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►  Private-jet glut spurs ‘insane’ bargains for aspiring buyers

Corporate-jet makers are flooding the market, spurring deep discounts for new aircraft and fueling a three-year slide in prices of used planes.

Most major manufacturers, including Gulfstream and Bombardier—which is also contending with rising hurdles in its commercial-jet business—have slowed production in the last couple years as demand for private jets sagged. That still hasn’t been enough to halt declines in aircraft values, say consultants, brokers and analysts in the $18 billion industry.

Gone is the optimism stoked by the election of Donald Trump, a corporate-jet maven with his own Boeing 757, along with hopes for speedy tax cuts that would bolster plane purchases. Instead, the news has been full of setbacks. Health and Human Services Secretary Tom Price resigned under fire for his frequent use of private planes at taxpayer expense. General Electric is selling off its corporate fleet to cut costs.

“The Trump bump is over,“ said Janine Iannarelli, a Houston-based plane broker.

The jet glut is one reason pre-owned prices were down 16 percent in August from a year earlier. With bargains aplenty on machines with few flight hours, manufacturers are cutting deals to entice buyers to purchase new planes. Meanwhile, they keep churning out aircraft and introducing new models.

“It’s a question of who wants to blink first,“ said Rolland Vincent, a consultant who puts together the JetNet iQ industry forecast. “Nobody—because whoever blinks, loses share.“

A rise in demand for new company planes, which would help stabilize the market, isn’t in the cards. Corporate plane-buying plans have hit a 17-year low, according to an annual survey by Honeywell International of more than 1,500 flight departments. Companies expect to replace or add planes equivalent to 19 percent of their fleets on average over the next five years, down from 27 percent in last year’s survey.

The steep discounts on new aircraft are galling customers who paid closer to a full price, said Barry Justice, founder and chief executive officer of Corporate Aviation Analysis & Planning. General Dynamics’s Gulfstream unit slashed as much as 35 percent off the price of its G450, which is being phased out as the new G500 aircraft nears arrival, Vincent said. The G450 had a list price of about $43 million, according to the Business & Commercial Aviation guide.

Bombardier has offered discounts of as much as $7 million on the Challenger 350’s list price of about $26 million as it fends off competitors entering the super midsize space, he said. The weakness across the industry in private-jet sales is adding to the pressure on Bombardier, which is also struggling to sell its C Series commercial planes. The U.S. government slapped import duties of about 300 percent on the single-aisle jetliner in the last two weeks after a complaint by Boeing Co.

For corporate aircraft, the global market hasn’t fully recovered from the last U.S. recession, when plunging demand popped a bubble that had flooded the industry with more than 1,000 new jet deliveries in both 2007 and 2008. A nascent recovery in 2013 and 2014 fell apart after the price of oil and other commodities collapsed, drying up sales in emerging markets such as Russia and Brazil.

Deliveries of new private jets are forecast to drop to 630 this year, down from 657 last year and 689 in 2015, according to JPMorgan Chase. The number is forecast to rebound slightly to 640 in 2018.

The more conservative pace has done little to relieve the glut, creating a buyer’s market for used aircraft. A five-year-old jet sold in 2016 was worth only 56 percent of its original list price, on average. That’s down from 64 percent in 2012, according to a report by Jetcraft, a plane broker that expects to close more than 80 deals this year. The value retention was as high as 91 percent in 2008.

Prices for used aircraft right now are “insane,“ said Justice. Some companies and wealthy individuals are buying pre-owned aircraft for the first time because the bargains are too good to pass up, he said.

“There’s a vast overproduction of large-cabin airplanes and there are only so many people in the world who are going to step up and pay $60 million-plus,“ he said. “What happens is, people are going to that pre-owned market.“

More new aircraft are on the way. Next year Bombardier will begin selling the Global 7000, which will compete with the Gulfstream G650ER as the largest and longest-range business jet. Textron Inc.‘s Cessna unit is close to beginning deliveries on a super midsize plane called the Longitude and is designing its largest-ever aircraft, the Hemisphere. Gulfstream will begin selling the G500 early next year and the G600 later in 2018, both of which are large-cabin aircraft.

Smaller aircraft are feeling the pressure as well. Swiss planemaker Pilatus Aircraft Ltd. is set to begin sales of its first business jet—the PC-24—building on the success of its single-engine turboprop. HondaJet began deliveries at the end of 2015, the first-ever business jet for the Japanese carmaker.

Those new models should help boost new aircraft sales because they will offer better performance and newer technology than the pre-owned models, which compete for buyers mostly on price, said Ben Driggs, Honeywell Aerospace’s president for the Americas.

“We are projecting growth in ‘18 and growth in ‘19 and beyond” for new aircraft deliveries, Driggs said.

Bombardier pulled back production rates in 2015 after its inventory of new jets began to pile up. The slower pace helped the Canadian company boost operating margins and support pre-owned prices of its planes, spokeswoman Anna Cristofaro said in an email. Bombardier’s sales from business jets were more than twice its revenue from commercial planes last year.

Gulfstream declined to comment.

“Our actions in 2015 have yielded results, and Bombardier’s young pre-owned Global model aircraft continue to be among the top performers in the large category in terms of value retention and pre-owned inventory levels,“ Cristofaro said.

That’s a step in the right direction. But the market as a whole will have to wait a little longer for relief.


►  Google parent turns on internet balloons in Puerto Rico

Google’s parent Alphabet Inc. said Friday that its stratospheric balloons are now delivering the internet to remote areas of Puerto Rico where cellphone towers were knocked out by Hurricane Maria.

Two of the search giant’s “Project Loon” balloons are already over the country enabling texts, emails and basic web access to AT&T customers with handsets that use its 4G LTE network.

The balloons — called HBAL199 and HBAL237 — are more than 60,000 feet (18,000 meters) above land, according to FlightRadar24.com . They navigate using an algorithm that puts them in the best position to deliver signal by rising and falling to ride wind currents. They are also solar-powered and only provide signal during the day

Several more balloons are on their way from Nevada, and Alphabet has been authorized by the Federal Communications Commission to send up to 30 balloons to serve the hard-hit area, according to Libby Leahy, spokeswoman for Alphabet’s X, its division for futuristic technologies.

Project Loon head Alastair Westgarth said in a blog post that Project Loon is “still an experimental technology and we’re not quite sure how well it will work,” though it has been tested since last year in Peru following flooding there.

Hurricane Maria devastated the U.S. territory of 3.4 million people since making landfall last month. Governor Ricardo Rossello said Friday the death toll had risen to 49. Less than a fifth of the island has electricity, half its cellphone towers are still not functioning, schools are closed and more than 4,000 are in shelters, according to a government website .

AT&T spokesman Jeffrey Kobs said the company has set up 14 temporary cell sites, and as of Friday more than 60 percent of the population was connected via mobile network, in part due to the help of humanitarian and government groups and Project Loon.

Other technology companies such as Cisco, Facebook and Tesla have also pledged help or have sent teams to the island to improve communications and restore power.

Science and Technology

The Free Press WV

►  Kids, screens and parental guilt: Time to loosen up?

Parents of small children have long been hearing about the perils of “screen time.” And with more screens, and new technologies such as Amazon’s Echo speaker, the message is getting louder.

And while plenty of parents are feeling guilty about it, some experts say it might be time to relax a little.

Go ahead and hand your kid a gadget now and then to cook dinner or get some work done. Not all kids can entertain themselves quietly, especially when they are young. Try that, and see how long it takes your toddler to start fishing a banana peel out of the overflowing trash can.

“I know I should limit my kid’s screen time a lot, but there is reality,” said Dorothy Jean Chang, who works for a tech company in New York and has a 2-year-old son. When she needs to work or finds her son awake too early, “it’s the best, easiest way to keep him occupied and quiet.”

Screen time, she says, “definitely happens more often than I like to admit.”

She’s not alone. Common Sense Media, a nonprofit group focused on kids’ use of media and technology, said in a report Thursday that kids aged 8 and under average about 2 hours and 19 minutes with screens every day at home. That’s about the same as in 2011, though it’s up from an hour and a half in 2013 — the last time the survey was conducted — when smartphones were not yet ubiquitous but TV watching was on the decline.

While the overall numbers have held steady in recent years, kids are shifting to mobile devices and other new technologies, just as their parents are. The survey found that kids spend an average of 48 minutes a day on mobile devices, up from 15 minutes in 2013. Kids are also getting exposed to voice-activated assistants, virtual reality and internet-connected toys, for which few guidelines exist because they are so new.

MIXED MESSAGE

Some parents and experts worry that screens are taking time away from exercise and learning.

But studies are inconclusive. The economist Emily Oster said studies have found that kids who watch a lot of TV tend to be poorer, belong to minority groups and have parents with less education — all factors that contribute to higher levels of obesity and lower test scores. For that reason, it’s “difficult to draw strong conclusions about the effects of television from this research,” Oster wrote in 2015.

In fact, the Common Sense survey found that kids whose parents have higher incomes and education spend “substantially less time” with screens than other children. The gap was larger in 2017 than in previous years.

For more than a quarter century, the American Academy of Pediatrics held that kids under 2 should not be exposed to screens at all, and older kids should have strict limits. The rules have relaxed, such that video calls with grandma are OK, though “entertainment” television still isn’t. Even so, guidelines still feel out of touch for many parents who use screens of various sizes to preserve their sanity and get things done.

After all, what’s the point of putting on an episode of “Daniel Tiger” so you can do laundry if the nation’s pediatricians insist you sit with your kid while she’s watching it?

“My kids are not any more or less crazy than your average toddlers because we watch a little TV,” said Jenny Hopf, a mother of two who co-founded Momidarity, an online video service for moms to connect with each other. “When used at the right time, it’s a lifesaver.”

Jen Bjorem, a pediatric speech pathologist in Leawood, Kansas, said that while it’s “quite unrealistic” for many families to totally do away with screen time, balance is key.

“Screen time can be a relief for many parents during times of high stress or just needing a break,” she said.

EVERTHING IN MODERATION

Bjorem recommends using “visual schedules” that toddlers can understand to set limits. Instead of words, these schedules have images — of dinner, bed time, reading or TV time, for example. Another idea for toddlers? “Sensory bins,” or plastic tubs filled with beads, dry pasta and other stuff kids can play around with and, ideally, be just as absorbed as in mobile app or an episode of “Elmo.”

Of course, some kids will play with these carefully crafted, Pinterest-worthy bins only for a few minutes. Then they might start throwing beans and pasta all over your living room. So you clean up, put away the bins and turn on the TV.

In an interview, Oster said that while screen time “is probably not as good for your kid as high-quality engagement” with parents, such engagement is probably not something we can give our kids all the time anyway.

“Sometimes you just need them to watch a little bit of TV because you have to do something, or you need (it) to be a better parent,” Oster said.

Science and Technolog

The Free Press WV

►  Applying for a credit card? Please take a selfie

The selfie is everywhere — Facebook, Instagram, Twitter — and soon your bank could be asking for one in order to approve your purchase or credit card application.

Payment processing giant Visa Inc. is launching a platform to allow banks to integrate various types of biometrics — your fingerprint, face, voice, etc. — into approving credit card applications and payments.

Consumers could experience Visa’s new platform in a couple different ways. If a person were to apply for a credit card application on their smartphone, the bank app could ask the applicant to take a selfie and then take a picture of a driver’s license or passport. The technology will then compare the photos for facial similarities as well as check the validity of the driver’s license, all happening within seconds.

The selfie could also play a role in an online purchase. With the wider acceptance of chip cards in the last couple of years, in-person fraud at retailers is on the decline. But online fraud is still a concern, with as many as one of six transactions being declined due to suspicious activity, according to Mark Nelsen, senior vice president for risk and authentication products at Visa.

Instead of a bank call center autodialing a customer when they have a concern about a transaction, this new technology could allow the customer to use Apple’s Touch ID or other fingerprint recognition technology, or take a selfie or record their voice, to verify they made the transaction. With voice recording, a customer may have to speak a certain phrase.

“Customers will be able choose their own preference for biometric authentication: voice, face, finger print. Any manner that they want,” said Tom Grissen, CEO of Daon, one of the companies that Visa is partnering with to launch the platform.

The announcement comes at a time when a huge amount of personal information on 145.5 million Americans was recently accessed or stolen from the credit bureau Equifax. The information — birthdates, Social Security numbers, addresses, last names — is also information that could be used tomorrow or 20 years from now to potentially commit identity fraud.

Financial companies are particularly interested in biometrics, not surprisingly, as mostly a fraud protection measure. While a birthdate, Social Security number or last name can be more easily stolen or mimicked — as anyone who has been a victim of identity fraud will tell you — it’s much harder to fraudulently mimic a person’s face, fingerprint or voice.

A bank’s traditional defense against stolen personal data has been a customer creating a password or four-digit personal identification number. But few people change their passwords regularly and make each one complex enough. Often people use the same password for multiple sites, so if it’s stolen from one location, multiple other locations become at risk.

“Passwords are frustrating, increasingly complex and proven not to be secure,” Gressen said.

So banks have been tinkering with biometrics for a couple years in various forms. Many banks now accept Apple’s Touch ID in their iPhone apps, which uses a person’s fingerprint to verify a person’s identity. Citigroup has rolled out facial recognition in its banking application as another example.

While nearly every bank is interested in biometrics, not every bank has the size and scale that JPMorgan Chase, Bank of America, or Citigroup has to afford in-house biometrics experts.

What Visa’s platform, which is officially known as Visa ID Intelligence , will do is provide banks and credit unions a place to install these biometric technologies into their own applications without having to build them in house. Think of it as an Apple App Store or Google Play store, but for banks and biometrics.

Visa itself is not storing any of the biometrics, the company says, it’s simply providing a connection between the bank and biometric technology companies.

Banks won’t be integrating Visa’s platform immediately, just like it took a couple years for chip cards to be fully introduced. But expect to see more forms of biometric authentication in the coming years, not just in banking, industry experts say. For example, Apple’s new iPhone X that will go on sale in November is using facial recognition technology as a form of authentication.


►  U.S.: Laptops in checked bags pose fire, explosion risk

The U.S. government is urging the world airline community to ban large, personal electronic devices like laptops from checked luggage because of the potential for a catastrophic fire.

The Federal Aviation Administration said in a paper filed recently with a U.N. agency that its tests show that when a laptop’s rechargeable lithium-ion battery overheats in close proximity to an aerosol spray can, it can cause an explosion capable of disabling an airliner’s fire suppression system. The fire could then rage unchecked, leading to “the loss of the aircraft,” the paper said.

The U.N. agency, the International Civil Aviation Organization, sets global aviation safety standards, although member countries must still ratify them. The proposed ban is on the agenda of a meeting of ICAO’s panel on dangerous goods being held this week and next week in Montreal.

The FAA has conducted 10 tests involving a fully-charged laptop packed in a suitcase. A heater was placed against the laptop’s battery to force it into “thermal runaway,” a condition in which the battery’s temperature continually rises.

In one test, an 8-ounce aerosol can of dry shampoo —which is permitted in checked baggage — was strapped to the laptop. There was a fire almost immediately and it grew rapidly. The aerosol can exploded within 40 seconds.

The test showed that because of the rapid progression of the fire, Halon gas fire suppressant systems used in airline cargo compartments would be unable to put out the fire before there was an explosion, the FAA said. The explosion might not be strong enough to structurally damage the plane, but it could damage the cargo compartment and allow the Halon to escape, the agency said. Then there would be nothing to prevent the fire from spreading.

Other tests of laptop batteries packed with potentially dangerous consumer goods that are permitted in checked baggage like nail polish remover, hand sanitizer and rubbing alcohol also resulted in large fires, although no explosions.

As a result, the paper recommends that passengers shouldn’t be allowed to pack large electronic devices in baggage unless they have specific approval from the airline. The paper says the European Safety Agency, the FAA’s counterpart in Europe; Airbus, one of the world’s largest makers of passenger airliners; the International Federation of Airline Pilots’ Association, and the International Coordinating Council of Aerospace Industries Association, which represents aircraft makers, concurred in the recommendation.

The paper doesn’t address whether the ban should extend to domestic flights, but points out the risk that baggage containing a large electronic device could be transferred from one flight to another without the knowledge of the airline. The FAA said it believes most devices larger than a smartphone are already being carried by passengers into the cabin, rather than put in checked bags.

Rechargeable lithium batteries are used in consumer products ranging from cellphones and laptops to electric cars. Manufacturers like them because they pack more energy into smaller packages, but the batteries can self-ignite if they have a manufacturing flaw, are damaged, exposed to excessive heat, overcharged or packed too closely together. The fires can burn up to 1,100 degrees Fahrenheit, close to the melting point of the aluminum used in aircraft construction.

Since 2006, three cargo jets have been destroyed and four pilots killed by in-flight fires that investigators say were either started by batteries or made more severe by their proximity.

Earlier this year, the U.S. imposed a ban on laptops in the cabins of planes coming into the country from 10 Middle Eastern airports for security reasons. The ban was fully lifted in July after U.S. officials said airports in the region had taken other steps to increase security.

The Pipeline and Hazardous Materials Safety Administration formerly led the U.S. negotiations on the regulation of dangerous goods at ICAO meetings. But the Obama administration put the FAA in charge in 2009 after congressional Democrats accused high-level officials at PHMSA of being too cozy with the industries they regulate.

Transportation Secretary Elaine Chao has now decided to put PHMSA back in charge at future ICAO dangerous goods deliberations, Representative Peter DeFazio, D-Ore., said Thursday. Both agencies are part of the Transportation Department.

DeFazio called the decision “inexplicable” in a letter to Chao.

“I strongly believe it has the potential to put the lives of airline passengers and crews at serious risk,” he said.

Chao didn’t immediately respond to a request for comment. Lobbyists for lithium battery makers and companies that use the batteries in their products have previously urged the change.

Science and Technology

The Free Press WV

►  T-Mobile, Sprint may be getting close to a merger

T-Mobile and Sprint appear to be edging ever closer to a merger, with a new report from CNBC suggesting the two companies could announce a deal in late October or early November.

Combining America’s third- and fourth-largest wireless carriers would leave the country with just three nationwide providers, including AT&T and Verizon. But a proposed merger between Sprint and T-Mobile could face a tough test before regulators, particularly as many policymakers (and consumers) have been expressing some concern about the consolidation of large, powerful industries. Here’s everything you need to know to get up to speed.

Q: Sprint and T-Mobile want to merge?

A: It’s basically an open secret at this point. Sprint has been pretty transparent about its intentions, and T-Mobile hasn’t really rejected the idea, either.

If this sounds familiar, it’s because we’ve been here before. In 2014, Sprint tried to buy T-Mobile in a deal that ultimately fell apart under scrutiny by the Justice Department and the Federal Communications Commission. Regulators at the time concluded that having four major competitors in the cellular space, not three, would do the most to preserve competition and help consumers. (There are also echoes of 2011, when the government thwarted a similar attempt by AT&T to purchase T-Mobile.)

In the years since, Americans have benefited from lower roaming costs, along with an end to traditional contracts and early termination fees, and a return to unlimited data plans, among other things.

Q: So if regulators didn’t like a Sprint-T-Mobile tie-up back then, what makes this time different?

A: Analysts say that a new agreement between the two companies would likely hand the reins to T-Mobile, which overtook Sprint in 2015 as the nation’s third-biggest carrier. Given that T-Mobile was behind the push for many of the industry changes we’ve seen in recent years, it’s possible that T-Mobile could do a lot with Sprint if it led the company.

But many of the underlying issues - such as what happens to competition in a world of three national providers - remain. As recently as last week, staff members at the Justice Department were said to be skeptical of a Sprint-T-Mobile deal.

Q: What might the companies argue in response?

A: T-Mobile didn’t respond to a request for comment, and Sprint declined to comment. But one argument you can expect to hear, analysts say, is that building out the next generation of wireless data - known as “5G” - will be fairly expensive, and that it would be cheaper for everyone involved if T-Mobile and Sprint could join forces and build a single 5G network rather than build two of them separately.

Another argument you might hear is that Sprint, whose business is weakening, simply can’t survive alone and that by teaming up with T-Mobile, the combined company could more effectively compete with AT&T and Verizon. It’s hard to say how true this is without a detailed economic analysis by regulators; on the one hand, a merger with Sprint might give T-Mobile enough scale to take on the bigger dogs. On the other hand, reducing the number of national wireless carriers to three could, ironically, make it easier for the remaining firms to unofficially coordinate with one another and raise prices.

“It’s easier to divide and conquer when there’s three versus four,“ said one telecom industry official, who spoke on condition of anonymity to speak more freely. “You worry that there’s so few in the market, they can coordinate and divide it up amongst themselves and not really compete against each other.“

Q: Could politics play a role here?

A: Certainly. The same dynamics that make this potentially a good deal for Sprint and T-Mobile could make it a bad deal for an administration that has championed the average American worker. And while political considerations don’t typically play into the economic analysis conducted by Justice Department staff, the review will likely be occurring during a time of heightened political sensitivity. And that raises the stakes for this deal.

In a deep dive on a hypothetical Sprint-T-Mobile merger earlier this summer, industry analyst Craig Moffett estimated that Sprint and T-Mobile would together close as many as 3,000 retail stores. This would still leave the combined company with more retail outlets than either AT&T or Verizon, but would also result in job cuts totaling more than $1 billion in wages that, by 2022, the company no longer has to pay.This retail footprint reduction, Moffett said, would be “perhaps the second-biggest driver of savings” after the closing down of redundant cell towers.

Policy analysts in Washington don’t expect the Trump administration to approve every proposed merger or acquisition it faces; politically, they say, the administration would need to block at least one or two to provide the impression of fairness.

This logic could help push the Trump administration to block a Sprint-T-Mobile merger. Not only would the administration be seen protecting American jobs, but it would also be relatively low-risk in that both Sprint and T-Mobile are foreign-owned. Rejecting the deal would dovetail with Trump’s “America First” approach to governing, according to analysts.


►  Snapchat is American teens’ favorite social media app — and Facebook can’t be happy about that

Snap may have turned off investors, but its core app is winning over one key group — American teenagers.

Even as the social networking company’s stock has slumped as the company has fallen shy of Wall Street’s expectations, its app has been gaining traction with young consumers. As you can see from this chart by Statista, which is based on the results of Piper Jaffray’s bi-annual “Taking Stock With Teens” survey, Snapchat is now the most popular social networking service among the teen set by far.

That’s quite an accomplishment, particularly given the increasing competition from Facebook-owned Instagram, which has repeatedly rolled out features that mimic Snapchat’s. Earlier this year, Instagram launched Stories, a copycat of one of Snapchat’s signature feature. By April, more people were using Instagram Stories on a daily basis than Snapchat.

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