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Encouraging Signs of Recovery

As the financial world parses Fed Chairman Bernanke’s every word to predict likely moves in the economy and as our community continues to suffer politicians bashing corporate jets- Jack Olcott sees encouraging signs for Business Aviation.

Jack Olcott   |   1st August 2013
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Jack Olcott Jack Olcott

Possibly the world’s most recognized advocate, if not expert on the value of Business Aviation,...
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Encouraging Signs of Recovery
Business Aviation is a vital tool to build on improving times.
As the financial world parses Fed Chairman Bernanke’s every word to predict likely moves in the economy and as our community continues to suffer politicians bashing corporate jets- Jack Olcott sees encouraging signs for Business Aviation.

For the first time since the 2008 financial crisis- all major manufacturers of corporate jets exhibited their products at this year’s Paris Air Show. That premier of all aviation events- first held in 1909 and now officially entitled Salon international de l’aeronautique et de l’espace- Paris – Le Bourget- had not seen such robust participation from the Business Aviation community since the European Business Aviation Convention & Exhibition (EBACE) was launched in 2001 and held annually in Geneva- Switzerland- to become the major showcase for business aircraft on the continent.

Bombardier- Cessna- Dassault- Embraer and Gulfstream were out in force and apparently pleased with the reception they received- even though just 32 firm orders and 20 options were booked between them. (The Paris Salon continued to be fertile ground for manufacturers of Airlines- however- with orders totaling nearly $150 Billion.)

Larger models with intercontinental range are the highlights of the recovering market for business jets. Corporations and entrepreneurs see opportunities in emerging economies situated far from North America. Whereas deliveries of new business aircraft to the USA fell by 1.4 percent and by 0.9 percent in Europe last year (2012)- shipments to Africa rose by 7.7 percent- to Asia by nearly 9 percent and to Latin America by 14 percent. The market for larger- pre-owned business jets with significant range capability also is strengthening.

Flights by corporations to distant markets have increased. According the European Business Aviation Association (EBAA)- business jet operations between Europe and emerging-market countries increased by 32 percent between 2006 and 2011. Flights to Asia doubled during the same period.

A NEEDED TRAVEL OPTION
Many emerging nations throughout the globe offer corporations and entrepreneurs significant opportunities for market expansion. For example- African nations seek and attract foreign investment for many reasons. Their natural resources are in great demand. Their populations seek jobs and the improved quality of life that results from interface with world commerce. More members of the international community are focusing attention on the health needs of Africans.

Leveraging those African opportunities requires a transportation capability that is marginally provided by the scheduled Airlines. There are very few scheduled flights between major African cities; where Airline service is available- multiple stops are the norm. In some situations- according to a spokesperson from Bombardier- travelers had to use connecting flights through Paris or London to reach certain African destinations via the Airlines. Clearly the most efficient and effective form of travel for companies seeking business in Africa is Business Aviation.

(As an aside- I find it significant that our nation’s Commander-in-Chief- who rarely misses an opportunity to bash corporate jets- took his family with him on Air Force One as he conducted a state visit to Africa. Obviously- the Boeing 747 was the appropriate means of transportation for a person with such heavy demands on his time- just as it is appropriate for a business leader to use his or her corporate jet to conduct their business.)

Reflecting the demand for international travel by corporations- the General Aviation Manufacturers Association reported that over 40 per cent of shipments in 2012 were large corporate jets. This segment of Business Aviation is expected to generate nearly 70 per cent of the dollars spent on business aircraft during the next decade. Contributing to that value is a healthy backlog for the Gulfstream G650 which has a range of about 7-000 nautical miles and sells for over $65 Million.

GROWING ACCEPTANCE
While the recovery is being led by demand for larger- longer-range business jets- the average flight department in the USA operates smaller aircraft. Typically- a company operates one—possibly two— jets or turboprop aircraft capable of carrying four to seven passengers. Such aircraft mostly provide transport between airports with limited (if any) Airline service- and the typical flying time is under two hours. By providing transportation to locations the scheduled Airlines do not serve – and do not want to serve–they are necessities in today’s business environment.

Our community is emerging from an era where economic and political forces damped the acceptance of Business Aviation as a necessary tool for growth. The winds of opinion show signs of reversing direction- however. Not long ago they were squarely headwinds. Perhaps now they could be considered quartering- and soon- we trust- they will be pushing our community forward.

The need for the unique transportation that only Business Aviation provides is a necessity for a recovering economy.

Do you have any questions or opinions on the above topic? Get them answered/published in World Aircraft Sales Magazine. Email feedback to: Jack@avbuyer.com

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