Possibly the world’s most recognized advocate, if not expert on the value of Business Aviation,... Read More
Common Need, One Market
Transportation’s universal role in economic development and quality of life.
Whether new or pre-owned, business aircraft have a unique capability to address a company’s or entrepreneur’s fundamental need to travel, observes Jack Olcott.
From the earliest days of recorded history, transportation has been a required component in the economic and social fabric of a society. The Old Testament Bible references the vital trade routes traversed by men, mules and camels between Egypt and the region we know today as Iraq. The first president of the USA, George Washington, urged his congress to build roads and canals to grow the economy. President Lincoln promoted the completion of our nation’s first transcontinental railroad to unite our growing nation, and President Eisenhower championed the Federal-Aid Act of 1956, which launched the Interstate Highway System.
Rather than reduce the importance of travel in today’s fast-paced business world, cell phones and the Internet have increased the pace of commerce, thereby expanding the need for rapid transportation. Nothing replaces the benefits of meeting customers and colleagues face-to-face when introducing products and services, when finalizing a contract or when resolving conflicts.
Being at the point of action before the competition arrives also is essential. Thus the principle form of transportation for business today involves air travel by either the Scheduled Airlines or Business Aviation. Enlightened Boards establish travel policies that integrate the best of both public and private carriage by air.
The importance of Business Aviation as a component of transport by air is reflected in the number of company jets and turboprops in service worldwide. According to JETNET, a highly respected organization that tracks the nature of aircraft transactions and documents aircraft ownership, there are more than 34,300 turbine-powered business aircraft (excluding helicopters) operated by nearly 24,700 corporate entities or owners as of July 1, 2014. Sixty percent of those business aircraft are registered in the USA.
JETNET reports that nearly 20,000 turbine-powered business aircraft are jets; the remainder are powered by turbine engines turning propellers—i.e., turboprops. Boeing placed the number of airliners in worldwide service, regardless of manufacturer but not including turboprops, at nearly 21,000 at the end of 2013. Between 2014 and 2033, the company forecast the worldwide airline fleet will double in size to reach nearly 42,200 jet airliners in service. Bombardier anticipates that an additional 22,000 business jets will be delivered worldwide between now and 2033, down by 2,000 units from its 20-year forecast issued last year but still impressive. While that number of new business jet sales is noticeably less than the 36,770 airliners Boeing forecast will be delivered between 2014 and 2033, the sizes of the airline and business aircraft fleets are likely to be about the same in the future since nearly 42 percent of all new airline deliveries will replace older, less fuel-efficient aircraft.
Thus it is clear that Scheduled Airlines and Business Aviation will continue to serve the travel needs of companies and entrepreneurs, each offering their unique form of air transportation. The Scheduled Airlines concentrate on a few highly travelled markets between major cities, and only about 50 percent of their passengers will be traveling for business reasons. Business Aviation offers safe, efficient travel—primarily for business—to many more locations, most with little or no scheduled service. Neither form of air transportation now or in the future, will replace the other.
Sphisticated Operators All users of Business Aviation have a common characteristic—their need for transportation that is efficient, quick and safe. Fortunately, several avenues exist to fulfil that requirement. For the company or entrepreneur desiring ownership of aviation assets, excellent products are available from manufacturers of new aircraft and from existing owners who wish to transition into a different aircraft or possibly withdraw from a position of ownership in favor of some other means of air transportation, such as the airlines or charter. Our nation’s transportation infrastructure provides several options to satisfy the common need for air travel.
Several decades ago Business Aviation was neither as developed as today or as well understood. Typically companies with sufficient capital or credit allocated budgets to purchase new equipment, electing to rely on the deeper resources of OEMs rather than deal with the less mature brokerage community that existed at the time. When price was the primary consideration, potential buyers automatically looked to the pre-owned arena.
The marketplace, however, has changed significantly. More buyers now understand that business jets, typically flying less than 20 percent of the annual hours of an airliner, are designed and manufactured to the same basic FAR Part 25 requirements as airliners in scheduled service. The vast majority of today’s business aircraft are well maintained and operated by highly trained crews. Computer programs track and document maintenance procedures. Independent consultants are available to help with aircraft selection, providing expert advice regarding the suitability of a particular model to the company’s or entrepreneur’s needs, whether new or pre-owned.
Today’s purchaser of business aircraft has access to excellent new and pre-owned equipment, as well as the technical expertise to make the best selection to address travel needs. The common need for efficient, effective and safe transportation has created one broad market for Business Aviation.
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