclusively tur-bine aircraft. Maybe not the greatest investment,but dont forget the awesome transportation,business and personal benefits of ownership thata business aircraft provides.

    We continue to be bullish about the long-term future of General Aviation based on justone thing unparalleled utility! Nothing elsecan move your valued goods, or important peo-ple across the state, or around the globe for thatmatter, like a business aircraft.

    The Bottom LineThere is no shortage of opinions - everybody hasone. In some parts of the world we even use a

    groundhog to make predictions. The commonthread, however, is fear. A Presidential electionyear, while unbelievably entertaining, is sure tokeep us cautious and fearful. This leads manycompanies to play the waiting game regardingbusiness decisions.

    Nevertheless, watching the economy is muchlike watching a drunk ride a hoverboard. Its ascary, yet exhilarating sight. Full speed ahead,then a sudden shift in weight, and a face-plantinto the dirt. Will our economies, like our drunkhoverboard rider, need a helping hand? Almostcertainly, but the question remains, where willthe aircraft market (and the hoverboard) land?

    A word to buyers: CARPE DIEM! Seize theDay, and buy the aircraft of your dreams! More information from www.vrefonline.com

    April 2016 AVBUYER MAGAZINE 49Advertising Enquiries see Page 4 www.AVBUYER.com

    Fletcher Aldredge is publisher of the industry-respected VrefAircraft Value Reference Guide. Vref is the industrys modernprice guide, designed especially for professionals operating intodays challenging marketplace. Contact Fletcher via [email protected]

    Pre-owned AC Sales.qxp_Finance 22/03/2016 09:57 Page 2

  • BIZAV INTELLIGENCE MARKET INSIGHTS

    iving every day within the real world of Business Aviation,professionals such as Richard Emery II, Chief OperatingOfficer of the Dallas, TX-based Mente Group, detect theslight shifts of conditions that foretell bigger events;

    bellwethers of future developments that shape the supply anddemand for goods and services related to the use of GeneralAviation aircraft for business transportation.

    As COO, Mente Group, a consulting organization offeringtechnical and operational advice as well as brokerage services tocorporations and high net worth individuals, Mr. Emery representsthe third generation of his family to engage in Business Aviation.Emery joined Mente Group after many successful years in seniorpositions with several OEMs, most recently as President ofBeechcraft Corporations European, Middle East and Asia division.

    Unlike traditional brokerage companies, Mente Groupapproaches business aircraft transactions from a consultingperspective. Their analytical services include feasibility studies:should a company embrace Business Aviation and, if so, whatform ranging from full ownership to charteror combination ofthose delivery systemswould best satisfy the transportationneeds of the client.

    Fleet planning is also a core competency, as are operationaland financial analysis. Technical support is provided to assistclients with aircraft appraisals, pre-purchase inspections andcompletions. Mente Group offers clients its proprietary 360Program whereby Mente Group experts are retained to addressclient questions and report on activities that facilitate continuousimprovement of flight operations.

    Such retainers are typically initiated by the clients AviationDirector, explains Emery, adding we always make every effort toinclude the Flight Department in our services to our corporateclients. While brokerage and acquisition services continue togarner approximately two-thirds the Mente Groups revenues,client contact typically starts with a consulting engagement.

    Industry PerspectivesEmery is cautiously optimistic about the market for BusinessAviation. This year and next may be difficult, but we anticipategrowth thereafter, he elaborates. As the airlines continue tostructure their business models to serve major hubs, thetransportation needs of business increasingly are not satisfied. Thedemand for Business Aviation is growing and will continue togrow.

    Noting the cyclical nature of new aircraft sales, Emery expressedhis belief that the production schedules of OEMs [exasperated bythe considerable lead time required to procure key componentsand the difficulty of starting and stopping manufacturing lines]

    have resulted in over-overcapacity with respect to todaysdemand, particularly among midsize and large aircraft.

    Because of considerable demand in recent years for large-cabin, long-range aircraft, we now see many models availableperhaps too many different designs with possibly too littleproduct differentiation, he notes. Hopefully OEMs willrationalize the market, leading to increased buying in the not-to-distant future. I believe there is an issue with the large number ofmodels being offered at this time, however.

    Emery also observes the changing nature of buying habits ofentrepreneurs and corporations. Whether we were dealing withindividuals or companies, there appeared to be a bright lineseveral years ago between those who purchased new aircraft andthose who sought pre-owned aircraft. That line, if it exists now, isconsiderably blurred.

    Todays client looks at the totality of Business Aviation as ameans for providing efficient transportation. Buyers whohistorically looked only at new equipment now are alsoconsidering young pre-owned aircraft.

    There is a whole generation of potential purchasers of aircraftwho are basically looking for transportationefficient andobviously safe transportation of people. For that individual orcompany, the whole spectrum of business aircraftnew, pre-owned, fractionalholds their interest. Todays buyer is taking abig picture approach to transportation via business aircraft.

    Buyer DemandTodays buyer demands cabin connectivity that enablespassengers to be productive while traveling, Emery adds.Consider the impact of cabin connectivity on the chartermarketwithout the ability to offer in-flight use of email andinternet, the charter provider is at a distinct disadvantage.Flight departments also demand such capabilities.

    Todays buyer seeks aircraft that link passengers with theirground-based clients and associates, or they retrofit theirpurchase with the needed equipment. At the Mente Group, wehave the experts who listen to our clients, understand what theyneed and assist with implementing the level of connectivitythey desire.

    Emery sees todays market as driven by the need fortransportation. Business Aviation provides a travel capabilitythat is not being met by the Scheduled Airlines. There is awhole generation of buyers who are simply seeking the mostefficient and effective use of time to reach their customers andcapitalize on opportunities, Emery concludes. That buyerlooks at Business Aviation holistically and seeks the besttravel solution.

    L

    Business Aviation Market InsightsRichard Emery, COO, Mente GroupAvBuyer is pleased to launch Business Aviation Market Insights to provide aunique glimpse of the Business Aviation market from the perspective of leaderswho buy, sell and operate business aircraft or offer expert advice. This month,Richard Emery, Mente Group shares his thoughts

    50 AVBUYER MAGAZINE April 2016 Aircraft Index see Page 153www.AVBUYER.com

    BizAv Market Insight April.qxp_JMesingerNov06 22/03/2016 10:23 Page 1

  • Elliott April.qxp_Layout 1 21/03/2016 12:59 Page 1

  • ithout intrastate airline service inWyoming, General Aviation serves asthe most efficient mode oftransportation in this vast, sparsely-populated region. Without General

    Aviation we couldnt do it, our practice would notexist as it does today, Cody Diekroeger, Chief Pilot,Premier Bone and Joint Center highlights.

    Today owned by a consortium of orthopedicsurgeons, the group was founded 43 years ago byDrs. David Kieffer and Robert Curnow as Gem CityBone and Joint. Eventually a decision was made totake specialized orthopedic care to the patientsrather than have the patients drive hundreds of milesfor treatment. Initially, before the use of a businessaircraft, a limousine and driver facilitated travel to thesatellite clinics.

    While the majority of surgeries are conducted atthe Premier Bone and Joint surgery center in

    Laramie, some procedures may be accomplished atthe satellite clinic locations since many are equippedwith x-ray and MRI equipment and qualifiedtechnicians.

    Well, after a year of driving in Wyoming Wyoming winter weather can be terrible [thedoctors] figured there had to be an easier way to dothis, and they started chartering a single engineairplane, Cody, also director of aviation, reveals.That soon led to the group purchasing a twinengine piston aircraft, and then, in 1985, they boughttheir first Beechcraft King Air turboprop airplane,which they still own.

    We had one pilot and one airplane until 2001when a second King Air was added, followed a fewyears later with two more King Airs joining the fleet.We fly the surgeons and their support staff acrossWyoming from the home base in Laramie to each ofour ten satellite clinic locations.

    High Flyers Interview

    52 AVBUYER MAGAZINE April 2016 Aircraft Index see Page 153www.AVBUYER.com

    W

    Diagnosing, treating and rehabilitating orthopedic conditions, Premier Bone & JointCenters team of board-certified physicians work with patients throughout Wyoming

    and surrounding states. Chief Pilot Cody Diekroeger tells Rani Singh they simplycould not do their job without the use of corporate aircraft.

    BOARDROOM CASE STUDY

    BizAv Helps Premier Bone & Joint Beat a Fractured Transport System

    BG 1 April16.qxp_Layout 1 22/03/2016 10:36 Page 1

  • According to Cody, the airplanes transport veryhighly qualified surgeons to communities that are notlarge enough to support a medical practice with suchspecialized medical care. The physicians are trainedin various specialties, and they rotate through theclinics every week, treating patients according to theirspecific orthopedic needs, he adds. Premier servesapproximately 75% of the state geographicallyabout 80% of the population.

    It could take a whole day for someone to drive toa major metropolitan city such as Denver, Coloradofor such medical care, Cody muses. Our airplanesallow our medical teams to travel to one of oursatellite clinics in an hour or less, spend the dayseeing patients and performing surgeries, and thenfly back to Laramie. Indeed, sometimes all fourairplanes are out on the same day, heading indifferent directions, transporting different orthopedicspecialists.

    How the Fleet is UsedCody spoke to AvBuyer while there was an actualprocedure occurring. Yes, we have our painmanagement physician here today in Casper,Wyoming, he explained. Its about a 30 minuteflight from Laramie. He is in an operating roomadministering injections to patients to address theirpain issues and is our most senior physician. Hesbeen doing this for many years.

    There are not too many pain managementphysicians in the country, so we feel very fortunate tohave someone who is capable to do this.

    Premier surgeons are flown to towns that typicallyhave populations ranging from 5,000 residents. Thelargest town population in Wyoming is 60,000 andeven if it has 60,000 people, the town may not belarge enough to support having an orthopedicpractice with so many different specialists, Codysays. Thus the group provides much neededspecialized care by bringing surgeons to theresidents.

    Many of the surgeries that our doctors perform inLaramie and at some of our satellites may beconsidered 'elective surgery', although [our medicalteam] may occasionally encounter time-sensitivetrauma cases. A patient may have a knee problem (atorn cartilage or ligament issue requiring attention),although it may not be a life-threatening or

    Thus thegroup providesmuch needed

    specializedcare by

    bringingsurgeons to

    the residents.

    Rani Singh writes about aviation. A soughtafter Journalist andauthor she also reportson news, foreign affairs,politics and business withthe worlds largest newsorganization.

    !

    April 2016 AVBUYER MAGAZINE 53Advertising Enquiries see Page 4 www.AVBUYER.com

    CODY DIEKROEGER & THE KING AIR FLEET AT LARAMIE

    BG 1 April16.qxp_Layout 1 22/03/2016 10:37 Page 2

  • The next daywell haveanother

    airplane goingto Rock

    Springs withphysicians

    with adifferent

    orthopedicspecialty.

    emergency situation. The Premier Bone and Jointphysicians are also the team doctors for theUniversity of Wyoming athletic department, travelingwith the sports teams and treating the athletes.

    And because Wyoming is so agricultural, farmersand ranchers often require medical attention due toinjuries sustained while working with livestock ormachinery. In fact, a local veterinarian has beenoperated on by almost every one of the Premiersurgeons due to injuries suffered while administeringtreatment to livestock!

    A Day in the Life of the Flight DepartmentWe would depart Laramie around seven in themorning, flying to our clinic in the southwest cornerof Wyoming, a town called Rock Springs, relaysCody. That is probably our busiest satellite clinic,and we may see upward of sixty patients a day. Wemay do a surgical procedure or two and then at theend of the day, fly the doctors back to Laramie.

    The next day well have another airplane goingto Rock Springs with physicians with a differentorthopedic specialty. Some of our doctors mayspecialize in upper extremities (hand, arm and maybe

    shoulders). Others may specialize in knees, sportsmedicine, or spinal conditions.

    Cody often has the opportunity to meet patients,relaying how the husband of one patient fromScottsbluff, Nebraska was thrilled with his wifesprogress. He told me that his wife loved oursurgeons; she loved our nursing staff and ourhospital. At some point shell have her other kneereplaced and shes going back to the same doctor.This man was just so happy for his wife, who he saidhad been in pain for quite some time, but now waslike a whole new person.

    We hear many stories like that. Some peoplerelay that our doctors operated on their knee, thattheyve sent their kids to us, and their grandkids. Sosome of our doctors have seen three generations ofpatients, Cody concludes. It looks as thoughPremier Bone and Joint will treat many Wyominggenerations to come but I re-iterate, it couldnthappen as it does today without the businessaircraft! More information fromwww.premierboneandjoint.comWith thanks to Andra Ciupitu who helped prepare this article.

    54 AVBUYER MAGAZINE April 2016 Aircraft Index see Page 153www.AVBUYER.com

    BOARDROOM CASE STUDY

    MEDICAL STAFF AT PREMIER BONE & JOINT CENTERAWAIT EARLYMORNING DEPARTURES FROM LARAMIETO SATELLITE CENTERS

    BG 1 April16.qxp_Layout 1 22/03/2016 10:38 Page 3

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  • n last months issue of AvBuyer, we discussedthe usefulness of an aviation consultant andemphasized that his or her recommendationsshould be objective and focused on the

    choices your corporation needs to make. Since theconsultant works closely with senior-levelmanagement or the companys aviation manager, aprofessional relationship must be established.

    This month, lets look at the nuts and bolts of thatrelationship and answer the common questions thatcorporations can expect when dealing with aviationconsultants.

    Before looking for an aviation consultant, its bestto start with why a consultant is needed. What is theproblem you want solved and what will a successfuloutcome look like? Is the question one of financialjustification, personnel staffing, operations or anotherarea of concern?

    Management and financial problems touch on theaviation departments style of operation and can

    include a variety of issues. Identifying the kinds ofanswers being sought helps qualify what type ofaviation consultant is needed.

    If you dont have prior experience with aviation oraviation consultants, word of mouth is a great firststep for locating assistance. Having a Board Memberwith exposure to Business Aviation may be helpful,since that person may have a reference or two andcan give you the benefit of their impressions - goodor bad.

    Your aviation manager should also be a goodsource of information. Hopefully he or she has beeninvolved in professional education and attendedmeetings and conferences where there wereopportunities to network with other managers whoused consultants.

    Many subject-matter experts as well as generalistsin aviation management publish articles in trademagazines; that source provides readers with a goodfeel for a consultants style and business outlook.

    56 AVBUYER MAGAZINE April 2016 Aircraft Index see Page 153www.AVBUYER.com

    I

    David Wyndham adds to his observations regarding how best to obtain value from a consultant. His recommendation? Start by

    having a good idea of why your company seeks expert advice

    BOARDROOM OWNERSHIP

    BizAv Help Is At Hand

    Finding Value In, and Working With an Aviation Consultant

    David Wyndham isco-owner & presidentof Conklin & deDecker where hisexpertise in cost andperformance analyses,fleet planning and lifecycle costing areinvaluable. Hesformerly aninstructor pilot withthe US Air Force. Contact him via [email protected]

    Ownership March16.qxp_Layout 1 22/03/2016 10:58 Page 1

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  • First-Hand ExperienceAt Conklin & de Decker, we receive numerousreferrals via current client recommendations. Someclients come to us having been familiar with the costdata that we publish and from reading articles suchas this one. While our website serves an advertisingfunction, potential clients for our consulting servicesoften start with the Internet and then checkrecommendations from their own network. A phonecall works as a great first interview.

    In working with any outsider, make sure theyunderstand your expectations. When first discussingyour requirements with a consulting firm, askquestions regarding their experience and their workwith similar clients. Seek questions they have for you.

    Clients who engage Conklin & de Decker areoften the Aviation Manager or the managers directboss at corporate headquarters. When an in-houseflight department does not exist, the hiring tends tocome from the main decision-maker (owner/CEO) ora financial executive like the CFO. It is rare, butpossible, for the aviation manager to lack theconfidence of the main decision-maker. In thoseinstances, the consultant clearly is working for theexecutive team.

    CompensationAt my company, our jobs are mostly closed-ended.We have a specific set of questions to address and

    areas where guidance is sought. For suchassignments, we quote a fixed-price for the project.On occasion the questions are open-ended and notconfined to a specific decision. Then an hourlyretainer is more appropriate.

    As with any hourly billing, make sure both theconsultant and the client understand expectationsand have a rough budget or not-to-exceed limit oncosts. Regardless of a closed- or open-endedrelationship, both parties must have clearly definedgoals and anticipated deliverables.

    Many of our clients seek assistance with costs ofowning and operating busine