Press Release

Issued by Asian Sky Group.

November 9, 2015

In a wide ranging interview with David Best, vice chairman of the Asian Business Aviation Association (AsBAA), Jeffrey Lowe, managing director for Asian Sky Group (ASG), reflected on the current state of the Asian and greater China markets as ASG gears up for its annual Asia-Pacific business jet fleet report due in early 2016.

Lowe suspects that growth in the Asia Pacific (including north Asia, greater China and SE Asia but excluding India and Australia) will be lower than forecasted and whereas ASG had previously forecasted single digit growth at the upper end in early 2015, it now appears that annual growth may come in at around just under 5%, which is half of what ASG had originally forecasted, not accounting for deductions but including new and pre-owned deliveries.

“Greater China continues to grow at the highest rate, followed by south east Asia and north Asia, respectively.” Says Lowe. “The greater China market is responsible for most of the aircraft deduction though making this market the most volatile in Asia Pacific.”

As we continue to look more specifically at the greater China market, most of the additions are in the large cabin and up segments as seen historically. In Hong Kong specifically, growth has been mostly G650s whereas in mainland China, there is more of a range of aircraft types from Excels through G550s. ASG notes that the local B-registry is still the most popular in mainland China despite current market conditions and sentiment but in Hong Kong, Cayman appears to be the registry of choice.

Aircraft deductions are predominately from mainland China and generally are for out of warranty Hawkers, older Challengers, GVs and some Legacys.

“With south east and north Asia being more mature markets, the aircraft types being added are much more diverse and also include pre-owned models, which are becoming more accepted. So you are seeing older G200s, F900s being added for example but also new Citations”.

Commenting on overall business activity levels currently in Asia, Lowe states that business levels are still high, which seems encouraging, but the amount of time it takes to complete transactions is longer. Typically, the process now takes four to six months as those previous first time buyers are now first time sellers and the re-education process has to start all over again.

The difference in pricing expectations between buyers and sellers is also at a high (for example, the spread between asking and selling prices.) “This is compounded by a rapidly changing market; essentially aircraft are depreciating faster than expected. Consequently, sellers are continually chasing the market trying to get ahead of it and in so doing make their aircraft the most attractive to buyers. Generally by the time they've caught up to the market, it has shifted again.”

Buyers and sellers are more skittish these days too. They are very much focused on short term economic indicators which thus results in last minute reactions and potentially a change in mind regarding a purchase or sale.

When asked about the global market, Lowe announces that ASG will shortly introduce a set of new indices, which will help evaluate the global aircraft sales market. “These indices look at market momentum and the onset of either a decline or recovery in the market. Looking at 2015 to date, the market turned upwards in March and April of this year, with a recovery predicted in June onwards. However August saw a decline signal with market momentum turned down in September and increasing. This all foretells of a difficult four quarter this year which we are already seeing in reality”.

ASG's Asia Pacific Civil Helicopter Fleet Report Year End 2015 will be released at HAI Heli-Expo from February 29 to March 3, 2016 and its Asia Pacific Jet Fleet Report Year End 2015 will be released at ABACE from April 12 to 14, 2016.