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Aviation History
2003
2003 - 0098.PDF
Business aviation MEXICAN WAVE Mexico has the world's third largest business aircraft fleet and also one of the oldest. But a flurry of fleet renewals and tighter regulations is changing that JUSTIN WASTNAGE / LONDON n the surface, Mexico is a perfect market for business jets: the ; major business centres are sev eral hundred kilometres apart; commercial air transport is crowded and expensive; and there is a desire among Mexico's elite to travel in greater security. Furthermore, the country's proximity to the USA and extensive trade links have created a business community educated in the benefits of corporate avia tion. Yet scratch a little deeper and you discover a large factor against corporate aviation: Mexico's economy is only one- quarter the size of its northern neighbour. The result of these competing factors is that Mexico's business aviation fleet ranks third only behind the USA and Brazil, but the aircraft are old. Business aviation ana lyst Amstat calculates there are 647 corpo rate jets and turboprops in Mexico, but that the average age of the aircraft is 23 years. Until recently most of them were retired US aircraft, making Mexico City's business aviation airport Toluca the unoffi cial "world capital of used aircraft". Fabio Rebello, Bombardier's regional vice president of sales for Latin America, says the situation is changing. Five years ago, "almost all" aircraft sold in Mexico were used, compared to around only 65% now, says Rene Garza, president of Bombardier's Mexican sales agent JetMach. There is a growing sophistication in the market, with customers demanding high- specification new aircraft with complex financing arrangements, says Rebello. There are many reasons for this change, some economic, some environmental, but all manufacturers, meeting this week at Toluca for the Aero Expo 03 air show, are reporting a general trend towards a large- scale fleet renewal. A prime motivator behind this mass upgrade is a more stringent regulatory regime being brought in by the Mexican civil aviation authority, the DGAC. Its first move in January 1999 was to insist on a US Federal Aviation Administration-issued export certificate of airworthiness for all used aircraft. Next is its phased move towards harmonising aviation requirements with the FAA, and both measures should reduce older types flying in the country. The DGAC has mandated that ground proxim ity warning systems be installed and traffic collision avoidance system be upgraded to TCAS II by the end of 2004. Mexico is also to introduce its reduced airspace vertical separation minima (RVSM) in line with The average age of Mexico's business aircraft, including old types such as Jetstars, is 23 years a US move which is scheduled for 2005. Mexico now has slightly fewer than 400 jets in operation, according to Flight Inter national's last corporate aircraft census Flight International, 3-9 September 2002). Ray Santa, Bombardier's pre-owned aircraft sales director for Latin America, estimates that around 65% of these will need updat ing to meet the new requirements. Learjet 25 operators in Europe, for example, found the cost of RVSM compliance too onerous and chose instead to replace their aircraft, a trend that Santa expects to follow in Mexico. "Operators of the oldest types will find it uneconomic to update their aircraft to meet the new requirements and replace their aircraft instead," he says, adding that sales of newer pre-owned aircraft could increase by 30% over the next two years as a result of the new regulations. Boom to bust The race towards aircraft ownership began in the mid-1990s, says Roberto Zambrano Villarreal, sub-director general of the Desarrollo holding company, which owns one of the largest corporate fleets in the country. "Mexico was experiencing a boom and every company wanted its own aircraft and often just bought the cheapest, which led to a huge influx of old US aircraft, just in time for the economy to crash," he says. Thanks in part to the North American Free Trade Area (NAFTA), Mexico has recov ered from that sharp downturn. The free flow of goods from cheap production facil ities in Mexico to the markets of "El Norte" has transformed Mexico into one of Latin America's most stable economies over the past five years and, despite the US slow down, growth of around 2.2% is predicted this year. The need for longer-range busi ness jets reflects NAFTA's growing impor tance, with Bombardier the market leader in new jet sales in the country. Rebello says that the demand is chiefly for the mid-sized Learjet 60 and the large Challenger 604. Unfortunately, says Rebello, the economy is now being affected by the US downturn, with Mexican companies, many of which have facilities north of the border, stalling acquisition of new aircraft. Bombardier still sees encouragement in the trend towards the acquisition of new aircraft, and Amstat figures show that of 54 retail sales in 2002, only 35 came from the USA, with Canadian aircraft taking the lion's share of the non-US figure. The growing sophistication of Mexican customers and their demand for newer air craft brings a concentration on operating costs as much as the cost of acquisition, says Rebello. Adrian Zambrano Yturria, j president of Pilatus dealer PC-12 Center de S Mexico says: "People who are buying a I King Air or a Cheyenne because they are 28 21-27 JANUARY 2003 FLIGHT INTERNATIONAL www.fliqhtinternational.com
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