Sitting here in St. Louis, trying to make sense out of the changes in world economic conditions and how they will affect the business aircraft market. Currently, the aircraft market seems to have found the bottom of this down cycle and will, optimistically, stay here for a while. My pessimist side is warning me that this is not a bottom, but just a plateau, and we will see another drop in pricing later this spring. Right now, I give my optimistic side a 75% chance of being correct.

As I am writing this, the Euro has been sliding against the Dollar - against all of the forecasts. The Dollar was expected to weaken against all major currencies due to the large U.S. federal deficit. Now the debt situation in Europe seems to be the big issue. Where is the next problem going to pop up?

Almost all models of aircraft have declined in value 50-60% from the Spring 2008. The bigger declines are tied to the large aircraft that were skyrocketing at that time. In hindsight, that was obviously a bubble. The G-IVs that couldn't be touched for under $20 million are now trading in the $6.5 to $9.0 million range. The Falcon 900s, CL604, G-V, Global, and others have all taken a similar plunge.

No size of aircraft has been immune. The older aircraft have been hit the hardest. Citation II's, with low-time engines, are trading for under $1.0 million. Early Beechjet 400As are trading in the $1.0 million range; while Citation CJ2s are going for less than $3.0 million.

Older mid-sized jets have also taken a major drop in value. Good Hawker 700As are barely going for above $1.0 million. Falcon 20F-5BRs are going for under $2.0 million. Hawker 800s are going for less than $2 million. These drops in value are closer to the 60%, and in some cases, much higher.

Newer mid-sized jets have taken similar declines. Hawker 800XPs, Citation XLS and Excels are good examples. Early Hawker 800XPs have been trading in the mid-3's, Excels in the $3's and XLS in the $6's.

Older large aircraft have taken the largest hit in value. Challenger 600s are trading in the low $1's, G-IIIs have sold for under $1.0 million. Challenger 601s are available for under $3.0 million.

Turboprops have also been hit hard. Decent late model B200s ('95 to '99 models) are going for below $2.0 million.

Looking through the downturns of the last 25 years, prices always seem to drop quickly and recover slowly. In this downturn, the prices dropped extremely fast and I expect the recovery to be slow also.

In the meantime, this is one of the best times to purchase a corporate jet that we may see in our lifetime!

THE EU EMISSION TRADING SCHEME (ETS)
by Tim Barber, Managing Director, JetBrokers-Europe

The European Union Emissions Trading Scheme (ETS) has been developed by the EU in an effort to reduce environmental pollutants - greenhouse gases, acid rain and the like. By governmental action, a limit has been placed on the quantity of these pollutants a company can generate. Consequently these units will have a value and could be traded in the same way that you would buy or sell shares of publicly traded companies.

With a number of heavy industries already tied into this scheme, Business Aviation is next! So, from January 1, 2012 all aircraft operators flying into, from or within the EU member states will be required to monitor emissions. There's a bench marking process now underway which started in January 2010 but the limits have already been set as follows:

• The cap will be set for 2012 at 97% of aviation emissions in 2004-5 and at 95% thereafter.
• Any free allocation of carbon credits will be based on 2010 revenue-tonne-km (TK) benchmarking completed by operators in 2010.
• 3% of the allocation will be held back for new entrants and 15% will be auctioned, leaving 79% to be allocated free to those that justify it by TK benchmarking.

EU Member States are in charge of distributing the 79% free carbon credits among the operators that have been attributed to them in accordance with the EC List of Operators. Compiling this list of operators appears to have been a far from scientific process so far, with numerous businesses excluded from the list. This exclusion could preclude those businesses from receiving their allocation until 2020, so there has some considerable angst throughout this period of uncertainty. The distribution of free carbon credits in each Member State will be done in accordance with the revenue (paying passenger/cargo) TK. This parameter has been adopted in the framework EU Directive and is not planned to be modified in the coming years.

Unfortunately, this distribution principle will effectively leave a very small number of free carbon credits for Business Aviation operators; just around 10%, due to the typically low passenger loads. The most important thing for operators to realise is that the only way to get a free allocation of carbon credits will be through the submission of TK data from the 2010 TK recording exercise. European Business Aviation Association (EBAA) has recommended to all its members to mention that Business Aviation operators will always assume that the aircraft is always full as operators don't sell seats and therefore have no control on the number of seats that will be occupied for each mission.

Extensive efforts to carve Business Aviation out of these regulations have repeatedly failed and the industry now has no alternative but to work within these constraints.

Looking forward it is probably only a matter of time before such schemes are introduced in other parts of the world so watching how the EU scheme fairs is quite important. To date, it has been clear that there have been more than a few difficulties; guidelines and deadlines have changed throughout 2009. Even now this confusion remains but it's here to stay and it now starts to cost real money.

So, where's the good news? There isn't much except that, if you're operating an aircraft below 5700kg, you're excluded.

Further information can be found at http://ec.europa.eu/environment/climat/aviation/index_en.htm and those with severe insomnia can take a look at the EU Directive documentation - 2008/101/EC.

PAPER AIRMEN CERTIFICATES EXPIRE ON MARCH 31, 2010
by Ed Perrey, Aircraft Analyst

According to FAA rulings, paper airmen certificates must be replaced with updated, tamper proof permanent certificates by March 31, 2010 or you will be unable to exercise the privileges of the certificate after this date. If you haven't already requested the new durable, plastic certificate, now is the time to do it. You may also replace your social security number with a new pilot certificate number to increase the security of your personal identity at the same time.

The application process can be done on the FAA web site: http://www.faa.gov/licenses_certificates/airmen_certification/expiring_paper_certificates.

While there is a requirement to submit a photo from an official source (drivers license, passport or government ID), a photo will not be included on your permanent certificate at this time. The FAA will eventually incorporate a photo on Airmen Certificates but is not doing so at this time.

FAA Application Process for Permanent Certificate:

• Go to www.faa.gov. Go to "Licenses & Certificates" & select "Airmen Certification."
• Under "Online Services" select "Airmen Services."
• Log in if you already have an on-line account with the FAA. If you don't have an on-line account with the FAA, you will need to create one.
• Select "Order Replacement Certificate" under the "Certificate" box.
• The site describes the fee to process your request to replace your certificate(s). If the certificates are issued on the basis of a foreign license, there will be a requirement to complete a Verification of Authenticity of Foreign License. There are instructions to click "Next" to begin the process.
• The endorsement "English Proficient" will be included on all pilot certificates with powered ratings, Flight Engineer, Flight Navigator, and Control Tower Operator certificates.
• Select all the certificate(s) you are replacing and pick "Upgrade to new format" as the reason for the request.
• When asked for the source of your photo, the choices are Driver's License, Passport, or Government ID. If you choose Driver's license or Passport, enter your state of residence, or the state that issued it, and enter the number. If you select Government ID, just enter the ID number.
• Update your personal information, by entering it in the requested field and selecting next. If not, just select "Next."
• Enter your payment method and proceed to the verification page where you will verify your request.

That's it! You are finished. According to the FAA site, your permanent certificate should arrive within two weeks.

JETBROKERS GROWING AND MOVING

JetBrokers is pleased to announce the addition of Ed Perrey to our Texas location. Ed will primarily be handling the late model King Air markets including the C90GT & GTi's, late model B200's, King Air 350's, Lear 40 series markets as well as the Pilatus PC-12 market. We have also moved our office location from Bergstrom Airport back to Marble Falls. Our phone and fax numbers will remain the same. Our new address is as follows:

900 Main Street, Suite 100
Marble Falls, TX 78654
Phone: 512-530-6900
Fax: 512-857-0462

DIRECT OPERATING COST

The DOC (Direct Operating Cost) used in the comparison charts includes fuel ($4.50 per gallon), engine reserves (either MSP or overhaul agency estimates), and maintenance costs using information gathered from operators. All inspection estimates are based upon the aircraft operating 400 hours per year and averaging 1.5 hour legs.

We have added many new aircraft in this issue and would like to know if we are inaccurate on any of this data. We have had to remove some models to make room. You will be able to find the removed models on our web site. Please call 1-800-532-6900 with any information.

JET AIRCRAFT COMPARISON SUMMARY

TURBO PROPS COMPARISON SUMMARY