Asian Sky Quarterly Second Quarter 2019

ASIAN SKY QUARTERLY SECOND QUARTER 2019

PRE-OWNED MARKET DASSAULT FALCON 8X

SPECIAL FEATURE ASIA-PACIFIC FLIGHT ACTIVITY INTERVIEWS ASIA-PACIFIC OUTLOOK YAO ZHOU METRICS & MOOD BEIJING OFFICE PARTNER DENTONS BEIJING MARKET SUMMARIES JETS & HELICOPTERS ALEX JIAO, CEO HONGKONG JET FIRST QUARTER 2019 BRIAN PROCTOR, CHAIRMAN INTERNATIONAL AIRCRAFT DEALERS ASSOCIATION ALL OTHERS FOLLOW

THE BEST NEVER REST

The G650ERTM recently achieved the fastest longest-range business jet flight in history—flying from Singapore to Tucson, Arizona, 44 minutes quicker than the previous record. With an industry-leading 90 world speed records and counting, you simply can’t go farther faster. ALL OTHERS CONTENTS FOLLOW 03 FOREWORD 30 INTERVIEW AsBAA Chairperson, Jenny Lau, discusses the association’s BRIAN PROCTOR, CHAIRMAN accomplishments over the last two years and wishes her INTERNATIONAL AIRCRAFT DEALERS ASSOCIATION successor well. Discussing IADA’s efforts towards ethical and standardized aircraft transactions. 04 ECONOMICS Overview of the Asia-Pacific’s region current status and 32 UPCOMING SPOTLIGHT specific country’s GDP versus their business jet and DASSAULT AVIATION FALCON 6X helicopter fleet size. An introduction to the Falcon 6X, with a complete look at the jet’s performance, cabin capacity and technology. 08 MOOD & INTENTIONS Results of our survey on the Asia-Pacific region’s outlook on 36 MARKET DYNAMICS economic status, aircraft utilization, purchase intentions and An analysis of inventory levels, market trends and the influencing factors. changing price signals for the business jet and helicopter fleets in the Asia-Pacific region. 14 INTERVIEW YAO ZHOU, BEIJING OFFICE PARTNER 44 AVIATION ADVICE DENTONS BEIJING HOLMAN FENWICK WILLAN Discussing the law firm’s expertise and experience in aviation, as Commentary by law firm HFW on the topic of grey charter well as the latest developments in aircraft finance and leasing. within business aviation.

18 SPECIAL FEATURE 48 CONFERENCE RECAP ASIA-PACIFIC FLIGHT ACTIVITY BY WINGX ROTORCRAFT ASIA CONFERENCE A look at the flight activity in Q1, including most popular Key takeaways and highlights from the Rotorcraft Asia flight routes and activities by OEM. Conference, held in Singapore.

22 INTERVIEW 53 MARKET SUMMARY - JETS ALEX JIAO, CEO, HONGKONG JET A look at market position and average days on market of Sharing the company’s insight on a challenging market and featured pre-owned business jets. news of its newly-acquired Aruba AOC. 63 MARKET SUMMARY – HELICOPTERS 26 PRE-OWNED SPOTLIGHT A look at market position and average days on market of DASSAULT AVIATION FALCON 8X featured pre-owned helicopters. A comprehensive market performance analysis of the pre- owned Falcon 8X.

PUBLISHER The materials and information provided by Asian Sky of whatever nature for any losses, damage, costs Group Limited (“ASG”) in this report is for reference or expenses howsoever caused, whether arising only. Any information we provide about how we may directly or indirectly from any error or omission in interpret the data and market, or how certain issues compiling such information. This report also uses EDITORIAL may be addressed is provided generally without third party information not compiled by ASG. ASG Litalia Yoakum considering your specific circumstances. Such is not responsible for such information and makes Roderick Li information should not be regarded as a substitute no representation about the accuracy, completeness for professional advice. Independent professional or any other aspect of information contained. The DESIGN advice should be sought before taking action on any information, data, articles, or resources provided by Aya Leung matters to which information provided in this report any other parties do not in any way signify that ASG Michael Wong may be relevant. endorses the same.

MARKET RESEARCH & DATA ANALYSIS ASG shall not be liable for any losses, damage, costs Bowen Zhang or expenses howsoever caused, arising directly or ADVERTISING/AIRCRAFT SALES ENQUIRIES: Avinava Sengupta indirectly from the use of or inability to use this report Alison Pang: [email protected] THE BEST NEVER REST Jordan Yuen or use of or reliance upon any information or material Casper Zhuang provided in this report or otherwise in connection with Maggie Gu any representation, statement or information on or contained in this report. Asian Sky Group The G650ERTM recently achieved the fastest longest-range business jet MEDIA SALES DIRECTOR Suite 1401, 14 Floor, Fortis Tower Alison Pang ASG endeavors to ensure that the information 77-79 Gloucester Road, Wan Chai, Hong Kong flight in history—flying from Singapore to Tucson, Arizona, 44 minutes contained in this report is accurate as at the date Tel: (852) 2235 9222 | Fax: (852) 2528 2766 quicker than the previous record. With an industry-leading 90 world of publication, but does not guarantee or warrant [email protected] speed records and counting, you simply can’t go farther faster. its accuracy or completeness, or accept any liability www.asianskygroup.com | www.asianskymedia.com

SECOND QUARTER 2019 — ASIAN SKY QUARTERLY | 1

PUBLISHER’S NOTE

I moved to HK in 1997 with the then Bombardier Business Aircraft Division. Looking back over the past 22 years, I’m able to say Asia’s business aviation community has grown stronger each year. In recent years one of the main reasons for this is the Asian Business Aviation Association (“AsBAA”). AsBAA has been an essential and significant voice in advocating for the industry in the Asia-Pacific region and is dedicated towards meeting the needs of business and general aviation. This ultimately supports all of us within this community and we owe our support back to AsBAA.

At Asian Sky Group we’re certainly pleased to show this support, which you’ll now see reflected throughout each issue of Asian Sky Quarterly. In the coming issues, the AsBAA chairperson will share his or her thoughts on the industry and we’ll also get a glimpse of what the organization as a whole and each chapter is doing to keep pushing us all forward. In this issue, current Chairperson Jenny Lau looks back on all the positive work she’s spearheaded over past two years and passes the mantle on to her successor.

Lots of great things going on at AsBAA … wish I could say the same for rates and purchase intentions. For a clearer picture of what’s happening the economic outlook as optimism levels continue to be at record lows. in the market, head to the ‘Mood & Intentions’ section in this issue of For the previous few quarters I had been cautiously optimistic about Asian Sky Quarterly. the economy, with what many of us thought was the beginnings of an ‘end in sight’ to the US-China trade dispute. But instead the dispute has As to the rest of Asian Sky Quarterly: the 2019 Q2 edition includes plenty escalated with each side continuing to flex their political muscles. In of insights on the market. Courtesy of WINGX is a look at Asia-Pacific the latest displays, the US imposed 25% tariffs on US$250B in Chinese flight activity in Q2. Brian Proctor, Chairman of the International Aircraft imports and essentially barred US companies from supplying critical Dealers Association (IADA), discusses the organization’s efforts toward components – without government approval – to Chinese telecom ethical aircraft transactions. Alex Jiao, CEO of Hongkong Jet, shares his giant Huawei. Beijing then responded with tariffs on US$60B worth of thoughts on the challenging market in Greater China and news of the US products and will draw up its own ‘unreliable entities’ blacklist. company’s newly-acquired Aruba AOC. Yao Zhou, PRC-registered lawyer with Dentons Beijing, discusses her experience with aircraft financing These tit for tat measures may play well to each sides’ domestic and leasing, as well as some of the latest developments’ owners fanbase, but each move drags down consumer confidence and should be aware of. More legal advice comes in the form of a column frustrates business. Certainly, in the US, the voice of dissent is getting by Holman Fenwick Willan on the area of grey charter. Also included louder, particularly from those in the agriculture sector. In China too, are spotlights on the upcoming Falcon 6X, along with an analysis of consumers and businesses are facing an economy that’s hit record pre-owned Falcon 8X market. This edition also features a recap of the lows. To overcome this, the Chinese Government has put into effect Rotorcraft Asia Conference held in Singapore, along with key takeaways stimulus measures to boost growth, which includes one of the largest from the event’s speakers. tax-cut packages in China’s history. As always, we hope this information is insightful. Despite all the recent moves in this trade war, I still believe a resolution will happen even though it’s not yet clear whether we’ve reached the highest points of tension yet or not. One thing is for sure - the decrease in economic optimism correlates directly with lower aircraft utilization Sincerely, Jeffrey C. Lowe Managing Director, Asian Sky Group SPECIAL THANKS TO OUR CONTRIBUTORS:

2 | ASIAN SKY QUARTERLY — SECOND QUARTER 2019 LOOKING BACK, LOOKING AHEAD FOREWORD

In 2017, AsBAA, Asia’s non-profit representative body for the business and general aviation industry (BA/GA) appointed me as Chairperson, a role that I have been deeply honoured to hold for the past two years. I was elected by AsBAA members to represent, to advocate, and to create a community in which organisations can cooperate towards mutual success.

In the time that I have been Chairperson of AsBAA, we have achieved good things. We have created stronger regional chapters to support members with localised issues. This would not have been possible without the outstanding contribution of the Board of Directors and Board of Governors. I take this opportunity to thank them for their commitment, support, and perseverance on behalf of the association, and the industry.

AsBAA remains committed to corporate social responsibility (CSR) and sustainability. In the past two years, we have expanded and enhanced the student and careers chapter, AsBAA Discovery, to include more events around the region than ever before. These events mitigate the risk of a depleted talent pool by raising awareness of careers in BA/ I am often asked about the significance of my gender in relation to my GA. More importantly, the projects give back to schools, universities and leadership at AsBAA and in my own company. The truth is that many employers in the communities in which we are privileged to operate. great women have led the industry before me, and I hope that I have I am also honoured to have seen AsBAA continue to raise vital funds inspired others to step forward after me. I thank all that have supported for its chosen charity, Orbis Flying Eye Hospital, through the Icons of me during my time as chairperson of AsBAA. I take this opportunity to Aviation Awards (IOA). The IOA will celebrate its five-year anniversary on give my complete support to the next leader, while urging you to join 2 November 2019, an event that I hope you will support. me in doing so.

Looking back over my two-year tenure as Chairperson, I am enormously grateful for the support that has been given to me by AsBAA members and the wider global community. During my time as Chairperson, we Best Wishes, have been honoured to successfully co-organise two ABACE events Jenny Lau with NBAA and sign memorandums of understanding (MOU) with Japan Chairperson, AsBAA Business Aviation Association (JBAA), the Malaysia Airport Authority, among others. These agreements will continue to serve AsBAA members over the coming years.

ABOUT ASBAA: AsBAA’s mission is to represent the needs of its members and the wider industry through its three core pillars: Advocacy, Representation and Community. The association actively advocates the benefits of business aviation to key stakeholders such as government, transport ministries and the media. It represents the interests of all sectors of the business and general aviation industry across the region, and creates a community in which members can network, access B2B opportunities, and tackle common issues with greater collective influence.

SECOND QUARTER 2019 — ASIAN SKY QUARTERLY | 3 2019Q1 ECONOMICS

Australia Malaysia As of publishing date, there are no official statistics on Australia’s Malaysia recorded a 4.5% y/y growth in Q1, succeeding the 4.7% economic performance in Q1 2019. According to Trading Economics’ growth last quarter and exceeding market expectations of 4.3%. On a prediction, the country’s GDP is expected to see a 2.7% y/y growth quarterly basis, Q1 posted a 1.1% growth. Despite a contraction of fixed and a 0.5% q/q growth, both slightly rebounding from the modest, investment, the country was benefited by increased private consumption, diminishing growth and also a two-year low last quarter (2.3% and government spending and trade surplus. Although major sectors of the 0.2% respectively). industry slowed, agriculture in Malaysia had a strong comeback.

Mainland China Philippines In the first quarter of 2019, China recorded a 6.4% y/y growth, The Philippine economy expanded 5.6% in the first quarter of 2019, unchanged from the previous quarter but slightly exceeding market relaxing from the rapid growth since 2015 Q1. On a quarterly basis, expectations of 6.3%. The q/q growth this quarter was 1.4%, down there was a 1.0% expansion. In the previous quarter, the Philippines from 1.5% in Q4 2018 and became the smallest quarterly growth rate had a revised 6.3% y/y and 1.8% q/q expansion respectively. Since since the first quarter of 2016. Despite the ongoing trade dispute 2019 started, government spending and fixed investment had slowed, with the US, the government’s pro-growth effort seemed to pay off as while a trade deficit was recorded. industrial output and consumer demand both rose. Taiwan Hong Kong In this quarter, Taiwan’s economy advanced 1.72% on a yearly basis, Following a 0.5% q/q contraction (revised) last quarter, Hong Kong slightly down from the revised 1.78% in the previous quarter thus taking saw a 1.3% expansion in the first quarter of 2019. On a yearly basis, over as the lowest growth since 2016 Q2. As for q/q growth, this quarter the SAR’s GDP grew 0.6%, easing from last quarter’s 1.2% (revised) saw a 0.49% increase, compared to last quarter’s 0.37%. The weak and becoming the slowest growth since the third quarter of 2009. The growth can be attributed to the dwindled government spending and slowdown could be a result of decelerated private consumption and slowed private consumption, as well as imports outrunning exports. government expenditure, also declined fixed investment. Thailand India Thailand’s GDP grew 2.8% year-on-year, following a revised 3.6% As of publishing date, there are no official statistics on India’s expansion in 2018 Q4 and slightly falling short of market expectations economic performance in Q1 2019. According to Trading Economics’ of 3.0%. This is the weakest annual growth since 2014 Q4 with slower prediction, the country’s GDP is expected to see a 6.5% y/y growth expansion in private consumption and investment, and on top of that, a and follow the previous quarter with a similar, slow pace, reflected in net external deficit. In terms of quarterly growth, the country saw a 1.0% its 1.5%-ish q/q expansion. q/q expansion, modestly up from a revised 0.9% in the previous quarter.

Indonesia Singapore After seeing a revised 5.18% growth last quarter, the y/y growth rate In the first quarter of 2019, Singapore is crossing the finish line with of Indonesia’s economy slowed down to 5.07% in 2019 Q1, slightly 1.3% growth y/y, down from 1.9% in 2018 Q4 and slightly missing falling short of the 5.18% market expectations. This can be attributed market expectations by 0.2%. On a quarterly basis, there was a to milder private consumption and fixed investment growth. On a 2% growth while the last quarter only recorded 1.4%. Although the quarterly basis, Indonesia’s GDP shrank 0.52%, compared to the 1.7% construction and service sectors gained steam, Singapore’s economy contraction in 2018 Q4. is dragged by the plunge of manufacturing, especially precision engineering and electronics clusters. Japan In the first quarter of 2019, Japan’s economy expanded 0.8% y/y, South Korea up from last quarter’s revised 0.2%. On a quarterly basis, it also South Korea’s economy grew 1.8% in this quarter, down from the 3.1% grew 0.5%, higher than the revised 0.4% in 2018 Q4 and surprised expansion in 2018 Q4 and failed to meet market expectations of 2.5%. the market when the expectation had been negative. This can be A sharp decline in the construction sector and a slowed growth in attributed to the fact that net exports increased for the first time in manufacturing resulted in this weakest growth rate since the third a year. Although both private consumption and capital expenditure quarter of 2009. Following last quarter’s 1% q/q growth is a 0.3% dropped, public investment rebounded and contributed most to the contraction in 2019 Q1. This is also due to shrinking construction, economic growth. manufacturing as well as utilities.

* China's researching area includes Mainland China, Hong Kong, Macau & Taiwan.

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SECOND QUARTER 2019 — ASIAN SKY QUARTERLY | 5 ECONOMICS

BUSINESS JET & HELICOPTER FLEET AND GDP BY COUNTRY

Australia China Hong Kong India

Indonesia Japan Malaysia New Zealand

Papua New Guinea Philippines Singapore South Korea

Taiwan Thailand

GDP (BILLION USD)* BUSINESS JET FLEET CIVIL TURBINE HELICOPTER FLEET

350 850

13,203 749 9,491 715 667 4,909 4,892 250 608

2,813 191 524

1,862 170 1,573 1,564 142 1,306 1,357 140 1,063 139 913 114 65 382 592 295 55 55 511 274 272 478 49 240 48 420 46 224 210 43 350 39 337 38 175 323 336 170 300 156 333 32 136 276 135 272 128 112 25 111 212 95 191 20 20 19 16

9 36 28 14 20 3 4 15 22 1 5

2013 2014 2015 2016 2017 2018 2019Q1 2013 2014 2015 2016 2017 2018 2019Q1 2013 2014 2015 2016 2017 2018 2019Q1

* Data Source: ASG & JETNET, the annual fleet size is subject to change. * GDP Source: Tradingeconomics.com

6 | ASIAN SKY QUARTERLY — SECOND QUARTER 2019 Based in our Shanghai office, Jason is an Operations Manager and Airworthiness Inspector who enjoys the art of drinking Chinese tea. The same appreciation and care for quality, details and service are applied when getting your aircraft efficiently inspected and certified. If you want to hear about the benefits of registering your aircraft in Bermuda, arrange to meet up for a cup today! Find out how we can help you with your aircraft registration needs at bermudaaircraftregistry.bm

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BCAA03-3406_Asian Sky Quarterly Q2 Issue_jason.indd 1 28/05/2019 9:25 AM MOOD & INTENTIONS: ASIA-PACIFIC REGION SURVEY 2019Q2

RESPONDENT LOCATION RESPONDENT AIRCRAFT TYPE RESPONDENT CATEGORY Rest of the World (10%) Greater China (39%) Turboprop (20%) Business Jet (56%) Owner / Aircraft Service Charter User (4%) Providers* (44%)

Oceania (10%) Broker (14%)

Central Asia (13%) + Others** 280 (15%) RESPONDENTS

Civil Helicopter Aircraft Operator SE & NE Asia (28%) (24%) /Management 39+281310+G 56+24+20+G Company (23%)44+23+15144+G

In the second quarter of 2019, over 280 respondents participated TOP 10 RESPONDENT’S LOCATIONS in ASG’s survey regarding the mood and intentions of the current Indonesia (3%) Thailand (3%) business aviation market. Japan (3%) Malaysia (3%) Respondents Regional Breakdown: Mainland China (24%) United States (5%) 1. Greater China (122 valid respondents, including Mainland China, Hong Kong, Macau, and Taiwan) Singapore (8%) 2. Southeast and Northeast Asia (80 valid respondents, including Malaysia, % Indonesia, Singapore, Brunei, Philippines, Thailand, Myanmar, Cambodia, 86 OF TOTAL Laos, Vietnam, Japan, and South Korea) RESPONDENTS

3. Central Asia (39 valid respondents, including India, Pakistan, UAE, etc.) Hong Kong (20%) 4. Oceania (29 valid respondents, including Australia and New Zealand) Australia (9%) 67% of the respondents from this quarter’s survey are from aircraft services Philippines (10%) India (11%) providers (FBO, MRO, etc.) and aircraft operators, as well as from aircraft brokers (14%), aircraft end users (4%) and other related areas. 24+19+13109+8533+G * Aircraft Serice Providers include: financial services, training, FBO, ground handlers, MRO, parts, etc. ** Others include law firms, research facilities and government official

WHAT IS OUR CURRENT ECONOMIC STATUS? (QUARTERLY COMPARISON)

Past Low Point 100%

24% 90% 26% 29% 32% 36% 38% 80% 38% 45% 41% 52% 52% At Low Point 70% Optimistic 30% 56% 55% 28% (Will get better) 27% 60% 35% 30% 50% 29% 35% 27% 40% Not Reached 34% Low Point 32% 28% 30% 37% 47% 34% 40% 46% 36% 20% 33% 34% 32%

Pessimistic 27%

(Will get worse) 21% 16% 10% 15% 10% 11% 0% 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

8 | ASIAN SKY QUARTERLY — SECOND QUARTER 2019 MOOD & INTENTIONS: ASIA-PACIFIC REGION SURVEY 2019Q2

ECONOMIC MOOD The pessimistic mood continued to spread in Asia Pacific, surpassing Q1. Over the past year, the slowing economy has impacted consumer Q1 2019 and has reached the highest point since Q4 2016. confidence. The Government has since put into effect stimulus measures to boost growth, which includes one of the largest tax-cut In Q2 2019, 32% of respondents believed that the economy passed packages in China’s history — lower value-added tax and social security its low point and will improve. This is slightly higher than the previous payments for companies. quarter, but the second lowest level since 2016 Q4. The number of respondents who believe the current economy is at its low point and The stimulus package will likely succeed in boosting China’s economy, will get better is 28%; 7% lower than the previous quarter. 40% of but whether this will improve consumer confidence, particularly respondents believed that the economy hadn’t reached its low point and consumers who purchase aircraft, will only be realized in future quarters. will continue to worsen, which is even higher than 2019 Q1’s level and becomes the highest level of pessimism since 2016 Q4. Oceania also saw a decrease in the optimistic level from 72% to 65%. The largest market in Oceania — Australia — faced a slowdown in the In Q2 2019, the optimism levels for Greater China (Mainland, Hong second half of 2018 that is expected to rollover into 2019. In May 2019, Kong, Macau and Taiwan) continued to be the main contributor to the Australians took to the voting polls to elect a new Prime Minister, who overall low optimistic levels as they went down from 50% to 43% this pledged to issue tax cuts to aid the slowing economy. quarter amid a rebound trend over the last two quarters. It is perhaps the ongoing US-China trade dispute which seemed to concern Chinese Central Asia was the only region to see positive change in its mood. This aviation shareholders as actions of the two countries intensified and was largely impacted by India, which has in recent quarters been noted clouded confidence in the market. as the fastest-growing economy in the world. Indian citizens also took to the polls re-electing Narendra Modi. Mainland China’s economic growth hit 6.4% y-o-y in the first quarter of 2019. While the growth rate exceeded market expectations, the In general, respondents who believed that the current economic economy is expected to slow as the new US tariffs take effect. Both situation has passed its low point or is at its low point can be described industrial production — including the notable manufacturing industry, as optimistic. This quarter, 56% of respondents believed that our as well as retail sales — measuring consumer demand — declined in economy will improve in the future; an 8% drop since 2019 Q1.

OPTIMISM LEVELS SINCE 2016Q2 - REGIONAL DIFFERENCES

Greater China SE & NE Asia Central Asia Oceania Overall

100% 100%

95% 94% 95% 91% 92% 92% 91% 92% 88% 90% 90% 89% 86% 89% 86% 84% 88% 83% 87% 88% 84% 82% 86% 81% 85% 80% 80% 79% 83% 76% 79% 80% 75% 79% 78% 75% 73% 70% 73% 70% 69% 72% 67% 68% 68% 64% 66% 62% 65% 61% 60% 57% 60% 54% 54% 54% 53% 50% 50% 52% 48%

43% 43% 40% 41%

30% 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

SECOND QUARTER 2019 — ASIAN SKY QUARTERLY | 9 MOOD & INTENTIONS: ASIA-PACIFIC REGION SURVEY 2019Q2

GREATER CHINA AIRCRAFT UTILIZATION: REGIONAL DIFFERENCES OPTIMISTIC In Q1, 29% of respondents in the surveyed

PESSIMISTIC area said their expected aircraft utilization had decreased, which is higher than the 27% Decreased The Same Increased Signal Line* recorded in Q1 but lower than the 31% in 2018 Q4. Additionally, 49% of respondents 60% 60% said their aircraft utilization had increased, 55% 55% 51% which is a 4% increase compared with the 46% 43% 43% 41% 36%

33% previous quarter. 33% 33% 31% 26% 24% 23% 23% 22% 22% 22% 21% 21% 21% 19% 18% 18% * An Optimistic-Pessimistic Signal Line has been added to regional aircraft usage trend 2017 2017 2017 2018 2018 2018 2018 2019 2019 analyses for Greater China, Oceania and 1831Q251 2223Q355 19Q46021 Q1 226018Q2 33Q34621 Q4 225523Q1 24Q23343 41 3321 2636 South and East Asia regions. An optimistic mood is derived from more respondents indicating ‘higher’ aircraft utilization compared with 12 months ago, while a OCEANIA pessimistic mood is derived from more people indicating ‘lower’ aircraft utilization

OPTIMISTIC compared with 12 months ago.

Greater China 36% of respondents indicated their aircraft PESSIMISTIC utilization in Q2 2019 increased. Though the increase is higher than the last two quarters, Decreased The Same Increased Signal Line* 43% of respondents stated their aircraft 58%

56% utilization decreased compared with 12 months 52% 48% 47% 45% 45% ago, which is a bigger decline compared with 42% 41% 38% 35% 33% 32% 30% 30% Q1’s result. 29% 26% 26% 25% 25% 24% 23% 21% 19% 18% 18% 27% This could be the result of raised concerns from China’s economy outlook of 2019: 2017 2017 2017 2018 2018 2018 2018 2019 2019 The futile US-China trade talks and slowing 2333Q245 2517Q358 38Q44121 Q1 185230Q2 18Q33547 Q4 195626Q1 25Q24530 2624 3248 4229 GDP growth added uncertainty to the country’s development.

Oceania SOUTHEAST AND NORTHEAST ASIA In this quarter, aircraft utilization remained at a similar level to the previous year. 48% of respondents reported the same level of OPTIMISTIC aircraft utilization. Only 29% of respondents have indicated their aircraft utilization increased, a 16% decline from 2019 Q1. PESSIMISTIC 24% of respondents indicated their aircraft utilization decreased.

Decreased The Same Increased Signal Line* Southeast and Northeast Asia 70% 68% 65%

64% In Q2 2019, 68% of respondents recorded 61% 60% 59% 56% 56% increased aircraft utilization, which is 8% higher compared with 2019 Q1. Only 15% of 27% 26%

25% respondents believe that their aircraft utilization 23% 26% 22% 22% 20% 18% 18% 17% 17% 17% 15% 14% 14% 13% decreased, which is 2% lower compared with 10% the previous quarter, indicating improved 2017 2017 2017 2018 2018 2018 2018 2019 2019 aircraft utilization. 2618Q256 2213Q365 14Q45927 Q1 226117Q2 20Q37010 Q4 226414Q1 18Q25625 1715 2317 6068

10 | ASIAN SKY QUARTERLY — SECOND QUARTER 2019 MOOD & INTENTIONS: ASIA-PACIFIC REGION SURVEY 2019Q2

HOW IS YOUR AIRCRAFT UTILIZATION COMPARED TO 12 MONTHS AGO?

100% Up by 20% and more (>20%) 90% 19%

80% Up but less than 20% (0 - 20%)

70% Increased 30%

60%

50%

40% 23% The same (0%) Unchanged 30%

20% Down but less than 20% (-20 - 0%) 20%

10% Decreased 9% Down by 20% or more (<-20%) 0% 2017 2017 2017 2018 2018 2018 2018 2019 2019 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

SATISFACTION KEY FACTORS: DO YOU OR YOUR CLIENT OWN OR CHARTER OPERATOR VS. CHARTER BROKER CHARTER A PRIVATE AIRCRAFT? (OUTER IS BETTER) Just Charter (17%) Both Own and Charter (55%) Charter Charter Operator Broker

Customer Service

Most Satisfied

Operational Operational Safety Efficiency Just Own (28%) 55+28+17+G

WHEN CHARTERING AN AIRCRAFT, Quality of Value for Maintenance Money (Price) WHAT IS YOUR PRIMARY SOURCE?

Quality of Contact Operator (80%) Contact Broker (20%) On-board Service

In Q2’s market survey, ASG recorded over 70 rankings from the Asia-Pacific region regarding the satisfaction factors of management companies and those of charter brokers. 187 respondents answered questions regarding end users’ travel behaviour.

Charter Market Sourcing Similar to previous quarters, when asked “Do you or your client own or 20+80+G charter a private aircraft?”, 17% of respondents only charter an aircraft, On the charter operator / broker side, when asking the primary choice while 28% just own a private aircraft. The remaining 55% would both own when chartering an aircraft, 80% of respondents would contact a charter and charter an aircraft, implying that to charter an aircraft is reasonable operator first. for those who already own one.

SECOND QUARTER 2019 — ASIAN SKY QUARTERLY | 11 MOOD & INTENTIONS: ASIA-PACIFIC REGION SURVEY 2019Q2

PURCHASE INTENTION WHERE ARE WE IN THE CURRENT PRE-OWNED MARKET? Regarding the current pre-owned market, 58% of respondents believed Buyer’s Market Balanced Market Seller’s Market I’m not sure that the current market is in a ‘Buyer’s Market’ with low demand and 58% high supply — increasing significantly from the last quarter and reached 49% 47% a two-year high. 43% 41% 39% 40% 38%

Over the past seven quarters, there was an increasing trend of 38% 38% 36% 29% 28% respondents believing that the market is moving away from a ‘Buyer’s 26% 21% Market’. In Q1 2019, 41% of respondents believed that we are now in 21% 26% 23% 17% 16% a balanced market with equal demand and supply; the percentage 14% 20% 10% 10% 15% plummeted to 20% in Q2. The remaining 15% believed that we have 8% 4% moved into a ‘Seller’s Market’, with higher demand on the market. 2% 8% 5% 5%

Based on the Market Dynamic analysis from ASG, it is now believed 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2 that the pre-owned business jet market has transitioned back to a ‘Buyer’s Market’ due to gloomy prospects and low purchase intentions. PURCHASE INTENTION 2017Q2 - 2019Q2* For details, please go to the Market Dynamics (Page 36), and Market Yes, a new aircraft Yes, a pre-owned aircraft No / I’m not sure Summary (Page 53) sections of this issue of ASQ. 59% Regarding the purchase intentions of Q1 2019, ASG noticed that the demand for both new aircraft and pre-owned aircraft together represent 46% 54.3% of the respondents who now have the intention of buying an 43% 41% 40% 41% aircraft. This is the third consecutive quarter with decreased aircraft 38% 38% 41% purchase intention. 33% 33% 32% 31% 31% 30% 28% 27% 30% 31% 29% 28% 29% * Since 2017 Q3’s market survey, a new method was applied filtering out 22% 27% those respondents who are not relevant to this question, hence reflec- 19% ting a percentage drop in the category “No / I’m not sure”. 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2

PURCHASE INTENTION - REGIONAL DIFFERENCES (FIXED WING)

Corporate Airliner Large Jet Medium Jet Small Jet Turboprop / Piston Fixed Wing Purchase intention by region is shown in a graph to understand regional differences SE & NE Asia 30% 30% 22% 11 % 7% for fixed-wing aircraft. Greater China has a significantly higher need for large jets, while Oceania 9% 18% 27% 9% 36% turboprops and small jets are more suitable for Oceania. Corporate airliners are commonly Greater China 11 % 41% 30% 11 % 7% needed all areas except Oceania. Additionally,

Central Asia 24% 24% 24% 19% 10% the medium and small jet categories are wanted, but on a relatively lower level.

PURCHASE INTENTION PURCHASE INTENTION PURCHASE DECISIONS - FIXED WING - HELICOPTER - INFLUENCING FACTORS (OUTER IS PREFERRED) (OUTER IS PREFERRED) (OUTER IS LIMITING)

Corporate Airliner Twin Turbine Government / Public Opinion (Such as ACJ, BBJ) (Such as Sikorsky S-76C++)

Most Preferred Most Limiting

Most Preferred

Turboprop/Piston Large Jet No Need No Interesting Fixed Wing (Such as G650, Aircraft (Such as King Air Series) Falcon 8X)

Piston Helicopter Single Turbine Helicopter Price Small Jet Midsize Jet (Such as Robinson R22) (Such as Bell 206) Greater China Oceania (Such as Citation Series, (Such as G200 & Central Asia SE & NE Asia Hawker Series) CL650)

12 | ASIAN SKY QUARTERLY — SECOND QUARTER 2019 You could sweat every detail of the deal, from interest rates to jurisdictional complexity – \ Or, you could let us.

In a seller’s market, industry relationships and experience can be the difference between closing a sale or missing an opportunity. Which is where our global team of business aviation experts comes in. From sourcing to closing, we provide a complete suite of financial services designed to simplify the aircraft acquisition process.

And with more than $2 billion in assets, world-class financial backing, hundreds of years of collective experience, and thousands of business aircraft transactions behind us, Global Jet Capital is uniquely positioned to craft customized financial solutions.

844.436.8200 \ [email protected] \ globaljetcapital.com

Miami \ Hong Kong \ Zurich \ New York LOCAL KNOWLEDGE, GLOBAL REACH YAO ZHOU, BEIJING OFFICE PARTNER, DENTONS BEIJING

laiming the title of ‘world’s largest law firm’, Dentons prides itself on its global reach and local insight, with 175 locations serving 78 countries. C In 1992, Dentons China was founded — becoming one of the first partnership law firms in China. Quickly evolving, the firm now has 45 offices spanning across every province and autonomous region. This expansive network allows local offices to draw on its worldwide resources from firms across the globe, to shape policy and enhance services and relationships. It has since earned the accolades of ‘Outstanding Law Firm in China’ and topped the Asia Legal Business’ annual rankings of ‘ALB China Top 20 Largest Firm’. Dentons China now offers a full-range of legal services to its clients, including in the scope of aviation and aerospace.

Practicing at Dentons Beijing is PRC-registered lawyer Yao Zhou, focusing on aircraft finance, banking and finance, foreign direct investment, merger and acquisition, private equity and venture capital investment. Drawing on her wealth of experience in a banking and transaction counsel, Ms. Zhou now extends her knowledge to advise on aircraft financing and leasing for both commercial and business aviation — which she has been practicing for the past decade. She has been involved in several cross-border commercial aircraft financing and leasing transactions, acting on behalf of banks and lenders, lessors and airlines on commercial aviation matters. Ms. Zhou has also counseled on general aircraft transactions, including the financing, management, sale and purchase of business jets, sale and purchase of commercial aircraft and the procurement of equipment for airlines and lessors.

14 | ASIAN SKY QUARTERLY — SECOND QUARTER 2019 INTERVIEW: YAO ZHOU

What range of services does Dentons Beijing provide to aviation clients?

Dentons Beijing aviation and aerospace team has an abundance of expertise and experience in the field, including commercial aviation, business aviation and - in recent years - has reflected the rapid rise of general aviation, unmanned aerial vehicles and other aspects of the business. Our team has provided legal services in the aeronautical field for many well-known aviation manufacturers, airlines and leasing companies. The team can advise on aircraft purchase, financing, leasing, maintenance, insurance, trust, refinancing, redelivery, retirement and disposal, and sales and exports.

Our lawyers have been at the forefront of aircraft financing and leasing transactions where only a few law firms in China are able to provide highly specialized legal services in this field. We have advised many well- known domestic and international financial institutions, airlines, leasing companies and manufacturers in cross-border or domestic leasing of aircraft, engines and other equipment.

What are some of the deals Dentons Beijing We have assisted in the importation of more than 1,000 aircraft has worked on? into China, including not only large and medium sized passenger and cargo jets but also small private jets and helicopters. We’ve We have participated in nearly every type of aircraft financing also represented engine manufacturers and engine leasing lease in Chinese civil and business aviation, and are familiar with companies in lease and sale-leaseback transactions, relating to the structures, features, background and benefits of a wide-range Pratt & Whitney, GE and Rolls-Royce engines. of transaction types. Having represented many major international and domestic banks, leasing companies, aircraft manufacturers and domestic lessees for a significant period, we fully understand What are some of the latest developments in the requirements and practices of each client in different aircraft finance and leasing? transactions and are well-aware of the risks and major concerns As business partners to our clients, and not just purely their lawyers, of every party to a transaction. our goal is to understand any market deal terms, valuation trends, regulatory hurdles and policy shifts in the industry — and in financing and leasing. This equips us to properly advise on the most suitable DENTONS BEIJING HAS REPRESENTED MAJOR direction to take. There are a few new developments and issues that CLIENTS FOR THE ACQUISITION AND LEASING OF clients must be aware of: THE FOLLOWING NEW AND PRE-OWNED AIRCRAFT: • Customs Requirements: For a PRC registered aircraft, should the • Gulfstream G200 / G450 / G500 / G550 aircraft be exported and sold offshore, transacting parties are • Bombardier Global Express XRS / Challenger CL 850 advised to confirm in advance with the relevant customs authority • Airbus A318 in China whether the aircraft is required to be exported through the • Sikorsky S-76++ same customs authority where the aircraft was imported into China • Dassault Falcon 200LX / Dassault Falcon 7X in the first place. This is rather crucial as it may impact the closing DENTONS BEIJING ALSO HAS EXPERIENCE WITH procedure of the deal and more importantly costs of closing the THE FOLLOWING: transaction. • Operating leases and sale and leaseback • Cancellation of import VAT when the aircraft is imported into China • Offshore securitizations of aircraft assets subject to leases with by way of leasing. Following a change of law last year, importation Chinese lessees VAT has now been abolished if the aircraft is leased into China. This • Cross-border aircraft leases with financings provided by Chinese is good news in terms of reducing the transaction costs. export credit agencies or commercial banks in China • Setting up joint venture airlines, aircraft leasing companies and • RC VAT rate on rentals was recently reduced from 16% to 13%; this is a aircraft maintenance facilities recent development, aimed at reducing the tax burden on businesses in China.

SECOND QUARTER 2019 — ASIAN SKY QUARTERLY | 15 INTERVIEW: YAO ZHOU

• Tianjin Free-Trade Zone now encourages outbound leasing (i.e. lessor being a Tianjin FTZ Special Purpose Vehicle and lessee being an offshore entity). This would provide more (creative) options for the market players when designing deal structures.

• For domestic transactions, we understand escrow arrangements are now possible since the Insured Aircraft Title Service (IATS) is now able to provide escrow services within China. This comes at the right time when Chinese clients are looking for escrow agents in China who can provide similar escrow services to the offshore corporate jet market.

How do you continue to offer clients support during this uncertain period?

Periods of political or economic uncertainty often causes uncertainty with our clients. In addition to closely monitoring the latest developments of events, such as the US-China Trade War or China’s economic situation, we design creative deal structures to help ease our clients. Often in situations like this, we cannot find answers in black and while law, but we have to rely on our experience and industry knowledge.

I always stress to my team that we must speak the same language as However, my best advice is to seek professional counsel. Acquiring an our clients – that is, we must know the industry and the economic / asset, such as an aircraft, requires a great deal of time and work. Clients business situation as well — and even better — than our clients. Only can be bogged down with paperwork and overwhelmed by the process. this way we can provide the most suitable legal service. Having a professional on your side helps to mitigate risks and ultimately cuts down on costs. What advice can you offer to those looking to acquire an aircraft? At Dentons Beijing, we find that because we specialize in aviation, we’re able to answer the questions before the questions are even asked. To start, a client must know exactly what type of aircraft he or she wants and what the use is. Many times, clients have not gotten passed www.dentons.com Contact: [email protected] that initial point.

16 | ASIAN SKY QUARTERLY — SECOND QUARTER 2019 SECOND QUARTER 2019 — ASIAN SKY QUARTERLY | 17 SPECIAL FEATURE ASIA-PACIFIC FLIGHT ACTIVITY - 2019Q1

DATA BY

18 | ASIAN SKY QUARTERLY — SECOND QUARTER 2019 SPECIAL FEATURE: ASIA-PACIFIC FLIGHT ACTIVITY 2019Q1

APAC OVERVIEW In 2019 Q1, the Asia-Pacific experienced a total of 17,245 business jet flights — an increase of 0.1% compared with 2018 Q1. In March 2019, WINGX is an established start-up company with a technology- there were 5,480 flights — an annual decrease of 10.5%, attributed to based approach to providing actionable market intelligence to the a sharp decline of flight activity within Greater China (1,023 flights; global business aviation industry. -25.7% year-on-year). Providing the widest possible range of market data relating to business aviation flight activity, WINGX strives to create meaningful AVERAGE FLIGHT DURATION analytics for its customers. Insights are presented in an interactive 2.0h to 4.0h, 1386, (8%) more than 4.0h, 6237, (36%) and dynamic format and can integrate its customers´ data to provide context and management reporting. max 30 min, 1534, (9%) Easily accessible and interactive formats are available to its 1.5h to 2.0h, 2052, (12%) customers to evaluate market intelligence. All that´s needed is an internet-browser and a login.

WINGX PRODUCTS INCLUDE:

• Market Dashboards

30 min to 1.5h, 6036, (35%) • Customized Dashboards 36+35+1298+G • Customized Market Research • Surveys & Forecasts 2019Q1 ASIA PACIFIC FLIGHT ACTIVITIES • Data Streams Flight Hours 6.70% Flights • Strategic Consulting 5.00% 6.70% YoY%: Flights YoY%: Flight Hours

18,172 16,286 16,814

-4,60% 5,480 5,926 5,839 -8.60%

-10-50%

2019-01 2019-02 2019-03

DEPARTURE AIRPORTS ARRIVAL AIRPORTS

Australia, Greater China, India, Japan and Singapore were the main countries for business jet activities, respectively, in 2019 Q1.

SECOND QUARTER 2019 — ASIAN SKY QUARTERLY | 19 SPECIAL FEATURE: ASIA-PACIFIC FLIGHT ACTIVITY 2019Q1

TOP DEPARTURE /ARRIVAL COUNTRIES

3,563 Australia 3,634

3,415 Greater China 3,422

1,860 India 1,857

1,175 Japan 1,219

836 Singapore Total Departures 858 Total Arrivals

ASIA PACIFIC CITY PAIRINGS FLIGHT ACTIVITIES BY OEM The Asia-Pacific city pairings consist of mainly domestic activity. Flights In 2019 Q1, six OEMs manufactured aircraft involved in 16,599 flights, within Greater China, specifically between Beijing, Hong Kong, Shenzhen accounting for 96% of the total flights. Bombardier, Gulfstream and and Shanghai, are among the most popular. Hong Kong has the highest Cessna are the top three OEMs in the region, involved in 28.8%, 27.4%, number of flights departing from its airport (697) in Greater China, along and 19% of the total flights, respectively. In Greater China, Gulfstream with the highest number arriving (110). Beijing, Shanghai, Shenzhen is the clear market leaders, with its models utilized in 51.3% of the total and Macau airports follow. Still, the most popular regional city pairing flights, followed by Bombardier utilized for 32.8% of flights. In contrast, in 2019 Q1 was Jakarta (Halim Perdanakusuma International Airport) – Gulfstream models are utilized in 27.4% of flights regionally, followed by Singapore (Seletar Airport). Bombardier utilized for 28.8% of flights regionally.

ASIA-PACIFIC’S TOP CITY PAIRINGS TOP OEM AIRCRAFT UTILIZATION

Jakarta - Seletar 167

Seletar - Jakarta 156 6,000 Total Flights - Greater China Sydney - Melbourne Total Flight - APAC 87 5,000 Beijing - Hong Kong 86 4,000 Melbourne - Sydney 84 3,000 Seoul - Seoul 84 2,000 Seletar - Subang 83 1,000 Hong Kong - Beijing 83 0 Gulfstream Bombardier Dassault Embraer Cessna Learjet New Deihi - Mumbai 80

Subang - Seletar 79

GREATER CHINA’S TOP CITY PAIRINGS 60% Greater China % 51.3% APAC % Beijing - Hong Kong 86 50%

Hong Kong - Beijing 83 40% 32.8%

Hong Kong - Hong Kong 78 30% 27.4% 28.8% Beijing - Shenzhen 70 18.2% 20% 10.5% Shenzhen - Beijing 66 10% 5.9% 5.3% 9.1% Beijing - Shanghai 53 1.4% 4.6% 0.4% 0 Shanghai - Beijing 53 Gulfstream Bombardier Dassault Embraer Cessna Learjet Hong Kong - Seletar 43

Beijing - Sanya 42

Sanya - Beijing 40

20 | ASIAN SKY QUARTERLY — SECOND QUARTER 2019 SECOND QUARTER 2019 — ASIAN SKY QUARTERLY | 21 NEW HEIGHTS IN BUSINESS AVIATION ALEX JIAO, CEO; HONGKONG JET

ongkong Jet, the leading comprehensive business aviation group in Asia Pacific is now headed by CEO, Alex Jiao. Adaptable, highly H experienced and at the forefront of the aviation industry, Alex is ready to reshape the company and take it to new heights. Alex sets a role model of Daniel Goleman’s “visionary leadership style” and is widely recognized in the aviation industry and by partners.

When did HKJ begin its operations and what’s How does HKJ endure the challenges within the company’s scope of services? the Greater China market?

Established in 2009, Hongkong Jet offers a comprehensive solution There has been a lot of negative news about the state of the Greater for clients, which includes aircraft management, charter, maintenance, China market with some even calling it a crisis. However, in Chinese, aircraft sales, consultancy and registry services. the word “crisis” consists of the words “risk” and “opportunity”. While there is no denying that the market is going through a rough period, This year is a special year for the company as it steps into its 10th I’d like to view this time as an opportunity to force the industry to a anniversary and while we continuously strive for further improvements, higher level. one thing that never changes is our focus to put clients as our top priority. For example, we understand that maintenance approvals are I am confident that Hongkong Jet will ride out this challenging period always an issue for aircraft owners and operators so we have gradually as it benefits from both internal and external strengths. We have built built up a global maintenance network—NAA 145 Approvals including a strong customer network throughout our 10 years of operation and FAA, Bermuda, Cayman Islands, Guernsey and HKCAD (incl. China-B / have evolved to implement an exclusive customer service system. Macau-B under JMM and Canada under TA-M). Our aim is to offer a total Our multi-cultural team of professionals instill a mature western maintenance solution for our clients’ aircraft. operation benchmark, focused on the highest levels of safety, efficiency and cost savings while our Asian background brings out Time has proven our efforts in building a solid foundation for Hongkong the best in customer service, ensuring our clients can enjoy the best Jet as we are now one of the leading comprehensive business aviation of both worlds. companies in Asia Pacific and I’m confident that we’ll be able to offer more services to our clients in the future.

22 | ASIAN SKY QUARTERLY — SECOND QUARTER 2019 INTERVIEW: ALEX JIAO

Also, we have good relationships with other operators, vendors, airport authorities and local service providers which gives us the flexibility in operations and cost control. The relationships we have established over the years all serve to benefit our clients. I always hold the idea that the aviation industry is a big team. We’re all players in it and we’d like to share our experiences with other players to get through the challenging environment together. Unity in one direction will help a lot.

Can the industry expect a turnaround in the Greater China market?

I like to look at the big picture to learn from the past and prepare for the future. Considering all the possible factors, there is obvious potential when comparing the market in Asia to Europe and the US. The reality is that a rapid increase may be unlikely, but an upward trend can be expected.

HKJ is an experienced operator and we have the manpower and skills to cope with the ever-changing operating landscape. I believe that HKJ has a solid foundation and with our professional and skilled staff, we are ready to build upon our previous successes.

What are some of the latest developments at Hongkong Jet?

Besides our recent completion of the IS-BAO Stage III renewal audit, one significant development is our newly acquired Aruba AOC under wholly- owned Sonic Air.

SECOND QUARTER 2019 — ASIAN SKY QUARTERLY | 23 INTERVIEW: ALEX JIAO

Our mission has always been to be the market leader and the most respected business aviation service provider throughout Asia Pacific and beyond. We hope that this new AOC can further strengthen our position in the market for wide-body business jet management. Our goal is to provide clients with cost-efficient solutions to aircraft management and with the Aruba AOC, clients now have the option of placing their asset on our AOC to earn charter revenue to offset a portion of the aircraft operating cost. We are delighted to be working closely together with the Registry of Aruba to achieve more for our clients in the very near future.

Other projects are ongoing, as are my plans to further improve and streamline the various departments within the company, from Managing and operating wide-body business jets is HKJ’s focus, operations to client relations to sales and marketing. and based on our analysis, the Aruba AOC is the most suitable platform for such type of operations. This is why we applied for our At the end of the day, to achieve the best, we must do our utmost Aruba AOC, which was granted to HKJ at this year’s ABACE. With to uphold our core company values of safety, service excellence, this new acquisition, we plan to start charter operations with our sustainability and profitability. state-of-the-art, ultra-luxurious B-787 Dreamliner with the aircraft www.hongkongjet.com.hk registration “P4-787”.

24 | ASIAN SKY QUARTERLY — SECOND QUARTER 2019 APR IL 21-23, 2020

SAVE THE DATE FOR THE PREMIER BUSINESS AVIATION EVENT IN ASIA Business aviation is an important emerging market in Asia, driving economic output and providing organizations opportunities for growth. Over the course of three days, from April 21 to 23, the Asian Business Aviation Conference & Exhibition (ABACE2020) will provide the perfect venue for those considering purchasing an aircraft as investment opportunity; companies thinking of using an aircraft for business; and flight departments who have long used aircraft as a critical business tool. There is no better place in Asia to discover every facet of this dynamic industry than at ABACE2020.

SAVE THE DATE | abace.aero

SECOND QUARTER 2019 — ASIAN SKY QUARTERLY | 25 PRE-OWNED SPOTLIGHT DASSAULT FALCON 8X

The flagship of Dassault Aviation’s business jet line is the Falcon 8X. The large cabin, ultra-long-range aircraft entered service in 2016 and is the largest Dassault aircraft in production, with the longest range.

26 | ASIAN SKY QUARTERLY — SECOND QUARTER 2019 PRE-OWNED SPOTLIGHT: DASSAULT FALCON 8X

INTRODUCTION

lying 6,450nm (11,945km) and powered by Pratt & Whitney Canada PW307Ds, the three-engine 8X can fly non-stop from F Beijing to Los Angeles, Shanghai to Seattle and Hong Kong to London. The 8X’s tri-engine means there are less constraints on the aircraft, compared with the those on extended twin-engine operations (ETOPs). For example, a three-engine aircraft flying from Sydney to Santiago, Chile is permitted to have a flight path that is 1,000nm shorter than what a twin-engine aircraft is permitted to fly.

An improved design of the wings allows the aircraft to be up to 30% more fuel-efficient than other aircraft in its size category, attributed to a much lower maximum take-off weight (MTOW) than its competitors. The 8X’s MTOW is 73,000lbs compared to around 100,000lbs for similar existing models.

FALCON 8X DELIVERIES BY YOD

21 16

APAC FLIGHT ACTIVITY 5 FLIGHT ACTIVITY FLOW - 2019Q1 4

Asia Pacific 71 Asia Pacific 2016 2017 2018 2019 Europe Asia Pacific 29 Asia Pacific Europe 26 The 8X, like the 7X, has tremendous short take-off and landing capabilities Asia Pacific 7 Middle East and can operate in ‘hot and high’ flying conditions. It is capable of steep Middle East 4 approaches up to six degrees, allowing it to serve challenging airports Asia Pacific such as London City Airport and Lugano, Switzerland. Asia Pacific 4 North America North America 3 The aircraft’s cabin is 6 feet 2 inches (1.88 meters) high, 7 feet 8 inches Asia Pacific (2.34m) wide and 42 feet 8 inches (13 meters) long and offers high levels of customization. Inside the cabin, passengers can stay connected with FalconConnect, a system that makes use of the advances in satellite FLIGHT DURATION CLASSIFICATION technology allowing for the use of personal devices on board the aircraft for phone calls, messaging, video streaming and more. 2.0h to 4.0h, 4 (3%) max. 30min, 3 (2%)

In the cockpit, the 8X features a new Enhanced Avionics System (EASy), jointly developed by Dassault Aviation and Honeywell, as well 30 mins to 1.5h, 20 (14%) as Honeywell’s next generation 3D color weather radar system with enhanced turbulence detection capability. The new FalconEye is also available on the 8X. This is the world’s first civil certified head up vision system (HUD) that combines synthetic vision – data-based terrain mapping – with enhanced vision. This combined vision system (CVS) gives pilots better situational awareness in poor weather - such as fog, mist and snow — during the day and night. In October, the European Aviation Safety Agency and US FAA certified the 8X to use FalconEye 1.5h to 2h, 32 more than 4h, 85 for poor visibility approaches down to 100ft. This new capability greatly (22%) (59%) expands the number of airports the aircraft can serve in bad weather conditions. Dassault is also aiming to achieve certification in 2020 for a dual-HUD option that allows pilots to land the aircraft without using Data Source: WINGX natural vision to see the runway. 59+221432+G

SECOND QUARTER 2019 — ASIAN SKY QUARTERLY | 27 PRE-OWNED SPOTLIGHT

MARKET ANALYSIS

The pre-owned market for the 8X is still in its infancy. 2016 saw five The 8X’s flight activity in 2019 Q1, within the Asia Pacific, was situated in deliveries, while 2017 and 2018 witnessed 21 and 16, respectively. Southeast Asia and India, where Dassault Aviation is expanding its presence Deliveries dropped in 2019, with only four delivered to new clients through the support of its recent acquisition of ExecuJet’s maintenance, thus far. The worldwide Falcon 8X fleet in operation stands at 46, with repair and overhaul (MRO) facility at Subang Airport in Malaysia. only 1 available for sale — listed by AvPro with a ‘Make Offer’ pricing. An additional 12 aircraft were ordered and are currently with the manufacturer, with no date yet on when those will be delivered. Most of the operational fleet is based in Europe.

AIRCRAFT DEPRECIATION COMPARISON

70,000

65,000

60,000

55,000

50,000

45,000

Aircraft Residual Value (,000 USD) Value Aircraft Residual 40,000

35,000

30,000 2016/01 2016/02 2016/03 2016/04 2017/01 2017/02 2017/03 2017/04 2018/01 2018/02 2018/03 2018/04 2019/01

FALCON 8X G550 G650 GLOBAL 6000

28 | ASIAN SKY QUARTERLY — SECOND QUARTER 2019 PRE-OWNED SPOTLIGHT

MARKET COMPETITION

Competing against the 8X in the ultra-long-range size category is the 8X buyers will typically be attracted to the aircraft’s technology, not only Gulfstream G550 and Bombardier Global 6000. The 8X has slightly in the cockpit and onboard, but with its impressive tri-jet configuration, smaller cabin than the G550 and the Global 6000. It also falls short of which may be enough for owners to forgive the smaller cabin and the maximum range of both the G550 and Global 6000. However, the reduced range. annual operating cost — variable, fixed and hourly — is significantly less www.dassaultfalcon.com with the 8X than its competitors.

MODEL COMPARISON MODEL FALCON 8X G550 GLOBAL 6000

HEIGHT (FT.) 6.20 6.20 6.25

WIDTH (FT.) 7.70 7.30 8.17

LENGTH (FT.) 42.70 50.10 48.35

CABIN DIMENSIONS CABIN VOLUME (CU. FT.) 1,695 1,812 2,002

RANGE - NBAA IFR RESERVES - SEATS FULL (NM) 6,290 6,360 5,890

BALANCED FIELD LENGTH (FT.) 5,820 5,963 6,200

PERFORMANCE LANDING FIELD LENGTH - FAR 135 (FT.) 2,688 2,750 2,750

VARIABLE COST (/YR) $1.6M USD $1.98M USD $2.05M USD

FIXED COST (/YR) $1.14M USD $1.25M USD $1.18M USD ANNUAL ANNUAL

OPERATING COST OPERATING HOURLY COST $6,670 USD $7,648 USD $7,949 USD

Source: Conklin & de decker Ver. 2019.1

SECOND QUARTER 2019 — ASIAN SKY QUARTERLY | 29 ASM ad-02-01-01.pdf 1 3/6/2019 10:29 AM

ETHICAL AIRCRAFT TRANSACTIONS BRIAN PROCTOR, CHAIRMAN INTERNATIONAL AIRCRAFT DEALERS ASSOCIATION AVAILABLE AT s the world’s only accreditation program for aircraft dealers and brokers, the International Aircraft Dealers Association (IADA) was formed in 1991 to assure WWW.ASIANSKYMEDIA.COM A aircraft buyers and sellers of the highest level of ethics, experience, standards and trust. First established as the National Aircraft Resale Association (NARA), the organization changed its name to reflect the international scope of the industry and UNDERSTAND THE DYNAMICS OF BUSINESS AND its members. Today, only 3% of all aircraft dealers merit IADA accreditation, while they GENERAL AVIATION IN SELECT ASIA PACIFIC COUNTRIES. handle more than 50% of all pre-owned business jet transactions.

M The process of attaining accreditation is notably stringent, with IADA is now working towards the accreditation of individual brokers, Y C CC C requirements ranging from a minimum number of transactions per supervised under IADA-accredited dealers. Each accredited firm must CM year (10) to abiding by a strict 14-point Code of Ethics – reiterated have at least 50% of its brokers achieve Certified Broker Status within C in an annual ethics and compliance training. Once granted initial 12 months of becoming an IADA member. MY accreditation, dealers must then be re-accredited every three years. CY C C “At the IADA spring meeting, we gathered 22 members and brokers CMY “IADA is taking a three-prong approach to improving the brokerage to develop test questions for a future training and educational guide K business: 1) Standardization; 2) Certification & Accreditation; and 3) for individual brokers,” says Proctor, further explaining that this Data Integrity,” explains IADA Chairman, Brian Proctor. certifies a consistent delivery of support and counsel throughout an aircraft transaction. When it comes to standards, the association is looking to simplify and streamline the process of transactions – or “those aspects that One of the latest developments of IADA is the launch of an available typically bog down transactions.” One example is through creating a aircraft search portal (www.AircraftExchange.com), featuring listings standardized letter of intent (LOI), which IADA hopes will become from IADA brokers and dealers. This online marketplace will allow buyers adopted by its members over time. to easily identify “reputably-listed aircraft for sale and consequently facilitate transactions.” In terms of certification and accreditation, IADA works with an independent third-party agency, JosephAllan Aviation Consulting, to In line with the association’s goal of maintaining data integrity, IADA has develop, review and analyze the qualifications of each potential IADA enlisted the support of a respected aviation researcher to validate the dealer. Those standards are “significantly more difficult than they had aircraft specifications listed on the platform, ensuring all information is been in the past,” says Proctor. accurate and updated.

“There was a perception in the marketplace, particularly in the US, that “Ultimately, the end user will benefit because as we raise standards and NARA was a ‘good ol’boys club’ and we want to change that perception. as we elevate the profession there will be more transparency and value We want to set apart IADA members so that clients can recognize that to the product that we – as brokers and dealers – bring to the industry.” there’s value in working with someone who is accredited.” IADA recently accredited 25 existing dealers and seven new dealers, all of 2019 brought about 16 new companies applying for accreditation. This who passed the stringent requirements. The association will now focus number dwindled down to nine accredited dealers. “In the history of the its work on accrediting brokers within those firms, while continuing its organization the most companies to apply was seven; 16 was a big deal effort for more efficient, effective and ethical aircraft transactions. and validation of the work IADA is doing,” says Proctor. www.iada.aero

30 | ASIAN SKY QUARTERLY — SECOND QUARTER 2019 ASM ad-02-01-01.pdf 1 3/6/2019 10:29 AM

INTERVIEW: BRIAN PROCTOR

AVAILABLE AT WWW.ASIANSKYMEDIA.COM UNDERSTAND THE DYNAMICS OF BUSINESS AND GENERAL AVIATION IN SELECT ASIA PACIFIC COUNTRIES.

Y C CC C CM C MY

CY C C

CMY

SECOND QUARTER 2019 — ASIAN SKY QUARTERLY | 31 UPCOMING SPOTLIGHT DASSAULT FALCON 6X

In 2018, Dassault launched the Falcon 6X program in Paris using a picture of the aircraft flying over Hong Kong harbour. It was perhaps an omen for how it is the perfect aircraft for the Asian market —long-range with next-level comfort. The model is now one step closer to rocking the sky with the ultimate cabin experience. At this year’s EBACE, the French manufacturer announced that the 6X’s critical design review had been completed and the manufacture of major parts has commenced. The new jet is on track for its first flight in 2021 and entry into service in 2022.

32 | ASIAN SKY QUARTERLY — SECOND QUARTER 2019 UPCOMING SPOTLIGHT: DASSAULT FALCON 6X

INTRODUCTION

owering the Falcon 6X is Pratt & Whitney Canada’s Pure®Power CROSS SECTION PW812D engines, capable of producing 13,000-14,000 lbs of P thrust. Equipped with a low maintenance single piece fan and 2.58 M / 8 ft 5 in emission reducing Talon combustor, the PurePower PW800 family offers the highest efficiency, reliability and maintainability in the 10,000- 20,000 lb class. Setting a new "green" engine standard for emissions, the engine’s low-noise design and low-vibration levels contribute to reducing cabin noise for a more comfortable passenger experience.

With a maximum capability of flying directly from Beijing to San Francisco or Moscow to Singapore, the 6X has a top speed of Mach 0.90 and a maximum range of 5,500nm. At its long-range cruise speed of Mach 0.85, 1.98 M / 6 ft in the 6X can also connect Paris to Beijing or Los Angeles to London.

The Falcon 6X can now land with much more fuel than most competing aircraft, allowing operators to make short stops at interim airports without having to refuel. Additionally, the twinjet is certified for steep 2.18 M / 7 ft 2 in approaches attributed to its new generation and ultra-efficient wings, which optimize landing on short runways with difficult approaches. • Configurable seating designs

With one of the largest cabins of its class, passengers can travel on the While the most attractive highlights of the 6X include its range and 6X in comfort and style. The aircraft’s cabin is six feet, six inches (1.98 cabin size, 6X owners and operators can also enjoy the extensive m) high and 8 feet 6 inches (2.58 m) wide — the highest and widest global support network backed by Dassault Aviation. Reduced cross section in a purpose-built business jet – and is 40 feet 4 inches maintenance costs, thanks to Dassault’s FalconCare program, (12.3 m) long. It can accommodate up to 16 passengers in three distinct not only allows for budget predictability but provides extended lounge areas, with room for multiple configurations including a large maintenance intervals. Complementing the aviation giant’s entry way/crew rest area and a spacious rear lounge. widespread authorized service centers located in Beijing, Shanghai, Hong Kong, Singapore and many other locations is its 24/7 customer Every element of the cabin’s design has been meticulously rethought, the service with over one hundred field service reps. With the acquisition result of an extensive survey of customer tastes and inputs from Dassault of the MRO network of ExecuJet, expanding Dassault’s support Aviation’s own in-house Design Studio. Significantly more natural light footprint throughout the Asia Pacific, Africa and Middle East regions, floods into the cabin thanks to 30 extra-large windows including a unique there is now more support than ever before. galley skylight – the first in business aviation – designed to provide www.dassaultfalcon.com additional brightness in an area usually devoid of natural light.

THE ULTIMATE CABIN EXPERIENCE

The Falcon 6X cabin is simply the tallest and widest in any purpose built business jet. It gives you more personal space to sit or stand. More room for areas of privacy and relaxation as well as common areas where teams can meet and confer. The 6X cabin is the ultimate in flexible living and working space, providing a level of comfort that will help you go far and accomplish more.

SECOND QUARTER 2019 — ASIAN SKY QUARTERLY | 33 SPECS

AT A GLANCE HIGHLIGHTS

Range 5,500 N.M • The tallest and widest cabin in any purpose-built business jet Seating 12 - 16 • 3,900 feet cabin altitude cruising at 41,000 feet Cabin Volume (excluding cockpit and baggage) 1,843 cu.ft • Natural light with 30 larger windows Maximum Operating Altitude 51,000 ft • Easy control of cabin management and entertainment functions MMO M.90 • Advanced EASy III avionics flight deck Maximum Takeoff Weight 77,460 lb • Pratt & Whitney PW812D engine - best-in-class availability Maximum Zero Fuel Weight 45,920 lb • PurePower Service Plan

RANGE MAP - FROM HONG KONG

Moscow

New York

Dubai From Hong Kong

Lagos

Sao Paulo

Sydney

6X unreached range from Hong Kong

• performance may be affected by real aircraft configuration (outfitting options, operating items) and by ATC routing and weather conditions, 8 passengers, Mach .80, 85% Wind reliability, NBAA IFR Reserves

34 | ASIAN SKY QUARTERLY — SECOND QUARTER 2019 MIAMI 2019 12 & 13 NOVEMBER FONTAINEBLEAU, MIAMI BEACH WWW.CORPORATEJETINVESTOR.COM/MIAMI-2019

“THE AVIATION EQUIVALENT OF VANITY FAIR -WITH A MIXTURE OF INSIGHT, FLAIR, AND FUN CONDUCTED IN THE MOST DELIGHTFUL WAY” SHELLEY SVOREN, 1ST REPUBLIC BANK

“THIS HAS BECOME THE ONE CONFERENCE I MAKE SURE TO CLEAR MY SCHEDULE FOR.” MIKE MCCRACKEN, HAWKEYE AIRCRAFT

“A TWO-DAY INVESTMENT THAT RETURNS MONTHS OF VALUE” ANTHONY KIOUSSIS, ASSET INSIGHT

“THIS REALLY HAS BECOME THE BEST CONFERENCE IN THE WORLD FOR PRIVATE AVIATION” KENNY DICHTER, WHEELS UP

Data Source: ASG & Jetnet

SECOND QUARTER 2019 — ASIAN SKY QUARTERLY | 35

Miami ad.indd 1 29/05/2019 10:13:39 MARKET DYNAMICS PRE-OWNED BUSINESS JETS FOR SALE - 2019 Q2

INVENTORY VALUE (USD)1

$7,453M

WORLDWIDE

$5,808M MAR 2019 $5,927M

$1,505M

ASIA PACIFIC

$783M $750M MAR 2019

May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May 2017 2018 2019

The Inventory Value Line represents the number of aircraft actively being marketed for sale in USD terms.2

The Trend Line represents the market’s direction in terms of the balance between sellers and buyers (supply and demand) at today’s price levels. A rising Trend Line indicates that pre-owned activity is stabilizing, with sellers of aircraft increasingly likely to find buyers.

The Signal Line represents an indication of where the market’s direction may be heading in the future. A Signal Line consistently falling below the Trend Line indicates that any improvement in the market’s direction may not be entirely sustainable.

TREND WORSENING MARKET TREND1 WORLDWIDE

MOVING TOWARDS SELLER’S MARKET MOVING TOWARDS BUYER’S MARKET TREND IMPROVEMENT

49 1 43 AIRCRAFT SOLD 40 41 36 37 WORLDWIDE 34 35 34 34 30 30 30 31 28 28 24 24 25 26 26 22 22 21 18

May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May 2017 2018 2019

1 The historical inventory value and transactions are subject to change based on latest market information updates. 2 ASG’s Inventory Value line is calculated by taking the total number of aircraft for sale from a selection of 26 different models, multiplied by their average asking prices. Source: JETNET & ASG 36 | ASIAN SKY QUARTERLY — SECOND QUARTER 2019 MARKET DYNAMICS

% OF FLEET SOLD

1.20% 1.15% 1.10% 1.05% 1.00% 0.95% 0.90% 0.85% 0.80% 0.75% 0.70% 0.65% 0.60% 0.55% 0.50% 0.45% 0.40% May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May 17 17 17 17 18 18 18 18 18 18 19 19 19

AVERAGE ASKING PRICE

27 MILLION USD MILLION

25 ASIA PACIFIC

21 WORLDWIDE

17 May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May 17 17 17 17 18 18 18 18 18 18 19 19 19

% OF FLEET FOR SALE

15%

13%

11 % ASIA PACIFIC

7% WORLDWIDE

3% May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May 17 17 17 17 18 18 18 18 18 18 19 19 19

AVERAGE DAYS ON MARKET

620

570 ASIA PACIFIC 520

470

420

370 WORLDWIDE 320

270

220 May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May 17 17 17 17 18 18 18 18 18 18 19 19 19

Source: JETNET & ASG SECOND QUARTER 2019 — ASIAN SKY QUARTERLY | 37 MARKET DYNAMICS

SUPPLY / DEMAND INDICATORS BUSINESS JETS

SUPPLY VS. DEMAND RATIO AVERAGE DAYS ON MARKET

SUPPLY > DEMAND DAYS ON MARKET % OF FLEET MODEL FOR SALE

AVERAGE AVERAGE

NO TRANSACTIONS 20.0% ACJ318

11.4% AIRBUS ACJ319

9.9% BBJ

4.3% BBJ2 BOEING

6.4% CL604

7.7% CL605

9.9% CL850

12.6% GL5000 BOMBARDIER

3.7% GL6000

7.5% L600

11.5% L650

NO TRANSACTIONS 27.6% EMBRAER L1000

3.8% F2000LX

6.1% F2000LXS

2.5% F2000S

7.1% F7X

NO TRANSACTIONS 8.3% F900DX DASSAULT 6.8% F900EX

6.7% F900EXe

4.1% F900LX

10.7% G200

3.1% G280

6.8% G450

3.2% G550 GULFSTREAM 4.3% G650

5.0% G650ER

400% 300% 200% 100% 0 6.7% 0 200 400 600 800 1000 Average Average AC for sale / Total sold in last 12 months

The above chart reflects where certain aircraft models are positioned These indications do not necessarily mean that prices will be higher in in terms of supply and demand (based on a ratio of completed the future, but it does indicate that sellers of these particular models transactions compared to the number of sellers and the average are more likely to find willing buyers in a shorter period of time than the number of days on the market for a transaction to take place). overall average.

For some model types, given the market indicators shown on the This can be seen most with certain Gulfstream (G200, G450, G550, previous page, the stabilization in pre-owned asking prices and G650), Bombardier models (Challenger 604/605 & Global 5000) decline in inventory level appear to have stimulated increased and Dassault Falcon models (2000 Series and 7X), where more demand, leading to an increase in transactions and a more balanced transactions are occurring relative to the number for sale, and state of supply and demand. transactions are requiring less time on the market for sellers to complete.

Source: JETNET & ASG 38 | ASIAN SKY QUARTERLY — SECOND QUARTER 2019 BUSINESS JETS MARKET POSITIONING towards supplyanddemandmarket earlier). equilibriumportrayed 4. Themomentumofthemarketplace (represented by thetrend 3. Theaverage days forsale relative to theoverall market average. 2. Thenumberofaircraft soldrelative to theaverage numberforsale. 1. Thepercentage ofaircraft forsalerelative to itsfleetsize. including thefollowingfourmarket indicators: model particular each for calculation ‘Marketability’ a on based is and market,overall the to relative model aircraft each of Ratio Demand providesThe above chart a visualrepresentation oftheSupply/ Source: JETNET &ASG GULFSTREAM DASSAULT EMBRAER BOMBARDIER BOEING AIRBUS F2000LXS F2000LX F900EXe G650ER F900DX GL6000 GL5000 F900EX F2000S ACJ319 ACJ318 F900LX CL850 CL605 CL604 L1000 BBJ 2 BBJ 1 G200 G650 G550 G450 G280 L600 L650 F7X MOVING TOWARDS BUYER’S MARKET Supply &Demand Supply Balanced * ASGchose26popularaircraft modelsasdescribedinthisreport find buyers available, compare to corporateairlinermodels. the variousas well as Gulfstreamtopositioned better appear models, Falcon600, Challenger sizedas Series,medium such 900 jets, & 2000 When taking into account these four factors, most of the the large and SECOND QUARTER 2019 MOVING TOWARDS SELLER’S MARKET — ASIANSKY QUARTERLY MARKET DYNAMICS | 39 MARKET DYNAMICS

PRE-OWNED CIVIL HELICOPTERS FOR SALE - 2019 Q2

INVENTORY VALUE (USD)1

$1,390M

WORLDWIDE $988M MAR 2019 $945WM

ASIA PACIFIC $92.3M MAR 2019 $93.0M $154M

May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May 2017 2018 2019

The Inventory Value Line represents the number of aircraft actively being marketed for sale in USD terms.2

MARKET TREND1 WORLDWIDE

MOVING TOWARDS SELLER’S MARKET MOVING TOWARDS BUYER’S MARKET

TREND REVERSAL

1 AIRCRAFT SOLD TREND WORLDWIDE IMPROVEMENT

18 19 16 16 15 14 15 14 15 13 12 10 10 8 8 9 7 6 7 6 7 4 5 2 1

May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May 2017 2018 2019

1 The historical inventory value and transactions are subject to change based on latest market information updates. 2 ASG’s Inventory Value line is calculated by taking the total number of aircraft for sale from a selection of 16 different models, multiplied by their average asking prices. Source: JETNET & ASG 40 | ASIAN SKY QUARTERLY — SECOND QUARTER 2019 MARKET DYNAMICS

% OF FLEET SOLD

0.50%

0.45%

0.40%

0.35%

0.30%

0.25%

0.20%

0.15%

0.10%

0.05%

0.00% May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May 17 17 17 17 18 18 18 18 18 18 19 19 19

AVERAGE ASKING PRICE

6.5

6 MILLION USD MILLION WORLDWIDE

5.5

5 ASIA PACIFIC

4.5

4 May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May 17 17 17 17 18 18 18 18 18 18 19 19 19

% OF FLEET FOR SALE

8.0% WORLDWIDE 7.0%

6.0%

5.0%

4.0%

3.0% ASIA PACIFIC 2.0%

1.0%

0.0% May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May 17 17 17 17 18 18 18 18 18 18 19 19 19

AVERAGE DAYS ON MARKET

800

750

700

650 WORLDWIDE 600

550

500

450

400 ASIA PACIFIC

350

300 May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May 17 17 17 17 18 18 18 18 18 18 19 19 19

Source: JETNET & ASG SECOND QUARTER 2019 — ASIAN SKY QUARTERLY | 41 MARKET DYNAMICS

SUPPLY / DEMAND INDICATORS CIVIL HELICOPTERS

SUPPLY VS. DEMAND RATIO AVERAGE DAYS ON MARKET

SUPPLY > DEMAND DAYS ON MARKET % OF FLEET MODEL FOR SALE

AVERAGE AVERAGE

13.1% S76C+

12.0% S76C++ SIKORSKY

3.1% S92A

5.4% BELL 412EP

4.9% BELL 412HP

5.4% BELL HELICOPTER BELL 429

10.0% AW109E PWR

3.6% AW109SP GN LEONARDO 2.6% AW139

4.5% AS332L1

8.8% H225

5.2% EC135P2

2.1% EC135T2

1.2% EC145 AIRBUS HELICOPTERS

21.4% EC155B

4.8% H155

350% 300% 250% 200% 150% 100% 50% 0 4.7% 0 100 200 300 400 500 600 700 800 Average Average AC for sale / Total sold in last 12 months

The above chart reflects where certain aircraft models are positioned in terms of supply and demand (based on a ration of completed transactions compared to the number of sellers, and average number of days on the market for a transaction to take place).

Source: JETNET & ASG 42 | ASIAN SKY QUARTERLY — SECOND QUARTER 2019 MARKET DYNAMICS

MARKET POSITIONING CIVIL HELICOPTERS

MOVING TOWARDS Balanced MOVING TOWARDS Supply & Demand BUYER’S MARKET SELLER’S MARKET

S76C+

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

The above chart provides a visual representation of the Supply / Demand Ratio of each aircraft model relative to the overall market, resulting in a ‘Marketability’ calculation of each particular model based on the following four market indicators:

1. The percentage of aircraft for sale relative to its fleet size. 2. The number of aircraft sold relative to the average number for sale. 3. The average days for sale relative to the overall market average. 4. The momentum of the marketplace (represented by the trend towards supply and demand market equilibrium portrayed earlier).

Source: JETNET & ASG SECOND QUARTER 2019 — ASIAN SKY QUARTERLY | 43 AVIATION ADVICE: GREY CHARTER

AVIATION ADVICE: GREY CHARTER BY NICK HUGHES AND GORDON GARDINER HOLMAN FENWICK WILLAN

rivate business can become all too public in P the event that an incident and/or investigation or audit uncovers unlawful conduct. This has been thrown into sharp focus by two cases this year in the UK. The situation also falls to be looked at in terms of the need for continuing vigilance over market arrangements applying in the Asia Pacific region.

In March 2019 a UK businessman, Robert Murgatroyd, trading as crashed into the sea near Guernsey, Channel Islands, on a flight flybpl.com, was convicted and imprisoned for three years and six between France and UK in January 2019. The flight was conducted months on seven charges arising out of an accident in course of using an aircraft on the N register. The ownership interests were what was an illegal charter flight carried out in September 2017. The structured so to facilitate operation outside of the US and involved aircraft effected a forced landing and was badly damaged although an owner trust arrangement, such that beneficial ownership rested happily all occupants survived. This was a case of illegal in a UK company whereas title was held by a US entity. The tragic public transport in the sense of passengers paying accident, in apparent bad weather, came about when an aircraft under the command of a pilot with a PPL conducted a VFR flight for a flight within the UK that was effected by Mr which encountered meteorological conditions that must have been Murgatroyd as the pilot when he had only a PPL. at or towards VMC limits. There were many other aspects of non-compliance with safety

regulations such that Mr. Murgatroyd was convicted on charges of The event has triggered an investigation into the regulations endangering the safety of an aircraft, endangering the safety of a applicable to the operation of the flight including airworthiness person, illegal public transport, flying otherwise than in accordance requirements, flight crew licensing and, of course, the carriage of with a licence, flying otherwise than in accordance with any condition passengers. The combination of an N registration / limitation contained in an airplane flight manual, failing to comply for the aircraft and operations in Europe of with applicable insurance regulations and flying without the airplane flight manual. It was held to be a reckless operation. It might be course create a need to comply with regulations thought to be at the lower end of the market involving a PA28 type applicable in both US and EASA jurisdictions. In this aircraft, but the principles apply across the board. case, there is no record of an application for permission to operate the aircraft commercially, according to the AAIB — the UK air accident Secondly, investigations continue into the cause of an accident investigation authority. The pilot, as was required, did hold both an that caused the death of nascent English Premiership footballer, FAA licence and an EASA licence (albeit they were PPL). And, as was Emiliano Sala (who was being flown to join his new club as their big one aspect of the Murgatroyd case (above), if it is found that reward new signing) and of the pilot, the late David Ibbotson, whose aircraft was given for the flight, a PPL is incompatible with requirements for

44 | ASIAN SKY QUARTERLY — SECOND QUARTER 2019 SPECIAL FEATURE: JET TECHNOLOGY OF THE FUTURE

the carriage of passengers (for reward). The details of the applicable two obvious consequences in terms of the value invested in the arrangements, for this and (triggered by the accident) possibly other asset and the contingent liabilities in case of accident or incident. related flights, will be revealed in due course. Any invalidity affecting a passenger's insurances, arising out of the event, will only redouble the problems. The underlying regulatory requirement in Europe is that if, for example, carriage was being performed with some "cost sharing" These cases have focused attention on owner / operators compliance arrangement as between pilot and passenger, there is again a need with applicable regulations. However, we must also not be blind to to comply with regulations applicable not only in Europe but also the need also to have regard to the use for which the aircraft may be in the USA. Many jurisdictions may allow "cost sharing" as a form put in any charter and to assure that the customer's use is lawful. of relaxation / exemption from regulation otherwise applicable to Cases of aircraft being seized and possibly forfeited and sold, over what would be commercial flights. The rules are often the subject the ownership interests, by authorities in case of illegal use, are not of guidance relating both to the operation of aircraft on the registry unheard of. At best there may be a protracted legal period involving concerned and also to aircraft registered in a foreign State. As may considerable loss of use as well as insurance and maintenance be well known, in the USA, legal interpretations issued by the FAA complications arising from the process. are that there must be a "pro rata share" of operating expenses as between pilot and passenger. So, in the case of two occupants, All arrangements should be vetted not only for commercial success in the Emiliano Sala case, for compliance, the pilot should have but also for legal compliance. borne half the operating expenses. Moreover, as the AAIB state, the www.HFW.com US rules require that the flight must not have been made for the purpose of merely transporting the passenger but instead for the common purpose of pilot and passenger. It cannot be a charter for the passenger.

Although those two cases are in Europe, similar facts could arise anywhere. They could also arise in the operation of far more complex aircraft and in the case of aircraft owned by more complex structures. Moreover, they illustrate the need for continued vigilance, for some education compliance, and for persons to be assured of compliance, in aircraft charter operations. Once non-compliance with applicable aviation regulation is established, the bedrock of other compliance, including with contracts, for all parties concerned, in all their arrangements touching upon the aircraft and their use of it, is put in jeopardy. For example, aviation insurance is underwritten on the basis that, with certain special caveats, the aircraft is operated in accordance with aviation law. The existence of the insurance may itself be a legal requirement and the non-availability of the insurance, by reason of breach of policy conditions, has only

SECOND QUARTER 2019 — ASIAN SKY QUARTERLY | 45 charter listing.pdf 1 3/29/19 3:25 PM

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COTACT SERENA LUI, CHARTER SERVICES MANAGER T : 8 6 F : 8 8 66 E : sluiasiansygroup.com SECOND QUARTER 2019 — ASIAN SKY QUARTERLY | 47 Suite . Fortis Tower. - Cloucester Road, an Chai, ong Kong www.asianskygroup.co www.asianskyedia.co ROTORCRAFT ASIA CONFERENCE 2019 APRIL 9TH, SINGAPORE

019 marked the first time Asian Sky Media joined as the Official Conference Partner to Rotorcraft 2Asia. The one-day conference brought the likes of OEMs, operators, lessors and analysts all picking apart the complex rotary market of the Asia Pacific.

One of the opening points of the Conference, made by Asian Sky Group’s Chairman, Max Buirski, was the growth in the Asia-Pacific (turbine) civil helicopter market and, thus, the potential it has. Enduring the downturn in the oil and gas market, shakeups in the PANEL: leasing market and an oversupply of medium and WHY ASIA IS NOT ONE REGION heavy-size helicopters, the Asia-Pacific fleet still managed to grow in 2018 — 4.6% to be exact. In Europe and North America there’s a bi-lateral between the FAA and EASA. A lot of countries generally follow FAA or EASA regulatory frameworks, but China is completely different not following one or the other. - TY CORLEY, HELICOPTER TECHNICAL ADVISOR, JET SUPPORT SERVICES, INC (JSSI)

48 | ASIAN SKY QUARTERLY — SECOND QUARTER 2019 ROTORCRAFT ASIA CONFERENCE 2019

PANEL: WHAT’S REALLY GOING ON IN CHINA

There are two growth opportunities for Russian Helicopters in China: 1) HEMS and 2) utility helicopters. - ARTEM FETISOV, CIVIL HELICOPTERS SALES DIRECTOR, RUSSIAN HELICOPTERS

China is a complex place with multiple provinces and some aspects vary from province to province, including mission segments. - MICHAEL YORK, SVP COMMERCIAL - AFRICA, MIDDLE EAST, ASIA, MILESTONE AVIATION

The Conference started out with a panel discussion on ‘Why Not unexpected from the day’s agenda was the interest in China’s Asia is Not One Region’, exploring the distinctions of operating helicopter market, which overtook Japan in 2018 to become the helicopters in Asia – from Japan to the Philippines. And, as noted second largest regional market behind Australia. A dedicated by Ascend by Cirium’s Aviation Analyst, Dennis Lau, this varied discussion “What’s Really Going on in China?” delved into all those region is set to overtake Europe’s helicopter market (in terms of new orders, the growing EMS market and what the market has to fleet size) sometime in the 2020s. come. Macquarie Rotorcraft Leasing’s Vice President, Sales & Relationship Management – Asia/Australia & Pacific, Philip Stransky However, the complexities are extreme. LCI Aviation’s Executive was, perhaps, the most pragmatic on China advising: “When you see Vice President, Nigel Leishman pointed out a few of the tough the number of new deliveries going into China everyone gets very limitations to work around, including Thailand’s importation excited, but it’s much more complex to go from the excitement to restriction on helicopters older than five years. generating revenue out of those new deliveries.”

SECOND QUARTER 2019 — ASIAN SKY QUARTERLY | 49 ROTORCRAFT ASIA CONFERENCE 2019

One of the more intriguing topics of the day brought the conference The final session of the day brought together four of the region’s towards the future – which, as the audience heard from Bell and major helicopters operators from the Philippines, Thailand and Airbus, is closer than we think. Taking the day’s spotlight, and Malaysia: INAEC Aviation Corporation, PhilJets Group, SFS Aviation attracting the largest crowd, was the ‘Beating the Traffic — eVTOL, and MHS Aviation. The panelists discussed the challenges of UAS, Uber’ panel. David Sale; Managing Director, Asia Pacific for operating in Asia, immediately turning their attention to the need for Bell started off the session explaining “there are three factors that more maintenance support from OEMs, noting it “should be better”. are driving on-demand mobility: urbanization, shared economy and Each also shared the difficulties they face operating in their home instant gratification.” And these points were touched on throughout countries and discussed the shared growth of the Southeast Asian the discussion. helicopter market, which has benefited all of the operators.

PANEL: BEATING THE TRAFFIC — EVTOL, UAS AND UBER

7 of the Top 10 most congested cities are in Asia Pacific, triggering issues that include limited productivity and unpredictability. - LIONEL SINAI, FOUNDER & CEO, ASCENT URBAN AIR MOBILITY

Safety is always a primary concern, particularly in a place like Jakarta where the population is so high. As an operator, we analyse and propose the safest routes. - DENON PRAWIRAATMADJA, CEO, WHITESKY AVIATION (HELI CITY)

AUDIENCE QUESTION: WHAT’S THE NOISE SIGNATURE OF THESE PRODUCTS IN COMPARISON TO EXISTING ROTARY-WING

50 | ASIAN SKY QUARTERLY — SECOND QUARTER 2019 PRODUCTS? ROTORCRAFT ASIA CONFERENCE 2019

BENJAMIN R. LOPEZ President, INAEC Aviation Corporation MOHSEIN MA’SOM CEO, MHS AVIATION THIERRY TEA CHAIRMAN, PHILJETS GROUP PANEL: LEADERSHIP ROUNDTABLE AUDIENCE QUESTION: IS THERE ANY CHANCE FOR AN ASEAN REGULATOR, SIMILAR TO THAT OF EASA?

TISANU RATANARAT CEO & ACCOUNTABLE MANAGER, SFS AVIATION CO. LTD

SECOND QUARTER 2019 — ASIAN SKY QUARTERLY | 51 Asian Sky_210mmx297mm.pdf 1 1/4/2019 3:34:43 PM

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AIRCRAFT POSITIONING - BUSINESS JET AIRCRAFT ACQUISITION VS. MAX RANGE

24 23 22 CORP. AIRLINER 21 LONG RANGE 20 LARGE 19 MEDIUM 18 LIGHT 17 VERY LIGHT 16 ACJ321 BBJ3 15 BBJ2 ACJ320 14 13 ACJ319 BBJ 12 ACJ318 G650ER G650 11 GLOBAL 6000 G550 LINEAGE 1000E 10 F8X GLOBAL 5000 9 G500 F7X

G450 8 F900LX

7 GLOBAL EXPRESS XRS LEGACY 650 F2000LXS G600 CL850 CL650 6 CL350 F2000S GLOBAL EXPRESS CIT. X+ G280 F2000LX G-V G350 LEGACY 500 F900EX EASY LEGACY 600 CL605 G-IVSP CIT. SOVEREIGN+ CL300 F900EX F2000DX G-IV LEGACY 450 F2000 4 F2000EX CIT. LATITUDE CIT. X G300 F50EX TOTAL ANNUAL COST (MILLION USD/YEAR) TOTAL G200 CIT. XLS+ H4000 L75 G150 L70 CIT. SOVEREIGN CL604 3 H900XP CIT. VII H850XP CIT. CJ4 H800 H800XP Where high-flying deals await your arrival CIT. XLS PHENOM 300 CIT. CJ3+ L45XR L60XR G100 CIT. EXCEL L40XR CIT. CJ2+ CIT. CJ3 CIT. ENCORE+ ASTRA SP SINGAPORE AIRSHOW 2020 NEXTANT 400XTI DIAMOND 1A 2 CIT. ENCORE CIT. ULTRA Asia’s largest aerospace and defence event CIT. M2 CIT. BRAVO CIT. CJ1+ BEECHJET 400 CIT. CJ1 This is the single most influential platform for you to leave an indelible mark on potential business partners. CIT. CJ2 H400XP PREMIER 1A PHENOM 100E Amidst an audience of the best minds and leaders in the global aviation industry, Singapore Airshow 2020 HONDAJET offers you the opportunity to showcase your latest technologies and innovations. Sign on the dotted line and reserve your space today! CIT. MUSTANG

HIGHLIGHTS FROM SINGAPORE AIRSHOW 2018 ECLIPSE 550 1,062 287 54,151 1,464 participating VIP delegations trade attendees meetings companies from from 91 countries from 147 countries conducted during 50 countries and regions and regions the exhibition 1 500 3,500 2,500 3,000 4,000 4,500 5,000 5,500 6,000 6,500 7,000 7,500 8,000 1,000 1,500 2,000

MAX RANGE (N.M.)

SECURE A CHOICE SPOT NOW AT [email protected] SINGAPOREAIRSHOW.COM

* The estimated total yearly cost is based on aircraft ownership cost for 10 years including financing, plus annual operating costs and regional adjustments. Organised by: Official Media Partner: Supporting Media Partners: Held in:

Source: Conklin & de Decker 2017 SECOND QUARTER 2019 — ASIAN SKY QUARTERLY | 53 MARKET SUMMARY -- JETSSUMMARY PER MODEL — BUSINESS JETS INVENTORY LEVEL, PRICE TREND & TRANSACTIONS AIRBUS ACJ318 • There are currently four Airbus ACJ318s available for sale, representing 20% of the total 20 aircraft in service. The inventory level dropped from five aircraft in the last quarter. • Average asking price increased to US$29.1M. • Due to one aircraft leaving the market, the average days on market drasti- cally decreased 72% to 250 days. • Zero transactions were completed in this period.

Average Asking Price

$30.3 $30.0 SPECS $29.1 Max Range 4,253 N.M. / 7,877 km (with ACTs) Max Speed Mach 0.82 Typ. Passengers 19

$28.0 FOR SALE 2019 May 2019 Feb

For Sale vs. Sold No. for Sale 4 (20.0%) 5 (25.0%) Avg Asking Price 29.1M USD 28.0M USD

5 5 5 5 5 5 5 5 5 5 5 Avg Days on Market 250 896 4 4

1 SOLD 2019 May 2019 Feb May Aug Nov Feb May Past 12 Months 0 0 2018 2019 Past 3 Months 0 0 For Sale Sold

ACJ319 • There were 8 Airbus ACJ319s available for sale in Q2, representing 11.4% of the total 70 aircraft in service. Inventory level has dropped from 11 to 8. • Average asking price in this period raised to US$49.7M.

• No aircraft entered the market. The average days on market for sale went up to 581 days. 0+5+01+0+0 0+5 0+0+0+0 0+4 0+0+0+0 0+5 0+0+0+0 0+5 0+0+0+0 0+5 0+0+0+0 0+5 0+0+0+0 0+5 0+0+0+0 0+5+0 0 +0+00+5 0+0+0+0 0+5 0+0+0+0 0+5 0+0+0+0 0+4 0+0+0+0 • There were two transaction completed in this quarter. Average Asking Price $51.4

$49.7 SPECS Max Range 6,000 N.M. /11,112 km Max Speed Mach 0.82 Typ. Passengers 19 $45.2 FOR SALE $43.3 2019 May 2019 Feb For Sale vs. Sold No. for Sale 8 (11.4%) 11 (15.7%) 11 11 11 10 10 10 10 Avg Asking Price 49.7M USD 45.2M USD 9 9 9 9 8 8 Avg Days on Market 581 517

1 1 1 SOLD 2019 May 2019 Feb Past 12 Months 3 1 May Aug Nov Feb May Past 3 Months 2 1 2018 2019 For Sale Sold

Source: JETNET & ASG 540+18 0+0+0|+0 ASIAN0+20 0+0+0+0 0+16 SKY0+0+0+0 0+20 QUARTERLY0+0+0+0 0+18+0 0+0+00+ 18 0+0+0+0 —0+20 SECOND0+0+0+0 0+22 0+0+0+0 0+22+0 QUARTER0+0+0 22 0+2+0+0+0 0+20 20192+0+0+0 0+18 2+0+0+0 0+16+0 0+0+0

BOEING

0+13+0 55 | 1 May May 13 2019 2019 $51.4

$90.0 0+4+0

0+14+0 +0

0+0+0 0+0+0 0+0+0 0+0+0 1

14 4

0+ 0+16+0 3

16 0+0+0

1 1

3 16 Feb Feb $47.2

0+12+0 0+12+0 0+17+0 $90.0

0+0+0 1+0+0 0+0+0

0+0+0 4+0+0 4 17

0+16+0 0+17+0 0+16+00+15+0 1 Sold Sold ASIAN SKY QUARTERLY

MARKET SUMMARY -- JETS SUMMARY MARKET 4 17 — $58.0 1 4 Nov Nov

16 0+0+0 1+0+0 1+0+0 4 15

0+16+0 0+16+0 0+16+0 0+15+0 0+16+0 For Sale For For Sale For 4 15 1 4 Aug Aug 15

4 16 SECOND QUARTER 2019 2019 QUARTER SECOND

0+16+0 0+16+0 0+16+0 0+16+0 0+18+0 Average Asking Price Average Asking Price

+0 0+0+0 0+0+0 0+0+0 0+0+0 0+0+0 0+0+0 0+0+0 For Sale vs. Sold For Sale vs. Sold 4

16 16

0+0+0 0+0+0 0+0+0 1+0+0 0+0+0 0+0+0 4 18 May May 2018 2018 $37.3

$69.0 0+16+0 0+ - 1 1 2019 Feb 16(12.1%) 47.2M USD 779 4 2 2019 Feb 3 (13.0%) 90.0M USD 652 2019 Feb 2019 Feb 4 0 6,235 N.M. / 11,547 km (with 9 ACTs) Mach 0.82 19 51.4M USD 652 2019 May 13(9.9%) 1 0 19 5,620 N.M. / 10,408 km (with 7 ACTs) 5,620 N.M. / 10,408 km (with 7 ACTs) Mach 0.82 2019 May 2019 May 1 (4.3%) 90.0M USD 202 2019 May

Currently, there are only one BBJ2 for sale — decreasing from three in Q1 three from — decreasing sale for one BBJ2 only are there Currently, in service. 23 aircraft 4.3% of the total approximately 2019, representing in this period. completed was no transaction There The BBJ2 market is a very limited one with only 23 aircraft in service world in service 23 aircraft one with only limited is a very market The BBJ2 than more where East, in the Middle concentrated much wide and it is very 17.4% of the represents only Asia Pacific service. in are 50% of the aircraft aircraft. four - a mere market Current asking prices range from US$19.5M for a 1999 model with 10,115 a US$19.5M for from range asking prices Current hours. ferry a 2011 model with only US$92.5M for to hours total 652 days. to dropped on market days The average in this quarter. completed was no transaction There In Q2 2019, there were 13 BBJs for sale, representing approximately 9.9% of approximately representing sale, for BBJs 13 were In Q2 2019, there 13 16 to from down went level inventory The in service. 131 aircraft the total off the market. taken and four the market entering with one aircraft BBJ2 Past 12 Months Past 3 Months Past Max Speed Passengers Typ. Max Range SOLD SPECS Avg Asking Price Avg Days on Market Avg No. for Sale No. for Past 12 Months Past 3 Months Past Typ. Passengers Typ. Max Range Max Speed FOR SALE FOR • • • SPECS • • • • BBJ Avg Days on Market Avg No. for Sale No. for Asking Price Avg Source: JETNET & ASG JETNET Source: FOR SALE FOR SOLD BOMBARDIER CHALLENGER 604/605 MARKET SUMMARY --JETS 56 CHALLENGER 850 $11.9 $5.3 2018 2018 $8.2 May May 39 12 | 8 ASIAN SKY QUARTERLY 30 11 For Sale vs. Sold vs. Sale For For Sale vs. Sold vs. Sale For 4 Average Asking Price Asking Average Price Asking Average 0+30+0 0+39+0 0+11+0 0+12+0 4+0+0 8+0+0 0+0+0 0+0+0 28 11 +0 14 1 11 CL605 CL604 Aug Aug 28 9 +0 0+ 9 1 9 29 8 For Sale For Sale 6 0+29+0 0+28+0 0+28+0 0+8+0 0+ 6+0+0 9+0+0 14+0+0 0+0+0 1+0+0 1+0+0 $11.0 $5.5 23 6 9 — $12.5 Nov Nov 23 SECOND QUARTER 2019 6 8 1 34 6 Sold Sold 3 0+34+0 0+23+0 0+23+0 0+6+0 0+6+0 0+6+0 3+0+0 8+0+0 9+0+0 0+0+0 1+0+0 0+0+0 36 6 8 1 0+36+0 $8.6 0+6+0 $11.9 8+0+0 1+0+0 $5.1 Feb Feb 41 6 38 6 5 0+38+0 0+41+0 0+6+0 0+6+0 5+0+0 0+0+0 0+0+0 0+0+0

39 7 6 0+39+0 0+7+0 6+0+0 0+0+0 $11.2 2019 2019 $7.2 May May 45 $5.1 7 0+45+0 0+7+0 0+0+0 0+0+0 FOR SALE Avg DaysonMarket Avg AskingPrice No. for Sale SPECS SOLD Typ. Passengers Max Speed Max Range Past 3Months Past 12Months FOR SALE Avg DaysonMarket Avg AskingPrice No. for Sale SOLD SPECS Past 3Months Past 12Months Typ. Passengers Max Speed Max Range • • • • • US$7.2M inQ2. Average askingprice fell from theprevious quarter from US$8.6Mto decrease of1%. contributed to thefall inaverage daysonmarket from 606(Q1) to 602(Q2),a Throughout thisperiodthere hasbeennotransaction. Thenew listing ing thenumberofaircraft seven. One more Challenger 850wasputonthemarket for sale inthisperiod,mak from US$11.9M(Q1)to US$11.2M(Q2). were completed duringthisperiod.Average askingprice dropped slightly increased by45%from 92to 133compared to Q1,despite five transactions 287 fleet inoperation. Over thepast quarter, theaverage daysonmarket increase of16%from theprevious quarter; representing 7.7%oftheentire There were 22pre-owned Challenger 605sonthemarket inQ2,whichisan quarter. asking price rebounded to US$5.1Mafter aslightfall duringthecourse ofthe 293, despite sixtransactions beingclosed duringthistimeframe. Average operation. Average daysonmarket increased by12%from February; 261to from the22aircraft inQ1andrepresenting 6.4%oftheentire 359fleet in There were 23Challenger 604sonthemarket inQ22019,slightly increasing

2019 May 9 Mach 0.82 4,027 N.M./7,458km CL604 14 Mach 0.80 2,811 N.M./5,206km 293 5.1M USD (6.4%) 23 2019 May 6 40 2019 May 602 7.2M USD (9.9%) 7 2019 May 0 4 2019 Feb 261 5.1M USD (6.1%) 22 2019 Feb 8 34 606 8.6M USD (8.5%) 6 2019 Feb 2019 Feb 1 4 9 Mach 0.82 4,000 N.M./7,408km CL605 133 11.2M USD 22 (7.7%) 2019 May 5 32 2019 May Source: JETNET &ASG 92 11.9M USD 19 (6.6%) 2019 Feb 3 27 2019 Feb -

BOMBARDIER

1+0+0 2+0+0

0+11+0 0+29+0 57 1 2 | May May 11 29 2019 2019 $32.0

3+0+0 1+0+0 $19.5

0+12+0 0+29+0 3 1 12 29

0+0+0 2+0+0 0+0+0

0+12+0 0+11+0 0+28+0 0+27+0 2 12 28

11 Feb Feb 27

2+0+0 2+0+0 $34.1 $19.8

0+11+0 0+26+0 2 2 11 26 $40.0

0+0+0 4+0+01+0+0 2+0+0 3+0+0

0+8+0 0+7+00+9+0 0+23+0 0+20+00+15+0 Sold Sold 2 ASIAN SKY QUARTERLY 8 MARKET SUMMARY -- JETS SUMMARY MARKET 23 — 4 3 7 Nov Nov 20 1 2 9 15

0+0+0 3+0+0 1+0+0 0+0+0

0+10+0 0+11+00+12+0 0+17+0 0+14+0 1 For Sale For For Sale For 10 17 $14.3 3 Aug Aug 11 14 1 12 14

2+0+0 3+0+0 2+0+0

0+14+0 0+15+0 0+14+0 SECOND QUARTER 2019 2019 QUARTER SECOND 2 2 Average Asking Price Average Asking Price For Sale vs. Sold For Sale vs. Sold 14 14 2 3 May May 14 15 2018 2018 $36.3 $15.9 13 4 2019 Feb 27 (11.8%) 19.8M USD 178 2019 Feb 13 3 2019 Feb 11 (3.8%) 34.1M USD 195 2019 Feb Mach 0.89 13 5,200 N.M. / 9,630 km 18 5 181 2019 May 2019 May 29 (12.6%) 19.5M USD 17 4 230 2019 May 2019 May 11 (3.7%) 32.0M USD 13 6,000 N.M. / 11,112 km Mach 0.88

Between Q2 and Q1, the average days on market increased slightly by 2% slightly increased days on market and Q1, the average Q2 Between 181. 178 to from US$19.5M (Q2). US$19.8M (Q1) to from dropped asking price Average impending arrival of the Global 5500, later this year, equipped with improved equipped with improved this year, 5500, later of the Global impending arrival engines. wing design and better 12.6% of represents 5000s on the market Global The number of pre-owned in operation. 231 fleet the entire There were 29 pre-owned Global 5000s on the market in Q2, increasing by increasing in Q2, 5000s on the market Global 29 pre-owned were There quarter. in the closed were transactions Five quarter. the previous 7% from the to may be attributed ’18 October since levels rise in inventory The steady Average asking price slightly fell from US$34.1M (Q1) to US$32.0M (Q2). US$32.0M US$34.1M (Q1) to from fell slightly asking price Average The number of pre-owned Global 6000s on the market represents 3.7% of the represents 6000s on the market Global The number of pre-owned in operation. 294 fleet entire 195 to by 18%, from rose days on market Q1 and Q2, the average Between 230. There were 11 pre-owned Global 6000s on the market in Q2, unchanged from in Q2, unchanged from 6000s on the market Global 11 pre-owned were There ’18 November since levels rise in inventory The steady quarter. the previous during this closed were transactions Four stall. to in Q1 seemed observed period. GLOBAL 6000 GLOBAL Past 12 Months Past 3 Months Past Max Range Max Speed Passengers Typ. SOLD SPECS • • • • No. for Sale No. for Asking Price Avg Days on Market Avg Source: JETNET & ASG JETNET Source: FOR SALE FOR Past 12 Months Past 3 Months Past Max Range Max Speed Passengers Typ. SOLD SPECS • • • • Avg Asking Price Avg Days on Market Avg No. for Sale No. for FOR SALE FOR GLOBAL 5000 GLOBAL DASSAULT $13.2 $16.5 $25.0 FALCON 2000LX/LXS/S FALCON 900DX/EX/EX EASy/LX MARKET SUMMARY --JETS 58 $12.9 0+24+0 $17.7 $22.2 2018 2018 $6.7 May May 24 9 | 1 6 ASIAN SKY QUARTERLY 0+23+0 0+24+0 23 FALCON 2000S For Sale vs. Sold vs. Sale For Sold vs. Sale For 7 FALCON 2000LXS 4 Average Asking Price Asking Average Price Asking Average 0+7+0 0+9+0 0+0+0 1+0+0 4+0+0 6+0+0 FALCON 2000LX 24 8 1 $12.9 Aug Aug 24 5 2 23 6 For Sale For Sale 2 $18.5 0+6+0 0+5+0 0+8+0 0+22+0 0+21+00+19+0 0+0+0 2+0+0 1+0+0 2+0+0 0+0+0 0+0+0 $17.5 $7.4 22 7 2 — Nov Nov 21 SECOND QUARTER 2019 7 6 4 F900EX $15.9 F900DX 19 8 Sold Sold 4 0+8+0 0+7+0 0+7+0 0+17+0 0+19+0 0+0+0 4+0+0 0+0+0 4+0+0 6+0+0 2+0+0 17 7 4 1 $11.6 $16.0 $25.0 F900EX EASy 4+0+0 $13.0 $27.9 $13.0 $6.9 Feb Feb 19 7 1 2 F900LX 19 8 1 0+8+0 0+7+0 0+7+0 0+20+0 0+21+0 1+0+0 2+0+0 1+0+0 0+0+0 1+0+0 11 20 1 0+11+0 $12.9 $15.0 1+0+0 $12.7 $16.0 $23.5 0+0+0 $6.9 $27.9 2019 2019 May May 21 11 1 2 0+11+0 1+0+0 2+0+0 FOR SALE • • • • Avg DaysonMarket Avg AskingPrice No. for Sale SPECS SOLD Typ. Passengers Max Speed Max Range Past 3Months Past 12Months • • • • FOR SALE Typ. Passengers Max Speed Max Range Avg DaysonMarket Avg AskingPrice No. for sale SOLD SPECS Past 3Months Past 12Months altogether intheprevious quarter. this quarter, whichisadramatic decrease given there were ninetransactions The only modelrecording sales activitywasFalcon 900EXwithtwo transactions days. 413 days.For the900LX,average daysonmarket increased from 38daysto 89 Falcon 900EXandFalcon 900EXEASythey increased by11%and38%to 331and Average daysonmarket for aFalcon 900DX decreased 32%to 192days,while for US$27.9M respectively. and Falcon 900LXinQ22019wasaround US$12.9M,US$6.9M,US$15.0Mand The average askingprice for aFalcon 900DX, Falcon 900EX,Falcon 900EXEASy increased from thelast quarter. There were 21Falcon 900DX/EX/EX EASy/LXaircraft for sale inQ2,slightly two transactions completed inQ1. There were two Falcon 2000LXtransactions inQ22019,whichisconsistent withthe 47% and74%,respectively. Falcon 2000LXSandtheFalcon 2000S,theaverage daysonmarket increased by Average daysonmarket for theFalcon 2000LXdecreased 34%,however for the in Q2were around US$12.7M,US$23.5MandUS$16M,respectively. The average askingprices for aFalcon 2000LX,Falcon 2000LXSandFalcon 2000S 2000LXS additionsinto themarket. increased 57.1%from last quarter. Theincrease isattributed to two 2000LXandtwo There were 11Falcon 2000LX/LXS/Saircraft for sale inQ2.Theinventory level

Reporting quarter vs. Previous quarter Reporting quarter vs. Previous quarter Reporting quarter vs. Previous quarter Reporting quarter vs. Previous quarter 192 |282 11.6M USD 12.9M USD| 2 |1 May |Feb May |Feb 166 13.0M USD 12.7M USD| 5 |3 May |Feb 0 | 0 | May |Feb 7,593 km 12 Mach 0.83 4,100 N.M./ F900DX 2 | 6 |4 10 Mach 0.83 4,000 N.M./ 2000LX 7,408 km | 250

331 |297 6.9M USD 6.9M USD| 8 |7 2|4 13 |12 May |Feb May |Feb 12 Mach 0.83 8,334 km 4,500 N.M./ F900EX

May |Feb 100 |68 25.0M USD 23.5M USD| 5 |3 May |Feb 1 | 4 |3 10 Mach 0.83 7,408 km 4,000 N.M./ 2000LXS

413 |300 13.0M USD 15.0M USD| 8 |9 May |Feb 0 |4 9 | May |Feb 12 Mach 0.83 8,334 km 4,500 N.M./ F900EX EASy

Source: JETNET &ASG 10 Mach 0.83 6,208 km 3,350 N.M./ 2000S May |Feb 210 |121 16.0M USD 16.0M USD| 1 | May |Feb 0 | 3 | 89 |38 27.9M USD 27.9M USD| 3 |2 May |Feb 0 |1 3 | May |Feb 8,800 km 12 Mach 0.83 4,750 N.M./ F900LX

DASSAULT

3+0+0

59 0+20+0 3 | May 2019 20 $27.7

2+0+0 0+19+0 2 19 $28.0

2+0+0 0+0+0 0+18+0 0+16+0 2 18

Feb 16 $25.4

1+0+0 0+10+0 1 10

3+0+0 1+0+02+0+0 0+11+0 0+8+0 Sold 3 ASIAN SKY QUARTERLY MARKET SUMMARY -- JETS SUMMARY MARKET 11 — 1 Nov 8 $20.9 2 11

1+0+0 2+0+03+0+0 0+22+0 0+21+0 For Sale For 1 22 2 Aug 21 3 21 SECOND QUARTER 2019 2019 QUARTER SECOND

0+0+0 1+0+0 0+23+0 0+21+0 Average Asking Price For Sale vs. Sold 23 1 May 2018 21 $26.3 13 4 2019 Feb 16 (5.7%) 25.4M USD 245 2019 Feb 5,950 N.M. / 11,018 km Mach 0.90 12 20 7 2019 May 20(7.1%) 27.7M USD 145 2019 May

There were seven 7X sold transactions in Q1 2019, an almost twofold activity twofold in Q1 2019, an almost 7X sold transactions seven were There quarter. than the previous increase of 9.1% since Q1 2019. of 9.1% since increase 245 in Q1 2019 by 41% from decreased a has for on market days The average 145 in Q2 2019.to There were 20 Falcon 7X aircraft for sale in Q2. The inventory level has level Q2. The inventory in sale for 7X aircraft 20 Falcon were There Q1 2019. since by 25.0% increased US$27.7M, an a 7X in Q2 2019 was around for asking price The average Past 12 Months Past 3 Months Past Max Range Max Speed Passengers Typ. SOLD SPECS No. for Sale No. for Asking Price Avg Days on Market Avg FOR SALE FOR FALCON 7X FALCON Source: JETNET & ASG JETNET Source: • • • • EMBRAER $12.5 LEGACY 600/650 MARKET SUMMARY --JETS 60 $30.7 LINEAGE 1000/E $7.3 2018 2018 May May 15 | 4 6 ASIAN SKY QUARTERLY 17 For Sale vs. Sold vs. Sale For 5 For Sale vs. Sold vs. Sale For Average Asking Price Asking Average Average Asking Price Asking Average 0+17+0 0+15+0 0+0+0 6+0+0 0+15+0 0+12+0 17 6 1 $7.9 0+0+0 0+0+0 0+0+0 Aug Aug 20 6 20 6 For Sale For Sale 0+20+0 0+20+0 0+17+0 0+0+0 0+0+0 1+0+0 0+18+0 0+18+0 0+18+0 15 6 4 — Legacy 650 Legacy 600 $6.2 Nov Nov 19 SECOND QUARTER 2019 5 +0 0+18+0 2 15 $22.5 18 6 +0 0+ Sold Sold 3 18 0+18+0 0+19+0 0+15+0 3+0+0 2+0+0 4+0+0 0+ 19 7 3 0+19+0 3+0+0 $11.5 0+21+0 $6.6 $25.0 Feb Feb 15 7 1 0+15+0 16 8 1 0+16+0 1+0+0 1+0+0 0+24+0 0+21+0 19 8 2 0+19+0 2+0+0 $14.0 0+24+0 2019 2019 May May $6.6 24 $26.1 8 1 0+24+0 1+0+0 0+24+0 0+0+0 0+0+0 0+0+0 0+0+0 0+0+0 0+0+0 0+0+0 0+0+0 0+0+0 0+0+0 • • • • • FOR SALE Avg DaysonMarket Avg AskingPrice No. for Sale SOLD SPECS Past 3Months Past 12Months Typ. Passengers Max Speed Max Range six andonetransactions were recorded for thetwo modelsrespectively. 650. Thedegree ofsales activityslightly decreased from theprevious quarter, when There were four Legacy600aircraft soldinQ22019,while there wasnonefor the newly-entered aircraft inthisquarter. days inQ12019,adeclineofaround 63.6%.Thedrastic declineisdueto theseven The average daysonmarket for aLegacy650decreased to 100daysinQ2from 275 days inQ12019,adecrease ofaround 21.2%. Average daysonmarket for aLegacy600decreased to 294daysinQ2from 373 and US$14.0M,respectively. The average askingprice for aLegacy600and650inQ22019wasUS$6.6M from the samecompany. aircraft. Thiscan bedueto theimminentrelease ofthePraetor series,anewcomer Q1 2019,thanksto the175%increase ofLegacy650thisquarter from four to 11 There were 24Legacy600/650aircraft for sale inQ2,increasing by60%since FOR SALE • • • • Avg DaysonMarket Avg AskingPrice No. for Sale SPECS SOLD Typ. Passengers Max Speed Max Range Past 3Months Past 12Months with zero transactions completed since Q32018. The Lineage1000/1000Emarket hasremained stagnant over thelast year Q2 2019from 598daysinQ12019;a5%increase. Average daysonmarket for aLineage1000/1000Eincreased to 627daysin US$26.1M, increasing by4.4%from theUS$25.0MinQ12019. The average askingprice for aLineage1000inQ22019wasaround 14% increase from thelast quarter. There were eightLineage1000/1000Eaircraft onmarket inQ22019,havinga

2019 May 294 6.6M USD (7.5%) 13 2019 May 4 17 13 Mach 0.80 3,400 N.M./6,297km Legacy 600 19 Mach 0.82 4,400 N.M./8,149km Lineage 1000 627 26.1M USD (27.6%) 8 2019 May 2019 May 0 0 2019 Feb 373 6.6M USD (6.3%) 11 2019 Feb 6 13 598 25.0M USD (24.1%) 7 2019 Feb 2019 Feb 0 0 13 Mach 0.80 3,640 N.M./7,112km Legacy 650 0 1 2019 May 100 14.0M USD 11 (11.5%) 2019 May 19 Mach 0.82 4,600 N.M./8,520km Lineage 1000E Source: JETNET &ASG 1 1 2019 Feb 275 11.5M USD 4 (4.1%) 2019 Feb

GULFSTREAM

3+0+0

2+0+0 0+31+0

6161 0+24+0 3 2 | | $4.1 31 24 May May 2019 2019

$16.3 3+0+0

0+28+0 0+22+0 3 3 $15.8 28 22

4+0+0 3+0+0 5+0+0 3+0+0

0+24+0 0+23+0 0+20+0 0+19+0 4 5 $4.5 24 20

3 3 $16.5 23 19 Feb Feb

$4.7 9+0+0

$16.8 4+0+0

0+27+0 0+16+0 $17.2 9 4 27 16

2+0+0 3+0+0 6+0+0 4+0+0

0+32+0 0+25+00+20+0 0+20+0 0+22+00+19+0 2 6 Sold Sold ASIAN SKY QUARTERLY ASIAN SKY QUARTERLY MARKET SUMMARY -- JETS -- JETS SUMMARY SUMMARY MARKET MARKET 32 20 —— 3 4 22 25 Nov Nov 2 4 $14.0 $3.7 20 19

4+0+0 2+0+05+0+0 3+0+0 2+0+0

0+23+0 0+22+00+21+0 0+22+0 0+23+0 3 4 For Sale For For Sale For 22 23 G280 G200 2 2 Aug Aug 23 22 5 3 23 21 FOURTH QUARTER 2018 2018 QUARTER FOURTH $18.3

6+0+0 2+0+0 2+0+0 4+0+0 SECOND QUARTER 2019 2019 QUARTER SECOND

0+30+0 0+32+0 0+26+0 0+21+0 Average Asking Price 2 6 Average Asking Price For Sale vs. Sold For Sale vs. Sold 30 26 2 4 21 32 May May 2018 2018 $15.2 $4.5 $16.8 - - 2019 Feb 4 2 2019 Feb 2 (1.3%) 16.8M USD 74 2019 May 5 (3.1%) 16.3M USD 91 2019 May 6 2 8 G280 3,600 N.M. / 6,667 km Mach 0.84 31 13 2019 Feb 19 (5.4%) 16.5M USD 186 2019 Feb 32 12 2019 Feb 21 (8.6%) 4.7M USD 182 2019 Feb 4,350 N.M. / 8,056 km Mach 0.85 13 G200 3,050 N.M. / 5,651km Mach 0.81 8 44 12 170 2019 May 2019 May 24 (6.8%) 16.3M USD 8 40 26 (10.7%) 4.1M USD 156 2019 May 2019 May

were 13 G450 sold transactions. were Average days on market for a G450 decreased to 170 days from 186 days 170 days from to a G450 decreased for days on market Average which is a 9% decline. during this quarter, market in Q2 2019. The pre-owned 12 G450 sold transactions were There with Q1 2019, when there activity by 23% compared in sales saw a decrease pared to Q1 when there were 19 aircraft. were Q1 when there to pared falling US$16.3M, slightly a G450 was around for asking price The average Q1 2019. US$16.6M since from There were 24 G450 aircraft on market in Q2 2019, increased by 26.3% com in Q2 2019, increased on market 24 G450 aircraft were There • • • • pared with Q1 2019, when there were 14 G200/G280 sold transactions. 14 G200/G280 sold were there with Q1 2019, when pared Average days on market for a G280 increased by 23% to 91 days in from 74 days 91 days in from by 23% to a G280 increased for days on market Average in Q1. of 10 G200/G280 With a total G280 transactions. G200 and two eight were There com activity in sales saw a 33% decline market the pre-owned transactions, US$16.3M, respectively. US$16.3M, respectively. 182 days 156 days from by 14% to a G200 decreased for days on market Average in Q1. There were 31 G200/G280 aircraft on market in Q2 2019, increasing 34.8% since 34.8% since in Q2 2019, increasing on market aircraft 31 G200/G280 were There Q1 2019. and US$4.1M was around a G200 and G280 for asking prices The average Past 12 Months Past 3 Months Past Max Range Max Speed Passengers Typ. SOLD SPECS Avg Asking Price Avg Days on Market Avg No. for Sale No. for FOR SALE FOR G450 Source: JETNET & ASG JETNET Source: G200 & G280 G200 & Past 12 Months Past 3 Months Past Max Speed Passengers Typ. Max Range SOLD SPECS Avg Asking Price Avg Days on Market Avg No. for Sale No. for FOR SALE FOR • • • • • GULFSTREAM $23.3 G550 MARKET SUMMARY --JETS 62 G650 &ER $56.9 $61.0 2018 2018

24 May May 20 | 4 2 ASIAN SKY QUARTERLY $62.4 $58.3 29 16 For Sale vs. Sold vs. Sale For For Sale vs. Sold vs. Sale For 3 Average Asking Price Asking Average 2 Average Asking Price Asking Average 0+29+0 0+24+0 3+0+0 4+0+0 0+16+0 0+20+0 2+0+0 2+0+0 24 13 3 2 27 11 Aug Aug 5 3 $29.2 26 15 For Sale For Sale 3 2 0+26+0 0+27+0 0+24+0 3+0+0 5+0+0 3+0+0 0+15+0 0+11+0 0+13+0 2+0+0 3+0+0 2+0+0 24 18 4 1 — $55.1 27 $51.7 Nov Nov 14 SECOND QUARTER 2019 3 1 28 12 1 Sold Sold 3 0+28+0 0+27+0 0+24+0 1+0+0 3+0+0 4+0+0 0+12+0 0+14+0 0+18+0 3+0+0 1+0+0 1+0+0 27 12 5 3 $25.4 0+27+0 5+0+0 0+12+0 $61.9 3+0+0 $52.0 26 Feb Feb 9 3 4 27 10 3 2 0+27+0 0+26+0 3+0+0 3+0+0 0+10+0 0+9+0 2+0+0 4+0+0 18 15 4 0+18+0 4+0+0 0+15+0 0+0+0 $55.3 $51.2 2019 2019 18 $23.4 May May 16 2 1 0+18+0 2+0+0 0+16+0 1+0+0 FOR SALE Avg DaysonMarket Avg AskingPrice No. for Sale SOLD SPECS Past 3Months Past 12Months Typ. Passengers Max Speed Max Range • • • • • • • FOR SALE Avg DaysonMarket Avg AskingPrice No. for Sale SPECS SOLD Typ. Passengers Max Speed Max Range Past 3Months Past 12Months from 243 daysfor G650ERsince theprevious quarter. respectively. Thisisa9%decrease from 134daysfor G650anda36%one The average daysonmarket for aG650andG650ERinQ2were 122and156, and US$55.3Mrespectively. The average askingprices for aG650andG650ERwere around US$50.9M since Q12019. There were 16G650/650ERaircraft on market inQ2,increasing by77.8% sales activityastheprevious quarter. There were nineG550soldtransactions inQ2,remaining thesamelevel of from 188daysinQ12019,adecrease ofaround 1.6%. The average daysonmarket for aG550hasslightly dropped to 185daysinQ2 of around 7.8%from US$25.4MinQ12019. The average askingprice for aG550inQ2wasaround US$23.4M,adecrease Q1 2019. There were 18G550aircraft onmarket inQ22019,decreasing 31%from

18 Mach 0.87 6,750 N.M./12,501km 185 23.4M USD (3.2%) 18 2019 May 2019 May 9 39 122 50.9M USD (4.3%) 10 2019 May 2019 May 3 14 18 Mach 0.90 7,000 N.M./12,964km G650 188 25.4M USD (5.0%) 26 2019 Feb 2019 Feb 9 30 2019 Feb 134 52.0M USD (2.7%) 6 2019 Feb 4 11 18 Mach 0.90 7,500 N.M./13,890km G650ER 0 10 2019 May 156 55.3M USD 6 (5.0%) 2019 May Source: JETNET &ASG 6 10 2019 Feb 243 61.9M USD 3 (2.6%) 2019 Feb AIRCRAFT POSITIONING - CIVIL HELICOPTERS AIRCRAFT ACQUISITION VS. MAX RANGE

8.00

HEAVY (SUPER) MEDIUM LIGHT TWIN SINGLE TURBINE AC313* PISTON S-92 H225

AS332 L1E 4.00

AW189 H175

AW139 S-76D H155

BELL 412EPI S-76C++ AC312*

H145 2.00 EC145 BELL 430 AW169 AW 109 GN

MD 902 AW109 POWER BELL 429

H135(T3) H135(P3)

H130 AW119KX BELL 407 MD 600N 1.00 BELL 407GXP BELL 206L4 H125 MD 520N PRICE (MILLION USD) AIRCRAFT ACQUISITION MD 530F AC311* H120 MD 500E

S-333 EN480B

R66

0.50

R44 RAVEN II

R22 BETA II 0.25 200 250 300 350 400 450 500 550 600 650 700 750

MAX RANGE (N.M.)

* The estimated total yearly cost is based on aircraft ownership cost for 10 years including financing, plus yearly operating cost and regional adjustments.

Source: JETNET & ASG SECOND QUARTER 2019 — ASIAN SKY QUARTERLY | 63 MARKETMARKET SUMMARY -- HELICOPTERSSUMMARY PER MODEL — CIVIL HELICOPTERS INVENTORY LEVEL, PRICE TREND & TRANSACTIONS

EC135T2 EC135T2 & P2 • There were three EC135T2s for sale in Q2 2019, remaining the same number since Q1 2019. The inventory level accounted for 2.1% of the overall 143 fleet in operation. There was one transaction in Q2 2019 compared with also one in Q1 2019. The average days on market decreased 10.1%, from 495 days in Q1 2019 to 445 days in Q2 2019. The fewer days on market can be attributed to the one helicopter sold in this quarter. The average asking price has increased to US$2.4M in Q2 2019 from US$2.1M in Q1 2019. EC135P2 • There were eight EC135P2s for sale in Q2 2019, remaining the same number since Q1 2019. The inventory level accounted for 5.2% of the overall 153 fleet in operation. The market has been stagnant since Q4 2018, with no sold transactions over nine months. The average days on market increased by Average Asking Price 7.6%, from 1,178 days in Q1 2019 to 1,267 days in Q2 2019. The average asking price has decreased to US$2.5M in Q2 2019 from US$2.6M in Q1 2019. $2.7 EC135P2 $2.6 $2.5 $2.5 SPECS EC135T2 EC135P2 Max Range $2.4 $2.4 332 N.M. / 614 km 332 N.M. / 614 km $2.1 Max Speed 127 Knots 127 Knots Typ. Passengers 6 6 EC135T2

$1.8 FOR SALE For Sale vs. Sold 2019 May 2019 Feb 2019 May 2019 Feb No. for Sale 3 (2.1%) 3 (2.1%) 8 (5.2%) 8 (5.2%) 18 18 Avg Asking Price 2.4M USD 2.1M USD 2.5M USD 2.6M USD 14 14 14 13 Avg Days on Market 445 495 1267 1178 12 11 11 11 11 11 11

1 2 2 1 1 SOLD 2019 May 2019 Feb 2019 May 2019 Feb May Aug Nov Feb May Past 12 Months 5 7 1 1 2018 2019 Past 3 Months 1 1 0 0 For Sale Sold

AS332L1 0+18+0 1+0+0 0+18+0 0+0+0 0+14+0 2+0+0 0+14+0 & 2+0+0 H225 0+14+0 0+0+0 0+12+0 0+0+0 0+13+0 0+0+0 0+11+0 0+0+0 0+11+0 1+0+0 0+11+0 0+0+0 0+11+0 0+0+0 0+11+0 1+0+0 0+11+0 0+0+0 AS332L1 • There were three AS332L1s for sale in Q2 2019, slightly increasing from two in Q1 2019. The inventory level accounted for 4.5% of the overall 67 fleet in operation. After being stagnant for over six months, the market saw two sold transactions in this quarter. The average days on market decreased by 29.4%, from 1,500 days in Q1 2019 to 1,059 days in Q2 2019. The average asking price has not changed since Q2 2018, remaining at US$4M in Q2 2019.

AIRBUS H225 • There were 15 H225s for sale in Q2 2019, same as Q1. The inventory level accounted for 8.8% of the overall 171 fleet in operation. There was one Average Asking Price transaction in Q2 2019 compared with five in Q1 2019. The average days on market increased by 14.7%, from 607 days in Q1 2019 to 696 days in Q2 2019. $15.3 The average asking price has remained US$4.5M since the last quarter.

$8.8 H225 SPECS AS332L1 H225 $4.0 $4.5 $4.5 Max Range 452 N.M. / 837 km 452 N.M. / 837 km AS332L1 Max Speed 142 Knots 142 Knots $4.0 $4.0 Typ. Passengers 19 19

For Sale vs. Sold

FOR SALE 2019 May 2019 Feb 2019 May 2019 Feb 3 (4.5%) 2 (3.0%) 20 No. for Sale 15 (8.8%) 15 (8.8%) 18 18 18 18 18 17 18 18 17 17 17 18 Avg Asking Price 4.0M USD 4.0M USD 4.5M USD 4.5M USD Avg Days on Market 1059 1500 696 607

3 4 2 2 1 1 2 SOLD 2019 May 2019 Feb 2019 May 2019 Feb May Aug Nov Feb May Past 12 Months 3 3 10 10 2018 2019 For Sale Sold Past 3 Months 2 0 1 5

Source: JETNET & ASG 64 |0+18+0 ASIAN 2+0+0 0+18+0 0+0+0 SKY 0+20+0 2+0+0 QUARTERLY 0+18+0 1+0+0 0+18+0 0+0+0 —0+18+0 3+0+0 SECOND 0+17+0 0+0+0 0+18+0 0+0+0 QUARTER 0+18+0 1+0+0 0+17+0 4+0+0 2019 0+17+0 0+0+0 0+17+0 0+0+0 0+18+0 2+0+0 MARKET SUMMARY -- HELICOPTERS

EC145 • There were 12 EC145s for sale in Q2 2019, remaining the same number since Q1 2019 after transactions and new listings. • The inventory level accounted for 1.2% of the overall 996 fleet in operation. • The market saw a stable activity level with three sold transactions in Q2 2019, same as Q1 2019. • The average days on market increased by 43.2%, from 315 days in Q1 2019 to 451 days in Q2 2019. • The average asking price remained US$3.5M from Q1 2019 to Q2, though it experienced a slight dip in between.

Average Asking Price

$4.0 $3.9 SPECS Max Range 461 N.M. / 855 km Max Speed 131 Knots $3.5 Typ. Passengers 9 $3.5 $3.4 FOR SALE 2019 May 2019 Feb For Sale vs. Sold No. for Sale 12 (1.2%) 12 (1.2%) Avg Asking Price 3.5M USD 3.5M USD Avg Days on Market 451 315 14 14 13 12 13 12 10 11 10 11 8 8 8 3 3 SOLD 2019 May 2019 Feb 2 2 2 1 14 16 Past 12 Months May Aug Nov Feb May Past 3 Months 3 3 2018 2019 For Sale Sold

EC155B & H155 0+10+0 2+0+0 0+8+0 3+0+0 0+8+0 0+0+0 0+8+0 0+0+0 0+11+0 3+0+0 0+10+0 0+0+0 0+14+0 2+0+0 0+14+0 2+0+0 0+13+0 0+0+0 0+12+0 0+0+0 0+11+0 0+0+0 0+13+0 0+0+0 0+12+0 1+0+0 H155 • There were seven H155s for sale in Q2 2019, decreasing by 12.5% since Q1 2019. The inventory level accounted for 4.8% of the overall 147 fleet in operation. The market saw a stable activity level with two sold transactions in Q2

2019, same as Q1 2018. The average days on market increased by 2.7%, from AIRBUS 768 days in Q1 2019 to 789 days in Q2 2019. The average asking price has not changed since Q1 2019, remaining at US$7.5M in Q2 2019. EC155B • There were six EC155Bs for sale in Q2 2019, decreasing by 14.3% since Q1 2019. The inventory level accounted for 21.4% of the overall 28 fleet in operation. There were zero sold transactions in Q2 2019 as well as in Q1 2019. The average days on market increased by 14.3%, from 1,116 days in Q1 Average Asking Price 2019 to 1,316 days in Q2 2019. The average asking price has not changed and $7.5 $7.5 remained at US$2M in Q2 2019. $5.2 $5.6 H155

$2.0 $2.0 $2.0 SPECS EC155B H155 EC155B Max Range 516 N.M. / 955 km 516 N.M. / 955 km Max Speed 135 Knots 150 Knots For Sale vs. Sold Typ. Passengers 13 13

22 21 FOR SALE 2019 May 2019 Feb 2019 May 2019 Feb 20 18 17 17 15 15 15 15 No. for Sale 6 (21.4%) 7 (25.0%) 7 (4.8%) 8 (5.5%) 14 14 13 Avg Asking Price 2.0M USD 2.0M USD 7.5M USD 7.5M USD Avg Days on Market 1316 1116 789 768 2 1 1 1 2 2 2 SOLD 2019 May 2019 Feb 2019 May 2019 Feb May Aug Nov Feb May Past 12 Months 2 2 9 8 2018 2019 For Sale Sold Past 3 Months 0 0 2 4 Source: JETNET & ASG 0+21+0 0+22+0 0+22+0 0+0+0 SECOND 0+21+0 2+0+0 0+20+0 1+0+0 0+18+0 QUARTER 1+0+0 0+17+0 0+0+0 0+17+0 20191+0+0 0+15+0 —2+0+0 ASIAN 0+15+0 2+0+0 0+14+0 SKY0+0+0 0+15+0 QUARTERLY0+0+0 0+14+0 0+0+0 0+15+0 2+0+0 | 650+13+0 0+0+0 BELL $3.0 $4.3 BELL 429 BELL 412EP/412HP MARKET SUMMARY --HELICOPTERS 66 $5.4 2018 2018 May May 30 19 | 3 ASIAN SKY QUARTERLY $5.7 35 19 For Sale vs. Sold vs. Sale For For Sale vs. Sold vs. Sale For Average Asking Price Asking Average 2 Average Asking Price Asking Average $4.4 0+35+0 0+30+0 0+19+0 0+19+0 2+0+0 3+0+0 0+0+0 0+0+0 38 17 4 2 37 Aug Aug 15 1 2 39 15 For Sale For Sale 1 BELL 412EP 0+39+0 0+37+0 0+38+0 0+15+0 0+15+0 0+17+0 BELL 412HP 1+0+0 1+0+0 4+0+0 0+0+0 2+0+0 2+0+0 38 16 1 — Nov Nov 38 18 SECOND QUARTER 2019 1 1 38 $5.7 17 Sold Sold 1 1 0+38+0 0+38+0 0+38+0 0+17+0 0+18+0 0+16+0 1+0+0 1+0+0 1+0+0 1+0+0 1+0+0 0+0+0 38 18 2 0+38+0 0+18+0 2+0+0 $2.8 $4.1 0+0+0 Feb Feb 35 17 $5.5 1 2 35 17 0+35+0 0+35+0 0+17+0 0+17+0 0+0+0 1+0+0 0+0+0 2+0+0 36 17 1 +0+0 2 0+36+0 0+17+0 2+0+0 $2.0 $4.1 2019 2019 May May 33 18 $5.1 1 0+33+0 0+18+0 1+0+0 1 0+0+0 FOR SALE Avg DaysonMarket Avg AskingPrice No. for Sale SPECS SOLD Typ. Passengers Max Speed Max Range Past 3Months Past 12Months Past 3Months Past 12Months SOLD Avg DaysonMarket Avg AskingPrice No. for Sale FOR SALE Typ. Passengers Max Speed Max Range SPECS • • • • • • Bell 412HP • Bell 412EP US$5.1M inQ22019. The average askingprice hasdecreased from US$5.5MinQ12019to 405 daysinQ22019. The average daysonmarket increased by15.1%,from 352daysin Q12019to There were two transactions inQ22019,compared withthree inQ12019. The inventory level accounted for 5.4%oftheoverall 331fleet inoperation. 2019. There were 18Bell429for sale inQ22019, oneadditionto the17aircraft inQ1 decreased 28.6%from US$2.8MinQ12019to US$2MinQ22019. 302 daysinQ12019to 158daysinQ22019.Theaverage askingprice has none inQ12019.Theaverage daysonmarket decreased by47.7%,from operation. There were two soldtransactions inQ22019 ascompared with Q1 2019.Theinventory level accounted for 4.9%oftheoverall 61fleet in There were three Bell412HPs for sale inQ22019,decreasing by50%since through Q12019andQ2. 748 daysinQ22019.Theaverage askingprice hasremained US$4.1M average daysonmarket increased by7.9%-from 693daysinQ12019to one soldtransaction inQ22019compared withfour inQ12019.The accounted for 5.4%oftheoverall 558fleet inoperation. There wasonly adding onemore aircraft onmarket since Q12019.Theinventory level There were 30Bell412EPs for sale inQ22019,increasing by3.4%

9 140 Knots 356 N.M./659km Bell 412EP 748 4.1M USD (5.4%) 30 2019 May 2019 May 1 10 2019 May 405 5.1M USD (5.4%) 18 2019 May 2 10 7 130 Knots 368 N.M./681km 693 4.1M USD (5.3%) 29 2019 Feb 2019 Feb 4 14 2019 Feb 352 5.5M USD (5.2%) 17 2019 Feb 3 8 14 133 Knots 349 N.M./646km Bell 412HP 158 2.0M USD 3 (4.9%) 2019 May 2 7 2019 May Source: JETNET &ASG 2019 Feb 2019 Feb 0 6 302 2.8M USD 6 (9.8%) MARKET SUMMARY -- HELICOPTERS

A109E POWER/A109SP GRANDNEW A109E Power • There were 37 A109E Powers for sale on market in Q2 2019, decreasing by 15.9% since Q1 2019. The inventory level accounted for 10 % of the overall 370 fleet in operation. There were zero transactions in Q2 2019. The market was being quiet compared with four transactions completed in Q1 2019. The average days on market increased by 3.2% - from 729 days in Q1 2019 to 752 days in Q2 2019. The average asking price has dropped to US$1.5M in Q2 2019 from US$1.7M in Q1 2019. A109SP Grandnew • There were six A109SP Grandnews for sale in Q2 2019, increasing by 50% since Q1 2019. The inventory level accounted for 3.6% of the overall 168 fleet Average Asking Price in operation. There were five sold transactions in Q2 2019 compared with $6.0 six in Q1 2019. The average days on market decreased by 11.6% - from 216 $4.6 days in Q1 2019 to 191 days in Q2 2019. The average asking price rose from $4.8 US$4.8 in Q1 2018 to US$4.6M in Q2 2019. $3.8 A109SP GRANDNEW A109E Power A109SP Grandnew SPECS $1.8 A109E Power $1.7 $1.5 Max Range 353 N.M. / 654 km 480 N.M. / 889 km Max Speed 139 Knots 130 Knots Typ. Passengers 7 7 For Sale vs. Sold

64 FOR SALE 63 62 60 2019 May 2019 Feb 2019 May 2019 Feb 58 55 53 52 49 48 No. for Sale 37 (10.0%) 44 (11.8%) 6 (3.6%) 4 (3.8%) 44 44 43 Avg Asking Price 1.5M USD 1.7M USD 4.6M USD 4.8M USD Avg Days on Market 752 729 191 216

SOLD 5 5 5 2019 May 2019 Feb 2019 May 2019 Feb 2 2 1 4 2 1 4 1 3 1 Past 12 Months 11 17 20 25 May Aug Nov Feb May Past 3 Months 0 4 5 6 2018 2019 0+64+0 0+63+0 5+0+0 0+64+0 2+0+0 0+62+0 2+0+0 0+60+0 1+0+0 For 0+58+0 4+0+0 Sale 0+55+0 2+0+0 0+53+0 5+0+0 Sold 0+52+0 1+0+0 0+49+0 5+0+0 0+48+0 4+0+0 0+44+0 1+0+0 0+44+0 3+0+0 0+43+0 1+0+0

AW139 • There were 25 AW139s for sale in Q2 2019. The inventory level has increased 8.7% from 23 aircraft in Q1 2019. • The inventory level accounted for 2.6% of the overall 947 fleet in operation. • There were only three sold transactions in Q2 2019 compared with eight in Q1 2019. • The average days on market increased by 7.6%, from 497 days in Q1 2019 to 535 days in Q2 2019. • The average asking price has slightly fell to US$7.4M in Q2 2019 from US$7.6M in Q1 2019.

Average Asking Price

$8.1

SPECS $7.6 Max Range 568 N.M. / 1,052 km $7.4 $7.4 Max Speed 140 Knots $7.3 Typ. Passengers 15

FOR SALE For Sale vs. Sold LEONARDO 2019 May 2019 Feb 29 No. for Sale 25 (2.6%) 23 (2.6%) 28 27 28 26 26 25 25 25 Avg Asking Price 7.4M USD 7.6M USD 23 24 23 24 Avg Days on Market 535 497

SOLD 2019 May 2019 Feb 4 2 3 2 Past 12 Months 16 15 1 1 Past 3 Months 3 8 May Aug Nov Feb May 2018 2019 For Sale Sold

Source: JETNET & ASG 0+29+0 0+29+0 1+0+0 0+28+0 SECOND1+0+0 FOURTH 0+27+0 0+0+0 QUARTER 0+28+0 0+0+0 0+26+0 2+0+0 0+26+0 201820190+0+0 0+25+0 —0+0+0 ASIAN 0+25+0 0+0+0 0+23+0 3+0+0 SKY 0+24+0 QUARTERLY2+0+0 0+25+0 4+0+0 0+23+0 0+0+0 | 670+24+0 0+0+0 SIKORSKY MARKET SUMMARY --HELICOPTERS 68 $16.1 S-76C+ /S-76C++ S-92 S-92 $2.1 $6.8 2018 2018 May May 55 | 7 ASIAN SKY QUARTERLY 49 For Sale vs. Sold vs. Sale For For Sale vs. Sold vs. Sale For 7 Average Asking Price Asking Average Average Asking Price Asking Average 1 0+49+0 0+55+0 0+7+0 0+7+0 0+0+0 0+0+0 1+0+0 0+0+0 47 8 1 47 Aug Aug 8 46 9 For Sale For Sale 1 0+46+0 0+47+0 0+47+0 0+9+0 0+8+0 0+8+0 1+0+0 0+0+0 1+0+0 0+0+0 0+0+0 0+0+0 44 9 S-76C++ S-76C+ 3 — 0+9+0 43 Nov Nov SECOND QUARTER 2019 9 2 0+9+0 44 9 Sold Sold 2 1 0+44+0 0+43+0 0+44+0 0+9+0 2+0+0 2+0+0 3+0+0 1+0+0 0+0+0 0+0+0 44 9 2 0+44+0 0+9+0 2+0+0 $13.3 Feb Feb $2.0 $5.4 44 10 43 10 2 0+43+0 0+44+0 0+10+0 0+10+0 2+0+0 0+0+0 0+0+0 0+0+0 0+0+0 43 9 4 0+43+0 0+9+0 4+0+0 $10.0 2019 2019 May May 44 $1.9 $4.7 9 0+44+0 0+9+0 0+0+0 0+0+0 0+0+0 • S76C++ • S76C+ FOR SALE Avg DaysonMarket Avg AskingPrice No. for Sale SPECS SOLD Typ. Passengers Max Speed Max Range Past 3Months Past 12Months • • • • • FOR SALE Avg DaysonMarket Avg AskingPrice No. for Sale SOLD SPECS Past 3Months Past 12Months Typ. Passengers Max Speed Max Range 2019 to US$4.7MinQ22019. days inQ22019.Theaverage askingprice hasdropped from US$5.4MinQ1 average daysonmarket decreased by1.5%-from 800daysinQ12019to 788 were two soldtransactions inQ22019compared withthree inQ12019.The inventory level accounted for 12%oftheoverall 209fleet inoperation. There There were 25S-76C++for sale inQ22019,increasing 13.6%inQ12019.The from US$2MinQ12019to US$1.9MinQ22019. in Q12019to 1,141daysinQ22019.Theaverage askingprice hasdecreased in Q12019.Theaverage daysonmarket increased by6.5%,from 1,071days ation. There were four soldtransactions inQ22019compared withonly one 2019. Theinventory level accounted for 13.1%oftheoverall 145fleet inoper There were 19S-76C+for sale inQ12019,decreasing by13.6%since Q1 US$10.0M. rebound intheprevious quarter. InQ22019,itdecreased from US$13.3Mto The average askingprice hasbeenconsistently falling despite aslight 552 daysinQ22019. The average daysonmarket decreased by18.2%,from 675daysin Q12019to There were nosoldtransactions inQ22019compared with oneinQ12019. The inventory accounted for 3.1%oftheoverall 290fleet in operation. There were 9S-92sfor sale inQ22019, decreasing by10%since Q12019.

19 155 Knots 474 N.M./877km 552 10.0M USD (3.1%) 9 2019 May 2019 May 0 2 1141 1.9M USD (13.1%) 19 2019 May 2019 May 12 155 Knots 335 N.M./620km S-76C+ 4 11 1071 2.0M USD (15.1%) 22 2019 Feb 2019 Feb 1 7 2019 Feb 675 13.3M USD (3.5%) 10 2019 Feb 1 2 788 4.7M USD 25 (12.0%) 2019 May 12 155 Knots 335 N.M./620km S-76C++ 2 101 2019 May Source: JETNET &ASG 2019 Feb 2019 Feb 3 9 800 5.4M USD 22 (10.5%) - Listing(06-2019) .pdf 1 10/6/2019 4:09 PM

2012 GULFSTREAM G550 2012 LINEAGE 1000 Fourteen (14) Passenger Configuration with Fwd & Aft Lavatory 881 Hours Since New, One Owner Since New One Owner Since New, RRCC, MSP Gold & PlaneParts 19 Passenger - 5 Zones Cabin Configuration WAAS, LPV, FANS 1A+, ADS-B Out High Speed Data & Cabin Wi-fi Swift Broadband Highspeed Internet TCAS,EFB,ELT,EGPWS,Windshear Detection

M Y 2013 GULFSTREAM G450 2018 LEGACY 500 CM ・ 14 Passenger Configuration with Fwd Galley Very Low Hours & One Owner Since New MY ・ RRCC, MSP & G-CMP 10 Pax with Fwd Galley ・ ADS-B OUT, CPDLC, FAN 1/A EECE, MSP Gold & CAMP, Swift Broadband High-Speed Data CY SVS, EVS & HUD, ADS-B Out, FANS 1/A+, ATN-B1 CPDLC CMY

2018 BOEING BBJ2 2015 BELL 429 Delivered in June 2018 Corporate 6 + 2 Config, Single/Dual Pilot IFR Total 4 Cockpit Seats + 2 Cabin Crew Seats + 27 TTOL Pax Seats Honeywell Primus 660 Color Weather Radar Six Zone Cabin Configuration, Additional Potable Water Tank CVR, FDR, ELT - Increased Gross Weight Compliant 5 Auxiliary Fuel Tanks (0 Fwd / 5 Aft) Wire Strike Protection System, Auxiliary Fuel Tank System

2001 SIKORSKY S76C+ 2003 SIKORSKY S76C+ Freon Air Conditioning Utility / Offshore Configuration Utility Configured Engines Enrolled on PBH Emergency Pop-Out Floats & Windows Dual Controls FMS / TCAS / GPS / ELT

CONTACT US EMAIL: SALESASIANSKYGROUP.COM TEL: 852 2235 9222 WWW.ASIANSKYGROUP.COM/AIRCRAFT-LISTING/ SECOND QUARTER 2019 — ASIAN SKY QUARTERLY | 69 ASM for ASQ.pdf 2 2/4/2019 10:45 AM

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