February 2012 Aviation Articles

The Emissions Trading Scheme Debacle, i.e. “The Carbon Tax.”

Before I start with the meat and potatoes of this month’s article, I do want to publically state that I am not a believer in the ‘Sky is Falling’ point of view regarding ‘Global Warming.’ So before any reader starts to berate me for having a biased point of view, or acting like an ostrich by sticking my head firmly into the ground to avoid seeing what is going on around me, please allow me to at least explain why I take this stand of non-belief:

When I was attending my local Comprehensive Secondary Education High School back in Rural England in the nineteen seventies and eighties, I distinctly remember the world’s scientific community trying to whip up the public’s attention and concern regarding the then great fear that we were on the edge of a modern Ice-Age and all life on Earth was in mortal danger thanks due to ‘Global Cooling.’ Now today, thirty five years later, scientists are proclaiming that the planet is now in massive danger thanks to ‘Global Warming.’ Apart from saying “I wish that they would make their minds up” I do know that much of the data created by both Mr. Gore and his scientific cronies was either misinterpreted, misrepresented, and/or hyped beyond the value of what it can tell us (Please watch The Great Global Warning Swindle, that was produced for Channel Four in Britain in 2007, as well as exhaustive research and documentation that is available on the counter-view against Global Warming.) You know the phrase: “79% of all statistics are pulled out of someone’s rear-end.” I know that there are many indications of a change in nature, but obviously the Global Warming activists do not believe in the ability of the earth to manage its own environmental systems better than mankind will ever be able to.

Okay, with that said onto the main feature...

The European Commission, a cabinet government that consists of twenty seven bureaucrats who conduct their legislative assembly in Brussels, are an executive arm of the European Union (E.U.) The Commission has taken on the perceived issue of climate change as one of their top priorities. Their belief is that the production of carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulphur hexafluoride and their release into the earth’s atmosphere by humanity is the principle cause of global warming due to a greenhouse effect. They have mandated that all E.U. member countries starting in 2013 must cut their carbon emissions by 30% of what they were measured to be in 1990, within the next eight years (year-end of 2020.) When that milestone is reached, further reduction shall be mandated.

This mandated reduction will be achieved by the E.U. by requiring their member states to require all greenhouse producers (i.e. all companies that operate in the E.U.) to measure, monitor and record their averaged historical production of carbon dioxide, and then dispense a wallet of Carbon Trading Credits to them all in an amount that is equal to 85% of their credit need, as well as selling credits to make up the 15% shortfall and also to non E.U. members who shall be emitting greenhouse gases within the borders of the E.U. These wallets all go into effect next year (2013.)

Even though most of the documents available at the Commissions website regarding the Emissions Trading Scheme, are peppered with the phrase ‘un-due burden’ as references to the many legal challenges against the scheme, the commission believes that ETS is as a simple, fair and cost effective measure against global warming, as well as recognizing that it is creating a brand new commodities market that is based entirely on the trade of unused ETS credits. The credits are loosely labelled by the E.U. as ‘financial instruments’ and frighteningly as far as I see it, they are viewing the trading of credits as a new creator of venture capital that will be injected into the economies of the E.U. member states, further shoring up the damage wreaked upon them by the Global Financial Crisis. Officially these credits are also called European Union Allowances or EUA’s. One credit (EUA) and shall have an opening price on January 1st, 2013 of €25 or approximately $33.50 at today’s rate of exchange.) 1 Credit = 1 Metric Tonne of Carbon Dioxide release.

Jet-A apparently, has 21.537 pounds of carbon dioxide locked up inside one U.S. gallon. This is released when it is burnt.

A typical current production, mid-size business jet is purported to emit 6.2 LBS of carbon dioxide per NM. For a flight from the Midwest U.S. to London or Paris, the total carbon dioxide emission shall equal 24,800 LBS (12.4 Short Tons or 11.272 Metric Tonnes.) At the rate of $33.50 per Metric Tonne, the Carbon Tax shall equal $377.62. It is predicted however, that due to speculating traders and government meddling, the cost per credit will go up by as much as 700 times the initial offered value, i.e. almost $24,000 per credit. Never say never regarding this not happening, because no-one ever expected a change in the Italian government that occurred recently, whereby the new Prime Minister and his cabinet are implementing a residency tax on all private aircraft per visit that can amount to almost $400,000 per visit for a Gulfstream sized aircraft as an example.

By reading the ETS legislation that is applicable to aviation, you will find that no aircraft is exempt if it produces more than 10 Metric Tonnes per annum. As you have seen, this allowance is pretty-much obliterated on the first flight across the pond from the U.S. to Europe.

The ETS legislation that targets the aviation industry reads as follows:

Aviation Flights which depart from or arrive in an aerodrome situated in the territory of a Member State to which the Treaty applies. This activity shall not include: (a) flights performed exclusively for the transport, on official mission, of a reigning Monarch and his immediate family, Heads of State, Heads of Government and Government Ministers, of a country other than a Member State, where this is substantiated by an appropriate status indicator in the flight plan; (b) military flights performed by military aircraft and customs and police flights; (c) flights related to search and rescue, fire-fighting flights, humanitarian flights and emergency medical service flights authorised by the appropriate competent authority; (d) any flights performed exclusively under visual flight rules as defined in Annex 2 to the Chicago Convention; (e) flights terminating at the aerodrome from which the aircraft has taken off and during which no intermediate landing has been made; (f) training flights performed exclusively for the purpose of obtaining a licence, or a rating in the case of cockpit flight crew where this is substantiated by an appropriate remark in the flight plan provided that the flight does not serve for the transport of passengers and/or cargo or for the positioning or ferrying of the aircraft; (g) flights performed exclusively for the purpose of scientific research or for the purpose of checking, testing or certifying aircraft or equipment whether airborne or ground-based; (h) flights performed by aircraft with a certified maximum take-off mass of less than 5700 kg; (i) flights performed in the framework of public service obligations imposed in accordance with Regulation (EEC) No 2408/92 on routes within outermost regions, as specified in Article 299(2) of the Treaty, or on routes where the capacity offered does not exceed 30000 seats per year; and (j) flights which, but for this point, would fall within this activity, performed by a commercial air transport operator operating either: fewer than 243 flights per period for three consecutive four-month periods, or flights with total annual emissions lower than 10000 tonnes per year. Flights performed exclusively for the transport, on official mission, of a reigning Monarch and his immediate family, Heads of State, Heads of Government and Government Ministers, of a Member State may not be excluded under this point."

Is there any way to avoid the Carbon Tax?

Our only hope is that the 26 or so countries that include the U.S.A., China, Russia and India, that all oppose this legislation that is being foisted upon all visitors to Europe, will manage to defeat it through trade embargos and other means. With as much financial strife that the Eurozone is feeling now especially with Greece, let’s not allow this Euro-Tax scheme to become cause for a military war.

So, what do you think about all of this? Do you think ETS/Carbon Tax is a good thing, or do you find it demonstrable like I do?

Upgrade Now For Best Value

The DOW is flirting with 13,000 and will likely hit an all-time high soon. The FDIC just reported that many banks are showing all-time profits. Even housing and unemployment statistics are improving somewhat. Mitt Romney just won the Michigan and Arizona primaries. The 1% are on a roll!


All kidding aside, the general economic conditions are improving, especially for corporations and those high-net worth individuals. Aircraft sales figures are slowly improving and the resale market is improving for the newer models. 


If you have been waiting, now is the time to upgrade. This means either acquire and aircraft or upgrade what you have. Here’s why.


  1. Most of the new aircraft sales forecasts indicate that 2012 will turn the corner on sales. GAMA’s 2011 sales report indicates that total units delivered were down 3.5% from 2010, but total billings were up up 0.4%. This shows that the larger, higher priced models are starting to do better. The Original Equipment Manufacturers (OEMs) generally show limited backlogs on their popular models. For new aircraft, prices are still reasonable. But, if the sales forecasts hold, new model sales will continue to improve. When that happens, price flexibility will start to decrease and delayed price increases will start to be put into effect. If you are waiting for new, act now.
  2. Most indications are that turbine flight hours are increasing. Hours billed for engine guaranteed maintenance programs are up. As flying hours increase, the active aircraft will need additional maintenance. Non-critical items that have been delayed will be scheduled. Right now, many Maintenance Repair & Overhaul (MRO) shops are not booked to near capacity. This means they have the schedule open for maintenance. Schedule it now if you can.
  3. Just as aircraft sales are hurting, so are airframe, avionic and engine upgrade sales. If you are looking at the latest flat panel display, cabin entertainment, interior refurbish or engine upgrade, these facilities are ready and have the time now. Which means that pricing and scheduling should be favorable to the buyer.

The only negative to buying or upgrading now seems to be a lack of financing, real or perceived. The financial institutions do have the money to lend (or finance leases), but the are more strict as to their requirements. The deal must make fiscal sense to them. So as a buyer, you need to have that relationship with your financial institution, as well as a healthy balance sheet/downpayment.


If you buy or upgrade now, you should get fair prices. As the market improves, pricing should firm up (as it has for the larger, newer jets). I don’t see aircraft values appreciating like they did in 2007, but values should hold or improve slightly for the popular models. Buying now should result in good value, and when you look to sell down the road, you should be able to avoid nasty residual value surprises.


FAA Updates Aviation Safety Reporting Program

As you may know, the FAA publishes Advisory Circular 00-46 to provide guidance for compliance with the Aviation Safety Reporting Program ("ASRP"). Under the ASRP, if an airman files an ASRP form (also somewhat inappropriately referred to as the "NASA form" since NASA is only the administrator of the ASRP) within the time required, any sanction that may be imposed in a subsequent enforcement action can be waived. The program does not affect an actual finding of violation against the airman. Rather, it simply provides a waiver of any sanction the FAA might seek to impose for the violation.

The sanction waiver will be available provided that (1) the violation was inadvertent and not deliberate; (2) the violation did not involve a criminal offense, accident, or action found at 49 U.S.C. 44709; (3) the person has not been found in any prior FAA enforcement action to have committed a regulatory violation for the past 5 years; and (4) the conduct of the airman giving rise to the violation did not exhibit incompetence or lack of qualification.

Recently the FAA updated this advisory circular to Advisory Circular 00-46E. The revised advisory circular changes the language governing when an ASRP report must be filed. Under earlier guidance, the report had to be filed within 10 days of the incident or occurrence. However, under the revised advisory circular to take advantage of the program a person must prove "that, within 10 days after the violation, or the date when the person became aware or should have been aware of the violation, he or she completed and delivered or mailed a written report of the incident or occurrence to NASA."

This new language appears to be less restrictive and will hopefully extend the availability of the program to factual situations that, by their nature, were previously precluded from participation (e.g. discovery of a mechanic's error well after the 10 day period has ended). However, it is unclear how strict the FAA or the NTSB will interpret the new language. Although I am cautiously optimistic, we'll have to wait and see.

Jetcraft Opens New Office In Hong Kong To Better Serve Growing Market For New and Pre-owned Business Aircraft


New business unit Jetcraft Asia to best serve clients by blending industry expertise with regional market knowledge
RALEIGH, NC, Feb. 28, 2012 – Jetcraft Corporation, a provider of business aircraft sales, acquisitions, trading and brokerage services, today announced the opening of a new office in Hong Kong, China, under the Jetcraft Asia banner.

“We believe that this is the right time to establish a permanent presence in Asia,” says Chad Anderson, President, Jetcraft Corporation. “While we have been active in the region for years, we have done so without a formal presence. Based on the projected growth of the Asian – and particularly the Chinese – market, we are now directly serving the region. By blending our proven approach to business aircraft sales with a team of Hong Kong-based industry professionals, we believe that Jetcraft Asia will offer buyers and sellers superior market intelligence and an in-depth understanding of regional business and regulatory issues. Speaking for the entire Jetcraft team, we are very excited about this latest step in our company’s growth and evolution,” adds Mr. Anderson.
“From our new office in Hong Kong, we will be able to best represent client interests in Asia,” continues Jahid Fazal-Karim, Co-Owner and Board Member, Jetcraft Corporation. “Traditionally, the Asian market has favored new business aircraft. However, we predict a growing market for pre-owned aircraft, particularly in China, within the next five years. Locally-registered aircraft are likely to remain in China since transferring registration in-country is generally simpler than importing and registering aircraft. Given Jetcraft’s commitment to offer comprehensive services in multiple markets with consistent quality, establishing a permanent presence in Asia was the next logical step for us. Jetcraft Asia will leverage regional market knowledge and our proven approach to remarketing aircraft in order to tailor solutions for our clients globally, both within the region and from elsewhere – whether selling into or buying from Asia,” concludes Mr. Fazal-Karim.
For more information or to contact the Jetcraft Asia team, please visit

About Jetcraft Corporation
Jetcraft Corporation is an international leader in new and pre-owned business aircraft sales, acquisitions and trades. Headquartered in Raleigh, NC, Jetcraft has sales offices/representation in five US cities; Basel and Zurich, Switzerland; Dubai, UAE, Moscow, Russia and Hong Kong, China. The company’s 50-year-plus track record in aircraft transactions has earned it a world class customer base and one of the strongest global networks in the industry. Jetcraft Avionics LLC, a subsidiary of Jetcraft Corporation, provides distribution of Enhanced Flight Vision Systems (EFVS) for aftermarket business and wide body aircraft using Elbit-Kollsman’s state-of-the-art EVS-II and AT-HUD. For more information, please visit

General Aviation - Billings up in 2011 but delivers still slow to the punch

Written by Molly McMillin
The Wichita Eagle

A resurgence expected last year in the general aviation market didn’t happen, but an increase is expected for 2012.

“Unfortunately, you will see that a resurgence did not take place for the industry as a whole,” General Aviation Manufacturers Association chairwoman Caroline Daniels said Wednesday, speaking of 2011. “However, 2011 did furnish signs of a sustained recovery and some reason for optimism.”

The 2011 decline in general aviation aircraft delivered was in the single digits at 3.5 percent. That’s after three years of double-digit declines since record deliveries in 2007. Billings, however, were up slightly last year “This is an indication that the trough in the industry cycle has been established,” Daniels said during a webcast from Washington, D.C. Some manufacturers showed flat or improved performance last year over 2010.

Deliveries by Wichita’s general aviation manufacturers rose last year. Wichita planemakers delivered 45 percent of all general aviation aircraft last year. GAMA released year-end general aviation shipment and billing numbers Wednesday during a state-of-the-industry event in Washington. Shipments for 2011 totaled 1,865 planes, down 3.5 percent from 1,932 planes the year before. Billings totaled $19.1 billion, up from $19.0 billion in 2010. “We don’t think we can go anywhere but up,” said Pete Bunce, GAMA president and CEO. “But how great the slope is depends on economic conditions.”

Those conditions include uncertainty in the European and global economy, he said. The good news, however, is that a majority of the market fundamentals for the industry are moving in the right direction. Unemployment levels are declining, corporate profits are up, flight activity has improved and emerging markets are driving new sales, GAMA officials said.

Despite a return to strong corporate profits, “it seems though, that companies remain in a wait and see mode,” Daniels said. Eventually, the healthy profits will turn into business from pent-up demand, she said. The number of used aircraft for sale has declined slightly, but is still at historically high figures. The amount of used aircraft inventory affects the sale of new planes.

The impact of the economic recession has been felt most acutely in the lighter end of the business jet market, while larger jets have turned in a steady performance. Buyers of large jets rely less on third-party financing and emerging markets have favored the large-jet category, Daniels said.

Wichita general aviation deliveries, 2007-11

  2011* 2010 2009 2008 2007
Bombardier Learjet 43 28 46 74 80
Cessna 689 534 740 1,300 1,274
Hawker Beechcraft 113 214 273 435 430**
Total Wichita 845 776 1,059 1,809 1,784
Worldwide shipments 1,865 1,932 2,276 3,969 4,272
Worldwide billings $19.1B $19.0B $19.5B $24.8B $21.9B

*2011 figures do not include Hawker Beechcraft’s fourth-quarter deliveries or billings. All figures do not include shipments for military use. **Hawker Beechcraft 2007 figures include shipments from Hawker Beechcraft and its predecessor, Raytheon Aircraft. When 2010 fourth quarter Hawker Beechcraft numbers are eliminated, total 2011 billings were 0.4 percent higher than a year ago. GAMA will adjust figures after Hawker Beechcraft’s earnings results.

Hawker Beechcraft

For months, Bill Boisture, chairman of Hawker Beechcraft Corp., has described the market as “bumping along the bottom.” Last year, Boisture predicted that demand in 2011 would be much like 2010, and 2012 would be much like 2011. “I have to say, sadly we were right,” Boisture said this week about demand last year. “We’ve felt like and thought for many reasons that ’12 would be a lot like ’11. And I can’t see much reason yet why that would be different.”

He hears the discussion that the economy is improving. “I hope for the sake of the American people that that’s true,” Boisture said. “But I would say that I don’t think that has really filtered through into a significant change in the aircraft market in our sector.” People are beginning to be a little more optimistic – or maybe they’re more accepting that today’s economy is now the new normal and they have to grow their business, he said. And if buying an airplane is needed to grow it, they have to figure out how to do that in today’s circumstances, Boisture said. The company has figured out how to be better at aggressively selling airplanes in today’s market, he said. “Our team continues to improve and continues to have a tighter focus,” Boisture said. “I think we’re getting better at it.” The availability of financing remains a big issue, however, especially in the light jet through piston aircraft market segments, he said. “The amount of equity that a buyer has to come with to get aircraft financing for a new airplane is significantly higher,” Boisture said. Financing is less of an issue with higher-priced airplanes and almost nonexistent in the large jet category, he said, because most buyers don’t need financing. GAMA’s Daniels agrees. “Third-party financing has been difficult to secure since the downturn,” Daniels said. That has led buyers to cancel aircraft purchases. “Once financing flows more freely, the aircraft market will improve,” she said.

Cessna Aircraft

At Cessna Aircraft, the amount of interest and activity at the beginning of the year increased from the same time a year ago, Brad Thress, Cessna senior vice president of business jets, said recently. “It’s a great way to start the year because the last two (years) have started so slowly,” Thress said. The industry is no longer in a time of monstrous order backlogs, however. Instead, companies must sell airplanes this year to make production expectations. Cessna has aggressively increased its sales force to find customers. “We are in the hunt for every deal,” said company spokesman Dianne White.

Cessna is continuing to invest significantly in new products, Thress said. Last year, it introduced the Citation M2 and the Latitude. “But there’s more coming that we’ll be announcing in the coming years,” he said. “It’s good business long-term to invest a lot in new products so as we do emerge from the downturn, we’ll have a fresh (products) in an invigorated market.”

Working with the FAA

One of the biggest issues facing manufacturers, said GAMA’s Bunce, is the need to streamline the certification process.

The volume of certification activities from planemakers is on the rise, and there is pressure to keep up, said Walter Desrosier, GAMA vice president of engineering and maintenance. “We’re working with the FAA to move to a more systems-safety oversight,” Desrosier said. The way it does certification today is by reviewing and approving every drawing and every test. “They’re involved in the minute details of routine day-to-day activities that are the same,” he said. “It’s the same widget being designed for one airplane to the next airplane to the next airplane.” There’s interest and support for the FAA to focus on a systems safety oversight that would leverage limited resources to focus on “safety critical” areas, new technologies and new manufacturing methods, Desrosier said. To do that means the FAA would oversee a company’s program that has FAA-approved processes and procedures. “The FAA would oversee how they’re doing that and the FAA would be able to accept that,” Desrosier said.

Language in the FAA reauthorization bill signed by President Obama includes a commitment for the industry and the FAA to work together on ways to be more efficient, Bunce said. “We’re very encouraged,” Bunce said. “It has to get done. There is a gigantic bottleneck there. The amount of work is accelerating while budgets are diminishing.” Another issue is a transition from today’s aviation fuel to unleaded fuel for piston-powered airplanes. That’s “absolutely vital,” Bunce said. And last year, bonus depreciation allowed buyers of business aircraft to depreciate their planes 100 percent. That helped spur sales. Whether that will be extended is unclear, Bunce said.

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