Impact of recession on bizjet utilisation
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Impact of recession on bizjet utilisation
What has been the impact of downturn/recession on biz/corp jet use, in-house, frax or charter; how much less flying is being done in North America and Europe, elsewhere?
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With 3,000 bizjets officially being listed for sale
Now that is an interesting statement. Where did you get that number from?..
Industry databases to which I subscribe!
With 3,000 bizjets officially being listed for sale
Now that is an interesting statement. Where did you get that number from?..
Industry databases to which I subscribe!
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How about everyone starts being a little more positive!!! We all know the world wide recession is biting hard. If the media would stop scare mongering people into staying at home and saving their money in the fear that they might lose their job, then this recession might not become so deep.
I for one am tired of seeing and hearing the words 'credit crunch' and 'recession'...especially on PPRUNE!
Happy Landings!
I for one am tired of seeing and hearing the words 'credit crunch' and 'recession'...especially on PPRUNE!
Happy Landings!
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The Contrarian view
And it's exactly all this non PPRuNe standard pleading on threads in this forum that's doing the psych job so effectively.
It is adding fuel to the fire every day. It's showing just how deep seated the 'twitch' is.
Rob
It is adding fuel to the fire every day. It's showing just how deep seated the 'twitch' is.
Rob
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Bizjetjockey has a point,
The original 'postee' wanted to know how the downturn is effecting the bizjet world...Well a whole lot better than the automotive industry!
Better than the the poor sods at woolies, better than the bankers at Leehmans, we can go on,
Anyone getting the point to all this yet? Of course its effecting us but once the dust has settled we just adapt and get on with it.
We will no doubt see some companies fold but the good news is..stronger compnaies take on the extra fat, and guess what they..start to expand and...start to re-hire...and...so the economy starts to grow...and so the cycle starts again...ALL is well fellow comrades rest assured and I'll see you at the next recession in about 15 -20 years from now and we will be talking about the same thing. I for one though by that time will be somewhere else though !
The original 'postee' wanted to know how the downturn is effecting the bizjet world...Well a whole lot better than the automotive industry!
Better than the the poor sods at woolies, better than the bankers at Leehmans, we can go on,
Anyone getting the point to all this yet? Of course its effecting us but once the dust has settled we just adapt and get on with it.
We will no doubt see some companies fold but the good news is..stronger compnaies take on the extra fat, and guess what they..start to expand and...start to re-hire...and...so the economy starts to grow...and so the cycle starts again...ALL is well fellow comrades rest assured and I'll see you at the next recession in about 15 -20 years from now and we will be talking about the same thing. I for one though by that time will be somewhere else though !
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IF you´re correct, I´ll buy you a pint or two.
I have naggin doubts about that, the next half year will be interesting. My Flightdepartment was about to be closed and now they recon they can´t get decent money for the plane thus they keep it. Re - consideration due in july.
I have a very uneasy feeling.
I have naggin doubts about that, the next half year will be interesting. My Flightdepartment was about to be closed and now they recon they can´t get decent money for the plane thus they keep it. Re - consideration due in july.
I have a very uneasy feeling.
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From today's New York Times:
http://www.nytimes.com/2009/01/29/bu...29jets.html?hp
Bloodbath does seem to be an appropriate description.
What’s not to like about a private jet? These days, plenty.
Kevin Moloney for The New York Times
“A year ago, there would be 30 people looking for one airplane,” said Jay Mesinger, a corporate jet broker. “Today there are 30 airplanes looking for one buyer.”
After enjoying a long run as an enviable perk of corporate America — justified to shareholders as time- and money-savers for globe-trotting executives — they are rapidly becoming symbols of high-flying excess.
Congress, in particular, is frowning upon companies that ask for taxpayer bailouts while still enjoying the comfort of their private planes or placing orders for a new one.
Detroit automakers learned that lesson late last year, and announced they would sell their fleets after being questioned in Congressional hearings. Now Citigroup has said it would not take delivery of a $42 million Dassault Falcon 7X jet that it had planned to buy.
“It’s getting to be a black eye to own a corporate jet,” said Paul Nisbet, an aviation analyst with JSA Research. With so many companies deciding to sell their planes — both for cost-cutting reasons and to avoid public relations headaches — the used-jet market is being flooded with inventory, and the prices of private jets are falling faster than the value of McMansions. On Wednesday, Starbucks said it would sell two of its three corporate jets, a Gulfstream 550 and a Gulfstream V, to save money.
“A year ago, there would be 30 people looking for one airplane,” said Jay Mesinger, a corporate jet broker, who said that prices had fallen 30 to 40 percent since late 2007. “Today there are 30 airplanes looking for one buyer.“
With the economy continuing to sour, more airplanes will most likely be chasing even fewer buyers.
“After the automakers came to Washington and after the Citibank silliness, there’s been a rush to get out of these airplanes,” said Clark Onstad, president of Solutions 4 VIP, a Denver company that outfits large corporate jets. “Price is not an issue. They are selling for image purposes, and the operation of a jet is a small overall cost in relation to a company’s image. So they are saying, ‘dump.’ ”
Manufacturers are hurting. This month Cessna, maker of the popular Cessna Citation, said it would lay off an additional 2,000 workers — its second round of cuts — and that the company would probably shrink production in 2009. Last week, employees at Hawker Beechcraft, another corporate jet maker, were told to prepare for another round of layoffs after 500 job cuts last December. Business at Cessna, which had been anticipating an upturn in orders in 2009, had a steep decline in the third quarter of 2008.
“Very recently this market has taken an extreme turn down,” with customers worldwide canceling orders and delaying deliveries, Douglas Oliver, a Cessna spokesman, said Wednesday. “We are looking at a brave new world compared to three months ago.”
The trade association for the corporate jet business said that its members were being unfairly maligned. “We are concerned that actions in Washington are disparaging and discouraging of general aviation being used for business purposes,” said Ed Bolen, president of the National Business Aviation Association.
When the global economy was surging, airplanes commanded a premium above sticker price, and manufacturers enjoyed a three- to five-year backlog. Given that shortage, buyers were even paying new plane prices for a used jet because they did not want to wait.
In the current depressed market, Mr. Mesinger said that Citigroup could pick up a used 2003 Bombardier Global Express XRS — which, like the Dassault Falcon, seats 12 to 14 people and has trans-Atlantic capability — for about $30 million. That same 2003 plane would have sold for $48 million in late 2007.
Another plane that can accommodate about the same number of travelers is the Gulfstream V. A 2003 model would have sold for $42 million to $44 million during the boom. Today a seller would be lucky to fetch a price of $25 million or so, brokers said.
The pool of potential buyers is also drying up because of the difficulty in obtaining credit.
“Until the banks start financing, the amount of planes on the market will continue to grow,” said Richard Santulli, chief executive of Netjets, a private jet company owned by Berkshire Hathaway. When credit eases, he added, “the market will open up because interest rates are so low.”
Mr. Nisbet of JSA Research said that the makers of smaller corporate jets were hurting more than companies selling bigger jets.
Indeed, General Dynamics, the parent company of Gulfstream, reported higher fourth-quarter profits Wednesday at Gulfstream as a result of strong 2008 sales.
The plane maker’s fourth-quarter profits rose 25 percent, to $264 million. It expects to deliver 124 planes in 2009, down from 156. But this drop will be offset by the fact that more of them will be bigger, high-end models. The company has a backlog of 246 orders for the next two and a half years.
These bigger jets, Mr. Nisbet said, “are often bought by billionaires who can dole out $55 million for a plane and fly it off.”
Kevin Moloney for The New York Times
“A year ago, there would be 30 people looking for one airplane,” said Jay Mesinger, a corporate jet broker. “Today there are 30 airplanes looking for one buyer.”
After enjoying a long run as an enviable perk of corporate America — justified to shareholders as time- and money-savers for globe-trotting executives — they are rapidly becoming symbols of high-flying excess.
Congress, in particular, is frowning upon companies that ask for taxpayer bailouts while still enjoying the comfort of their private planes or placing orders for a new one.
Detroit automakers learned that lesson late last year, and announced they would sell their fleets after being questioned in Congressional hearings. Now Citigroup has said it would not take delivery of a $42 million Dassault Falcon 7X jet that it had planned to buy.
“It’s getting to be a black eye to own a corporate jet,” said Paul Nisbet, an aviation analyst with JSA Research. With so many companies deciding to sell their planes — both for cost-cutting reasons and to avoid public relations headaches — the used-jet market is being flooded with inventory, and the prices of private jets are falling faster than the value of McMansions. On Wednesday, Starbucks said it would sell two of its three corporate jets, a Gulfstream 550 and a Gulfstream V, to save money.
“A year ago, there would be 30 people looking for one airplane,” said Jay Mesinger, a corporate jet broker, who said that prices had fallen 30 to 40 percent since late 2007. “Today there are 30 airplanes looking for one buyer.“
With the economy continuing to sour, more airplanes will most likely be chasing even fewer buyers.
“After the automakers came to Washington and after the Citibank silliness, there’s been a rush to get out of these airplanes,” said Clark Onstad, president of Solutions 4 VIP, a Denver company that outfits large corporate jets. “Price is not an issue. They are selling for image purposes, and the operation of a jet is a small overall cost in relation to a company’s image. So they are saying, ‘dump.’ ”
Manufacturers are hurting. This month Cessna, maker of the popular Cessna Citation, said it would lay off an additional 2,000 workers — its second round of cuts — and that the company would probably shrink production in 2009. Last week, employees at Hawker Beechcraft, another corporate jet maker, were told to prepare for another round of layoffs after 500 job cuts last December. Business at Cessna, which had been anticipating an upturn in orders in 2009, had a steep decline in the third quarter of 2008.
“Very recently this market has taken an extreme turn down,” with customers worldwide canceling orders and delaying deliveries, Douglas Oliver, a Cessna spokesman, said Wednesday. “We are looking at a brave new world compared to three months ago.”
The trade association for the corporate jet business said that its members were being unfairly maligned. “We are concerned that actions in Washington are disparaging and discouraging of general aviation being used for business purposes,” said Ed Bolen, president of the National Business Aviation Association.
When the global economy was surging, airplanes commanded a premium above sticker price, and manufacturers enjoyed a three- to five-year backlog. Given that shortage, buyers were even paying new plane prices for a used jet because they did not want to wait.
In the current depressed market, Mr. Mesinger said that Citigroup could pick up a used 2003 Bombardier Global Express XRS — which, like the Dassault Falcon, seats 12 to 14 people and has trans-Atlantic capability — for about $30 million. That same 2003 plane would have sold for $48 million in late 2007.
Another plane that can accommodate about the same number of travelers is the Gulfstream V. A 2003 model would have sold for $42 million to $44 million during the boom. Today a seller would be lucky to fetch a price of $25 million or so, brokers said.
The pool of potential buyers is also drying up because of the difficulty in obtaining credit.
“Until the banks start financing, the amount of planes on the market will continue to grow,” said Richard Santulli, chief executive of Netjets, a private jet company owned by Berkshire Hathaway. When credit eases, he added, “the market will open up because interest rates are so low.”
Mr. Nisbet of JSA Research said that the makers of smaller corporate jets were hurting more than companies selling bigger jets.
Indeed, General Dynamics, the parent company of Gulfstream, reported higher fourth-quarter profits Wednesday at Gulfstream as a result of strong 2008 sales.
The plane maker’s fourth-quarter profits rose 25 percent, to $264 million. It expects to deliver 124 planes in 2009, down from 156. But this drop will be offset by the fact that more of them will be bigger, high-end models. The company has a backlog of 246 orders for the next two and a half years.
These bigger jets, Mr. Nisbet said, “are often bought by billionaires who can dole out $55 million for a plane and fly it off.”
Bloodbath does seem to be an appropriate description.
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Very timely and realistic summary. Who's off to the Super Bowl in their Business Jet on Feb 1 at Tampa Bay?
Will the President and the henchmen from the IR be counting the numbers and checking the ownership to see if that 'business flight' was really justified.
Will the President and the henchmen from the IR be counting the numbers and checking the ownership to see if that 'business flight' was really justified.
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"I for one am tired of seeing and hearing the words 'credit crunch' and 'recession'...especially on PPRuNe!"-BizJetJock
While we an all empathise with the sentiment, it is just ostrich like to pretend it isn't happening. As evidenced by OFBSLF's extract from the NYT, even people with a vested interest in our business, acknowledge that times are tough and corporate aviation is not immune from financial realities.
My opinion is worth diddly-squat, but history says that we WILL recover, but putting a timescale on it just may leave you even more depressed if it takes longer.
I suggest that in the meantime, we all look to ways of making professional and personal efforts to economise, as this will leave us stronger and more efficient to weather the storms ahead.
While we an all empathise with the sentiment, it is just ostrich like to pretend it isn't happening. As evidenced by OFBSLF's extract from the NYT, even people with a vested interest in our business, acknowledge that times are tough and corporate aviation is not immune from financial realities.
My opinion is worth diddly-squat, but history says that we WILL recover, but putting a timescale on it just may leave you even more depressed if it takes longer.
I suggest that in the meantime, we all look to ways of making professional and personal efforts to economise, as this will leave us stronger and more efficient to weather the storms ahead.
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Business Aviation: We have seen the enemy and it is us
Remember when Pogo said this?
After the craziness we all experienced here in the states last week with companies like CitiGroup suddenly distancing itself from its business airplanes, I think corporate aviation needs to realize that the folks who demand the services and those who provide it are the ones who are helping to feed the fires of the panic of airplanes being dumped and orders being canceled.
Business aviation has always hidden behind a veil of secrecy. Now it's killing us. I got beaten up some when I posted this idea at my blog.
Maybe I am crazy. What do you think?
And let's skip the part about me being crazy and just deal with the topic now that I think about it.
After the craziness we all experienced here in the states last week with companies like CitiGroup suddenly distancing itself from its business airplanes, I think corporate aviation needs to realize that the folks who demand the services and those who provide it are the ones who are helping to feed the fires of the panic of airplanes being dumped and orders being canceled.
Business aviation has always hidden behind a veil of secrecy. Now it's killing us. I got beaten up some when I posted this idea at my blog.
Maybe I am crazy. What do you think?
And let's skip the part about me being crazy and just deal with the topic now that I think about it.
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It seems like the issue depends on who pays for it.
In every case where the people using the service are paying for it, there is never an issue, and no need to keep it low key.
When corporate managers are using it, and making the decisions to spend stockholders funds to pay for it there is an obvious need for keeping a low profile.
In Citi's case, it was further complicated by the taxpayers and political folks being added to those who paid for it that caused it to hit the fan.
In every case where the people using the service are paying for it, there is never an issue, and no need to keep it low key.
When corporate managers are using it, and making the decisions to spend stockholders funds to pay for it there is an obvious need for keeping a low profile.
In Citi's case, it was further complicated by the taxpayers and political folks being added to those who paid for it that caused it to hit the fan.
Last edited by repariit; 31st Jan 2009 at 22:15.