Asia’s super-rich eye bargains as second-hand jet market soars

The second-hand purchases that began last year has hardened amid slowing economic growth in the region, while cost-conscious Chinese buyers have shunned flashy symbols of wealth. (Reuters)
Updated 20 April 2018
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Asia’s super-rich eye bargains as second-hand jet market soars

  • Pre-owned jet prices have also seen a steep drop in the past two years
  • It is also helping to firm prices by reducing an oversupply of used business jets on the global market

SHANGHAI: Asia’s super-wealthy are increasingly opting for second-hand private jets rather than buying new ones, as private buyers look for deep discounts and shorter waiting times, aircraft brokers said.
Buyers from the region bought 61 pre-owned aircraft and 54 new jets in 2017, marking the first time second-hand purchases outstripped new orders, according to a report by aviation consultancy Asian Sky Media.
It underscores how a trend that began last year has hardened amid slowing economic growth in the region, while cost-conscious Chinese buyers have shunned flashy symbols of wealth.
Brokers said customers included Chinese companies, which were buying such jets to support overseas expansion and opting for used planes to keep costs down. Pre-owned jet prices have also seen a steep drop in the past two years, they said.
“Customers have changed, their knowledge of the industry has changed and they now understand the value of a pre-owned aircraft,” Jeffrey Lowe, managing director of consultancy Asian Sky Media, said on the sidelines of the Asian Business Aviation Conference & Exhibition in Shanghai this week.
“The market has had an abundance of supply of late, so they were able to find good airplanes at good prices too which were not necessarily all that old and still under warranty. So that has certainly spurred the market.”
Planemakers such as General Dynamics Corp’s Gulfstream and Bombardier Inc. have reduced production in recent years as market demand contracted and they worked on releasing new models, resulting in longer waiting times for buyers.
“The market base has grown,” said David Dixon, president of business jet brokerage Jetcraft Asia.
“Some people who don’t want to spend $60-65 million on one of these, can spend $40 million instead. There’s a lot you can do with $20 million.”
Industry executives said however, that this shift was not negative for planemakers such as Gulfstream and Bombardier, as it was helping to firm prices by reducing an oversupply of used business jets on the global market.
Customers were also attracted by new models being pushed out by planemakers, brokers said.
At the show, Gulfstream showed off its newest G500 and G600 jets, while Bombardier displayed a mock-up of its upcoming Global 7000 long-range plane.
Gulfstream, which rivals Bombardier for the largest share of the Asia-Pacific private jet fleet, said it was confident in the market and that growing maturity of the region’s buyers was a plus for the US planemaker.
“There’s a realization now that these airplanes are really being used for business, they’re business tools,” said Gulfstream’s Senior Vice President of Worldwide Sales, Scott Neal.


Japan, Philippines meet to advance infrastructure plans

Updated 21 November 2018
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Japan, Philippines meet to advance infrastructure plans

  • Japanese loans so far dwarf those of China, whose pledges for projects are still largely ideas
  • Duterte has made a $180 billion infrastructure overhaul the centerpiece of his economic policy agenda, but people are looking for progress

MANILA: Philippine government ministers met with a top adviser of Japan’s prime minister on Wednesday, in a effort to move forward major infrastructure projects, just hours after a visit by the Chinese president pledging to do the same.
Philippine leader Rodrigo Duterte has made a $180 billion infrastructure overhaul the centerpiece of his economic policy agenda, but already into the third year of his presidency, he is under some pressure to show signs that his ambitious “Build, Build, Build” program is making much progress.
While attention has been focused largely on fanfare of Duterte’s “pivot” to China and his frequent praise for Beijing’s economic support, agreed Japanese loans so far dwarf those of China, which has pledged billions of dollars of financing and investment for projects that are still largely ideas.
Japan will finance 156.4 billion yen ($1.39 billion) for the construction of a subway in the capital Manila, rehabilitation of one of its troubled elevated rail lines, a new Manila bypass road and a new airport on Bohol, a tourist island.
The loans are part of an 1 trillion yen aid and investment package offered in 2017 by Japanese Prime Minister Shinzo Abe, whose special adviser, Hiroto Izumi, is in Manila to discuss revamping a railroad across the capital, a flood control system, and jointly operating an industrial zone, Finance assistant secretary Antonio Lambino told Reuters.
Edmund Tayao, a Manila-based political analyst, said the strong performance of the Philippine economy meant it had outgrown its infrastructure, and there was public pressure to modernize it.
“This is a long-delayed requisite,” he said. “When we speak of trains, mass transit systems, disappointment is an understatement. It is frustrating to compare it with neighbors.”
Expectations have been high since Duterte left China two years ago with $24 billion of investment and loans pledges, and there were hopes that this week’s visit of Chinese President Xi Jinping, the first in 13 years, would have seen firm commitments for those to advance.
However, of Tuesday’s 29 agreements, the only loan agreed was $232.5 million financing for a dam. Others counted as deals included two feasibility studies, memorandums of understanding for arrangements that already existed, or a handing over of certificates.
Michael Ricafort, an economist at RCBC bank in Manila, said that with the spotlight on foreign interest in the infrastructure program, the government was keen to show progress was being made.
“The government is now put on the spot. People are looking for the promises to be fulfilled.”