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Aviation History
2002
2002 - 2657.PDF
Used aircraft "The market is soft. We have around nine aircraft in our inventory, which is unusu ally high," he says. "Even our flagship (Raytheon Beech] King Air range, with a very low engine time [3,OOO-5,0OOh] is sell ing for around 10% less than a year ago. High time, early King Air models will go for a lot less," he adds. Raytheon Aircraft blames the high used- aircraft inventory and low resale prices, particularly for jet-powered aircraft, for the collapse in the new turboprop market. The company says turboprops have been hit harder than jets and a large number of King Airs due for delivery in the second half remain unsold, despite dramatic cuts in production rates. Dan Dickensen, chairman of aircraft dealer General Aviation Services, says the latest downturn should come as no sur prise. "The economy revolves in 10-year cycles. However, each time there is a dip in the market, unforeseen events come along and exacerbate the problem." He adds: "Twenty years ago we were heading into recession and then the government with drew investment tax credit on |business| aircraft, causing a further slowing of sales. In 1991 the economy had slowed again, and then came the Gulf War. Poor market conditions last year were exaggerated by 11 September." Market stalls This recession, like others before it, has been twofold in its effect. Not only has it severely affected the bottom lines and bal ance sheets of many companies, it is also forcing chief executives either to get more out of their ageing aircraft - or to sell and not replace them, so stalling the market. The high-profile events at Enron and Worldcom have done little to further the cause of business aviation. Instead, the incidents have dented the industry's credi bility, says executive vice-president of the The price of National Aircraft Resale Association, Susan alow-time Sheets. "It has taken years to build a Raytheon strong, positive and widely accepted image Beech King of business aircraft as working tools. Air has Scandals such as these, where executives dropped were known users of business aircraft consider- [Enron is believed to have operated six air- ably in 12 craft and WorldCom two], could undo all months the good work in no time," she adds. She is convinced of the need for increased scrutiny of large corporations "if we are not to lose the ground we have gained". JP Morgan supports this, saying: "The media and the government have paid an increasing amount of attention to alle gations of fraud and corporate excess over the past several months. In this environ ment, we believe corporate managements will think twice before authorising the pur chase of a S20-40 million business jet." If true, this is a severe blow to aircraft manufacturers. In their quest to sell new aircraft, they are having to accept used www.flightinternational.com FLIGHT INTERNATIONAL 3-9 SEPTEMBER 2002 57
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