Gradual ascent

Originally published on www.businesstravellerme.com 16/03/2011 - Filed under: Tried & Tested » Airlines » Executive jets »

Print
Send

Corporate jet operators attending the recent Middle East Business Aviation show were neither downbeat nor ecstatic about their sector's outlook, reports Dominic Ellis

As one Emirates flight after another soared over the static display of corporate jets at the fourth Middle East Business Aviation (MEBA) show, it seemed an appropriate metaphor for the changing face of Gulf aviation.

Four years ago, the smaller versions were the high-flying models as suppliers, owners and operators raced around in a buying and ordering frenzy – but then the global market nose-dived soon after Lehman Brothers closed its doors in September 2008, and struggled to recover in the wake of the worst recession since the 1930s.

Now through a mix of adversity and maturity, the region’s corporate jet scene has a different feel to it these days, appearing less dizzy and more grounded.?All the issues that have dogged scheduled airlines for years – price, service, location, competition – are now filtering through to their business jet cousins, as operating a swish multi-million-dollar piece of metal that can whisk you from A to B – via C and D if needs be – isn’t enough.

Claudio Galdo Camelier, Embraer’s Vice President Marketing Intelligence Executive Jets, said the global picture is uneven and while Latin American markets have grown 15% compared with the end of 2008, the US had slipped 20% and the Dubai Financial Market was 70% below its previous value.

“We still see a very slow market in the Middle East, which is slowly recovering, but far from 2007,” he said. “Globally the market has contracted and I can’t see recovery before 2013 in terms of deliveries, and only by 2017 will it reach the same record of 2008 – but this isn’t necessarily bad news. The market is still looking to receive 750 new aircraft a year in the next two to three years, which is the same as 2006-07, which were good years, so the business jet market is definitely not dead.”

MEBA understandably takes a ‘glass half full’ approach, predicting MENA markets will account for 20-25% of all new business jet deliveries between 2012-18 – although that may be a best case scenario, given that MENA’s share of the global market currently stands around 6-7 per cent.

MEBA Founding Chairman Ali Al Naqbi foresees at least three more private aviation airports to open in Jordan, Saudi Arabia and Egypt, by 2015, but is under no illusions about the disparate challenges ahead.

“It is my feeling that the message of business aircraft being productivity and profitability enhancing tools has not yet reached every corner of the business community,” he said. “An inventory of private aircraft in the region shows that more than 30 per cent is accounted for by big-size jets, unlike in matured business aviation regions where small jets occupy almost 90 per cent of total aircraft numbers.”

Other major hurdles to overcome regionally include co-ordinating air traffic control between the 22 regulatory authorities, and eliminating the so-called ‘grey market’ of charter operators, where unscrupulous owners rent out their aircraft commercially despite having no documentation or insurance.

“This is one of our biggest challenges – it is a huge safety concern and it’s very important for our business in the region to stamp it out.”
Dave Edwards, Managing Director of GAMA Aviation, which chalks up its first year of UAE operations in February, is targeting seven more aircraft next year to complement its five currently in operation. He agrees with Naqbi about the industry’s perception problem."There’s still a stigma attached to corporate jets and they’re perceived as glamorous and out-of-reach rather than efficient business tools.”

He believes Sharjah International Airport, where GAMA plans to open a 12,000sq ft hangar by the end of the year, has the edge over Dubai International when it comes to time savings for top-tier corporates.

“Dubai is becoming busier and busier, but in Sharjah we don’t have problems with holding. If you’re coming from Dubai World Trade Centre to Dubai International, it may take you up to 75 minutes from leaving the office to taking off, whereas you can get from Dubai to Sharjah Airport in 20 minutes along the Emirates Road. Our business is selling time – we’re always trying to create the 25-hour day.”

At the other end of the highway, Abu Dhabi Airports Company (ADAC) recently slashed Al Bateen Executive Airport’s landing and parking fees by 35 and 17 per cent respectively in order to be seen as a “serious player” in the market, according to newly appointed general manager Stephen Jones. ADAC has invested almost $50m in turning the 50-year-old military airport into a luxury business aviation gateway.

Jones denied that the discounts meant the airport was previously over-priced. “Not at all – Al Bateen has always been competitive,” he said. “These are not five-minute price reductions. We want more high-quality charter operators and we’re well aware we’re up against tough competition.”

Shane O’Hare, President & CEO of Royal Jet, said its corporate business dipped 30 per cent in the recession, although the increasingly diverse nature of its customer base meant the sector now accounts for around 25 per cent of total business.

“Corporate has come back a little bit, and will be underpinned by GDP growth,” he said. “We’ve seen an increase in Iraq business with their rebuilding process, as well as demand for India, SubContinent and North Africa, with a lot of high-level government missions.”
Royal Jet recently took delivery of its sixth Boeing Business Jet, complementing its two mid-range Gulfstream 300s, long-range Gulfstream IVSP, Learjet 60 and Embraer Lineage 1000.

“All six BBJs have different configurations, the new one has 18 VIP seats and is designed like a private hotel suite,” he said.
O’Hare said the summer will serve as a litmus test on the strength of the market. “We’re seeing green shoots of recovery but the market conditions in 2010 were almost identical to 2009.”

Show news in brief

ExecuJet Middle East wasted no time riding on the back of Qatar’s successful World Cup bid, teaming up with Al Faisal Holding to form ExecuJet Qatar, which is due to launch early 2011. ExecuJet Middle East has been operating in Dubai for over 11 years.
Tag Aviation Asia, the Hong Kong affiliate of Tag Aviation Holding, has formed an alliance with the China First Mandarin Group (CFMG) from Shenyang, People’s Republic of China, to capitalise on China’s expanding business market.
Fujairah International Airport has sealed an Expression of Interest agreement with Cochin International Airport, which will lead to new flights between the two cities.
Comlux Aviation Group bought two Bombardier Global 7000 business aircraft, in a deal worth $130 million at list prices, and Bombardier received a firm order for five mid-size Learjet 85s and two large-cabin Challenger 605 jets from Jet Air Flug worth $155 million at list prices.
Al Jaber Aviation promoted its new Airbus 318 Elite, claiming it is a more viable option than traditional business jets as it can fly larger groups (up to 19 passengers). Internet, audio and video on-demand are among the on-board services.
Rizon Jet from Doha is among the new operators of the Airbus Corporate Jetliner which it will manage on behalf of a new Gulf customer. Rizon Jet will also open a new FBO and MRO facility at Doha International Airport in January.
Nasair has started new services between Dubai and Saudi Arabia (10 flights a week), evenly split between Riyadh and Jeddah, and aims to operate 18 flights per week from Riyadh, Jeddah and Al Dammam to Dubai this year, as well as at least three more international routes before March.
328 Support Services of Germany launched its 328DBJ, which replaces the Envoy version of the 328 and will be the standard for all future VIP conversions. IFE can be tailored to passengers’ needs.
Dassault Falcon sold 14 aircraft in the Middle East in the last two years and has a backlog of 15 additional aircraft to be delivered to regional buyers by 2013. Dassault's current regional fleet size of about 60 business jets is expected to grow by a third during the next three years.