Home' Australian Aviation Magazine : December 09 Contents 48
DECEMBER 2009 AUSTRALIAN AVIATION
Overall though, dealers who spoke to
Australian Aviation indicated that used
business aircraft values are beginning to
settle. "We've seen 2008 and 2009 aircraft
start to recover in their pricing, but aircraft
older than that haven't shown any signs
of recovery," said Creighton-Jones. " at's
typical, because in a downturn environment
buyers tend to focus on the new or as close
to new as possible in the pre-owned market
as the value equation is so good."
Also helping to drive the industry is the
recent strength of the Australian dollar
against the US dollar, which most aircraft
and services are denominated in, and his-
torically this has been a major driver of the
interest in business aircraft.
" e strong Australian dollar relative to
the US dollar is a very important factor in
business aviation," said Creighton-Jones.
"It's going to prevent aircraft in this down-
turn leaving Australia and its going to aid
the acquisition of aircraft."
Bell agrees with that sentiment, and he
notes that it is more likely to push up inter-
est in the smaller business aircraft from
savvy buyers now able to enter the market.
"I think particularly with the lower end
of the market -- the entry level turboprops
and entry level jets -- for the entrepre-
neurial person who is really tuned into the
exchange rate situation and are able to take
advantage of it, I think we will see some
However, this is not the sole reason,
as Creighton-Jones explains. "If there's a
business case for an aircraft, it's a great time
to buy. It's an even greater time for people
who don't have aeroplanes at the moment
to enter the industry for the first time as
there are low acquisition costs."
Padgett agrees, saying, "I think they're
buying because there are a number of
factors -- there is a need for an aircraft,
the lower cost, finance is available, it's the
right product -- and the Australian dollar
strength is just the icing on the cake."
Creighton-Jones adds that for buyers of
larger aircraft, such as the Bombardier Glo-
bal Express series, the exchange rate is less
of a driver in their decision making process.
"With the larger business jets, people tend
to buy them on a need basis, regardless of
the exchange rate. I don't think that end of
the scale is as exchange rate sensitive."
Still, Padgett admits that the fast appre-
ciation of the dollar hasn't yet transformed
into a string of orders. " e interest hasn't
been as strong as I would have thought it
might be. I think its certainly increasing
enthusiasm for buying, but I haven't seen a
whole lot of people rush in because of the
Australian dollar," he said.
at appears to be mostly due to the
conser vatism picked up by some potential
buyers, which is not surprising given the
global economy is only just showing signs
However, finance for business aircraft
-- which has been an issue for purchasers over
the last year -- appears to be coming back.
" e finance companies, rather than the
banks, are very happy. Our finance com-
pany is looking for deals," said Padgett.
" ere's no doubt values of business aircraft
have been hard hit, but having said that we
have not had a knockback on finance for
any of the aircraft we have sold recently."
While aircraft sales and associated man-
agement services have largely held up well,
business aircraft charter has felt the effects
of a number of companies slashing their
As with aircraft sales, the biggest falls in
charter activity have been among North
American and European operators who
have yet to see any recovery, and competi-
tion among charter companies in those
regions remains fierce.
Australia has not been immune from this
either. "I think the only real downturn that
was noticeable in Australia is in charter,"
said Bell. "I had a few reports from a cou-
ple of our members that the charter activity
has been down in the last year."
Creighton-Jones confirms this. "Our
charter volumes went down dramatically in
the latter part of 2008 to a low point of just
over 50 per cent of our usual volumes. at's
recovered substantially to date and we're
down about 30 per cent from our peaks."
Signs are that this is starting to come
back, albeit led by the demand for bigger
aircraft. "It's primarily been long range
charter that has recovered the fastest. e
narrowbody market on the charter side has
yet to recover as well as the long range fly-
ing," said Creighton-Jones.
At the other end of the scale, the increas-
ing number of narrowbody aircraft available
for charter, such as Learjets and Citations
and the increasing number of operators has
meant that there has been less noticeable re-
covery in that sector, which is predominately
focused on domestic operations. Interesting-
ly, Creighton-Jones noted that some clients
are also requesting larger aircraft such as
SLOWING CHARTER business aircraft charter has felt the effects of a number of companies slashing their
travel budgets. Pictured is a Hawker 850XP registered to Ramsay Aircharter. (Seth Jaworski)
NEED BASIS Larger business aircraft tend to be acquired on a need basis, regardless of the exchange rate.
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