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Where are we in the Business Jet Cycle?

a.k.a.

The Only Way is Up…

Eddy Pieniazek Ascend

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Business Jets - 2011

The Build up to 2010

How does the market look for 2011?

Which Markets will drive recovery?

The role of BRIC Countries

China’s Potential

Up and only up, or double dip?

Questions

Content

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Our role in this market sector Ascend

provides data,

analytics and

advice to

help investors

finance aircraft

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The Build-up to 2010 The Outlook for 2011

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7,781 delivered

since 2000

17,711 Total now

In service

2008 Peak year

1,224 deliveries

2003 Low point

505 deliveries

Last Ten Years – Business Jet Deliveries 2001-2010

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Last Ten Years – Business Jet Deliveries

North America dominated the past

Where did they go?

0

200

400

600

800

1000

1200

1400

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Unknown area

Australasia

Africa

Middle East

Asia

Latin America and Caribbean

Europe

North America

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Last Ten Years – Business Jet Deliveries

Rest of World (ROW) growth from 25% to >50% share

The Market is shifting

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Unknown area

Australasia

Africa

Middle East

Asia

Latin America and Caribbean

Europe

North America

North America

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Market Shifts – the trend continues

current fleet (17,711) on order (2,480 known)

Asia AustralasiaEurope Latin America and CaribbeanMiddle East North AmericaTBD

AsiaAustralasia

Europe

Latin

America and

Caribbean

Middle East

North

America

TBD

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Market Shifts – Value Changes Since 2008

Long Range example – Global Express Family

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Market Shifts – Value Changes Since 2008

Mid Range examples – Falcon 900 Family

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Market Shifts – Value Changes Since 2008 Medium range example – Challenger 300

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Market Shifts – Value Changes Since 2008 Light-Medium range example – Citation Excel/XLS

11.50

9.10

12.25

7.20

11.55

6.20

10.55

5.20

9.00

5.05

7.45

2.80

2.50

5.00

7.50

10.00

12.50

Sep-08 Dec-08 Mar-09 Jul-09 Oct-09 Mar-10 Dec-10

Mark

et

Valu

e (

US

$m

)

MARKET VALUE TRENDS — CITATION EXCEL/XLS FAMILY

2009 XLS+

2008 XLS

2006 XLS

2004 XLS

2003 Excel

1998 Excel

Source: Ascend Online Values (V1)Source: Ascend Online Values (V1)

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Driving the Recovery The role of BRIC countries China’s Potential

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Source: IATA

Recovery in Global Economy is present in all regions but US and Europe are underperforming

-6

-4

-2

0

2

4

6

8

10

12

14

2000 2002 2004 2006 2008 2010 2012

Real GDP Growth by Key Regions

2000 – 2012

China (RPC): 9%

Asia Pacific: 5.6%

Middle East: 4%

North America: 1.7%

Europe: 0.7%

Markets looking to Asia-Pac (esp. China) and Middle East

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Driving the Recovery - Deliveries to the BRIC

Which Markets?

0

5

10

15

20

25

30

35

40

45

50

55

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

BrazilRussia

IndiaChinaMiddle East

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Driving the Recovery – Deliveries in 2010

Brazil – small is beautiful - 36 of 57 deliveries were Phenoms, 3

Mustangs, 4 CJ2/3s

Russia – only five but they’re all for the long haul – Falcon 7X,

Global Express and Challengers

India – remains a mixed promise…10 aircraft from G550, Falcon

7X and Global Express to Lear 60s and Phenom 100s

China – Distance is key: 22 aircraft of which 7 Gulfstream 450/550,

3 Falcon 7X, 2 Challengers, 4 Hawker 4000s

Middle East – Bigger is better again: 21 aircraft of which 4 were

Gulfstream 450/550, 5 Challengers, 4 Falcon 7X, 3 Globals

The BRIC Collective – not the answer – not just yet

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Driving the Recovery

Business Aircraft fleet is growing

China displays Potential

0

20

40

60

80

100

120

140

160

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

LoI

Ordered

In Storage

In Service

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Let’s go shopping!

“ The average wealth of the 1,000 wealthiest Chinese grew 26% in the

last year. This year there are 1,363 Chinese individuals with 1 billion

RMB (US$150 million), compared to 1,000 individual last year and only

24 ten years ago”

Editorial from China International Business, November 2010

According to the 2010 Hurun Rich List, one-sixth of the

2,000 richest in China have plans to buy private aircraft.

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Hurdles to Overcome for BA / GA in China

Airports & Aerodromes

The lack of airport infrastructure in China has limited the development of

BA / GA activities in China. China is building more

The lack of the BA / GA Professional

Ranging from flight instructors to FBO managers, engineers and maintenance facilities,

BA / GA brokers, Air traffic controllers. Recruiting & building is underway

High Import taxes

Import tax can be more than 20% of the aircraft purchase price in many cases

Airspace

+ The Government has started to look at the issue

- how the Government / Military will change their attitudes is very uncertain

…but moves are underway to meet the challenge

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Airspace Issues in China

Altimetry (use of m

instead of ft, affects

IFR flights more)

No airspace for GA activities in general

(no class G airspace),

Uneven concentration

of air traffic

over China

Growing commercial, business

and GA fleet, all fighting for

access to limited airspace Only 20-30% upper airspace

is for civilian usage

Long application process

in applying for private

flights in China

Insufficient

well-trained ATC

professionals

Airspace is owned and

controlled

by military, not CAAC

Affects IFR (commercial, business flights)

Affects VFR (private and GA flights)

Affects both

Chinese airlines tend to

get better routing and quicker

clearance approval

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China Airspace Reform

Lower airspace in China will be divided by three sections:

1. Areas under control 2. Areas under surveillance and 3. Areas where aircraft can fly freely after reporting their flight plan in advance

Original test points were Pearl River Delta (Southern China), Northeast China, and the GA Industrial Park in Xian.

The open airspace reform will be trialed in Changchun and Guangzhou first in 2011 and includes the setting up of lower airspace in controlled airspace (CTA) that is different to the one which covers the majority of China.

Other areas are also now being tested, such as the tropical island of Hainan

China’s State Council and Central Military Commission issued a joint

circular before the Zhuhai Airshow 2010 (Titled ‘Opinions About Resolving

and Deeper Understanding of Domestic Lower Airspace Management’)

China will open parts of its low-altitude airspace to promote the country’s

GA sector. Lower airspace in China = below 4,000 m. (where GA aircraft

operate)

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AVIC CAIGA has established core bases in five cities for

GA development

Zhuhai AVIC CAIGA development heart of China,

aftermarket support, maintenance

and manufacturing

Shijiazhuang

Agriculture-used aircraft,

sports aircraft

Guizhou Aircraft and automotive

parts

Jingmen lighter-than-air vehicles

manufacturing

Shenzhen Aerospace & non-aerospace

materials R&D

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China already in Action

Beijing Capital Airlines – 50 aircraft now, 24 are business aircraft.

By 2015 “the fleet will be 270”, of which 141 will be business aircraft.

China First Mandarin Group (CFMG) and TAG to manage 20-30

aircraft in 2-3 years

Minsheng Financial Leasing – building a leasing fleet of 30 for 2011,

expects to have ordered 100 by 2014.

AVIC CAIGA looking to build a suite of light general and business

aircraft

China to supply, as well as fly

Ten Year Projection 2011-2020

China Business Jet Fleet to grow x 7 to 700

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Where to from here?

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2011 Deliveries Anticipated Deliveries (approx 730)

VLJ/Entry Level

29%

Long Range

25%

Light

11%

Light Medium

14%

Medium

21%

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2011 Deliveries Value of Anticipated Deliveries (US$bn)

Long Range,

$8.5b, 46%

Light, $0.6b, 3%VLJ/Entry

Level, $0.7b,

4%

Light Medium,

$4.6b, 24%

Medium, $4.4b,

23%

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