ASIAN SKY QUARTERLY THIRD QUARTER 2016

SPOTLIGHT BBJ & BBJ MAX

COUNTRY PROFILE JAPAN

INTERVIEWS DAVID LONGRIDGE PRESIDENT, BBJ

LEONA QI ASIA-PACIFIC OUTLOOK PRESIDENT OF NORTH ASIA VISTAJET METRICS & MOOD

CURRENT MARKET SUMMARIES THIRDQUARTER 2016 JETS & HELICOPTERS

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II | ASIAN SKY QUARTERLY — THIRD QUARTER 2016 PUBLISHER’S NOTE

This is the 4th edition of Asian Sky Quarterly which means we’ve been at this for Along with Moods & Intentions, all the regular sections – Economics and a year now. And yes while it is interesting to look back at changes throughout Market Dynamics -- are featured in this edition. the year in the somewhat dry economic data and market dynamics, the most interesting “look back” is the information found in ASG’s survey results. We’ve had the opportunity to yet again sit down with some notable personalities Fascinating, informative, surprising but also inexplicable at times – so it goes in the industry. VistaJet’s Leona Qi spoke about the charter company’s unique with people’s moods and intentions. The survey has been a great success. This business model and its plans to further expand. BBJ President, David Longridge quarter we had over 210 respondents, which was the highest to date and also a provided some insight on the upcoming additions to the BBJ family, as well as better geographical balance was achieved from across the Asia-Pacific region. BBJ’s success in the China market.

Examining the changes over the 12 months since Issue 1 of Asian Sky Quarterly, As Japan goes through some trying economic times, we found it important to it would seem the business aviation environment is getting worse: the mood take a closer look at this market for this edition’s country profile. ASG spoke to in the Asia-Pacific region has gotten more pessimistic, as more people are a number of industry leaders in Japan, who provided us with an inside look at feeling we are not yet at the low point of the current economic cycle; and, in all the industry and challenges it faces. likelihood a direct consequence of this pessimism, as 2016 has progressed, utilizations have continued to decrease with the highest slow down As always, Asian Sky Quarterly aims to offer a better understanding of the occurring in China. market. Thank you to our readers and supporters.

But then against this backdrop of ominous dark clouds and going against the grain, you have purchase intentions increasing quarter to quarter with respondents indicating this quarter the highest intent yet to purchase a new or pre-owned aircraft (28%/29%). Over the course of the year the percentage of “No / I’m not sure” has dropped 16% from 58% down to a new low of 43%. So on one hand increased pessimism but then on the other increased purchase intentions. The two are completely contradictory to one another. As said, there’s Sincerely, no explaining people’s moods and intentions sometimes. So, let’s ignore the Jeffrey C. Lowe bad mood and sell more airplanes. Managing Director, Asian Sky Group

SPECIAL THANKS TO OUR CONTRIBUTORS:

THIRD QUARTER 2016 — ASIAN SKY QUARTERLY | 1 CONTENTS

06 ECONOMICS 30 AIRCRAFT SPOTLIGHT Overview of the Asia-Pacific region’s current status and A comprehensive market performance analysis of the each specific country’s GDP in contrast with their business BBJ 1, BBJ 2, and BBJ 3, plus an introduction to the BBJ aircraft fleet growth. MAX 8 & 9.

08 MOOD & INTENTIONS 36 INTERVIEW: Survey results of the Asia-Pacific region’s mood on current DAVID LONGRIDGE, BBJ PRESIDENT economic status, aircraft utilization, purchase intentions, Speaking on BBJ’s success in Asia and the upcoming BBJ and influencing factors. Max series.

14 COUNTRY PROFILE 39 MARKET SUMMARY -- JETS Overview and examination of Japan’s business aviation A model-by-model market positioning and average days- industry, its fleet growth, and top operators. on-market analysis with featured pre-owned business jets.

22 MARKET DYNAMICS 55 MARKET SUMMARY -- HELICOPTERS An in-depth analysis of the changing pricing signals A model-by-model market positioning and average days-on- and momentum, given the continual market analysis with featured pre-owned civil helicopters. fluctuations of supply and demand.

29 INTERVIEW: LEONA QI, VISTAJET PRESIDENT OF NORTH ASIA Discussing the company’s plans for expansion, evolving customer service, and their new mobile app.

PUBLISHER Asian Sky Quarterly is published by Blu Inc Media (HK) Ltd, a or indirectly from any error or omission in compiling such Asian Sky Group subsidiary of SPH Magazines Pte Ltd. Copyright and trademark information. This report also uses third party information not registered by SPH Magazines Pte Ltd. All rights reserved. compiled by ASG. ASG is not responsible for such information PUBLISHING AGENT Content copyright © Blu Inc Media (HK) Ltd. and makes no representation about the accuracy, completeness Blu Inc Media (HK) or any other aspect of information contained. The information, The trademark and content may not be used or reproduced data, articles, or resources provided by any other parties do EDITORIAL without the permission of SPH Magazines Pte Ltd and Blu Inc not in any way signify that ASG endorses the same. Litalia Yoakum Media (HK) Ltd. © 2015 by Blu Inc Media (HK) Ltd.

CREATIVE DIRECTOR The materials and information provided by Asian Sky Group AIRCRAFT SALES INQUIRIES: Jennifer Spano Limited (“ASG”) in this report is for reference only. Any information we provide about how we may interpret the DESIGN data and market, or how certain issues may be addressed Blu Inc Media and ASG is provided generally without considering your specific circumstances. Such information should not be regarded as Asian Sky Group ADVERTISING ENQUIRIES a substitute for professional advice. Independent professional Suite 3905, Far East Finance Centre, [email protected] advice should be sought before taking action on any matters 16 Harcourt Road, Admiralty, Hong Kong [email protected] to which information provided in this report may be relevant. Tel: (852) 2235 9222 | Fax: (852) 2528 2766 [email protected] | www.asianskygroup.com TECHNICAL ASG shall not be liable for any losses, damage, costs or Colorprint Offset expenses howsoever caused, arising directly or indirectly from Address 地址 the use of or inability to use this report or use of or reliance 香港柴湾新业街8号八号商业广场18楼1808室 upon any information or material provided in this report or Tel 电话 +852 2896 7777 otherwise in connection with any representation, statement or Fax 传真 +852 2869 6666 information on or contained in this report. Blu Inc Media (HK) Ltd Website 网站 www.cpo.com.hk 2/F, Chinaweal Centre, 414-424 Jaffe Rd, ASG endeavors to ensure that the information contained in Wanchai, Hong Kong this report is accurate as at the date of publication, but does Tel: (852) 2165 2800 | Fax: (852) 2868 1799 not guarantee or warrant its accuracy or completeness, or www.bluincmedia.com accept any liability of whatever nature for any losses, damage, All editorial and circulation inquiries should be directed to costs or expenses howsoever caused, whether arising directly this address

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THIRD QUARTER 2016 — ASIAN SKY QUARTERLY | 3 ECONOMICS A still subdued external demand environment and fading policy pass-throughs are weighing on aggregate demand in Asia (ex-Japan). In the near-term, the growth trajectory will depend on the trend in external demand, and monetary and fiscal policy response, which will likely remain defensive in nature.

Source: Morgan Stanley

Australia Korea Domestic demand remained weak, as the unwinding of the Passenger sales contracted by 10% YOY, in July, after the resources boom continued to weigh on the economy. The expiration of tax benefits in June 2016, which has boosted current setup of increased political uncertainty post elections car sales in the preceding months. Retail sales had improved and the move by one of the rating agencies to move further in the month, which was largely down to a favorable to a negative ratings watch has arguably increased the base of comparison. After cutting policy rates in June, the constraints for a fiscal policy response. Bank of Korea has stayed on hold in its subsequent monetary policy meetings. The fiscal stance is likely to stay conservative, China due to concerns stemming from aging demographics, The combination of the fading impact of previous policy particularly the weak financial position of pension funds as stimulus and no new incremental policy support in recent well as financial stability risks. months has been weighing on the domestic trend. Fiscal spending and infrastructure investment growth have slowed down. Property investment growth, which had been Export growth remained in the negative territory for the 21st one of the key drivers to the mini-cycle recovery, has also consecutive month, which has displayed signs of sluggishness decelerated, as property sales growth has moderated due to compared to earlier in the year. Overall domestic demand is the implementation of tightening measures in select cities still subdued and car sales have continued to contract. Capital with strong growth in property prices. Policy makers will likely goods imports have bounced back into positive territory but implement defensive easing measures if growth continues to have slipped at the margin. slow, but the pace of policy support is likely to be slower in the second half of the year, as compared to before. Philippines The strong run of growth in domestic demand has continued Hong Kong almost unabated, as capital goods import growth stayed well All growth indicators in Hong Kong paint a picture of persistent above 50%, while passenger car sales continued to expand at weakness in aggregate demand. Retail sales, property a double-digit growth rate. Export growth remained negative transactions, loan growth, and exports growth are still in the for the 15th month and has slipped further at the margin. contractionary territory and in some cases for an extended period of time. Retail sales declined for the 16th consecutive Singapore month, a further indication of the broad-based, persistent Most growth indicators continued to contract on a YoY basis, slowdown in the Hong Kong economy. indicative of the cyclical and structural headwinds that the economy is facing. The sluggish global growth environment, coupled with headwinds to domestic demand, will continue to Within domestic demand, two wheeler sales remain at robust weigh on aggregate demand trends. levels and passenger car sales have rebounded in July. The pick-up in food prices over the last four months has meant Taiwan that the transition to lower inflation has been delayed. In the Consumption indicators including retail and auto sales have last three months, the government has also embarked on a moderated, as subdued wage earnings growth continues higher fiscal deficit. to weigh on consumer demand. Recently, the government announced plans to boost investment through the provision of infrastructure support. These measures are expected to Consumption-related indicators have shown some signs of improve the domestic investment environment while enticing stabilization recently, led by improving passenger car sales. participation from the private sector. The Bank of Indonesia has kept its policy rate unchanged after having cut it by a cumulative 100 basis points. No further rate Thailand cuts are expected from the central bank. Growth within private consumption has held up relatively well, largely attributed to durable goods posting positive Japan growth after a period of nearly three years. The economy has Weak wage growth, an uncertain global economic outlook experienced a repeated pick up in the last couple months, and a strong yen limited growth in Japan. Businesses and but durability of this improvement in growth trajectory will be consumers have been reluctant to spend, resulting in negative dependent on the policy response going forward, as well as GDP numbers in five quarters over the past three years. The external demand conditions. government has unveiled a 269B USD stimulus package, in an attempt to jumpstart the economy.

4 | ASIAN SKY QUARTERLY — THIRD QUARTER 2016 ECONOMICS FLEET AND GDP BY COUNTRY

Australia China Hong Kong India

Indonesia Japan Malaysia New Zealand

Papua New Philippines Singapore South Korea Guinea

Taiwan Thailand

GDP (B USD)* BUSINESS JET FLEET † CIVIL HELICOPTER FLEET †

11,393 308

2,086 1,779 6,040 5,495 4,643 2,305

1,709 1,515 1,464 835 1,142 765 181 1,095 965 751 755 145 145 746 141 718 114 538

74 64

446 424 56 53 361 52 319 49 47 341 316 253 308 216 304 37 37 195 200 255 197 35 163 236 161 229 208 157 200 29 134 23 121 145 22 111 113 17 16 15 13 77 8 43 39 3 3 32 31 22 10 1 1 2010 2 011 2012 2013 2014 2015 2016 2016 2010 2 011 2012 2013 2014 2015 2016 2016 2010 2 011 2012 2013 2014 2015 2016 2016 Q1 Q2 Q1 Q2 Q1 Q2

* 2014 & 2015 ASG data and historically adjusted using Jetnet fleet yearly increases. * GDP Source: Trading Economics.com

† Business jet and civil helicopter fleet data obtained from ASG’s Fleet Reports. For more information, please download the Fleet Reports from www.asianskygroup.com.

THIRD QUARTER 2016 — ASIAN SKY QUARTERLY | 5 MOOD & INTENTIONS: ASIA-PACIFIC REGION SURVEY 2016 Q3

In August 2016, 211 respondents participated in ASG’s survey on the TOP 5 RESPONDENT’S COUNTRIES mood and intentions of the current business aviation market – our highest response yet. Japan 13 (9%) Australia 48 (33%) Regions with the most respondents include: Singapore 17 (12%) • Greater China (33%, including Mainland China, Taiwan, Hong Kong and Macau)

• South & East Asia (26%, including Japan, Indonesia, Philippines, South Korea, Singapore, and Thailand)

• Oceania (25%, Australia, New Zealand and Papua New Guinea) Hong Kong 31 (22%) China 34 (24%) Respondents were also from Central Asia (2% India, and ), as well as those who live outside of the region but have associated business in the area (14% of total respondents). 33+24+22129+G RESPONDENT’S AIRCRAFT TYPE

RESPONDENT LOCATION BREAKDOWN

Helicopters 65 (30%) Central Asia 5 (2%)

Asia Pacific Business Associated 29 (14%) Greater China 70 (33%)

Business Jets or 152 (70%) + 70+30+G 210 WHAT IS OUR CURRENT ECONOMIC STATUS? RESPONDENTS (QUARTERLY COMPARISON) South & Oceania 53 (25%) East Asia 54 (26%) 2016 Q3 2016 Q2 2016 Q1 2015 Q4 MARKET33 MOOD FOR CURRENT ECONOMICS+2625142+G

Past Low Point At Low Point Pessimistic Optimistic (Will get worse) (Will get better) 26% 27% 24% 30% 22% 30% 25% 30% 2016 Q3 47% 53%

2016 Q2 46% 54%

45% 2016 Q1 48% 52% 48% 3046% +4525G 47% 2015 Q4 45% 55% 30+4822G Neutral 30Not Reached Low Point +4624G For this quarter (2016 Q3), 26% of the total respondents believe that our as ‘Pessimistic’,27 because respondents believe the economy will worsen.+4726G economy has passed its low point and will get better. This is up from Based on results from this quarter and previous quarters, we can see 22% in 2016 Q1. that the percentage of people holding a pessimistic outlook toward the economy has fluctuated minimally (45% to 48%) since 2015 Q4. This In the ‘Economic Status’ section, the answers ‘Past Low Point’ and ‘At quarter results are at 47%. Over 50% of the respondents steadily hold Low Point’ are described as ‘Optimistic’, as respondents believe that the an optimistic opinion and trust the economy will get better in the near economy will eventually get better. ‘Not Reached Low Point’ is described future.

6 | ASIAN SKY QUARTERLY — THIRD QUARTER 2016 MOOD & INTENTIONS: ASIA-PACIFIC REGION SURVEY 2016 Q3

WHAT IS OUR CURRENT ECONOMIC STATUS?

Optimistic Pessimistic

Greater China 54% 46%

South & East Asia 57% 43%

Central Asia 80% 20%

Oceania 43% 57%

Asia Pacific Business Associated 38% 62%

0% 50% 100%

When comparing this quarter’s opinions of economic status by region, respondents believe the economy has not reached its low point, which a high of 80% of the Central Asia respondents are optimistic about their is a significant 9% raise compared to last quarter. And for respondents future economy. Over 50% of respondents in Greater China, South & that have associated business in the Asia-Pacific region, they are also East Asia, are optimistic about their economic future. For Oceania pessimistic of the current economy and believe the economy will countries — in line with decreasing domestic demand in the Oceania worsen in the future. regions — the market seems to be more pessimistic now as 57% of the

HOW IS YOUR AIRCRAFT UTILIZATION COMPARED TO 12 MONTHS AGO?

2015 Q4 2016 Q1 2016 Q2 2016 Q3

37%

33%33% 28% 25% 26% 21% 19% 19% 20% 20% 19% 17% 14% 14% 14% 11% 12% 8% 10%

Down 20% or more Down but less than The same (0%) Up but less than Up by 20% and more (<-20%) 20% (-20-0%) 20% (0-20%) (>20%)

+0+0+0+044% +0+0+0+0 +0+0+0+0 +0+0+0+0 1914+014+0+017+0+0+0+0+0 +0+0 43%25+0+0 19+0 20+0+026+0+0+0+0+0 +0+0 37+0+0 33+0 33+0+028+0+0+0+0+0 +0+0 11+0+0 20+0 21+0+019+0+0+0+0+0 +0+0 8+0+0 14 1210 37%

33%34% 33%33% 34%33% 28% 29%

19%

Decreased+0+0+0+0+0+0+0+0 The+0+0+0+0 same +0+0+0+0 Increased Regarding utilization, respondents4433+034+0+0 were43+0+0+0 asked+0+0+0+0 ‘what+0+0+0+0+0+0 is+0+0+0+0 your +0+0 aircraft’s 37+0+0 33+0 33+0+0 28+0+0+0last+0+0 quarter.+0+0+0+0+0+0 +0+029%+0+0+0+0 of +0+0 the 19+0+0 respondents 34 3329 believe that their utilization has utilization compared to 12 months ago?’. 43% of respondents believed increased, which is 4% less compared to 2016 Q2. Aircraft utilization in their aircraft utilization is down, which is 9% higher compared to the the region has been steadily decreasing since 2016 Q1.

THIRD QUARTER 2016 — ASIAN SKY QUARTERLY | 7 MOOD & INTENTIONS: ASIA-PACIFIC REGION SURVEY 2016 Q3

GREATER CHINA’S AIRCRAFT UTILIZATION TREND ANALYSIS AIRCRAFT UTILIZATION: REGIONAL DIFFERENCES BALANCING OPTIMISTIC SIGNAL LINE An Optimistic-Pessimistic Signal Line has PESSIMISTIC Slightly Worsening Worsening continued been added to regional aircraft usage trend analyses for Greater China, Oceania and South & East Asia regions. An optimistic mood is Much Improved derived from more people indicating a ‘higher’ aircraft utilization than 12 months ago, and a Decreased The Same Increased Signal Line pessimistic mood is derived from more people

49% 47% indicating a ‘lower’ aircraft utilization than 12

39% 37% months ago. 35% 34% 32%32% 34% 27% 19% 16% Greater China Respondents believe that aircraft utilization is 2015 Q4 2016 Q1 2016 Q2 2016 Q3 +0+0+0+0 +0+0+0+0 +0+0+0+0 decreasing and the trend is worsening. Since 4935+016+0+0+0+0+0 +0+0 39 27+034+0+0+0+0+0 +0+0 37 32+032+0+0+0+0+0 +0+0 47 1934 2015 Q4, the total aircraft utilization has been decreasing, although there was a brief upturn in 2016 Q1. Eventually the total utilization trend has fallen into the pessimistic zone. OCEANIA’S AIRCRAFT UTILIZATION TREND ANALYSIS

Worsening BALANCING OPTIMISTIC SIGNAL LINE Improvedexpectation with total higher utilization Oceania PESSIMISTIC Aircraft utilization in the Oceania region (mostly Continued worsening with total utilization expectation lowered Australian respondents) began 2016 with a positive response and improved total aircraft

Decreased The Same Increased Signal Line utilization. However, after Q1 the signal line has dropped from the blue zone and fallen into the

46% pessimistic area. Total aircraft utilization has 41% 42% 38% been worsening and the trend sees continuing 35% 37% 30% 32% into 2016Q4. 25% 27% 24% 22%

2015 Q4 2016 Q1 2016 Q2 2016 Q3 South and East Asia 35+0+0+0+0+024+0+0+0+0+0+0+0 37+0+0+0+0+038+0+0+0+0+0+0+0 30+0+0+0+0+027+0+0+0+0+0+0+0 3222 South and East Asia – Since 2015 Q4 aircraft 41 25 42 46 utilization levels in South and East Asia have been rising and the signal line entered the blue zone briefly in 2016 Q2. After Q2 though, the aircraft utilization signal line exited the blue SOUTH AND EAST ASIA’S AIRCRAFT UTILIZATION TREND ANALYSIS zone, and like other area in Asia Pacific, a pessimistic mood towards aircraft utilization utilizationWorsening expectation with total lower reformed.

BALANCING OPTIMISTIC SIGNAL LINE Much Improved with total PESSIMISTIC utilization expectation higher Slightly Improved

Decreased The Same Increased Signal Line

50% 50%

43% 41% 37% 36% 32% 35% 28% 23% 18%

7% 201543+0+0+0+0+07+0+0 Q4+0+0+0+0+0 2016 32+0+0+0+0+018+0+0 Q1 +0+0+0+0+0 2016 36+0+0+0+0+041+0+0 Q2 +0+0+0+0+0 2016 2835 Q3 8 | ASIAN50 SKY QUARTERLY — THIRD50 QUARTER 2016 23 37 MOOD & INTENTIONS: ASIA-PACIFIC REGION SURVEY 2016 Q3

MANAGEMENT COMPANY SATISFACTION KEY FACTORS (OUTER IS BETTER)

Greater China Oceania South & East Asia APAC Overall Overall, aircraft owners are satisfied with the ‘operational safety’ (4.0 points, highest), and not satisfied with the ‘value for money’ (3.3 points, Customer Service lowest) from their management companies. The Oceania region has 4.5 the highest satisfaction level compared to other regions, particularly for 4.0 factors such as ‘Value for Money’, ‘Operational safety’ and ‘Customer 3.5 Service’. In Greater China, respondents are mostly satisfied with the Operational Operational Safety 3.0 Efficiency factors ‘Operational Safety’ and ‘Quality of Maintenance’, but not satisfied with ‘Value for Money’. For South & East Asia, ‘Operational Safety’ is the 2.5 most satisfying factor while the least satisfied factor is ‘Value for Money’. 2.0

Quality of Value for Maintenance Money (Price)

Quality of On-board Service

DO YOU OR YOUR CLIENT OWN OR CHARTER PRIMARY CHOICE WHEN SOURCING A PRIVATE AIRCRAFT? A CHARTER AIRCRAFT

Just Own (38%) Both Own and Charter (52%) Contact Operator (82%) Contact Broker (18%)

Just Charter (10%)

When asking ‘Do you52+ or your client own or charter a 10+38+Gprivate aircraft?’, 10% already own a jet, chartering18 a jet for travel is still a reasonable+82+G option. of the respondents would say they just charter an aircraft and 38% of When asking respondents what would be their source for chartering an the respondents say they just own a private aircraft. The remaining 52% aircraft, 82% would contact an operator first. would both own and charter an aircraft. For frequent flyers therefore who

OVERALL SATISFACTION BROKER VS OPERATOR (OUTER IS BETTER)

Operator Broker

Customer Service 4.5

4.0 Operation Operation When asking respondents to compare charter brokers and charter 3.5 Safety Efficiency operators, we found that the satisfaction level of a charter operator is 3.0 generally higher compared to a charter broker, except where the quality

2.5 of on-board service is concerned.

Quality of Value for Maintenance Money (Price)

Quality of On-board Service

THIRD QUARTER 2016 — ASIAN SKY QUARTERLY | 9 MOOD & INTENTIONS: ASIA-PACIFIC REGION SURVEY 2016 Q3

PURCHASE INTENTION 2015 Q4 - 2016 Q3

2015 Q4 2016 Q1 58% 58%

2016 Q2 48% 2016 Q3 43% This quarter, 28% of respondents are considering to buy a new aircraft, which is a 6% increase compared to last quarter. 29% of respondents are 30% 28% 29% considering to buy a pre-owned aircraft, which is 1% decrease compared 22% 22% 22% 20% 20% to last quarter.

Yes, a new aircraft Yes, a pre-owned No / I’m not sure 2020+0+0+0+0+0+0+022+0+0+028+0+0+0+0 +0 22+0 22+0+0+0+0+0+0+0aircraft 30+0+0+029+0+0+0+0 +0 58+0 58 4843

PURCHASE INTENTION - AIRCRAFT TYPE (OUTER IS PREFERRED)

Corporate

Piston Helicopter Large Jet When asking our respondents about their preferences when purchasing an aircraft, most of them would still choose a large jet (i.e. G550, Falcon 7X) first. On the helicopter side, respondents prefer to buy a single turbine engine helicopter (i.e. Robinson R66, Bell 206). Single Turbine Medium Jet Helicopter

Twin Turbine Small Jet Helicopter

Turboprop/ Piston Fixed Wing

PURCHASE DECISIONS - INFLUENCING FACTORS Influencing Factors on Purchase Decision (OUTER IS LIMITING) This quarter, we simplified the influencing factors into four major categories: Need, Business Activity, Aircraft Price and Public Image and Greater China Oceania South & East Asia APAC Overall found significant regional differences. In Greater China, what concerns aircraft buyers the most is public image because they worried that the government / public would still consider buying a jet as a display of wealth Need and social hierarchy, rather than an efficient means of transportation. Given this overriding concern it is noteworthy that according to the survey results Chinese buyers are the least sensitive to price when making a purchase decision. In Oceania, the actual need and the current aircraft price stands in the way when buyers are trying to make a purchase decision. However, buyers don’t need to worry about public image when Business Activity Public Image purchasing an aircraft. In South & East Asia, buyers are not sensitive of the current economic downturn and they indeed have the need for a private aircraft, but they do have a concern about their public image when purchasing an aircraft. Taking Japan’s survey results as an example, like China, the public image is the factor they are most concerned with, while they are also sensitive to aircraft prices, when making a purchase Aircraft Price decision.

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THIRD QUARTER 2016 — ASIAN SKY QUARTERLY | 11

GJCP 21073 - Asian Sky Quarterly - October 2016 2.indd 1 9/28/16 2:27 PM COUNTRY PROFILE JAPAN

Photo: Tokyo

12 | ASIAN SKY QUARTERLY — THIRD QUARTER 2016 COUNTRY PROFILE: JAPAN

Airport, known as Haneda Airport. The Japan Business Aviation CHANGE IS ON Association (JBAA), along with the Japan Civil Aviation Bureau (JCAB), and MLIT continue to make efforts toward creating a more business THE HORIZON aviation-friendly market. by Litalia Yoakum STATUS QUO

AS THE WORLD’S THIRD LARGEST ECONOMY, the ‘Land of the Rising While the country pushes to open its doors wider to the industry, data Sun’ aims to develop into a more welcoming country towards the from ASG’s Business Jet Fleet Report shows the market has grown over industry. Like the economy, expansion within certain the past few years. aspects of the industry is stagnant. However, the Pacific island nation is confident that change is on the horizon. There are currently 53 business jets based in Japan, with 64% (34) of these in the long range and light categories and over half manufactured Made up of over 6,000 islands — with four main islands: Hokkaido, within the last 10 years. This is an increase since 2014, when the Honshu, Shikoku, and Kyushu — Japan is considered a Great Power, with number of business jets based in the country was 44. a strong work ethic, inclination toward technology, and government- industry cooperation, allowing the country to develop into an advanced According to the JCAB, overall business aviation movements (arrivals society. and departures) in Japan are on the rise, with a 2.2% increase per year from 2010-2014. Internationally, movement is also increasing, with a In recent years, the country has been plagued with issues that have 3.3% annual increase. the potential to suppress the economy, if not managed. According to the Statistics Bureau of Japan, in 2015 the country’s population was “Business aircraft sales transactions in Japan are not increasing, but 127,110,000 — down by almost one million from five years earlier when there are stable demands — especially for ultra-long range business jets the population was 128,057,352. The shrinking population is attributed and very light jets,” says Vice President of Business Development to plummeting birthrates and an increasing amount of elderly citizens, Japan, Shingo Ueda. “Inbound activities from foreign countries to Japan with nearly one-third of the total population over 60 years old. are increasing drastically in recent years, thanks to the expansion of Haneda airport’s capability for business jets.” The country’s economy has shown modest growth, as well as suffering a number of recessions. Government stimulus pushed the economy Japan’s rotary market remains strong, with the third largest helicopter toward recovery, until the 2011 earthquake and subsequent tsunami market in the region — 765 in total. The country’s geographic that killed over 15,000 people. Japan has since attempted to get back on characteristics make it a natural place for helicopter operations. The track, albeit slowly, with the help of Prime Minister Shinzō Abe’s reform Japanese fleet is dominated by medium-sized, light twin, and piston package ‘Abenomics’. helicopters, at 77%, with the fleet involved primarily in multi-mission, EMS, law enforcement, and search and rescue (SAR) missions. The In early August, Japan’s Cabinet approved another economic stimulus heavy and medium helicopter segments’ popularity in the country is package — totaling 28.1 trillion yen (276 Billion USD) — in an effort to attributed to the operational needs of para-public needs, often used by once again improve the status of the economy. The package will focus prefectural authorities. on agriculture and tourism, as well as providing support for child and elder care to enable more women to work full-time. A large amount will “The para-public and civil helicopter markets are very well matured. The also be set aside for infrastructure projects to help promote tourism – number of JCAB-registered helicopters has remained stable for the last expanding ports for large cruise ships, upgrading airport facilities, and decade,” explains Japan Helicopter Society’s Toshiro Tamaki. speeding up high-speed train project.

Politics within the island remain challenging, as the Prime Minister Overall business calls for a debate on rewriting Japan’s pacifist constitution, including removing Article 9 —renouncing war — and creating a more conventional aviation movements and defensive army. The debate, supported by conservatives within the country, has caused alarm in neighboring countries, as well as in Japan are on the domestically. Emergence of a stronger military would undoubtedly impact the aviation industry, as an increased demand for pilots and rise, with a 2.2% aircraft would be necessary. increase per year A stronger military presence has added increased tension in relations with China. The two countries are currently working to dissolve territorial from 2010-2014. disputes over the Diaoyu Islands, in the East China Sea, as well as battling a long history of political disagreements. INFRASTRUCTURE CHALLENGES While the country works to get on track, the aviation sector strives to become more business aviation-friendly. The Ministry of Land, The JBAA, along with JCAB, and MLIT, have made considerable Infrastructure, Transport and Tourism (MLIT) has worked toward improvements toward creating a more accessible business aviation accommodating business jets, particularly at the Tokyo International environment.

THIRD QUARTER 2016 — ASIAN SKY QUARTERLY | 13 COUNTRY PROFILE: JAPAN

Created in 2013, MLIT set up the Council for International Development eight parking slots, or 16 slots for business aircraft, it’s still relatively small, of Aviation Infrastructure “to promote aviation infrastructure business especially when you look at the size of the city.” internationally through public-private collaborative initiative.” Paddock when onto explain that the government needs to understand the “Air transportation in Japan, including infrastructure, has been built benefit of business aviation, in order for more improvements to be made. mainly for commercial ,” says JBAA Managing Director & Secretary General, Makoto Tsunogae. “Most of the airports are designed and As minimal changes have come about in recent years, the number of operated for commercial , and in many aspects, regulations for support facilities has increased. Throughout Japan there are countless airlines are applied to charter operations of small airplanes, which create FBOs and ground handlers however, there are only a few full-serviced a high cost structure for Japanese operators. In 2011, the government FBOs including Kobe Air Center - HirataGakuen at the Kobe Airport and realized that business aviation is indispensable to draw the world Fuji Dream Aviation Engineering Co., Ltd at Mt. Fuji Shizuoka Airport. economy into Japan. Since then, small but steady improvements have These offer arrival and departure clearances — customs, immigration, been made.” and quarantine (CIQ), as well as ground handling services. Although Kobe provides full services, opening hours are limited and arrangements A great part of increased business aviation movement can be attributed must be made weeks ahead of arrival. to the improved accessibility at the Haneda airport — which opened the airport up to more parking spots and a dedicated traffic lane, in As Japan moves closer to the Rugby World Cup in 2019 and the September 2014. During this same year, 70% of foreign visitors to Japan 2020 Summer Olympic/Paralympic Games, the JCAB and JBAA will came through one of three major airports: Narita, Kansai, and Haneda. continue to create initiatives to further facilitate the business aviation environment in Japan. Again in April 2016, the increased accessibility toward business aviation aircraft, at the Haneda airport, was approved by the JCAB. The arrival and departure slots for business jets doubled from eight to 16 slots, per In 2014, 70% of foreign day. The Narita International Airport has also become more accessible toward business jets, after opening Premier Gate —Tokyo’s first dedicated visitors to Japan came business aviation terminal — in 2012. Narita International Airport, Chubu Centrair International Airport, and Nagoya International Airport also offer through one of three business aviation terminals. major airports: Narita, Although changes are being made, there is still a lot of work to be done, as Jet Aviation’s Senior VP & General Manager U.S. Aircraft Services, David Kansai, and Haneda. Paddock explains: “The overall market is restrictive and doesn’t allow for natural growth for business aircraft. They are prioritizing available space at airports for passenger airlines and cargo airlines and not general EDUCATION aviation.” Since business aviation’s beginnings in Japan, the country’s values have In reference to the doubling of slots at the Haneda airport, “For an airport led many to view the use of a private jet as an ‘obvious display of power the size of Haneda — in the city the size of Tokyo — whether you add and wealth’, according to Aviation Consultant Specialist, Jiro Kamimura.

Photo: Tokyo

14 | ASIAN SKY QUARTERLY — THIRD QUARTER 2016 COUNTRY PROFILE: JAPAN

Business Jet Fleet — Size Category Breakdown Organizations including the JBAA were founded on the principle of ‘popularizing the use of business aviation in Japan’. JBAA has made great strides in its effort to advocate for the industry and corresponding benefits. Very Light 6 (11 % ) Corp. Airliner 2 (4%)

TOURISM

Long Range 14 (26%) An increased interest in tourism generally brings a boost in general aviation activity and operations. 2015 brought the highest number of international visitors — 18 million — to Japan, according to the Japan National Tourism Organization (JNTO). The number of luxury travelers 53 increased, as well, with a 35% increase from the previous year.

Large 6 (11 % ) The country is particularly sought after by wealthy Chinese travelers, aged 18-36. The Chinese Luxury Traveler 2016 — a luxury travel report released by Marriot International, in partnership with Hurun Research Light 20 (38%) Mid-Size 5 (10%) Institute — listed Japan as the most “memorable destination for Generation Y luxury travelers in 2015” and their “most visited destination 4+26111038+G over Chinese New Year 2016”. Increased travel to Japan is attributed to the country’s proximity to China, shopping and dining experiences, and modern, sophisticated culture. Business Jet Fleet — OEM Breakdown Japan ranks ninth globally (out of 141 countries) and second in Asia Pacific on the Travel & Tourism Competitiveness Index. The country’s Airbus 1 (2%) Boeing 1 (2%) success within the Index is credited toward a number of factors including culture and heritage, efficient ground and air transport, and Dassault 2 (4%) information and communications technology (ICT) readiness. Hawker 3 (6%) Bombardier 7 (13%) Although the country is seemingly prepared to handle a continued influx of visitors, future events in 2019 and 2020 provide Japan with additional opportunities to showcase accessibility for tourists. 53 GOVERNMENT USE 27 (51%) As Japan positions itself to strengthen its military power, the country becomes only the fourth nation to test fly its own stealth jet — joining the Gulfstream 12 (22%) US, Russia, and China. Although the jet — built with reduced invisibility to infrared sensors and supersonic speed capability — is being considered as the basis for a new fighter jet to replace the F-2, a decision will not be 51+2213642+G made until the end of March 2019. The issue is not only with cultural customs but with educating the market on the significance of business aviation and its potential to support the economy. Helicopter Fleet — Mission Breakdown While the use of a private aircraft is often seen as a luxury, it is important to educate the market on the significance it can bring to an economy. For corporations, an aircraft can be utilized as a business tool to operate Flight Training 30 ( ) Multi-Mission 313 (41%) efficiently and maximize productivity. 4%

Private 45 (6%) “Considering the number of multi-national companies in Japan, there should be huge demand for business aircraft in Japan,” says Ueda. SAR 63 (8%) “Once the market realizes the benefit of business aviation and some major Japanese corporations start buying business jets, then Japan Law Enforcement market could be a potentially huge market for business aviation.” 102 (13%)

According to the International Civil Aviation Organization (ICAO), 765 “Business aviation provides benefits for every party involved in the value chain of air transport. Any entity in the value chain of the business aviation industry, such as airports, major operators, business aircraft EMS 104 (14%) manufacturers, business flight pilots, major service providers and business aviation users, can benefit from growing business aviation Corporate 108 (14%) traffic and its wider effect on a region.” 41+1413864+G THIRD QUARTER 2016 — ASIAN SKY QUARTERLY | 15 COUNTRY PROFILE: JAPAN

Business Jets — Top Operators by OEM

5+05 +4+04 +4+04 +3+03 +3+03 +33 Total Service Asia Jet Jet Aviation Jet Japan - Civil Coast Guard Nakanihon Air Nakanihon Transportation Gov’t of Japan - Gov’t Aviation Bureau Aviation Ministry of Land &

ACJ318 1 1 BBJ 1 1 Global 6000 2 2 Global Express 2 2 Citation CJ4 3 3 Citation Ultra/V 3 3 Falcon 900/C/DX 2 2 2 2 4 Gulfstream IV/IV-SP 2 2 2 2 Total 5 4 4 3 3 3 22 % of Fleet 9% 8% 8% 6% 6% 6% 43%

Civil Helicopters — Top Operators by OEM

75 62 52 48 42 27 75+ 62+52+ 48+ 42+2427+ 18 24+17 18+17+1616 Total Agency Services Aero Asahi Aero Departments Nakanihon Air Nakanihon Hirata Gakuen Nishi Nihon Air National Police Toho Air Service Toho Akagi Helicopter Akagi Prefectural Police Prefectural Japan Coast Guard All Nippon Helicopter

Airbus Helicopters 40 46 21 8 11 25 11 12 14 13 201 Bell Helicopter 20 12 16 9 7 9 6 79 Kaman 3 3 Kamov 1 1 Leonardo 1 14 17 24 3 59 MD 9 3 12 Robinson 3 3 Sikorsky 6 1 14 2 23 Total 75 62 52 48 42 27 24 18 17 16 381 % of Fleet 10% 8% 7% 6% 6% 4% 3% 2% 2% 2% 50%

16 | ASIAN SKY QUARTERLY — THIRD QUARTER 2016 COUNTRY PROFILE: JAPAN

The testing comes in light of the proposed amendment to the country’s Helicopter Fleet — Size Category Breakdown constitution, seeking to remove the war-renouncing article, which reads: “the Japanese people forever renounce war as a sovereign right of the nation and the threat or use of force as means of settling international disputes.” The article would be replaced with one that calls for increased Piston 147 (19%) Heavy 23 (3%) military support.

Historically, general aviation has played a significant role in Japan. Government entities, including Prefectural Police Departments, Fire Medium 281 (37%) Departments, and the Japan Coast Guard utilize aircraft. Of the 765 helicopters within the Japan fleet, 76% are used in multi-mission, EMS, law enforcement, and search and rescue (SAR) missions. Of the 53 business jets within Japan, 46 are owned by government entities, with 765 the remaining amount privately-owned. Single 156 (20%)

For general aviation, a change to the constitution could have a tremendous effect on the industry. An increased military presence, will Light Twin 158 (21%) likely bring a sudden need for pilots. This coming at a time when Asia faces a dire shortage of pilots and Japan, specifically, faces the added challenge of a shrinking population. 3+37212019+G Voting on the constitutional changes will require a two-thirds majority Helicopter Fleet — OEM Breakdown in both houses of parliament, as well as a majority of votes in a public referendum. Should Abe’s proposal go through, this will be the first amendment to the constitution since its adoption after Japan’s defeat in World War II. MD 15 (2%) Others 10 (1%)

Sikorsky 30 (4%) Airbus Helicopters ROTARY MARKET Leonardo 88 (12%) 345 (45%) With the third largest helicopter fleet in the region, the archipelago of Japan has proven to have a more developed helicopter market than the business jet segment. The 765 helicopters are used most often for prefectural authorities including Prefectural Police Departments, the Japan Coast Guard, and the National Police Agency. 765 Bell Helicopter “Civil and para public helicopter markets are well matured, so the 129 (17%) number of registration in JCAB has remained stable for the last decade,” Robinson 148 (19%) says Japan Helicopter Society’s Toshiro Tamaki. 45+191712421+G

Photo: japan-guide

THIRD QUARTER 2016 — ASIAN SKY QUARTERLY | 17 COUNTRY PROFILE: JAPAN

Although the fleet is one of the largest in the Asia-Pacific region, there is still growth that can be done.

“The extension of operation/mission hours is one possibility to expanding the helicopter market,” continues Tamaki, who believes the use of instrument meteorological conditions (IMC) operations are needed to help expand the market.

IMC is a flight category describing the weather conditions that require pilots to fly using the primary assistance of an instrument, under instrument flight rules (IFR). The typical conditions for pilots is flying under visual meteorological conditions (VMC), which are conditions in which there is sufficient visibility to fly the aircraft.

The use of an instrument to aid in less than ideal weather conditions is now being planned by JCAB and its Collaborative Actions for Renovation of Air Traffic Systems (CARATS) initiative. The initiative is aimed at enhancing aircraft safety and improving operation efficiency, as well as combating increasing airspace traffic.

MADE IN JAPAN

In a time when automobile and consumer electronics manufacturers are moving out of one of the leading car making countries in the world, Japan is now seeking to save face with the aerospace industry.

“The Japanese manufacturing industries will move out of Japan, where cheaper manufacturing costs are available,” says Aviation Consultant Specialist, Jiro Kamimura. “This is inevitable in any industrially matured nation.”

partnership with Boeing, of which the country was a major supplier for The challenge now is to the Boeing 787. prove that the country The challenge now is to prove that the country can successfully enter into the aerospace industry, despite its rocky history. can successfully enter into the aerospace FUTURE OF JAPAN BUSINESS AVIATION Although the business aviation environment in Japan has progressed, industry. there are still a number of improvements to be made.

“The most important issue on general aviation in Japan is that it is not well-recognized,” says Universal Aviation Japan Representative Director, As the country strives to keep manufacturing jobs at home, The Hiroshi Higashiyama. “An understanding by the public is important. Mitsubishi (MRJ) — built by Mitsubishi Aircraft Corporation If the market matures and develops, then the market should grow in — is at the forefront of Japan’s entry into the industry. The nation’s first the next 5-10 years. The key factors are the Rugby World Cup in 2019 locally built passenger jet in 50 years, since the YS-11 made and the Olympic/Paralympic Games in 2020. These big events are the by Nihon Aircraft Manufacturing Corp., is attempting to break through a final straw to grow the market. However, we’ll need to [continue] to plot market dominated by and Bombardier. strategies even after these events for even further development.”

Although the jet has been overrun by costs, delays and aborted tests, “Competitive international environment, economic growth of developing 407 orders —including options and purchase rights — have already been countries, and a change in business decision making processes in Japan received for the new aircraft. will bring steady growth to the business aviation market,” says JBAA’s Makoto Tsunogae. “However, most or part [of the fleet] will be overtaken A ban on aircraft production (until 1952), during the occupation of by foreign-registered aircraft, unless cost structure of ownership and Japan after World War II, kept Japan’s aerospace industry from taking operations are changed.” off. This was a period that coincided with rapid growth within the industry. The country still became involved with production of military The world will now wait and see what Japan has to offer once the Rugby aircraft and subcontracting work, however was unsuccessful with its World Cup and Olympic/Paralympic Games come around. For now, the own endeavors. One of Japan’s strongest ties to the industry is its right steps are being taken to improve the industry.

18 | ASIAN SKY QUARTERLY — THIRD QUARTER 2016 THIRD QUARTER 2016 — ASIAN SKY QUARTERLY | 19 UNDERSTANDING MARKET DYNAMICS

Throughout the following pages, we have attempted to create a structure to analyse the market dynamics for the most prevalent business jets and civil helicopters models in the Asia Pacific region. We have analysed the most popular 26 business jets and 16 civil helicopters operated in this region, with the hopes of tangibly understanding whether timing is appropriate for potential buyers and aircraft owners to purchase or sell an aircraft.

MARKET INVENTORY OFFER VS. DEMAND INDICATORS This section describes the amount of aircraft (in USD) currently for sale This section shows whether some aircraft models are in demand (no. on the market and shows the trend and activity level of such market. of transactions) in contrast with current offer levels (how many are for sale). It also shows for how long each model has been available on the The Inventory Value Line represents the total number of aircraft (chosen market for sale on average. Those measurements can provide essential models) for sale in US dollars, being the number of aircraft currently for insights into the marketability of certain models versus others. sale on the market multiplied by their average asking price. MARKET POSITIONING BY MODEL The Trend Line represents the difference between the 12 and 6 months This chart presents the aggregates of four market indicators – relative moving averages of the Inventory Value line, indicating whether the supply, demand, attractiveness and market momentum – for each market momentum is performing better or worse. A rising Trend aircraft model analyzed in this report, in an attempt to qualify whether Line indicates that the market momentum is moving towards a it is currently positioned in a buyer’s market, seller’s market or in a seller’s market, while a declining Trend Line indicates that the market balanced offer & demand situation. The positioning of the last quarter momentum is moving towards a buyer’s market. is also shown to highlight the change and direction of any movement.

The Signal Line measures the average market trend over a period of 3 months. The signal line crossing above the trend lineindicates a possible recovery, while crossing below indicates a possible decline.

20 | ASIAN SKY QUARTERLY — THIRD QUARTER 2016 MARKET DYNAMICS

PRE-OWNED BUSINESS JETS MARKET INVENTORY This section shows market value and trend indicators for the worldwide fleet of 26 popular business jet models as covered in this report.

INVENTORY VALUE (USD)

$8,244M APRIL 2016

$7,880M

$5,842 M

MARKET TREND

DECLINE

BUYER’S MARKET

RECOVERY

RECOVERY

35 AIRCRAFT SOLD 31 26 27 26 26 25 24 24 22 21 20 21 21 20 18 18 17 15 15 16 12 13 11

Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug 2014 2015 2016

Inventory Value In the 24 months up to August 2016, the value of the pre- trend still shows currently “Buyer’s Market” characteristics owned business jets’ inventory for sale grew from $5.8 where prices are continuing to be driven lower and buyers Trend Line billion to $7.9 billion USD – an increase of 35% – and now have many options to choose from. Signal Line represents 10.2% of the entire fleet (chosen models) in numbers, suggesting a relative abundance of aircraft for There was an average of 20.8 pre-owned business jets sale. sold per month over the last 12 months, decreasing from an average of 21.9 per month last quarter. With average Since February 2016, the value of the pre-owned jet inven- asking prices falling at a higher rate (-8.5% per year) versus tory for sale has stabilised, due to a combination of lowering last quarter (-6.5% per year) and availability having stabi- asking prices and a recent halt in additional aircraft on offer. lised around 390 jets for sale since last April, the business July and August 2016 were the only 2 consecutive months jet market in the coming quarters is now looking to return in 2 years where both aircraft prices and availability have towards a healthier position where supply and demand are decreased. With the average days on market now being balanced. near its highest in years (311 days), the business jet market Source: JETNET & ASG THIRD QUARTER 2016 — ASIAN SKY QUARTERLY | 21 MARKET DYNAMICS

OFFER VS. DEMAND INDICATORS BUSINESS JETS 2016 Q3

OFFER VS. DEMAND RATIO AVG. DAYS ON MARKET Pre-owned Sales - Last 12 Months Q3 2016

OFFER HIGHER OFFER LOWER % OF FLEET BUSINESS JET SHORTER TIME LONGER TIME THAN DEMAND THAN DEMAND FOR SALE MODEL TO SELL TO SELL

NO TRANSACTION 20.0% ACJ318

9.9% ACJ319 AIRBUS

10.8% BBJ

9.5% BBJ 2 BOEING

11.3% CL604

10.8% CL605

14.9% CL850

10.8% GL5000 BOMBARDIER

6.0% GL6000

17.8% L600

17.8% L650 EMBRAER

14.8% L1000 AVERAGE

9.2% F2000LX

NO TRANSACTION 1.9% F2000LXS

NO TRANSACTION 3.2% F2000S AVERAGE

12.0% F7X

NO TRANSACTION 8.3% F900DX DASSAULT 9.3% F900EX

9.2% F900EXe

18.4% F900LX

15.9% G200

4.2% G280

7.8% G450

6.2% G550 GULFSTREAM 8.3% G650

7.4% G650ER

350% 300% 250% 200% 150% 100% 50% 0 10.2% Avg. 0 200 400 600 800

Avg. AC for sale / Total sold in last 12 months Average Days For Sale on Market

The pre-owned business jet inventory value level since February 2016, the slightly increased from 312 to 326 days and is continuing to increase. market is now heading towards a healthier and balanced offer/demand Taking longer than average to sell are the ACJ318, BBJ, BBJ 2, CL850, position. However, some models have significantly reduced their market Legacy 600, Falcon 2000S and F900EX/Easy models. Taking a lower- offer/demand ratio (price inflation pressure) – such as the ACJ319, than-average time to sell are the ACJ319, Challenger 604/605, Global Falcon 7X, F900EX, G200 and G650. Conversely Increasing their market 5000 & 6000, Legacy 650, Lineage 1000, Falcon LX/LXS, 7X, 900DX/LX, offer/demand ratio (price deflation pressure) were the CL604, Global 6000 G200/280 and G450/550/650/ER. and Legacy 600/650, indicating either an increase in offer, a reduction in demand, or both. The average days for sale on market for the fleet has

Source: JETNET & ASG 22 | ASIAN SKY QUARTERLY — THIRD QUARTER 2016 MARKET DYNAMICS

MARKET POSITIONING BY MODEL BUSINESS JETS

SELLER’S MARKET BUYER’S MARKET More buyers than sellers Balanced More sellers than buyers or Higher prices to sell Offer & Demand or Lower prices to buy or More transactions or Fewer transactions

ACJ318

ACJ319 Market Position 2016 Q2 AIRBUS

BBJ Market Position 2016 Q3

BBJ 2 BOEING

CL604

CL605

CL850

GL5000 BOMBARDIER GL6000

L600

L650

EMBRAER L1000

F2000LX

F2000LXS

F2000S

F7X

F900DX DASSAULT F900EX

F900EXe

F900LX

G200

G280

G450

G550

GULFSTREAM G650

G650ER

The graphs above provide a visual representation of the ‘market every model is reaching towards a balanced position, except for the position’ of each aircraft model analysed in this report relative to each ACJ318 which still trails behind. From a buyer’s perspective therefore other and to what could be considered as a balanced market demand now is a timely opportunity to buy as the bottom of the market appears and offer status according to four market indicators: the percentage in sight and sellers are finally accepting lower prices. From a seller’s of aircraft for sale relative to its fleet size, the number of aircraft sold perspective, if the pre-owned business jet market reaches an offer- relative to the average number for sale, the average days for sale on demand equilibrium within the following 1 or 2 quarters, asking prices the market relative to all models’ average days on market, and the may finally halt their descent and represent the end of the urgency to momentum of the marketplace, whether it is moving towards a buyer’s sell. or seller’s market as a whole as portrayed earlier.

Interestingly, most business jet models have continued to approach a healthier and more balanced market offer/demand position. Nearly

Source: JETNET & ASG THIRD QUARTER 2016 — ASIAN SKY QUARTERLY | 23 MARKET DYNAMICS

PRE-OWNED CIVIL HELICOPTERS MARKET INVENTORY This section shows market value and trend indicators for the worldwide fleet of 16 popular helicopter models as covered in this report.

INVENTORY VALUE (USD) $1,158 M 2016 Q2 OFFER VS. DEMAND RATIO

$1,087 M

$683 M

$648 M

DECLINE MARKET TREND

BUYER’S MARKET DECLINE

AIRCRAFT SOLD 15 11 12 10 9 8 8 8 8 7 7 7 6 6 5 5 5 5 3 4 4 4 2 2

Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug 2014 2015 2016

Inventory Value In the 24 months up to August 2016, the value of the civil high at 493 days. The number of aircraft sold per month has helicopter pre-owned inventory for sale has increased by remained in line with the 12-month average of 6 helicopters Trend Line 59%, from 683M to 1087M USD, exhibiting the effects of a per month. Signal Line sudden change in December 2014 from a relatively stable situation before that time. With now 4.7% of the civil With the uncertainty of leasing helicopter fleets potentially helicopter fleet for sale (16 chosen models), this market becoming available on the market, it is still too early to remains significantly depressed despite a recent stabilisation predict whether the market will remain in a Buyer’s Market at around 200 aircraft for sale. Average asking prices have position, or if it will continue towards a balanced supply/offer remained strong since April 2016 (+6.4% annual average) situation. despite average days for sale on the market breaking a new

Source: JETNET & ASG 24 | ASIAN SKY QUARTERLY — THIRD QUARTER 2016 MARKET DYNAMICS

OFFER VS. DEMAND INDICATORS CIVIL HELICOPTERS 2016 Q3

OFFER VS. DEMAND RATIO AVG. DAYS ON MARKET Pre-owned Sales - Last 12 Months Q3 2016

OFFER HIGHER OFFER LOWER % OF FLEET HELICOPTER SHORTER TIME LONGER TIME THAN DEMAND THAN DEMAND FOR SALE MODEL TO SELL TO SELL

16.7% S76C+

7.5% S76C++ SIKORSKY

1.4% S92A

2.9% BELL 412EP

5.9% BELL 412HP

3.0% BELL HELICOPTER BELL 429

14.5% AW109E PWR AVERAGE

2.8% AW109SP GN AVERAGE LEONARDO 2.4% AW139

9.0% AS332L1

2.9% H225

5.8% EC135P2

2.1% EC135T2

1.4% EC145 AIRBUS HELICOPTERS

26.7% EC155B NO TRANSACTION

7.1% H155

350% 300% 250% 200% 150% 100% 50% 0 4.7% Avg. 0 100 200 300 400 500 600 700 800

Avg. AC for sale / Total sold in last 12 months Average Days For Sale on Market

The pre-owned civil helicopter inventory value for sale is indicating HP, AW109E PWR, AS332L1, EC155B and H155 Will need to adjust their signs of a potential course reversal with the average offer-to-demand price downwards to complete a transaction. With 4.7% of the fleet for ratio coming down from 328% to 276%. Although prices themselves sale, a low but steady level of transactions from a stable inventory, have yet to come down and transactions are flat and relatively stable. little movement in prices and aircraft staying longer on the market, it is The S92A, AW109SP GN and EC135T2 models all currently enjoy more still unclear whether the civil helicopter market will remain in a Buyer’s demand than number of aircraft on offer, however with average days for Market position, or improve towards easier marketability. sale now having increased from 467 to 502 days for the fleet, sellers of lower demand models such as the Sikorsky S76C+/++, the Bell 412EP/

Source: JETNET & ASG THIRD QUARTER 2016 — ASIAN SKY QUARTERLY | 25 MARKET DYNAMICS

MARKET POSITIONING BY MODEL CIVIL HELICOPTERS

SELLER’S MARKET BUYER’S MARKET More buyers than sellers Balanced More sellers than buyers or Higher prices to sell Offer & Demand or Lower prices to buy or More transactions or Fewer transactions

S76C+ Market Position 2016 Q2

Market Position 2016 Q3 S76C++ SIKORSKY S92A

BELL 412EP

BELL 412HP

BELL 429 BELL HELICOPTER

AW109E PWR

AW109SP GN

LEONARDO AW139

AS332L1

H225

EC135P2

EC135T2

EC145 AIRBUS HELICOPTERS

EC155B

H155

Uncharacteristically, helicopter average asking prices have not seen their position shift from a clear Buyer’s Market position towards a depreciated as one would have expected following a sudden increase more balanced market territory. The S76C+, AW109E PWR, AS332L1, of availability on the market, and sales have continued at the same EC155B and H155 all remain in a Buyer’s Market situation, with the average levels of 6 to 8 sales per month, although taking a much longer S92A, Bell 412EP/429, AW109SP GN, EC135P2/T2 and EC145 are time to conclude. As the number of helicopters offered on the market exhibiting some neutral market offer-demand characteristics. has stabilised around 200 since March 2016, most models have now

Source: JETNET & ASG 26 | ASIAN SKY QUARTERLY — THIRD QUARTER 2016 MARKET POSITIONING BY MODEL EXPANDING THE MARKET INTERVIEW WITH LEONA QI VISTAJET PRESIDENT OF NORTH ASIA Interview by Litalia Yoakum

aunched in 2004, VistaJet has enjoyed the accolade of The subscription model offers a compelling proposition for the being deemed one of the world’s fastest growing private region’s growing number of high-net-worth-individuals, corporations, L aviation companies – offering private jet services through its and entrepreneurs who value the time saving benefits of private flight Flight Solutions Program and On-Demand solutions. The business without asset risk. model eliminates operational and residual value risks, factors often accompanying aircraft ownership. With the number of flights to Asia Qi stresses the importance of tailor-made experiences onboard a increasing by 62% and number of passengers to the region increasing by VistaJet flight for maximum comfort and a home-like feeling. As for 57% year-on-year, VistaJet is now looking to capitalize on this growing particular customer service within the Asia-Pacific region, VistaJet will market. continue to go above and beyond. “From the most basic, we have people that speak the languages of our clients -- from our customer service “We have a very unique business model,” says VistaJet President of team to cabin hostesses on board. Catering is also something we take North Asia, Leona Qi. “We own our entire fleet and the customer only into consideration.” These are just a few of the smaller details that the really pays for the hours they’re in the air. Owning an aircraft comes with company takes into consideration when preparing a flight for Asian risks; VistaJet’s model eliminates that.” clients.

With over 65 aircraft to the company name, the VistaJet fleet is capable VistaJet joined the tech realm in March 2016, launching a VistaJet of taking clients almost anywhere they desire. “As long as it’s safe and mobile application to make booking easy and convenient. “Customers the runway is long enough, we’ll fly our customers there,” explains Qi. can book a flight, along with other details on line,” explains Qi. “In our business, it’s important to have actual humans reply to customers, but in The fleet, made up of large-cabin Bombardier Global and Challenger this day and age we do find a lot of customers appreciate the flexibility private jets, has an average age of just 18 months. Clients registered for and convenience of a mobile app and online services.” the Flight Solutions Program have 24/7 guaranteed access to the fleet, anywhere in the world. With continued unmatched customer service and infinite accessibility to support services, VistaJet now looks to the future. “Our slogan is Although the business model may suggest an inclination for programs ‘Think Global’. We want to provide our clients with global and consistent over ownership, Qi affirms that VistaJet is not exclusively for those service. We are committed to offering the best.” that don’t own an aircraft. “A lot of our customers are aircraft owners themselves, using VistaJet for supplemental hours or for longer The company’s commitment to its service is to continue to expand past distance. Our fleet is super medium to long range. If a client owns an the 90% of the globe it has already covered, as well as focusing on less- aircraft in Asia with a maximum range of six hours and they want to go established markets. “The company launched in 2004 and we’ve come to the US or Europe, then they’d be more than happy to use an aircraft a long way over the last decade. In 2006, VistaJet traveled to about through VistaJet.” 233 destinations carrying less than 5,000 passengers. In 2015, we have landed in close to 15,000 airports and about 37,000 passengers Currently, VistaJet covers about 90% of the globe with more established worldwide have traveled with us. Our growth has been quite steep over markets in Europe, the Middle East, and Russia. With flight traffic the past few years.” Asia is now a priority market for the company. constantly increasing in Asia, the company is now focusing more attention on this market. “At VistaJet, we’re very excited about the Asia market – “VistaJet has a lot of entrepreneurial spirit,” says Qi. “We’ve done a lot especially China,” says Qi. “Looking at the movements [in the region], we of growing and will continue to do so. In terms of business aviation, the believe this market will continue to grow over the coming years.” best and the most competitive will continue to grow – and VistaJet is one of the best and most competitive.” “VistaJet is seeing some changes in the market, in terms of what businesses are demanding. We see a lot of businesses and individuals www..com moving away from private ownership, because of the need for complete flexibility. This is where VistaJet can step in.”

THIRD QUARTER 2016 — ASIAN SKY QUARTERLY | 27 AIRCRAFT SPOTLIGHT BOEING BBJ

Launched as a joint venture between Boeing and General Electric in 1996, the (BBJ) was created in response to the demand for an airliner-sized business jet. Based on the 737 airliner — one of the best-selling commercial aircraft of all time — the BBJ is specially modified to provide for the private jet sector. The BBJ prides itself on a luxury configuration that comfortably fits up to 60 passengers and its long-range is often deemed a main selling point. AIRCRAFT SPOTLIGHT

The first and most popular aircraft of the series, the BBJ is based on Asking prices have slowly depreciated over the last year and a half. the 737-700 with the wing from the 737-800, which is very In September of 2015, the average asking price was 46M USD and in practical combination for corporate travelers. The BBJ offers plenty October of 2014, the average asking price was 50M USD. The biggest of space with a typical configuration consisting of four cabin areas: a factor driving asking prices tends to be which completion facility did boardroom, a lounge, a VIP bedroom, and business office. This aircraft the cabin outfitting. is also a popular choice among government entities and corporations, which generally require a higher density configuration. Alternatively, When examining the overall fleet, there are 157 worldwide in operation privately owned BBJs typically have a more luxurious configuration, with the majority of these based in the US, followed by Saudi Arabia, designed to carry only around 20 passengers. The ability to customize the United Arab Emirates, and China. Of those available for sale, six are each BBJ is additionally a major selling point for the aircraft. The cabin based in the Middle East. volume for this aircraft is 5,396 cubic feet and can fly passengers up to 6,235 nautical-miles, including nine auxiliary fuel tanks. Overall, the demand for large-cabin, long-range business jets is down from previous years, a decline that can be attributed to dropping prices After the worldwide success of the BBJ came the BBJ 2, offering even in the oil industry and the strengthening of the US dollar against other more cabin space than the BBJ, with a 21% increase in cabin volume. currencies. While the market is down across the board, pre-owned BBJs The airframe of the BBJ 2 is based off the -800 and it also still have increasing interest, particularly in greater China, where large- offers an increased payload capability. It has the capacity for up to cabin, long-range jets are favored. seven auxiliary fuel tanks and the BBJ 2 can fly 5,620 nautical-miles. The first delivery of a BBJ 2 was in 2001. When comparing the BBJ family to comparable sized aircraft (ACJs, CL850, and Lineage 1000E), BBJ is leading the market. In the past 12 In 2005, Boeing announced an even larger BBJ 3 that was produced months, eight BBJ 1s have been sold and one BBJ 2. This is exceptionally a year later. The BBJ 3 is based off the 737-900ER and has 35% more well, compared to the ACJ 319 which sold five, the Challenger 850 which cabin volume than the original BBJ. It is also 28 feet longer than the sold five as well and the Lineage 1000/E which sold only two. original and weighs 16,700 pounds more at takeoff. The BBJ 3 has up to eight auxiliary fuel tanks and a range of 5,495 nautical miles. The Max 7, the BBJ Max family member replacing the BBJ, formally launched in July 2016, will be ready for delivery in 2022. As the delivery The first edition of the BBJ series is the most popular of the three BBJ date is too far out, the Max 7 is not expected to impact prices on the pre- models — with 130 jets in the worldwide fleet. The BBJ 2, produced in owned market. However, a pre-owned BBJ is deemed an ideal interim 2001, has a worldwide fleet size of 21 jets and the BBJ 3 has a fleet size aircraft for any of the new members of the BBJ Max family. So, it is likely of 6. Currently, there are 13 BBJs available on the market and 2 pending that when the Max 8, Max 9 or Max 7 start deliveries, many owners will transactions. The 15 aircraft range in age from 1998 to 2011. look to exit their pre-owned aircraft and enter the latest Max, expanding the pre-owned market even further. The lowest asking price is 21.75M USD and the highest is 59.5M USD, with an average asking price of 41.7M USD. Two BBJ 2s are also As prices continue to drop for older pre-owned BBJs, there is a available: a 2001 model, priced at 38.9M USD, and a 2012 model, priced corresponding increase in BBJ purchases indicating it is a buyer’s at 95M. The average days spent on the market for the BBJ is 607 and market. Prospective buyers now have the luxury to wait for the best 529 days for the BBJ 2. opportunities.

FLEET AGE DISTRIBUTION

30 Year of Manufacturing BBJ 1 BBJ 2 BBJ 3 25

20

15

10

5

0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

30 Year of Delivery BBJ 1 BBJ 2 BBJ 3 25

20

15

10

5

0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

THIRD QUARTER 2016 — ASIAN SKY QUARTERLY | 29 AIRCRAFT SPOTLIGHT

BBJ 1/2 - PRICE VS AGE-TIME SCORE

REF MODEL YOD Airframe Time ASKING PRICE DOM PAX AUX TANKS 1 BBJ 1 1999 9,926 Make Offer 603 23 3 2 BBJ 1 1998 3,743 $ 21,950,000 672 18 9 3 BBJ 1 1999 4,478 $ 37,000,000 43 19 5 4 BBJ 1 1999 11, 415 $ 21,750,000 245 23 5 5 BBJ 1 2000 7,296 $ 26,000,000 119 18 7 6 BBJ 1 1999 8,891 Make Offer 117 26 3 7 BBJ 1 1999 6,891 $ 39,500,000 Off Market 18 7 8 BBJ 1 2002 4,848 Make Offer 428 18 7 9 BBJ 1 2003 5,906 Make Offer 168 22 5 10 BBJ 1 2001 3,864 $ 35,000,000 1,372 33 6 11 BBJ 1 2006 1,818 $ 59,500,000 769 15 7 12 BBJ 1 2007 2,849 $ 56,950,000 2,055 19 6 13 BBJ 1 2008 2,105 $ 48,950,000 692 16 7 14 BBJ 1 2008 163 Make Offer 1,125 18 7 15 BBJ 1 2010 955 $ 56,000,000 902 28 7 16 BBJ 1 2 011 1,240 $ 56,000,000 791 27 7 17 BBJ 2 2001 10,554 $ 38,900,000 557 29 5 18 BBJ 2 2012 550 $ 95,000,000 336 19 6

BBJ PRICE VS AGE-TIME SCORE BBJ 1 ASKING PRICE UNDER CONTRACT

MAKE OFFER TREND LINE FROM ASKING PRICES

65

14 60 11

15 16 12 55

50 13

45 (M USD) 40 7 8 3 35 10 9 Asking Price

30

5 6 25 1 4 20

15 Age Time Score (2x Year of Manufacturing + Airframe Time)

* BBJ 1 No.2, and all BBJ 2 are not included in the graph. * No.2 and No.8 are currently under contract, No.8 is currently “make offer” on market.

Source: Asian Sky Group and JETNET

30 | ASIAN SKY QUARTERLY — THIRD QUARTER 2016 AIRCRAFT SPOTLIGHT

PRE-OWNED BBJ FOR SALE

INVENTORY VALUE (USD)

$8,244M (Apr. 2016) TOTAL BUSINESS JET MARKET (26 models) $7,880 M

$5,842 M

$812M TOTAL BBJ

$683M $584M

$514M

MARKET TREND Signal Line (MACD EMA 91 days) MACD Line (12-6 months EMA)

DECLINE

BUYER’S RECOVERY MARKET

NO. AIRCRAFT SOLD

3

2 1 1 1 1 1 1

Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug 14 14 14 14 15 15 15 15 15 15 15 15 15 15 15 15 16 16 16 16 16 16 16 16

The graphs above show market value and trend indicators F2000s, F900DX/LX, G280 and G650ER. Nevertheless, it for the worldwide fleet of the Boeing Business Jet (BBJ) appears the BBJ’s market situation continues to display aircraft. The meanings of the Inventory Value, Trend Line some balanced market characteristics, which should put and Signal Line are described in the Market Inventory any buyers or sellers at ease. section of this document on page 24.

Over the last 24 months up to August 2016, the value of the BBJ inventory for sale decreased from $683M to $584M USD, or -14.5%, suggesting a stable situation on the supply side. The demand side however, is still well below the average monthly offer, with only 5 sale transactions in the last 12 months, or 8 in the last 24 months. With the average of 607 days on the market for selling a BBJ being almost double the business jet fleet average of 326 days, the BBJ (and BBJ 2) is one of the least transacted pre-owned aircraft in the past 12 months, joining other models such as the ACJ318/319, CL850, L650, L1000,

THIRD QUARTER 2016 — ASIAN SKY QUARTERLY | 31 AIRCRAFT SPOTLIGHT BBJ MAX 8/9

he baseline models of the BBJ family — which consists of the 2020. The BBJ MAX 9 has a range of 6,375nm and a cabin size of BBJ 1, BBJ 2, and BBJ 3 — are now being improved by the latest 1,120 square-feet (104.05 square-meters), similar to that of a BBJ T generation, the BBJ MAX series. Launched in April 2014 — with 3. The length is also similar to the BBJ 3 at 107 feet and 2 inches an expected delivery of 2018 — the ultra-long range BBJ MAX 8 is the (32.66m). first member of the family. Compared to the BBJ MAX 8, the BBJ MAX 9 has one additional Based on the commercial airliner 737 MAX 8, the BBJ MAX 8 will take auxiliary fuel tank (making eight in total), an increased length of 8 advantage of the efficiency of LEAP-1B engines and Boeing developed feet 8 inches, a strengthened main landing gear and wing, and a two advanced technology winglets. The new engine and winglet provide position tail skid. The BBJ MAX 9 also has an increased Maximum a 13% fuel-burn improvement, which results in a 6,555 nautical mile Take-Off Weight (MTOW) of 194,700 pounds, up from 181,200 pounds range — an increase of more than 14% over the BBJ 2. The BBJ MAX for the BBJ Max 8. 8 has the same amount of cabin space as the BBJ 2 — 1,025 square- feet (95.2 square-meter) and is equal length at 98 feet and 6 inches The MAX program will continue to maintain the uncompromising (30.02m). It also maintains the advantages of a lower cabin altitude, cabin comfort of today’s BBJ, as well as providing increased range seen in the baseline BBJ models. capability, an updated flight deck, lower noise, and reduced emissions. Buyers can also expect the BBJ MAX 7, which was announced at the To provide suitable ground clearance for the larger engines, the landing Farnborough International Airshow in July 2016. Ready for deliver in gear is lengthened so the aircraft will stand taller on the ground. The 2022, users will be impressed by a range of 7,000nm, 800nm more BBJ MAX 8 will employ fly-by-wire controls to the wing spoilers, as well than the baseline BBJ. as incorporate the addition of four 15.1 inch Rockwell Collins flight displays in the cockpit — the same displays that are on the Boeing Since the launch of the MAX program, both the BBJ MAX 8 and BBJ 787 Dreamliner. Maintenance on the BBJ MAX 8 will also be easier, MAX 9 have attracted plenty of attention from buyers. As of July 2016, because of its enhanced onboard network system and self-diagnostic Boeing Business Jets had 12 BBJ MAXs on order; 11 for the BBJ MAX capabilities. 8 model and one for the BBJ MAX 9.

Following the launch of the BBJ MAX 8 comes the BBJ MAX 9, based www.boeing.com/commercial/bbj on the 737 MAX 9 commercial airliner. It will be ready for delivery in

32 | ASIAN SKY QUARTERLY — THIRD QUARTER 2016 AIRCRAFT SPOTLIGHT

SPECS

BBJ MAX 8 BBJ MAX 9

WEIGHTS-LB (KG) WEIGHTS-LB (KG) MAX. TAKEOFF 181,200 (82,191) MAX. TAKEOFF 194,700 (88,314) MAX. LANDING 152,800 (69,309) MAX. LANDING 163,900 (74,344) MAX. ZERO FUEL 145,400 (65,952) MAX. ZERO FUEL 156,500 (70,987) OPERATING EMPTY 110,000 (49,895) OPERATING EMPTY 118,080 (53,560) INTERIOR ALLOWANCE 18,000 (8,165) INTERIOR ALLOWANCE 21,000 (9,525)

CABIN - SQ FT (SQ M)* 1,025 (95.2) CABIN - SQ FT (SQ M)* 1,120 (104.1)

CARGO VOLUME - CU FT (CU M) 713 (20.2) CARGO VOLUME - CU FT (CU M) 874 (24.7)

FUEL CAPACITY - US GAL (L) 10,420 (39,444) FUEL CAPACITY - US GAL (L) 10,944 (41,428)

RANGE NM (KM)** RANGE NM (KM)** 8 PASSENGERS 6,555 (12,140) 8 PASSENGERS 6,375 (11,807)

*AT FLOOR LEVEL *AT FLOOR LEVEL **WITH 7 AUXILIARY FUEL TANKS **WITH 8 AUXILIARY FUEL TANKS

35.9 M / 117 ft 10 in 39.5 M / 129 ft 8 in 35.9 M / 117 ft 10 in 42.2 M / 138 ft 4 in WINGSPAN LENGTH WINGSPAN LENGTH 12.3 M / 40 ft 4 in 12.3 M / 40 ft 4 in HEIGHT HEIGHT

CROSS SECTION COMPARISON

3.53 M / 11ft 7 in INTERIOR WIDTH

BBJ MAX 8 & 9

Traditional ultra-long range business jets

MAX RANGE ADVANTAGE

660 nm of Additional Range

7 Tanks 8 Tanks BBJ 9 Tanks

BBJ 2 MAX 8 6,550

BBJ 3 MAX 9 6,375

3,000 4,000 5,000 6,000 7,000 Source: www.boeing.com/commercial/bbj

Range (nm)

THIRD QUARTER 2016 — ASIAN SKY QUARTERLY | 33 CAPITALIZING ON AN ACTIVE ASIA PACIFIC

Q&A with David Longridge, BBJ President

Interview by Litalia Yoakum

ith a growing market, the announcement of a new addition, and enthusiastic showings at business aviation shows across the globe, Boeing Business Jets W has experienced an exciting few last years — in addition to marking its 20th anniversary this year for the popular jet series.

The new BBJ Max family was launched in 2014, with the BBJ Max 8 which has a 6,555 nautical mile range, more cabin space than a BBJ 2, and three times the cargo space. The BBJ Max 9 was launched just a year later, with a 6,375nm range. The newest member of the family, the BBJ Max 7, was announced at the 2016 Farnborough International Airshow. This ultra-long-range aircraft boasts an impressive 7,000nm range and is set to be launched in 2022.

In the interim, the BBJ team is continuing to capitalize on the success of the BBJ family. David Longridge, a veteran of Boeing, is at the forefront of Boeing Business Jets as the President. Since 1996, 238 BBJ airplanes have been sold, including the BBJ, BBJ 777, BBJ 787 and BBJ 747.

34 | ASIAN SKY QUARTERLY — THIRD QUARTER 2016 INDUSTRY INSIDER

What is the current outlook of business aviation in the The BBJ Max 7, 8, 9 and the BBJ 787 is a killer lineup. We would love to Asia-Pacific region? sell more 747 and more 777, but looking at the market the 787 and the BBJ Max will be the foundation of the market going forward. It’s very healthy. We are very happy about how things are going for Boeing Business Jets. We have a total of 53 BBJs, including narrow and Will the latest BBJ Max detract from the BBJ pre-owned wide bodies, in the Asia-Pacific region. The bulk of these (38) are the BBJ market? family – based on the 737. There are three additional 737s that were sold outside of the BBJ framework. There have been four 787s sold, two No, not at all. One of the things that amazes me about this market 777s sold, one 747-8 sold and five BBJ Max (our new variant) sold in the is its sheer depth and size. If you look at Gulfstream or Bombardier, region. Overall, total sales are healthy for us. the pre-owned market hasn’t slowed them down and they have a lot more to contend with than we do. The percentage of pre-owned aircraft In service, there are 36 BBJs. 33 of them are from the BBJ family, two available, relative to our total fleet, is in line with that of our competitors, from the 737s, and one 787. Relative to the size and expense of a BBJ so we aren’t worried. this size and price range, there is a lot of market activity. A big segment of our market consists of new aircraft deals and there’s Is there one market that is more active than others? the other growing segment, which is the pre-owned market. A pre-owned aircraft is a great way to introduce people to what it’s like to fly an ultra- Greater China is definitely the most active market in this region. We have large business jet, if you’re moving up from, say a smaller jet. Some of 18 aircraft in service there, which amounts to 50% of the entire region’s these pre-owned BBJs are more financially within reach. in-service fleet. This includes the region’s first 787 BBJ. Of those 18 We believe that once you’ve flown on an aircraft of this size, with a currently in service, 14 of them have entered service since 2014. This shower, a bedroom, office, and a dining room, then it’s difficult to go back is relatively recent. to a smaller aircraft. Pre-owned aircraft are a great way of introducing Greater China is also active, and doing particularly well, in the pre-owned new customers to flying in a Boeing aircraft. market. In the last few months of 2015, five aircraft were sold to China and this year a few were sold, as well. What can we expect from Boeing Business Jets in the coming years? Why is BBJ doing so well in the Greater China market? In the ultra-large business jet range, we expect to see relatively stable The number one reason this market prefers the BBJ is the product and steady sales for the foreseeable future. This is not an enormous itself. Boeing Business Jets has the only aircraft that goes non-stop market, so we don’t expect the numbers that Gulfstream or Bombardier from Beijing to New York and back again – that’s the BBJ Max 8. The may have. However, we do expect to sell between 6-10 aircraft annually. BBJ has about a 500nm range advantage over the next comparable Outside of sales, Boeing Business Jets has come a long way over the business jet, which is an ACJ Neo. Aside from just the product, we offer past few years. I worked for Boeing Business Jets in Western Europe 20 a great product support organization and we have a dedicated field years ago. This company has a far more global brand, product and sales support representative in Beijing. We also have a fantastic sales force team than it did at the beginning of BBJ. Now, we have a nicely balanced who really understand the Chinese market. It’s not just the product, but market, where we can sell steadily. the team we have behind it; the BBJ team is enthusiastic, professional, and knowledgeable and the market is responding to this through sales. Our product line will focus on the 737 max family and What are the main differences between the market in the the 787. Probably more Max, but over time the 787 will Asia-Pacific region and the markets of North America still sell. and Europe? We’ll continue to enhance our products. We are just putting the finishing touches on the upcoming Max 7, which will join the BBJ family. The 787 The biggest, most obvious difference for us between these markets is continues to be a very exciting product for a specific part of the market the pace of sales. China is by far Boeing Business Jets’ most active place. As always, we will continue to market our aircraft and improve region. It is a knowledgeable customer base. And more so, the sheer size them — making them faster and more interesting. We’ll continue to and pace of the market is outdoing other regions. Even when China’s stick to the perspective that when you buy an aircraft of this size, it’s economic growth is low, it still outpaces other regions. The distance all about putting what you want in the interior. We’re really pushing that these customers are flying is often much longer than the distances customization. Overall, we’ll continue to be a world leader in customer of a customer in North America or Europe. This plays well into the BBJ support, and provide that with enthusiasm and a knowledgeable team. market.

www.boeing.com/commercial/bbj What can the market expect from the latest BBJ addition — the BBJ Max 7?

The BBJ Max 7 — based on the 737-7 Max airliner — will be ready for deliveries in 2022. It will be six feet longer than a current BBJ. It’s a bit smaller than a BBJ 2, but bigger than a BBJ, with a 7,000nm range. It will have a lower cabin altitude feature, for a maximum cabin altitude of 6,500 feet. It will also have the things in it that make the BBJ successful today, but it will fly further and be physically larger. This is a very exciting product and we believe this aircraft will sell very well.

THIRD QUARTER 2016 — ASIAN SKY QUARTERLY | 35 36 | ASIAN SKY QUARTERLY — THIRD QUARTER 2016 AIRCRAFT POSITIONING

BUSINESS JETS Aircraft Total Yearly Cost vs Maximum Range

20 1 ACJ318 61 Beechjet 400 19 2 ACJ319 62 Cit. Bravo 3 ACJ320 63 Cit. CJ2 18 4 4 ACJ321 64 Cit. CJ2+ 17 5 BBJ 1 65 Cit. CJ3 6 BBJ 2 66 Cit. CJ3+ 16 7 BBJ 3 67 Cit. CJ4 15 8 CL850 68 Cit. Encore 7 Corp. Airliner 3 9 CL870 CS 69 Cit. Encore+ 6 14 10 CL890 CS 70 Cit. Excel 2 13 11 Lineage 1000E 71 Cit. Ultra 72 Cit. VII 12 F7X Light 12 73 Cit. XLS 5 13 F8X 1 14 G550 74 Cit. XLS+ 11 15 G650 75 Diamond 1A 76 H400XP 16 G650ER 16 17 Global 5000 77 L40XR 15 10 18 18 Global 6000 78 L45XR 14 Long Range 19 Global Express 79 L70 11 9 20 Global Express XRS 80 L75 13 81 Nextant 400XTi 21 G-V 17 12 82 Phenom 300 22 CL604 8 83 Cit. CJ1 23 CL605 35 24 F2000 84 Cit. CJ1+ 85 Cit. M2 25 F2000DX 32 7 26 F2000EX 86 Cit. Mustang 20 27 F2000LX 87 Eclipse 550

28 F2000LXS Light Very 88 HondaJet 29 F2000S 89 Phenom 100E 6 90 Premier IA 39 30 F900EX 8 28 31 F900EX EASy 10 38 Large 23 19 29 32 F900LX 9 31 33 G300 47 34 21 5 34 G350 45 52 35 G450 36 G-IV 27 37 G-IVSP 60 46 38 Legacy 600 30 39 Legacy 650 37 4 25 40 Astra SP 44 24 33 41 Cit. Latitude 43 36 42 Cit. Sovereign 41 22 (MILLION USD/YEAR) COST YEARLY TOTAL 59 26 43 Cit. Sovereign+ 48 50 51 44 Cit. X 45 Cit. X+ 42 53 3 46 CL300 80 74 47 CL350 48 F50EX 79 49 G100 57 50 G150 51 G200 56

Mid - Size 55 52 G280 77 72 58 53 H4000 67 54 78 82 54 H800 73 49 66 55 H800XP 70 2 56 H850XP 57 H900XP 65 69 40 58 L60XR 64 68 59 Legacy 450 81 60 Legacy 500 75 71 76 62 61 85 84 63 90 83 89 88 86

87

1 550 750 1000 1500 2000 3000 4000 5000 6000 7000 8000 MAX RANGE (N.M.)

* Total Yearly Cost estimated using Conklin & de Decker 2016 industrial cost figures for aircraft acquisition cost on 10 years, plus yearly operating cost, plus adjustments to account for regional differences and financing.

Source: ASG & Conklin & de Decker 2016 THIRD QUARTER 2016 — ASIAN SKY QUARTERLY | 37 MARKET SUMMARY PER MODEL — BUSINESS JETS

AIRBUS AVERAGE ASKING PRICE & NO. OF AIRCRAFT FOR SALE ACJ318

$43.8 $42.2

$39.7

SPECS Max Range 4,200 N.M. / 7,800 km (with ACTs) Max Speed Mach 0.82 Typ. Passengers 19 6 6 5 FOR SALE 2016 Q3 No. for sale 5 (25.0%) Avg Asking Price 39.7M USD Avg Days on Market 929

SOLD Aug Nov Feb May Aug Past 12 Months 0 2015 2016 Past 3 Months 0

ACJ319

$59.8

$45.0 $49.5

SPECS Max Range 6,000 N.M. /11,100 km (with ACTs) 7 Max Speed Mach 0.82 6 Typ. Passengers 19 5 FOR SALE 2016 Q3 No. for sale 7 (9.9%) Avg Asking Price 59.8M USD Avg Days on Market 261

SOLD Aug Nov Feb May Aug Past 12 Months 5 2015 2016 Past 3 Months 1

Source: JETNET & ASG 38 | ASIAN SKY QUARTERLY — THIRD QUARTER 2016 MARKET SUMMARY — JETS

BBJ 1 BOEING

$43.0 $42.7

$41.7

SPECS Max Range 6,235 N.M. / 11,547 km (with 9 ACTs) Max Speed Mach 0.82 16 Typ. Passengers 19 14 14 FOR SALE 2016 Q3 No. for sale 14 (10.8%) Avg Asking Price 41.7M USD Avg Days on Market 607

SOLD Aug Nov Feb May Aug Past 12 Months 8 2015 2016 Past 3 Months 1

BBJ 2

$67.0 $55.6 $39.2

SPECS Max Range 5,620 N.M. / 10,408 km (with 7 ACTs) Max Speed Mach 0.82 3 Typ. Passengers 19

FOR SALE 2 2 2016 Q3 No. for sale 2 (9.5%) Avg Asking Price 67.0M USD Avg Days on Market 529

Aug Nov Feb May Aug SOLD 2015 2016 Past 12 Months 1 Past 3 Months 1

Source: JETNET & ASG THIRD QUARTER 2016 — ASIAN SKY QUARTERLY | 39 MARKET SUMMARY — JETS

CHALLENGER 604/605 BOEING

$15.4 CL605 $13.0 $12.6

$7.1 CL604 $6.3 $6.3

BOMBARDIER SPECS CL604 CL605 Max Range 4,027 N.M. / 7,458 km 4,000 N.M. / 7,408 km 72 Max Speed Mach 0.82 Mach 0.82 67 67 Typ. Passengers 9 9

FOR SALE 2016 Q3 No. for sale 41 (11.3%) 31 (10.8%) Avg Asking Price 6.3M USD 12.6M USD Avg Days on Market 310 196

SOLD Aug Nov Feb May Aug Past 12 Months 31 24 2015 2016 Past 3 Months 8 7

[email protected] FEATURED AIRCRAFT +852 2235 9222

REDUCED PRICE

2003 CHALLENGER 604 SN5557 5,700,000 USD 2000 GLOBAL EXPRESS SN9060 MAKE OFFER 4,300 Hours, 9 Pax 5,612 Hours, 14 Pax

Source: JETNET & ASG

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40 | ASIAN SKY QUARTERLY — THIRD QUARTER 2016 MARKET SUMMARY — JETS

CHALLENGER 850

$9.8

$9.4 BOMBARDIER

$8.8

SPECS Max Range 2,811 N.M. / 5,206 km Max Speed Mach 0.80 Typ. Passengers 14 14 13 FOR SALE 10 2016 Q3 No. for sale 10 (14.9%) Avg Asking Price 9.4M USD Avg Days on Market 694

SOLD Aug Nov Feb May Aug Past 12 Months 5 2015 2016 Past 3 Months 1

GLOBAL 5000

$21.0

$16.3 $15.9 SPECS Max Range 5,200 N.M. / 9,630 km Max Speed Mach 0.89 Typ. Passengers 13 24 23 FOR SALE 2016 Q3 13 No. for sale 23 (10.8%) Avg Asking Price 15.9M USD Avg Days on Market 266

Aug Nov Feb May Aug SOLD 2015 2016 Past 12 Months 9 Past 3 Months 4

Source: JETNET & ASG THIRD QUARTER 2016 — ASIAN SKY QUARTERLY | 41 MARKET SUMMARY — JETS

GLOBAL 6000

$42.6 $41.5 $40.0 BOMBARDIER

12 SPECS Max Range 6,000 N.M. / 11,112 km Max Speed Mach 0.88 5 5 Typ. Passengers 13

FOR SALE No. for sale 12 (6.0%) 2016 Q3 Avg Asking Price 40.0M USD Avg Days on Market 191

Aug Nov Feb May Aug SOLD Past 12 Months 7 Past 3 Months 0 2015 2016

Source: JETNET & ASG 42 | ASIAN SKY QUARTERLY — THIRD QUARTER 2016 MARKET SUMMARY — JETS

FALCON 7X

$34.0 $28.2 $27.7

31

23 21

SPECS Max Range 5,950 N.M. / 11,018 km

Max Speed Mach 0.90 DASSAULT Typ. Passengers 12

FOR SALE No. for sale 31 (12.0%) 2016 Q3 Avg Asking Price 27.7M USD Avg Days on Market 217

Aug Nov Feb May Aug Past 12 Months 16 2015 2016 SOLD Past 3 Months 3

[email protected] FEATURED AIRCRAFT +852 2235 9222

REDUCED PRICE

2000 FALCON 2000 SN112 5,900,000 USD 2001 FALCON 2000 SN152 MAKE OFFER 5,350 Hours, 10 Pax 5,474 Hours, 10 Pax

2010 FALCON 2000LX SN223 MAKE OFFER 2011 FALCON 7X SN130 29,950,000 USD 1,237 Hours, 12 Pax 2,096 Hours, 15 Pax

Source: JETNET & ASG THIRD QUARTER 2016 — ASIAN SKY QUARTERLY | 43 MARKET SUMMARY — JETS

FALCON 2000LX/LXS/S

FALCON 2000LXS $30.0 $29.0 $27.9

FALCON 2000LX $19.5 $19.3 $18.0

SPECS 2000LX 2000LXS 2000S Max Range 4,000 N.M. / 7,408 km 4,000 N.M. / 7,408 km 3,350 N.M. / 6,208 km 19 Max Speed Mach 0.83 Mach 0.83 Mach 0.83 Typ. Passengers 10 10 10 14

FOR SALE 11 DASSAULT 2016 Q3 No. for sale 12 (9.2%) 1 (1.9%) 1 (3.2%) Avg Asking Price 19.5M USD 27.9M USD Make Offer Avg Days on Market 246 103 369

SOLD Aug Nov Feb May Aug Past 12 Months 9 0 1 2015 2016 Past 3 Months 2 0 0

[email protected] FEATURED AIRCRAFT +852 2235 9222

NEW ARRIVAL

2008 FALCON 7X SN32 24,700,000 USD 2009 FALCON 900EX EASy SN205 MAKE OFFER 1,882 Hours, 12 Pax 2,669 Hours, 14 Pax

Scan this code to subscribe to ASG’s newsletter and stay updated on the latest aircraft for sale.

2007 FALCON 900EX EASy II SN181 21,800,000 USD 3,560 Hours,11 Pax

Source: JETNET & ASG 44 | ASIAN SKY QUARTERLY — THIRD QUARTER 2016

MARKET SUMMARY — JETS

FALCON 900DX/EX/EX EASy/LX DASSAULT

SPECS F900DX F900EX F900EX EASy F900LX Max Range 4,100 N.M. / 7,593 km 4,500 N.M. / 8,334 km 4,500 N.M. / 8,334 km 4,750 N.M. / 8,800 km Max Speed Mach 0.83 Mach 0.83 Mach 0.83 Mach 0.83 Typ. Passengers 12 12 12 12

FOR SALE 2016 Q3 No. for sale 2 (8.3%) 11 (9.3%) 11 (9.2%) 9 (18.4%) Avg Asking Price 13.0M USD 9.5M USD 17.6M USD 28.9M USD Avg Days on Market 156 340 712 300

SOLD Past 12 Months 2 10 7 2 Past 3 Months 0 3 0 1

$33.7

F900LX $30.2 $28.9 $21.7

F900EX EASy $17.6 $17.6 $15.4

F900DX $13.4 $13.0

$11.4 F900EX $10.1 $9.5

41 36

33

Aug Nov Feb May Aug 2015 2016

Source: JETNET & ASG THIRD QUARTER 2016 — ASIAN SKY QUARTERLY | 45 MARKET SUMMARY — JETS

FEATURED AIRCRAFT 2011 FALCON 900LX SN258

2,295 HOURS SINCE NEW 617 CYCLES SINCE NEW

• ONE OWNER SINCE NEW • AVAILABLE FOR VIEWING IN WILMINGTON, U.S. • A/2A/A+/2A+/Z INSPECTIONS - DECEMBER 2015 BY HAWKER PACIFIC • CAMP MAINTENANCE TRACKING PROGRAM • MSP • FALCONCARE PROGRAM COVERAGE • HONEYWELL 2ND CERT EASY II SUITE UPGRADE • ADS-B OUT • CPDLC

ASKING PRICE: 22.95M USD

EMBRAER [email protected] +852 2235 9222 REDUCED PRICE

LINEAGE 1000/E

$39.0 $39.0 Make Offer

SPECS Lineage 1000 Lineage 1000E Max Range 4,400 N.M. / 8,149 km 4,600 N.M. / 8,520 km Max Speed Mach 0.82 Mach 0.82 Typ. Passengers 19 19 4 4

FOR SALE 2016 Q3 No. for sale 4 (14.8%) 2 Avg Asking Price Make Offer Avg Days on Market 232

SOLD Aug Nov Feb May Aug Past 12 Months 2 2015 2016 Past 3 Months 0

Source: JETNET & ASG 46 | ASIAN SKY QUARTERLY — THIRD QUARTER 2016 EMBRAER

Source: JETNET & ASG JETNET Source: 7 1 Legacy 650 3,640 N.M. / 7,112 km Mach 0.80 13 16 (17.8%) 18.5M USD 224 MARKET SUMMARY — JETS — SUMMARY MARKET

| 47 ASIAN SKY QUARTERLY — 2016 THIRD QUARTER 14 1 31 (17.8%) 7.9M USD 365 Legacy 600 3,400 N.M. / 6,297 km Mach 0.80 13 DATALINK CAPABILITY DATALINK DUAL FLIGHT MANAGEMENT SYSTEM DUAL FLIGHT MANAGEMENT CAT II, RVSM CERTIFICATION CAT ADS-B OUT INSTALLED COMPLETED 72 MONTH INSPECTION INCOMPLETED 72 MONTH INSPECTION AIRFRAME ENROLLED ON EMBRAER 2008 LEGACY 600 2008 LEGACY SN14501069

ENGINE ENROLLED ON

• • • NOV 2014 AND RVSM COMPLIANCE NOV • STANDARD EEC (INCLUDING AVIONICS, AVIONICS, EEC (INCLUDING STANDARD AIRFRAME, APU) • ASKING PRICE: 9.3M USD 586 HOURS SINCE NEW SINCE NEW 373 CYCLES • CORPORATECARE ROLLS ROYCE • [email protected] +852 2235 9222

Max Range Max Speed Passengers Typ. Past 12 Months Past 3 Months Past SOLD SPECS No. for sale No. for Asking Price Avg Days on Market Avg 2016 Q3 FOR SALE FOR 47 Aug $7.9 2016 $18.5 42 May $20.2 $8.3

Feb

Legacy 600 Legacy 650 Nov FEATURED AIRCRAFT FEATURED NEW ARRIVAL 25 Aug $9.4 $21.4 2015 LEGACY 600/650 LEGACY

2011 FALCON 900LX SN258 2011 FALCON MARKET SUMMARY — JETS

G200 & G280

$22.6

G280 $18.6 $19.0

$6.1 $5.5 G200 $5.0

SPECS G200 G280 46 Max Range 3,050 N.M. / 5,651km 3,600 N.M. / 6,667 km Max Speed Mach 0.81 Mach 0.84 43 Typ. Passengers 8 8

36 FOR SALE 2016 Q3 No. for sale 39 (15.9%) 4 (4.2%) Avg Asking Price 5.0M USD 19.0M USD Avg Days on Market 288 143

SOLD Aug Nov Feb May Aug Past 12 Months 39 2 2015 2016 Past 3 Months 13 2

[email protected] FEATURED AIRCRAFT +852 2235 9222 GULFSTREAM

NEW ARRIVAL REDUCED PRICE

2005 G200 SN118 MAKE OFFER 2007 G200 SN156 MAKE OFFER 7,812 Hours, 9 Pax 2,229 Hours, 9 Pax

NEW ARRIVAL NEW ARRIVAL

2004 G200 SN102 5,500,000 USD 2007 G200 SN168 MAKE OFFER 3,929 Hours, 9 Pax 6,651 Hours, 9 Pax

Source: JETNET & ASG 48 | ASIAN SKY QUARTERLY — THIRD QUARTER 2016 MARKET SUMMARY — JETS

$22.0

$17.4

$15.6

SPECS 28 Max Range 4,350 N.M. / 8,056 km 25 26 Max Speed Mach 0.85 Typ. Passengers 13

FOR SALE 2016 Q3 No. for sale 26 (7.8%) Avg Asking Price 15.6M USD Avg Days on Market 293

SOLD Aug Nov Feb May Aug Past 12 Months 25 2015 2016 Past 3 Months 9 GULFSTREAM

[email protected] FEATURED AIRCRAFT +852 2235 9222

NEW ARRIVAL REDUCED PRICE 2007 G450 SN4063 12,250,000 USD 2004 G550 SN5015 17,495,000 USD 3,612 Hours, 16 Pax 6,299 Hours, 12 Pax

2007 G450 SN4117 13,495,000 USD 2005 G450 SN4024 MAKE OFFER 4,516 Hours, 14 Pax

Source: JETNET & ASG THIRD QUARTER 2016 — ASIAN SKY QUARTERLY | 49 MARKET SUMMARY — JETS

$31.9

$28.3 $29.4

34 33 6,750 N.M. / 12,501km 29 Mach 0.87 18

2016 Q3 33 (6.2%) 28.3M USD 258

Aug Nov Feb May Aug 36 2015 2016 7

FEATURED AIRCRAFT GULFSTREAM 2009 G550 SN5231

ENTRY INTO SERVICE: 2009 1,357 HOURS SINCE NEW 552 CYCLES SINCE NEW

• 18 PASSENGERS CONFIGURATION • ENROLLED WITH ROLLS-ROYCE CORPORATECARE & HONEYWELL MSP PLAN • FORWARD GALLEY / FORWARD & AFTER LAVATORIES • SATCOM / WLAN • TAWS / TCAS / EVS / HUD • ADSB-OUT

ASKING PRICE: CONTACT FOR OWNER APPROVED BEST PRICING

[email protected] +852 2235 9222 NEW ARRIVAL

50 | ASIAN SKY QUARTERLY — THIRD QUARTER 2016 MARKET SUMMARY — JETS

$75.0

$68.4 $69.0

$70.0

$63.5

$61.0 G650 G650ER 7,000 N.M. / 12,964km 7,500 N.M. / 13,890km Mach 0.90 Mach 0.90 18 18 18 16

2016 Q3 10 11 (8.3%) 4 (7.4%) 61.0M USD 69.0M USD 200 145

Aug Nov Feb May Aug 14 3 2015 2016 5 2 GULFSTREAM FEATURED AIRCRAFT 2009 G550 SN5231 2014 G650 SN6109

423 HOURS SINCE NEW 139 CYCLES SINCE NEW

• U.S. BASED & REGISTERED SINCE NEW • HONEYWELL SWIFTBROADBAND HIGH SPEED DATA INTERNET • HONEYWELL DBS SATELLITE TELEVISION • ENHANCED NAV & SYNTHETIC VISION • FANS 1/A CPDLC/ADS-B OUT /RNP • RUNWAY AWARENESS ADVISORY SYSTEM (RAAS) • 15 PASSENGER, FORWARD GALLEY CUSTOM CONFIGURATION • TRANSFERRABLE MANUFACTURER WARRANTIES • ENROLLED ON GCMP

ASKING PRICE: 61.95M USD

[email protected] +852 2235 9222 REDUCED PRICE

THIRD QUARTER 2016 — ASIAN SKY QUARTERLY | 51 C

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52 | ASIAN SKY QUARTERLY — THIRD QUARTER 2016 AIRCRAFT POSITIONING

CIVIL HELICOPTERS Aircraft Acquisition Price vs Maximum Range

32.0 1 AS332 L1e 21 AW119 Kx 2 2 AW189 22 H130 1 28.0 3 H225 23 Bell 407GXP

Heavy 4 S-92 24 AC311* 24.0 5 H175 25 H125 6 Bell 412EPI 26 Bell 407 3 7 S-76D 27 MD 600N 20.0 28 Bell 206L4 4 8 AW139 5 9 H155 29 MD 520N 16.0 30 MD 530F

10 H145 Single Turbine 11 S-76C++ 31 H120 14.0 Medium 32 MD 500E 12 AC312* 6 33 S-333 12.0 13 EC145 7 14 AW 169 34 EN480B 15 AW109 GN 35 R66 10 10.0 16 H135 36 R44 Raven II 9 14 8 17 Bell 430 37 R22 Beta II 8.0 Piston 18 Bell 429 11 15

Light Twin 19 MD 902 13 20 AW109 Power 12 16 18

19

20 4.0

21

22 23

25 17 24 26 2.0

28 27 30 29

32 31

1.0 (MILLION USD) PRICE ACQUISITION AIRCRAFT

33 35 34

0.5

36

0.3

37

0.1 200 250 300 350 400 450 500 550 600 650 700 MAX RANGE (N.M.)

* Aircraft Purchase Price estimation using Conklin & de Decker 2016 industrial cost figures for aircraft acquisition cost.

Source: JETNET & ASG THIRD QUARTER 2016 — ASIAN SKY QUARTERLY | 53 MARKET SUMMARY PER MODEL — CIVIL HELICOPTERS AVERAGE ASKING PRICE & NO. OF AIRCRAFT FOR SALE EC135T2 & P2

$2.8 EC135P2 $2.6 $2.7

EC135T2 $2.2

$1.8 $1.8

SPECS EC135T2 EC135P2 Max Range 332 N.M. / 614 km 332 N.M. / 614 km Max Speed 127 Knots 127 Knots Typ. Passengers 6 6 13 12 12

FOR SALE No. for sale 3 (2.1%) 9 (5.8%) 2016 Q3 Avg Asking Price 1.8M USD 2.7M USD Avg Days on Market 1,150 658

Aug Nov Feb May Aug 2015 2016 SOLD Past 12 Months 5 10 Past 3 Months 0 2

FEATURED AIRCRAFT 2008 EC130B4 SN4601

DELIVERY YEAR: 2015 TOTAL HOURS: 1,698 SINCE NEW TOTAL CYCLES: 3,465 SINCE NEW AIRBUS HELICOPTERS AIRBUS • UTILITY CONFIGURATION • ALWAYS MAINTAINED BY AIRBUS HELICOPTERS • ALWAYS HANGARED • CARGO HOOK • DUAL CONTROLS • 7 SEATS CONFIGURATION • AIR CONDITIONING SYSTEM • EMERGENCY FLOATATION GEAR - FIXED PARTS

ASKING PRICE: MAKE OFFER

[email protected] +852 2235 9222

NEW ARRIVAL

Source: JETNET & ASG 54 | ASIAN SKY QUARTERLY — THIRD QUARTER 2016 MARKET SUMMARY — HELICOPTER

EC145

$4.5 $4.5 $4.5

SPECS Max Range 461 N.M. / 855 km 11 11 Max Speed 131 Knots 7 Typ. Passengers 9

FOR SALE 2016 Q3 No. for sale 10 (1.4%) Avg Asking Price 4.5M USD Avg Days on Market 252

SOLD Aug Nov Feb May Aug Past 12 Months 6 2015 2016 Past 3 Months 3

[email protected] FEATURED AIRCRAFT +852 2235 9222 AIRBUS HELICOPTERS

2008 EC145 SN9226 MAKE OFFER 2009 EC155 SN6847 4,950,000 USD 2,483 Hours, 8 Pax, Utility 980 Hours, 5 Pax, VIP

NEW ARRIVAL 2013 EC135 P2+ SN1107 MAKE OFFER 2005 AS350B2 SN9072 995,000 USD 1,350 Hours, 5 Pax, VIP 946 Hours, 5 Pax, VIP Source: JETNET & ASG THIRD QUARTER 2016 — ASIAN SKY QUARTERLY | 55 MARKET SUMMARY -- HELICOPTER

EC155B & H155

$5.7 H155 $5.7 $5.6

Make Make Offer $3.3 Offer

SPECS EC155B H155 Max Range 516 N.M. / 955 km 516 N.M. / 955 km 18 18 Max Speed 135 Knots 150 Knots

14 Typ. Passengers 13 13

FOR SALE 2016 Q3 No. for sale 8 (26.7%) 10 (7.1%) Avg Asking Price Make Offer 5.6M USD Avg Days on Market 770 479

Aug Nov Feb May Aug SOLD 2015 2016 Past 12 Months 0 1 Past 3 Months 0 1 *EC155B1 has changed its model name to H155

FEATURED AIRCRAFT 2008 EC155B1 SN6825

DELIVERY YEAR: 2008 TOTAL HOURS: 3,984 SINCE NEW AIRBUS HELICOPTERS AIRBUS

• EMERGENCY FLOATS (FP+RP) • TOTAL 3,984 HOURS • 12 SEATS OFFSHORE CONFIGURATION • 5 SEATS CORPORATE CONFIGURATION • WEATHER RADAR

ASKING PRICE: MAKE OFFER

[email protected] +852 2235 9222

FOR SALE

Source: JETNET & ASG 56 | ASIAN SKY QUARTERLY — THIRD QUARTER 2016 MARKET SUMMARY — HELICOPTER

AS332L1 & H225

$25.5 $25.5 $25.5 H225

SPECS AS332L1 H225 Max Range 452 N.M. / 837 km 452 N.M. / 837 km $8.4 $8.4 $8.5 Max Speed 142 Knots 142 Knots AS332L1 Typ. Passengers 19 19

FOR SALE 14 2016 Q3 11 No. for sale 6 (9.0%) 5 (2.9%) 9 Avg Asking Price 8.5M USD 25.5M USD Avg Days on Market 489 269

SOLD Aug Nov Feb May Aug Past 12 Months 1 2 2015 2016 Past 3 Months 1 2

FEATURED AIRCRAFT 2015 H225 SN2968 AIRBUS HELICOPTERS

DELIVERY YEAR: 2015 FERRY FLIGHT HOURS/LANDINGS ONLY

• 19 PASSENGERS • FERRY FLIGHT HOURS ONLY • C-CLASS UTILITY OPERATIONS • EMERGENCY FLOATATION GEAR WITH AUTOMATIC FIRING • CARGO SLING W/ DYNAMOMETER • MULTI-PURPOSE ENGINE AIR INTAKES (ANTI-SAND & ANTI-ICE FILTERS) • COCKPIT & CABIN AC

ASKING PRICE: MAKE OFFER

[email protected] +852 2235 9222

FOR SALE

Source: JETNET & ASG THIRD QUARTER 2016 — ASIAN SKY QUARTERLY | 57 MARKET SUMMARY — HELICOPTER

BELL 429

$6.1 $5.7 $4.8

SPECS Max Range 368 N.M. / 681 km Max Speed 130 Knots 8 8 Typ. Passengers 7 5

FOR SALE 2016 Q3 No. for sale 8 (3.0%) Avg Asking Price 5.7M USD Avg Days on Market 247

SOLD Aug Nov Feb May Aug 2015 2016 Past 12 Months 5 Past 3 Months 3

[email protected] FEATURED AIRCRAFT +852 2235 9222

2010 BELL 429 SN57021 MAKE OFFER 2009 BELL 407 SN53939 MAKE OFFER BELL HELICOPTER BELL 338 Hours, 6 Pax, VIP 837 Hours, 7 Pax, VIP Source: JETNET & ASG

Don’t miss an update! Subscribe to our mailing list and stay informed.

58 | ASIAN SKY QUARTERLY — THIRD QUARTER 2016 MARKET SUMMARY — HELICOPTER

BELL 412EP/412HP

$6.7 BELL 412EP $5.0 $5.3

$3.8 BELL 412HP $2.9 $3.8

SPECS Bell 412EP Bell 412HP Max Range 356 N.M. / 659 km 349 N.M. / 646 km Max Speed 140 Knots 133 Knots 22 Typ. Passengers 9 14 20 19

FOR SALE No. for sale 4 (5.9%) 16 (2.9%) 2016 Q3 Avg Asking Price 5.3M USD 3.8M USD Avg Days on Market 558 379

Aug Nov Feb May Aug 2015 2016 Past 12 Months 2 3 SOLD Past 3 Months 3 2

FEATURED AIRCRAFT 2010 BELL 407 SN53986

633 HOURS SINCE NEW

• 6 PASSENGERS • ONE OWNER SINCE NEW

• HIGH SKID GEAR BELL HELICOPTER • CARGO HOOK • FLOATS • DUAL CONTROLS • NO DAMAGE HISTORY • 5 YEAR INSPECTION C/W JANUARY 2015

ASKING PRICE: MAKE OFFER

[email protected] +852 2235 9222

FOR SALE

Source: JETNET & ASG THIRD QUARTER 2016 — ASIAN SKY QUARTERLY | 59 MARKET SUMMARY — HELICOPTER

A109E POWER/A109SP GRANDNEW

$4.9 A109SP GRANDNEW $4.8 $4.9

$2.7 A109E Power $2.2 $2.1

SPECS A109E Power A109SP Grandnew Max Range 353 N.M. / 654 km 480 N.M. / 889 km Max Speed 139 Knots 130 Knots 63 Typ. Passengers 7 7

58 58 FOR SALE 2016 Q3 No. for sale 54 (15.8%) 4 (2.8%) Avg Asking Price 2.1M USD 4.9M USD Avg Days on Market 595 437

SOLD Aug Nov Feb May Aug Past 12 Months 9 6 2015 2016 Past 3 Months 2 0

[email protected] FEATURED AIRCRAFT +852 2235 9222

2006 A109E POWER SN11657 1,595,000 USD 2009 A109E POWER SN11773 1,950,000 USD 2,915 Hours, 6 Pax, EMS 2,327 Hours, 6 Pax, EMS LEONARDO

2011 A109E POWER SN11784 2,950,000 USD 2008 A109S GRAND SN22114 3,295,000 USD 1,179 Hours, 6 Pax, EMS 530 Hours, 5 Pax, VIP

Source: JETNET & ASG 60 | ASIAN SKY QUARTERLY — THIRD QUARTER 2016 THIRD QUARTER 2016 — ASIAN SKY QUARTERLY | 60 MARKET SUMMARY — HELICOPTER

AW139

$9.8

$8.8 $8.4

SPECS Max Range 568 N.M. / 1,052 km Max Speed 140 Knots Typ. Passengers 15 19 18 17

FOR SALE No. for sale 19 (2.4%) 2016 Q3 Avg Asking Price 8.4M USD Avg Days on Market 518

SOLD Past 12 Months 10 Past 3 Months 2 Aug Nov Feb May Aug 2015 2016 LEONARDO

Source: JETNET & ASG THIRD QUARTER 2016 — ASIAN SKY QUARTERLY | 61 SIKORSKY S-92 S-92 MARKET SUMMARY —HELICOPTER 62 Source: JETNET &ASG 2 2015 Aug |ASIANSKY QUARTERLY —THIRDQUARTER 2016 FOR SALE FEATURED AIRCRAFT Nov MAKE OFFER Feb May 4 2016 Aug 4 +852 2235 9222 +852 22359222 [email protected] MAKE OFFER ASKING PRICE: • • • 10,357 HOURSSINCENEW 2005 S-76C+SN760592 FOR SALE 2016 Q3 Avg DaysonMarket Avg AskingPrice No. for sale SPECS SOLD Past 3Months Past 12Months Typ. Passengers Max Speed Max Range 12PAX INTERIOR OILANDGAS PLATFORM COMPLIANT ENROLLED ONSBH&PAP

326 Make Offer 4 (1.4%) 2 4 19 155 Knots 474 N.M./877km

MARKET SUMMARY — HELICOPTER

S-76C+ / S-76C++

$8.4 S-76C++ $7.1 $7.3

$3.8 S-76C+ $4.5 $4.2

40 39 SPECS S-76C+ S-76C++ Max Range 335 N.M. / 620 km 335 N.M. / 620 km Max Speed 155 Knots 155 Knots Typ. Passengers 12 12 26 FOR SALE 2016 Q3 No. for sale 144 (16.7%) 214 (7.5%) Avg Asking Price 4.2M USD 7.3M USD Avg Days on Market 489 272

SOLD Aug Nov Feb May Aug Past 12 Months 4 2 2015 2016 Past 3 Months 0 1

FEATURED AIRCRAFT 2005 S-76C+ SN760592 2001 S-76C+ SN760521

10,028 HOURS SINCE NEW

• 12 PASSENGERS • FREON AIR CONDITIONING • UTILITY CONFIGURED • EMERGENCY POP-OUT FLOATS & WINDOWS

ASKING PRICE: MAKE OFFER

[email protected] +852 2235 9222 SIKORSKY

FOR SALE

Source: JETNET & ASG THIRD QUARTER 2016 — ASIAN SKY QUARTERLY | 63 OTHER FEATURED AIRCRAFT For inquiries, please contact [email protected]

NEW ARRIVAL FOR SALE YEAR: 2002 YEAR: 2004 HOURS: 1,021 HOURS: 3,584 PAX: 8 PAX: 8

Make Offer 2,650,000 USD Hawker 800XP SN 258579 King Air 350 SN FL393

NEW ARRIVAL FOR SALE YEAR: 2014 YEAR: 1998 HOURS: 137 HOURS: 6,179 PAX: 9 PAX: 8

Make Offer 1,550,000 USD Citation X+ SN 750-0513 King Air 350 SN FL196

MODEL YEAR HOURS PAX ASKING (USD) - Hawker 800XP 2002 4,508 9 2,495,000 Beechcraft - Hawker 800XP 2002 1,680 8 2,750,000 Beechcraft - King Air 350i 2014 New Delivery 8 Make Offer Beechcraft - King Air B200 2005 3,572 7 Make Offer Beechcraft - King Air C90GTX 2013 15 6 Make Offer Beechcraft - Premier I 2003 2,267 6 Make Offer Bombardier - Challenger 300 2010 649 8 Make Offer Bombardier - 45XR 2006 3,473 8 Make Offer Bombardier - Learjet 45XR 2009 2,841 8 4,995,000 Bombardier - 2004 2,084 7 Make Offer Cessna - Citation CJ2 2004 3,641 6 Make Offer Cessna - Citation CJ2+ 2010 958 7 4,200,000 FIXED WING Cessna - Citation X+ 2014 137 9 Make Offer Cessna - Citation XLS 2005 3,646 9 4,495,000 - 50EX 2004 3,775 9 5,495,000 Embraer - Legacy 600 2007 2,282 13 8,300,000 Gulfstream - GIV-SP 1998 4,547 15 6,995,000 Gulfstream - GIV-SP 1998 6,492 13 Make Offer Gulfstream - G200 2000 4,238 9 3,495,000 Gulfstream - G400 2002 4,618 13 6,950,000

MODEL YEAR HOURS CONFIG/PAX ASKING (USD) Airbus Helicopters - AS350B2 1997 + 2,800 + Utility: 5 968,000 Airbus Helicopters - AS350B3 2004 2,089 Utility: 5 Make Offer Airbus Helicopters - AS355F2 1997 7,74 4 VIP: 5 675,000 Airbus Helicopters - AS355F2 1994 + 2,527 VIP: 5 675,000 Airbus Helicopters - AS355N 1995 1,881 Utility: 5 Make Offer Airbus Helicopters - EC135 P2+ 2006 2,450 + Utility: 5-7 3,000,000 Airbus Helicopters - EC135 T2i 2007 2,139 VIP: 5 2,895,000

ROTARY Airbus Helicopters - EC135 T1 1998 3,352 EMS: 5 1,100,000 Airbus Helicopters - EC145 2006 3,225 VIP: 8 1,950,000 Airbus Helicopters - EC155 B1 2012 300 VIP: 6 Make Offer Leonardo - A119 2004 + 4,000 + Utility: 6 1,280,000 Leonardo - AW139 2010 + 6,000 + Utility: 12 10,500,000 Sikorsky - S-76C+ 2005 2,600 + Utility: 5-7 Make Offer

Note: “*“ means multiple aircraft available. The earliest manufacturing year is shown. Price Reduced New Arrival

64 | ASIAN SKY QUARTERLY — THIRD QUARTER 2016 charter ad-en.pdf 2 5/10/2016 3:43 PM

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