Brian Humphries- president and CEO of the European Business Aviation Association (EBAA) says the priorities that face the EBAA are currently four-fold. “The first is the economic situation- we’re all suffering but we must keep it in perspective-” he outlined in an interview with World Aircraft Sales Magazine. “Long term you’ve got to be optimistic it's just a question of getting through 2009 - ...
AN INTERVIEW WITH BRIAN HUMPHRIES
The effects of the economy- and strangulation by regulation…
Brian Humphries- president and CEO of the European Business Aviation Association (EBAA) says the priorities that face the EBAA are currently four-fold. “The first is the economic situation- we’re all suffering but we must keep it in perspective-” he outlined in an interview with World Aircraft Sales Magazine. “Long term you’ve got to be optimistic it's just a question of getting through 2009 - which could be a very long year- but those companies coming out of it will be stronger for it.”
Humphries has again taken over the role of CEO at EBAA. He explained that the EBAA has in the meantime recruited an additional consultant who is a specialist in operations and who has already started coordinating the work on the NPA response to EASA’s Draft Rules on Operations and other urgent items.
“The message I’d like to get across is that it is business as normal- We’ve streamlined our operations- have additional resources and are confident our members and customers will see seamless support.”
Asked if there had been any European business aviation companies going into liquidation yet- Humphries recollected that he had only heard of one so far and that was a small UK helicopter operator. “The companies which are not heavily geared will get through this OK-” he predicted. “Everybody is hurting but remember that most of our operator members don’t own their own aircraft- so they’re not having to service the debt – that is down to the owner.”
“However- some owners with aircraft under management are selling or have sold their aircraft- so operators are feeling the pain in having less aircraft to manage- and therefore have had to lay-off people- but this doesn’t mean that they’ll go insolvent-” he emphasized.
The degree of downturn in the market can also be gauged by falling aircraft movements. “If you take into account the number of business aviation flights within the 27 States of the European Union i.e. arrivals- departures- internal flights- and over-flights- it was 3% down- 2008 versus 2007.”
The figure is distorted though- explains Humphries. “What we saw was growth in the first part of 2008 and then an increasingly steep fall-off in the second half. If you look back month on month then this traffic is down significantly. February 2009 figures were 21% down compared to the same month in 2008- January 2009 was 20% down- with December and November 2008- 16% and 17% down respectively.
“During a normal year traffic peaks in June/July and comes back down again but last year we saw- June slightly up- July slightly down and from then on it was an ever-decreasing trend. The point is- that if you look at the absolute movements numbers you’ll see that they are flat- so we are not seeing a further reduction in the monthly number of movements.
“What we are not yet seeing is the increase that we normally see in the annual cycle-” Humphries observed. “Remember these are departures- arrivals- internal flights and over-flights- so we are heavily affected by the U.S. market and they are probably worse affected than we are in Europe. If you look at the London Luton Airport [which is probably the most popular U.K. trans-Atlantic business aviation airport] business aviation traffic is 30% down.
“Because of the tough times experienced by the industry- the EBAA is running a campaign for its members to help them defend their corner in the current climate. These are unprecedented times. Thankfully we haven’t got the business aviation persecution complex that is happening in the U.S. which makes people feel guilty about using business aircraft-” he added.
“The EBAA’s sponsored PriceWaterhouse study on the value of business aviation to the EU- came out just at the right time and shows that the industry is worth €20 billion to the European economy- 164-000 jobs and is 0.2% of European GDP- proving that we’re not just in the business of rich men’s toys-” Humphries emphasized.
The second problem exacerbating members is what Humphries calls- ‘Strangulation by Regulation’ in the middle of the severest recession seen in decades. As an example he cites the EU-ETS (European Union- Emission Trading Scheme) implementation- the first phase of which kicks-in during August this year.
“We are very worried by the sheer bureaucracy involved with the implementation of EU-ETS. It’s not that we don’t want to pay our way- and indeed NetJets and Bombardier are already doing 100% carbon offsets under their own schemes- but it is the sheer bureaucracy of the Monitoring- Reporting and Verification system (MRV) which is totally inappropriate to business aviation.”
The really bad news is that the EU-ETS paper-chase has already started and by 31st August this year every European flight department must have its EU-ETS MRV plans filed or face a fine.
Humphries explains- “Some operators have been taken by surprise on how close the first phase of this legislation is- and in the U.S. I don’t think they’ve grasped it at all yet.” The full blown carbon trading scheme is due to start on the 1st January 2012. All non-EU operators- even a one time non-commercial operator- will have to be a part of the scheme.
“The two key things we are involved in is making people aware of what is happening- and we are very active participants in what the present proposals mean- working with Eurocontrol to try and get a simpler system accepted for low-emitters and a more affordable one for those that come above 10-000 metric tons but below the next level.
“We’ve pushed very hard for all aircraft emitting under 10-000 metric tons annually to be able to use a very simplified process based on Eurocontrol data and known as the Pagoda model where the operator would be told - ‘you’ve flown this number of hours and emitted this amount of carbon.’
Subject to model testing this looks as if it will run- but if the model meets accuracy requirements for higher emitters we want to see it accepted for them too.
He also explained that outside aviation- EU carbon trading rules have a much simpler and therefore less expensive procedure. “Someone has calculated that to implement the full EU-ETS reporting system will probably cost each operator £40-000 per year. When you talk to these officials their attitude is- ‘Well it’s only £40-000 which isn’t much to a business jet operator’.
“Well hold on-” said Humphries- “Just because operators have got high capital- it doesn’t mean to say that they’ve got high return on capital employed. To many companies- £40-000 could make the difference between make or break!”
Humphries went on to explain that the degree of extra work in making the calculations and filing in the paperwork correctly is mind-boggling - things like calculating the specific gravity of fuel and fuel temperatures have to be worked out by someone.
“For us the ton/kilometer calculation isn’t going to give us much because its not us that decides how many people fly on the aircraft- it’s the charterers-” fumed Humphries. “In business aviation we sell (charter) a whole aircraft- whereas a key performance indicator for the airlines- is how many passengers they put on seats.”
The outcome? “The outcome will probably see us having to buy most of our carbon offsets - but we’ve said we don’t mind this- and are prepared to pay our way and do the right thing- but not with this hopeless bureaucracy. We are currently working on €30 per ton of carbon - purchasing it shouldn’t be unaffordable- but what is unaffordable is operators taking on extra people specifically to do all the MRV. It’s ridiculous!
“We calculate that all European business aviation emits two million tons of CO2 annually which equates to one small land-based power station. Business aviation is less than 1% of all aviation emissions and 8% of total aviation traffic- so for goodness sake - don’t impose all this complexity on us!”
EBAA members were sorely disappointed earlier in the year when the EU authorities turned down the idea of having an in-house centralized not-for-profit carbon trading organization for all members.
“We are also worried about EASA Rule Making- which couldn’t have come at a worse economic time. It is terribly complicated and completely changes the way the rules are presented. This is a great concern to the EBAA membership and I know it is shared by the airlines too.”
The third problem is airfield security- particularly on smaller fields. “I’m sure we’ll find a way out even though we have the UK authorities being unreasonable” Humphries explained. “We are working with the EU Commission and basically looking for simpler more appropriate rules tailored to our business model Europe-wide for aircraft weighing above a certain weight threshold and similar rules for corporate passengers up to a higher limit.
“For those that have to do screening- we are looking for a simplified process. There are challenges but I hope we’ll get a sensible resolution. There seems to be general acceptance that helicopters should be excluded from any new regulations. The British authorities are the biggest problem here- although of course they could always specify tighter limits if they feel these are appropriate in UK- but I hope we’ll get a common sense solution eventually.”
A fourth concern is still access to airports according to Humphries. In this business we don’t have grandfather rights- therefore we always get pushed out. We are- however- working with the EU Commission and are suggesting that business aviation be treated as an entity i.e. as a programmed- non-scheduled carrier- thereby giving us rights to slots. British Airways is one operator with 300 aircraft- for example- whereas we are 300 operators with one aircraft!
“At EBACE we don’t expect a reduction in the number of exhibitors- in fact I think we may have slightly more than last year as they’ve already booked and paid- but as to how many visitors will come- I’d probably say your guess is as good as mine-” Humphries offered. “Last year we had 13-692 attendees and I suspect it will be less this year but we just don’t know. We’ve got some extremely good information sessions and some top-line speakers lined-up- and there is lots to talk about.”
According to the EBACE website (www.ebace.aero)- static aircraft park numbers were up to around 55 well before the event- but as to the number of used aircraft on view Humphries said- “I’m sure there will be a number of used aircraft which will reflect the current market.
“We are worried about the 2010 event though and watching our expenditure carefully-” he concluded.
For more information about EBAA visit www.ebaa.aero