Month: February 2013

News for the Private-Jet Set

What are you thinking about in the aviation world this week? Looking at the news this week, my thoughts have gone from the bizjet market to pack-n-go bikes to amazingly fast cars. And of course, sequestration. Raise your hand if you’re over it!

FAA and Automatic Budget Cuts

There is a lot of talk about how the FAA will handle the potential automatic budget cuts set to take effect March 1. (Tomorrow!!) Furloughs, delays, and cuts, oh my!

Bombardier’s Order Book Is Full

Everybody likes some good news every once in a while, and the bizjet market could certainly use a little sunshine. Bombardier is really rocking right now, with a 43% increase in jet orders in 2012 over 2011. There is an underbelly though: Bombardier reported lower earnings in the 4th quarter of 2012, causing stocks to slide. And the Learjet 85 has been delayed about six months, but the huge number of orders for Challengers should help turn things around.

Jet Setter’s Dream Bike

If you like traveling but can’t live without your bicycle, then this new handmade two-wheeler from Holland Cycles is just for you. It packs up compactly to fit into a standard S&S travel case. Called the Holland Jet, the bike relies on the Ritchey Break-Away travel bike design.

Beechcraft Looks to Unload Hawker Jet Business

Hawker Jet Business is for sale! Now the question is who will buy it? A deal with China’s Superior Aviation Beijing Co. broke down last fall, but the assets have been broken up. Beechcraft is only selling off the jet part of the corporation. Apparently five companies have expressed interest. Who will be the new owner?

New Superfast Supercar

Feel the need for speed? The McLaren P1 will scratch that itch. Go 60 mph in less than 3 seconds. But you’re going to have to hurry — McLaren is only making 375 of them. You’ll need to snatch yours up right away.

That’s quite a shopping list: fold-up bike, McLaren P1, Learjet 85, and Hawker Jet Business!

New Jet? Understand the Tax Benefits of Bonus Depreciation

The news is teeming with financial jargon and op-eds spouting the benefits and shortcomings of the American Taxpayer Relief Act of 2012, which was signed into law at the beginning of January. Bonus Deprecation? Section 179? Through this financial news flurry, it can be difficult to find grounded information about how this legislation affects all aspects of business, and private jet owners in particular.

Here’s how it works: A company can write off the purchase price of certain equipment a little at a time through depreciation. However, to boost the bottom line of U.S. businesses, the government instated Section 179 of the tax code. Section 179 allows businesses to write off 50% of the purchase price of qualifying equipment, such as a new private jet, in the first year rather than claiming the deduction over a period of five years (this stimulus applies to all qualified capital assets, not just aircraft).

The idea is to give businesses an incentive to invest in themselves through the purchase of new equipment. As of 2007, Section 179 was supposed to be phased out and eventually eliminated. However, this tax code has proven popular over the years and has been included in multiple Stimulus Acts since 2007.

The American Taxpayer Relief Act of 2012 is no different. This bill extends the 50% accelerated depreciation tax relief, also known as Bonus Depreciation, to factory-new jets purchased in 2013. This extension includes any aircraft ordered by year-end. As long as you have a written, binding contract by Dec. 31, a new jet is covered by Bonus Depreciation even if it won’t be delivered until 2014. This legislation applies only purchases of new jets, not pre-owned aircraft.

So what does all this mean? It means that now is a good time to buy a jet!

This legislation represents an opportunity to determine the best private jet purchase for you and your business. Compare the benefits of accelerated depreciation on a new aircraft with the up-front savings of purchasing a pre-owned jet. See this month’s Art of the Deal article to learn about how a qualified and experienced broker can help you determine the right choice for your individual goals.

For more information about Bonus Depreciation and Section 179 of the tax code, see http://www.nbaa.org/admin/taxes/depreciation/bonus/index.php and http://www.section179.org/section_179_deduction.html.

Air Travel of the Future

Here at Corporate Jet Insider, we like to spend some time peering in to the crystal ball from time to time. What does the future hold for air travel in general and private jets in particular? After seeing how pundits expect the commercial airlines to evolve, we think more fliers will be looking for a different mode of travel.

A few months ago, we talked about how smaller, regional airports are the way forward for air travel. The old model of huge hub airports is cumbersome for fliers. Often, consumers have to drive more than an hour just to reach the airport, and they then suffer through long lines at check-in, security, and baggage claim. A simple, quick flight can quickly turn into a day-long fiasco.

And if the recently announced merger of US Airways and American Airlines goes through, only three major carriers will serve the vast majority of Americans. Does this bode well for the flying public? The jury is out, but Charlie Leocha, director of the Consumer Travel Alliance, predicts higher prices. Many travelers also complain of poor customer service on commercial flights.

This brings us to another troubling view of the future of flying: automation and technology. In an attempt to ease flying, airlines look to automate check-in and boarding. Ben Minicucci, COO of Alaska Airlines, even predicts that “Your first interaction will be with a flight attendant.”

Is this what people really want? How about more leg room, more arm room? Do people really want to do their own check-in with a computer? For some travelers, the answer will be a resounding yes. For others, already juggling bags, stress, and documents, less help is less attractive. The automation sounds more like cost-cutting than improving the customer experience.

But we’re more interested in real changes in aviation, not just talking points for airlines. As people grow more frustrated with the inconvenience of airline travel, they will increasingly look to alternate routes. A few ways this will happen:

  • More jet charter services, like Arrow, based in Seattle. Travelers pay a membership fee and get a reasonable rate and all of the convenience of flying on a private aircraft.
  • Companies like Nextant Aerospace. This so-called “remanufacturer” builds new aircraft out of old parts, turning worn-out Hawker Beechjet 400A/XPs into Nextant 400XTs. Eager aircraft owners in the growing private aircraft market in India are jumping at this economical way to get in on the game.

It’s exciting to see companies looking ahead and innovating the way we fly. While the hub airport model and airline consolidations continue to limit choices and decrease customer service, private aircraft still offer control, comfort, and convenience.

Internet Giants Turn to Private Jet Terminal Construction

Techies and aviation enthusiasts alike are following the story that broke on Feb. 8. Signature Aviation  announced a proposal to build a terminal dedicated private jets at recently updated Mineta San Jose International Airport. Located in the heart of Silicon Valley, the $82 million project will add to the airport’s west side.  Signature Aviation will partner with Blue City Holdings, an LLC that manages Google executives’ jets, to construct a 29-acre business jet hub. The city council will vote in April to determine the future of the proposal.

The Google jets need a home! However, Google doesn’t actually own them; the three top dogs at the Internet giant do. Google’s co-founders Larry Page and Sergey Brin and CEO Eric Schmidt reportedly own a total of eight aircraft, and they intend to house them at the proposed terminal. We could only find record of these five. Anybody know what the other three are?

  • Boeing 767-200
  • 2 Gulfstream Vs
  • Boeing 757
  • Dornier Alpha fighter jet

The lodging for these jets has been slightly controversial. Since 2007, the Google brass has leased space from NASA under the company name H211. H211 manages the jets at their current home, Moffett Field, which is owned and operated by NASA Ames Research Center. For $1.3 million per year, H211 uses the facilities here, including the historic hangars. Built in 1931, the 8-square-acre Hangar One is one of the largest free-standing buildings in the world. It was originally constructed to accommodate the massive airship USS Macon.

But Hangar One is in trouble. About 10 years ago, scientists discovered that Hangar One was leaking toxic chemicals (PCBs, lead, and asbestos) into the nearby wetlands. So H211 executives made an offer in December 2011 to pay $33 million to refurbish the historic site, with the condition that they would lease the hangar for their exclusive use. The total deal was estimated at $44 million. Industry insiders believe that the new proposal with Signature Aviation to build the facility at Mineta San Jose International Airport means that the offer for Hangar One was rejected by NASA and the White House.

And with no funding from NASA or the Department of Defense, it looks like the future for Hangar One is still up in the air.

Beyond the Web Search

Internet browsing may be your initial step when you begin exploring the possibility of buying a private jet. The Web can provide a wealth of information, and you’ll find out what other aircraft owners have to say about certain models of aircraft.

But when you’re ready to start a serious search for the aircraft that meets your needs, you wouldn’t want to buy one you found on the Internet — or anywhere — without enlisting the help of a professional jet broker.

And doing so will save you time, headaches and, ultimately, money.

Detailed knowledge

Aircraft brokers have the best advice about the process of buying a used aircraft that suits your style and your pocketbook. A client may not have a great deal of background knowledge or in-depth technical knowledge about private aircraft. But aircraft brokers know the advantages and disadvantages of each type of jet available and are able to advise you accordingly.

For example, a professional broker might advise you not to shell out millions of dollars for a new aircraft when a plane that meets your requirements is available on the pre-owned market. With the help of a broker, you’ll make your purchase based on fact — not whim or fancy.

When you’re ready to inspect an aircraft you’re considering buying, you’ll want to have a professional who has a good understanding of airplanes look it over thoroughly for an unbiased and informed opinion. The broker can also help you locate a suitable, unbiased provider to perform a detailed pre-sale inspection of the aircraft.

A broker also considers details such as whether the current owner of the jet has paid the taxes on the aircraft, and knows that if the asking price appears too good to be true, it probably is — and not a wise purchase.

A professional broker will do a due-diligence check, ensuring that you are buying a plane that will serve your ongoing needs so you don’t have to upgrade in a short time or pay extra for space, fuel and salaries when you don’t need to.

Quality and value

Jet brokers such as L & L International are experts in the investment opportunities of used airplanes for sale. They understand the needs of specific buyers and the qualities of each of the used airplanes on the market. The first thing that a jet broker will do is perform a full cost analysis. The breakdown of your needs will factor highly in this. For example, if you are looking for a small airplane to transport people around the country, then you won’t need to spend more money than necessary on one of the ultra-long-range jets that are capable of intercontinental travel.

L & L International understands what qualities the buyers of used jets are searching for and the qualities of specific aircraft that may be especially suitable to the particular needs of those clients.

So, whether you are looking to upgrade or purchase your first aircraft, relying on a broker is the most efficient way to maximize your chances of finding the aircraft that’s the right fit for you.

Strong Numbers for Preowned Business Jets

Everybody’s talking about the record-breaking year for preowned business jets. They should; JetNet released compelling numbers:

  • 2,240 preowned business jets sold in 2012 (new record!)
  • Full sale transactions of used business jets were up 7.2%
  • Average Days on Market decreased by 10 for business jets
  • Percentage of fleet for sale decreased to 13.4%

What does this mean for buyers?

Because the for-sale inventory is higher than 10%, it’s still considered a buyer’s market. So if you’re interested in acquiring a preowned jet, now is the time. The improvement in the private jet market is expected to increase, so we will likely see a continuing decrease in the number of preowned jets for sale. That means now is the time to buy.

What does this mean for sellers?

Fewer days on the market and the record number of transactions are good news for sellers! Things are loosening up, and some of the more risk-averse buyers and financers are gaining confidence in the economy again.

Also, depending on your aircraft, you may have a hot commodity! Business Jet Traveler’s annual report shows the top jets for sale in the preowned market. For example, the Gulfstream G200 averages only 259 days on the market, well below the industry-wide average of 370. Aircraft built after 1999 are the most sought after, and only 7% are for sale, creating a pretty tight market.

These numbers released last week are an encouraging step toward a once-again thriving business jet market. It looks like 2013 is the time to get in on the action!

Flying with Fido

For some, a family vacation should include the entire family — even the four-legged members. However, traveling in the cargo hold of a commercial aircraft puts animals in unnecessary danger.

For some people, traveling with pets is a necessity. Breeders and show-dog handlers earn their livelihood from their pets. For them, making sure their four-legged friends arrive with both body and mind intact is crucial.

Flying can be dangerous for animals

According to Private Jets VIP, the Humane Society of the United States recommends that people don’t transport pets by commercial air unless absolutely necessary. Numerous documented incidents reveal the potential dangers for beloved pets: getting sick or dehydrated, suffering an accidental injury or even dying while on aircraft.

Private Jets VIP says that investing in a private flight is an investment in your pet’s health, happiness and safety, as well as your peace of mind.

Some commercial airlines allow small pets in carriers to ride in the cabin with their owners, but they often have restrictions on the number of pets allowed. On a private aircraft, pets need only remain in their carriers during takeoff, landing and any turbulence, unless they have behavior issues. Otherwise, they can remain at their owners’ side or in their arms, and they are never separated. Owners don’t have to worry about their pets not being allowed on board, being loaded into the cargo hold or getting lost during flight connections or cancellations, Private Jets VIP says.

On a private jet, pet owners can make sure their animals are comfortable, content, fed, and hydrated. Some charter companies even provide pets with special treats, toys or other luxuries, Private Jets VIP says.

What to know before you go

RYL, a private jet chartering company, advises those who intend to fly with pets to inform their brokers that pets will travel with them, so the brokers can secure an aircraft approved to transport pets.

Note that large dogs are typically counted as a passenger and are either seat-belted in during take-off and landing or placed in a pet carrier during these times to ensure the animal’s safety, RYL says. It is imperative that the pet is well trained when pursuing the seat belt option because of the considerable cost to repair damaged seats, upholstery and carpets.

Regardless of the method used to transport pets, the American Veterinary Medical Association strongly discourages the use of sedatives and tranquilizers for cats and dogs, according to RYL. An animal’s natural ability to balance and maintain equilibrium is altered under sedation, which can be dangerous when the animal is moved in flight. In addition, because the animals are exposed to increased altitude pressures during flights, they can succumb to respiratory and cardiovascular problems when sedated or tranquilized.

In general, flying can be stressful for pets and is not always the best mode of transport. Before including pets on a flight, owners should consider whether their animals will get along with the other people and pets on the flight. In addition, owners should understand that even on a private flight with the best accommodations, animals may still not be happy during the flight. Cries or howls of anxiety that continue throughout the duration of the flight may make the trip stressful for all on board.

Even with these limitations, pet owners who need or want to travel with their pets will take considerable comfort in the benefits that a private flight offers.