Would you buy a used car from this man? Which man? Well that’s a good question. (I probably wouldn’t buy one from either) In this instance, I mean the man on the left, Masahiro Origuchi (折口雅博), the infamous ex-President of Comsn (コムスン) – the company that, according to their English homepage, is “preserving the dignity and independence of the elderly” (link) when they are not screwing taxpayers by lining their pockets with illegal subsidies.
To be frank, I don’t know if I’d buy a used car from a guy with a smile like that, but want about a used plane? You think I’m kidding? Well, according to a company press release (here), someone just did. A very lucky Mr. Donald P. Bass of Maryland, USA just offered to buy Mr. Origuchi’s private jet off him for the handsome sum of 38 million US dollars. That’s quite a lot of money for a second hand plane especially when you don’t know much about the seller.
I wonder if Mr. Bass watches Japanese television? If he does he might be in for a bit of a surprise as to what the company really used the plane for. Officially, the plane was owned on the balance sheet of Origuchi’s listed company, Goodwill. Origuchi had been quoted at the time of purchase saying that it would make it easier for him to visit foreign shareholders who lived overseas and kindly volunteered that when he flew for private use, his family company, The Origuchi Research Institute (折口総研）, would foot the bill for the running costs. What a generous guy. Although I suppose Mr. Bass wasn’t able to read much of the Japanese press when he did a background check on his seller. Despite being a happily married “family man”, Origuchi is brash with the media and quick to admit that a little bit on the side doesn’t hurt. According to industry sources he is well known for his attraction to high-school girls and often finds excuses to invite them to his holiday house in Karuizawa. So much so that he has earnt the nickname “Lolita Origuchi.” (source)
As it always is with a a Japanese expose, the amazingly long list of (underage) names are just starting to come out of the woodwork: Ejiri Sawajiri (沢尻エリカ), Haruna Yabuki (矢吹春奈), Mayuko Iwasa (岩佐真悠子), Akina Minami (南明奈), Akane Ozawa (大沢あかね), Kurumi Morishita (森下くるみ), Yu Abiru (アビル優）… Strangely the girls seem happy to own up to their relationships, the latest being Akina Minami (on the left) who didn’t seem in any rush to deny their relationship at the press conference for her latest stage show about the swimming club at a girls only high school which have a tendancy toward loose bikinis (sneak preview) based on the popular anime “umisho“. You have to seriously question his ulterior motives when he built swimming pools in both his home (Den’enchofu!) and his holiday house . It seems as though Origuchi is seriously having troubles graduating from his youth when he created Juliana Tokyo and Velfarre.
But I’m not here today to expose any more scandalous stories about Origuchi. I’ll leave that up to the 週刊誌 (shukanshi, tabloids) and their first-class photography. What caught my attention about this news was his plane. Without being an expert on the price of second hand planes, I think it is safe to assume that 38 million dollars is a hefty price tag. After all, Tom Cruise could only afford a 20 million dollar jet for Katie’s wedding present. It turns out that Origuchi’s plane wasn’t just any old corporate jet, it was a top of the range “Gulfstream V”. The Gulfstream V cost over $800 million dollars to design and since being released 10 years ago has been known as the Rolls Royce of the air when it comes to private jets. No wonder Origuchi copped a lot of flack after buying it with shareholders money.
I suppose if you are going to spend all of that money on a plane then you may as well get a nice one. In fact, Origuchi was quick to point out that he had a brand new one, unlike poor Horie-mon who could only afford a second hand jet (Perhaps that was because Horie used his own money whereas Origuchi was using someone elses?) Fresh after reading Stippy.com’s scathing remarks about the bitch fighting at bulldog sauce, I was keen to work out just how many millions of dollars he had wasted with such an obviously egocentric (and hedonistic) purchase. But hold on a second. Let’s just click on that link to Goodwill’s balance sheet again. According to some quick math and an online fx calculator, it appears as though Goodwill only paid $34 million dollars when they bought the plane back in 2004.
What am I missing here? Generally when you buy something new, the price drops the day after your purchase. A diamond engagement ring, a condo in central Tokyo… a plane is no exception. Even today, a second hand plane will generally cost you about 20% less than buying a new one. So why was Origuchi able to profit a nice $4 million dollars in three years after “using” his plane so creatively. The answer is not so obvious. It turns out that right now the world is going through a shortage of planes. Production of everything from huge Jumbo jets to small private jets is just not keeping up with demand. Technology hiccups at Airbus and Boeing have not helped things and the universal strength in the global economy (at least until subprime hit us) has meant that everyone wants to fly and the incremental demand from BRICS hasn’t made things any easier. To add icing to the cake, the trend that you’re seeing at JAL of retiring older planes and replacing them with more efficient planes is a global one. It seems as though the success of Warren Buffet’s netjets has been a big driver of demand for smaller size jets, too. If any stippy readers out there were lucky enough to pick up a private jet in the last few years then you are probably sitting on a few million dollars of unrealised asset gains! (don’t tell the Japanese government).
The next question that crossed my mind was how much it would cost to run one of these beasts. Hey, if I can make 4 million dollars in 3 years, maybe this is a good investment to be looking at? Unfortunately, it wasn’t quite as cheap as I had hoped. According to jets.com the average annual upkeep cost for one of these babies is over $800,000 US dollars. The key costs that you probably don’t want to skimp on include pilots ($200k), hull ($180k) and the hangar ($120). One of the more interesting costs was “charts” as $12,000 per annum. But it doesn’t end there. That $800k were your fixed costs – i.e. just enough for you to move your plane into the hangar. To cruise with your little baby, you’re going to need another $3-$4,000 per hour in variable costs. About half of that is fuel but maintenance, labour, parts, insurance etc. adds up, too. I’m not sure how much a business man would use a plane but if you budgeted for one 12 hour return international flight per month and 1 domestic return 1 hour flights per week, you’re already at 30 hours a month or another $1~1.5 million US dollars per year. You could buy an オクション (okushon, million dollar condo) in central Tokyo with the variable costs alone!
In other words, Origuchi’s shareholders have footed at least another $2 million US dollars per year to keep him popular with the
ladies girls. I guess that even with the 4 buck profit he has booked on the sale, it is still hard to argue that it was a very economical decision. To put this into context, let’s just think about how much it would have cost him to do all this without buying a plane? While I could go to kokunaisen.com and try to work out how much he would have paid per trip, let’s be a little more realistic. How much would it have cost him to do this all by chartering a private jet (after all he does have a reputation to live up to)? According to a friend who recently was a guest on a netjets plane, the hourly cost of chartering a jet with them is about $10,000 USD. While this doesn’t include the membership fee (netjets is like a time-share operation but for planes) it does give you a bit of an idea. If Origuchi was to fly the same schedule that I mentioned above it would have cost him just shy of $4 million US dollars a year or almost double what he was paying in upkeep, maintenance and variable costs. When you consider that he did pocket a nice $4 million gain at the end of it, perhaps it wasn’t such a silly business decision after all. Unfortunately, I don’t think that stippy.com will ever be in quite the same echelon where we can test out this hypothesis for real!
Have any readers out there ridden in his private jet? Has anyone ridden in a private jet in Japan before? (the closest I came was viewing the Prime Minister’s jet (from the tarmac) at the Cairo airport earlier this year!) Unlike in the states, people like this are still a rare breed in Japan. Share your brushes with the elite in the comments section below.
Other stippy.com articles possibly of interest:
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