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European Business Aviation Overview

Tempting fate with that ‘B’ word- as Europe flourishes

Movers and shakers within the European business aviation community are always nervous about using the ‘B’ word to describe their business. I guess they avoid it because they think it might tempt fate and invoke the other associated ‘B’ word. Overwhelmingly European business jet operators and FBO service providers found another ‘B’ word- telling World Aircraft Sales Magazine that business was extremely ‘Buoyant’- and seeing solid growth on the back of what has been a phenomenal two-three year period. Never-theless- some of the top executives are much closer to using the dreaded ‘Booming’ word than they were even just a year ago.
   George Galanopoulos- managing director of U.K. business jet charter and management operator London Executive Aviation (LEA)- says his turnover has increased approximately 15 percent over the last 12 months- adding that if no major world mishap occurs- then he can see business aviation continuing to increase its prosperity for years to come.
   Backing this mood of optimism there have been some massive European business aviation announcements over the last 12 months.
   Most recently NetJets Europe are probably painting the most vibrant picture of how much business air charter there is out there- as- for the first time since its inception (in 1996)- NetJets Europe has achieved full-year net profitability. News of this record year was revealed in Warren Buffett’s annual letter to Berkshire Hathaway shareholders in February.
   Buffett states- “European demand has now exploded- with a net of 589 customers added in 2005-2006. Under Mark Booth’s brilliant leadership- NetJets is now operating profitably in Europe- and we expect the positive trend to continue”.
   NetJets Europe says that it has more than 1-300 customers throughout Europe- including a quarter of the continent’s 50 largest public companies- and an increasing number of business executives- entrepreneurs and high net-worth individuals. In 2006- NetJets Europe customers flew more than 62-000 flights- a 33 percent increase over the previous year.
   Its biggest markets in Europe remain the UK- France and Switzerland- however- there has been rapid growth in other increasingly important territories: Germany (up 46 percent over the year)- Central and Eastern Europe (up 54 percent) and Russia (up 40 percent) says NetJets.
   The company also recently placed the largest business jet order in European aviation history - a $1.1 billion order for 24 Dassault Falcon 7X aircraft- some of which will be delivered in 2007. In total- NetJets Europe will take delivery of 24 new aircraft from a range of manufacturers in 2007- valued at over $380 million- which will increase NetJets Europe’s fleet from 114 to 138 aircraft.
   The company has also been signed up for another five years to supply business jet uplift for Germany’s national airline- Lufthansa’s Private Jet service. The airline says that it currently books around ten NetJets Europe business jets per day for its passengers. The Falcon 2000 has been added to the Private Jet option and joins NetJets’ Hawker 800XPs- Citation XLS and Citation Bravos on this service.
   Showing its full confidence in the luxury long haul wide-body corporate aircraft and governmental charter market is Comlux of Zurich. This five year-old company is the European launch customer for the 18 seat VIP Airbus A318Elite (three firm orders and three options originally announced) and Bombardier’s Challenger 605. The first of its Elites (costing in the region of $45 million each completed) will be the first to be completed worldwide and is expected to be on show at EBACE fresh out of Lufthansa Technik’s Hamburg completion center. All three are due to be operational this year. Comlux CEO Ettore Rodaro is so confident of the market that he firmed-up two of his three options taking his firm orders to five- with one option remaining. The company also has two Challenger 850s (based on Bombardier’s 50-seat Regional Jet)- one in executive layout and the other in shuttle configuration- and also operates an Airbus ACJ.   

Record times for European planemakers
And on the subject of Airbus- Airbus Corporate Jets has enjoyed its best ever start to a year with the announcement that it took orders for six large corporate aircraft in January alone- making its best-ever recorded sales month. Included are the Comlux confirmed orders for two more A318 Elites; the Royal Air Force of Oman ordered two A320s for governmental/head of State use; and an order was received for one each of the four engined A340-300 and the ultra long range A340-500 (R.R. Trent powered) from an undisclosed Asian customer.
   Indeed- last year was Airbus’ best ever sales year with 20 ACJ family members ordered- plus one VVIP Airbus A330. 2007 looks like a year in which ACJ can legitimately use the ‘B’ word.
   Also at the top end of the market Dassault Falcon Jet has surpassed its previous record corporate jet backlog thanks to its brand new Falcon 7X program. The first delivery of the fly-by-wire- luxury long-range aircraft is on-schedule for the second quarter 2007.
   Dassault Aviation chairman and CEO Charles Edelstenne says the record is the second in consecutive years. The 158 firm Falcon 7X order backlog- which includes the $1.1 billion NetJets Europe order- is the largest ever order for business jets in Europe.
   Edelstenne adds that Falcon Business Jets accounted for 62 percent of Dassault Aviation’s total consolidated sales in 2006. “It wasn’t long ago that 40 percent of our sales came from outside the U.S. but that number has grown to more than 60 percent- driven this year primarily by Western Europe. It’s important to recognize that the U.S. market has not weakened - other markets have gained strength. Over 80 aircraft will be delivered in 2007 compared to 61 in 2006.”
   “A substantial fuel efficiency advantage and consistently superior retained values continue to be the force behind the success of our Falcon sales efforts-” added John Rosanvallon- president and CEO of Dassault Falcon. “This makes the Falcon 7X the most successful launch of a business jet ever in terms of sales dollar value.” Such is the success of the aircraft- even before the first is delivered- that the next delivery position is way out in the second half of 2011 says the company.

Raw numbers
Brian Humphries- CEO of the European Business Aviation Association (EBAA)- says a recent survey showed there are 2-851 turbine powered aircraft in Europe - 11 percent up on the previous year - and 851 more than the 2000 registered at the time of the first EBACE. He said Business Jet traffic in Europe is growing at nine percent per annum.
   The latest corporate aviation data from JETNET/AvData roughly agrees with these figures - it says there are 1-916 business jets and 957 turboprops registered across Europe- the Ukraine and the Russian Federation.
   Top of the class for both business jet numbers and turboprops is Germany with 316 business jets and 179 turboprops. In second place is the UK with 305 bizjets and Switzerland is in third with 173. The distribution is slightly different for turboprops- with France in second place (174) just behind Germany. Third is the UK with 140.
   There are many surprises in JETNET’s data. For instance France has 159 jets- Austria 144- Italy 138 and Portugal 134 (mainly NetJets Europe aircraft as they are Portugal registered).

In support of a growing market…
To meet all this extra business- the European FBO chains have been acquiring- consolidating- and refurbishing - and spending millions of dollars in the process.   
   Signature Flight Support has been investing heavily in its recent FBO acquisitions at Le Bourget- Paris- and as a result has become by far the largest FBO company on this historic airfield. It’s acquisitions include (in late 2005) the ex-PrivatAir FBO hangars and ramp space- and in March 2006 ‘Le Terminal’- a six story office building close to the company’s original FBO- with two adjoining hangars - and approximately three acres of aircraft parking ramp has quadrupled its presence.
    Signature’s assets on Le Bourget now account for 13 hangars- three FBO passenger terminals- around 68 staff and over 54-000 square meters of ramp. “We have kept our original [FBO] facility and are negotiating to lease this out to a single customer as an office and hangar for a private aircraft-” said David Best- Signature’s managing director- Europe. “We will retain the rights and lease of the ramp space.”
   The ex-PrivatAir terminal is now known as Signature Paris Terminal 1 and is the main transit handling point. Le Terminal- renamed Signature Paris Terminal 2 and due to open in August this year- will have two floors of lounges- pilots facilities and VIP areas- two of Signature and tenants offices- and two ready for future expansion.
   “Designs for this ‘multi million euro investment’ have been completed and we have begun the initial works. The first stage- to let us use the property- will include full refurbishment without structural changes. The second stage with structural changes requires additional approvals from the airport and the local authorities. We will pursue these once we are open for business-” said Best.
   Although Signature Le Bourget handles the most number of business aircraft movements within the European sphere- Best says that given the aircraft weight profiles- Signature’s London-Luton FBO still remains the largest operation.
   “Overall- our European business is going extremely well- we have consolidated our businesses at Heathrow and have invested in refurbishing facilities and infrastructure throughout the UK. We are also working on further developments in our European facilities to grow these businesses.”
   In the UK- TAG Aviation has spent over $200 million on its Farnborough business aviation-only Airport. Yet more spectacular hangarage is penciled in for planning and the structure of the airport’s ‘Dakota Farnborough Hotel’ has started to rise above ground level. This 174 room 4-and-a-half-star hotel will be available to visiting flight crews and the public by May 2008 - but don’t try booking it for the July Farnborough Air Show- its already fully booked says the hotel chain. Brandon O’Reilly- TAG Farnborough’s new chief executive- says the hotel will finally make Farnborough a total ‘one stop shop’ for business aviation.
   The airport saw its movements for 2006 reach 21-500- a growth of about 13 percent year-on-year. O’Reilly says at this rate he expects to reach his current movements cap of 28-000 per annum next year. The company is turning away 1-500 potential weekend movements per year (because of a weekend cap- movements are limited to 2-500 per year) and this can’t be improved until the results of a planning appeal are released in May or June. TAG Farnborough is asking to be allowed to accept 5-000 weekend movements per year. Currently only based operators can use the airport on Saturdays and Sundays.
   Turning to the north of England at Leeds Bradford Airport- Multiflight has invested over $17 million in its FBO operation over the last five years- and opened its new passenger terminal in February. Managing director Steve Borrowdale confirms that the company has invested to match corporate demand in the north east.
   Leeds has fast become England’s second largest financial center- and is seeing phenomenal associated business aircraft usage.
   Multiflight’s investment also includes the construction of two 3-000 sq. meter hangars and a huge increase in ramp space. Visiting aircraft movements went through 6-000 in 2006 thanks to significant fractional movements- according to Borrowdale. He has around 50 business aircraft currently under his wing- including a Falcon 900EX EASy.
   According to Borrowdale- more arriving FBO customers (some on direct US/UK flights) are hooking up with helicopters to a final destination- he is planning to expand his owned/managed four ship fleet to meet this demand.

And not forgetting flight training…
Yet its not only executive jet operators and FBO companies that are investing in trying to keep apace with the surge in business aviation activity… While FlightSafety International has opened at Farnborough- competitor CAE has officially inaugurated its brand new business aviation four-bay expansion at its Burgess Hill training center near Gatwick Airport.
   The state-of-the-art facility will become CAE’s European home for business aviation training- starting with Falcon 900EX EASy- Falcon 2000EX EASy and Falcon 7X training for which CAE is the exclusive provider. Falcon 900EX EASy client training started on March 7th- Falcon 2000EX EASy availability was set for 10th May and the first Falcon 7X course from 26th July.


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