Even thought the Dow Jones Industrial Average, as well as other market indicies are causing many of us heart palpitations; the good old reliable and accurate “Cox Jet Index” shows that the Used Business Jet Market is still on the “onward and up-ward path” as the globe slowly slithers out of the biggest recession in living economic history.
Regardless of the encouraging Graphs above, we are currently operating under extremely strange times as I see it personally. We officially sloughed off the “recession” label last year, and the activity within the marketplace has bourne this out as being accurate; so much-so that even the heavy iron is again selling now. However any used business aircraft transaction today is for want of a better phrase: “Squirrelly as hell” with buyers willing to walk at the drop of a hat, or the nod of a chin. I believe that this is directly attributable to the uncertainty that is rife within our global lives at the present.
Let’s take for instance the situation in the Greece, Spain, Portugal, Italy and Ireland (Eire); the economies of these Euro-zone countries, and the official currency of the same, are in severe jeopardy. This in turn has the World’s stock markets on the run again, most in the wrong direction, all the while the price of oil seems to be staying in a moderate band because the U.S. Dollar is climbing in value against other currencies, and the folks at OPEC are enjoying economic gains made for them from the foreign exchanges rather than from oil demand.
The rising Dollar is causing great angst amongst the multi-nationals of this great country, because their foreign earned profits translate into fewer Dollars at home here; adding to this pressure at the top, are the alleged socializing of the nation through the new legislation that is seemingly pouring out of Capitol Hill in an un-ending river of change. We are also fighting two wars abroad, and one of the largest natural disasters ever seen on our home shores thanks to deep-well drilling gone bad.
Add all of this up, throw an Icelandic volcano, and the ever present spectre of terrorism into this big pot of woe, and pretty soon the World’s lunch menu poses a bitter and uncertain meal for consumption, hence all of the indecision, flightiness, and all-round bizarre behaviour currently being played out by the buyer of the minute.
The Annual Meeting in Geneva in early May of the European Business Aviation Council was like at surfaced submarine that had been riding out a long period of enemy surface activity, sitting in the silent depths of the ocean. Everyone there was convinced that all enemy action was long-gone and their opportunity to bath in the sun under blue skies was safe, safe, safe. Okay so it sounds like I am writing in some sort of code, but the metaphors that I am using to describe the high-riding optimism of the business aviation industry on that side of the Atlantic Ocean, just didn’t fully jive with our current economic outlook.
You may call me a naysayer, but seeing that only about 8% of the business aircraft fleet resides in Europe, including Russia and the Baltic States, the optimism shown at this convention, might be read two ways: 1.) The industry over there is either in denial or is now experiencing a renaissance whereby the traditional modus operandi of using the airlines and railways to get from city to city is the first choice, with business aircraft service coming in second, is changing to a more American way of thinking; or 2.) We Americans had better start paying attention to how the nice multi-language folks over there, structure their small slice of this industry, because our share is contracting and we shall soon be seeing more and more people choose to charter and ride fractional aircraft over the American tradition of owning your own.
We are still not out of the woods when it comes to public and governmental perception of business aircraft use here, even though geographically, companies cannot achieve successful domestic growth by relying on ground transportation, and the legacy airline system. It is still thought to be passé of corporate management, and private individuals to be visible users of business aircraft. This prevailing point-of-view now active on our side of the Atlantic, has been the norm in Europe since the end of the Second World War, hence the prevalence of the charter and fractional providers over there.
I’m not saying that any of this is bad; however America is just not like Europe. Their model will not fit our business environment. Our industry will suffer mortally though, if the Middle East continues to take on debt without encouraging the much needed and generally forecasted growth, and Asia is unable to order itself into a politically stable region. If these scenarios remain in the so-called “bad zone”, we are all on the brink of a painful consolidation within our business sphere. I for one will shed a tear if Wichita and Seattle become second-tier, aircraft manufacturing cities due to a severe lack of demand, while the BRIC nations: Brasil, Russia, India and China take over and become the first tier. Okay maybe this is inevitable, but there is no reason why we can as a collective group, combat the European trend, and start educating the public and our elected officials, why the American way of doing business is the best for us, and largely for the rest of the World as well.