Dubai: Business jet operators are banking on strong demand from emerging economies to fuel growth in 2012.
Demand for luxury travel has slowed in recent years due to the global economic downturn. Traditional markets, such as the United States and Europe, are wallowing in huge amounts of public debt, which has had a knock-on effect for countries in the Middle East.
However, Gulf nations, and particularly the UAE and Saudi Arabia, remain attractive markets for the business aviation industry despite the global slowdown.
The World Wealth Report 2011, conducted by French business consultancy Capgemini and Merrill Lynch Global Wealth Management, showed the number of high net worth individuals (HNWI) in the Middle East grew 10.4 per cent to 0.4 million in 2010, while wealth jumped 12.5 per cent to $1.7 trillion (Dh6.2 trillion).
However, the report also revealed the UAE witnessed a 3.5 per cent drop in HNWI population due to the after-effects of the slowdown in the Dubai real estate market. Therefore, the real growth over the next 12 months is predicted to come from the BRICs (Brazil, India, Russia and China).
"The whole of business aviation has had a difficult couple of years. However, what you see in our market, which is the high-end, is the billionaire does not suffer as much as the millionaire," said Francois Chazelle, vice-president of worldwide sales at Airbus Corporate Jets.
"Sales are stable in the Middle East but the growth is in China; the Russians are also coming back having been absent over the last couple of years. Russia has been a traditional market since mid 1990s but China is the one that is growing very fast; we have already sold more than 20 aircraft to [customers in] China but we feel we have not even started [there]," he added.
Airbus Corporate Jets is the Toulouse-based company's new unit and is designed to better serve high-end clients. The manufacturer says it will bring together commercial, programme and support activities under one umbrella.
Upgrade
"The Middle East remains a very big market. The trend is for people who buy business jets to always upgrade and that is still happening; people are buying bigger jets to replace smaller jets. We are addressing billionaires and it is true they are more resilient," Chazelle said.
"The market in the Middle East has remained quite stable and some of the main local markets are the ones that have been least affected by the crisis. When you look at Saudi Arabia, the UAE and Qatar, they have been pretty stable and on the business aviation side they continue to be good customers," he added. US-based aerospace services provider Honeywell, in its latest Business Aviation Outlook report, forecast sales and delivery of around $230 billion in new business jets from 2011 through 2021, which it says represents approximately a two per cent increase in total expected industry sales. The results, which were featured in a special presentation by the Middle East Business Aviation Association at the Dubai Airshow, also showed that purchase expectations trended up in the Middle East and Asia but retreated in other regions, most noticeably in Europe, which is embroiled in a devastating sovereign debt crisis.
"...The market has certainly shrunk but it is starting to recover and is becoming extremely competitive," said Mike Berry, managing director for the Middle East at ExecuJet Aviation Group.
"Customers have become demanding as well as very price-sensitive. From a market perspective, we have seen the bottom of the downturn in the industry and from an ExecuJet point of view we have expanded our presence into China and we see buyers coming back from both traditional and emerging markets," he added.
High net worth
According to Berry, the Middle East is a unique market due to the high number of net worth individuals in a relatively small population.
He says customers in this region have become astute business jet owners but are also looking at ways to cut costs.
He said his company offers travel solutions unmatched by commercial airlines, in terms of accessibility to destinations and avoiding airport check-in and wait times. "It is also the flexibility to travel to your very own schedule," Berry said.
"In this region, which is traditionally a wide-body market, owners define their travel profile, source a suitable jet and the interior is completed to their needs. For most jets, customers' wives are involved in the configuration of the decoration of the interior so that it does not end up just looking like a business jet; it is more to their particular tastes.
"We remain very cautious and optimistic. It is going to be a slow recovery and you are not going to see the highs this region saw prior to the 2008 downturn before the backend of 2012, maybe 2013," he added.
Royal Jet, a charter operator based in Abu Dhabi, is looking to crack the lucrative, but competitive, market in Saudi Arabia.
"Performance wise, Royal Jet will have its best every year [in 2011] in the face of a global recession," said Shane O'Hare, president and chief executive officer of Royal Jet.
"We also launched a new brokerage service this year, which has generated $23 million worth of business, as well as expanding geographically. We launched a base in Jeddah, which is a tough market that we have to crack because it is the biggest market in the Middle East for business jets," he added.
CB Aviation strengthens UAE presence
Dubai: CB Aviation has opened a technologies, consultancies and aviation brokerage services office in Dubai.
The company is focusing on the Middle East and African markets, where according to global statistics growth in tourism and aviation are expected to touch 20 per cent.
According to sources in the civil aviation sector, the volume of investments in projects in the Middle East will exceed $330 billion (Dh1.2 trillion) over the coming years.
Nowadays, the business aviation sector receives the attention of chief executive officers who are keen on saving the time and effort consumed by travel. Based on this, CB Aviation has created a business aviation service to meet the requirements of business people and chief executive officers for private and other aircraft for transporting working teams and facilitating urgent business missions.
Statement
Saeed Al Mansouri, vice-president of CB Aviation for the Middle East and Africa, said: "We are pleased to announce the opening of CB Aviation offices in Dubai to mark the 12th edition of the Dubai Airshow, which is an occasion that should not be missed for communicating with the major players in the world of civil aviation and aerospace industries."
