Recovering traffic levels are driving desire for both expansion and consolidation in the European market for business-aircraft handling services. But at the same time bureaucratic and market-access restrictions at many of the continent’s airports continue to hamper moves to open new FBOs or take control of existing facilities.
And yet despite these opportunity inhibitors, several business-aviation service groups are now actively preparing to build or extend their FBO networks in Europe. Several have indicated to AIN that they intend to complete fresh acquisitions, mergers and partnerships over the next 12 months. Others are much less convinced that the time is yet right for the cycle of restructuring and consolidation that many view as inevitable in the sector.
According to Terry Yeomans, UK representative for flight-planning group Air Routing International, there is a good prima facie case for expanding FBO networks in Europe, but figuring out how to achieve this effectively is by no means straightforward. “Major hubs in Europe are pretty much covered by the major players, so, like property speculation, the trick is finding the next hot spot and getting the timing right,” he said. “The 10 new European Union member countries would have to be prime targets for expansion on paper, but trying to gauge traffic levels over investment levels is one of many hurdles to overcome.”
For example, Signature Flight Support is currently targeting six separate European locations in its expansion strategy. According to the U.S.-based group’s CEO, Beth Haskins, negotiations are already under way and at least one of these prospective deals is expected to be completed.
While declining to identify the European locations in Signature’s sights, Haskins said that all fit the group’s standard expansion criteria of being major business cities, financial capitals or upscale resort areas. She admitted that Brussels–the Belgian capital and home to the European Commission–was considered but has now been ruled out due to restricted airport infrastructure and the strength of long-established FBO Abelag Aviation. Frankfurt– Germany’s main financial center–is understood to be one location under consideration, although this has not been officially confirmed.
“We would prefer to expand through full ownership of facilities, but such opportunities are few and far between in Europe,” Haskins said. She indicated that some of the half-dozen expansion targets being evaluated would entail buying fully fledged FBOs, while others would amount to some sort of more limited presence at an airport–perhaps partnerships with other companies. One criterion for prospective new Signature bases is that they should not burden the group with hefty new overheads. Among the sites being considered are secondary airports, where business aircraft operators could be offered an alternative gateway to a city’s crowded main airport.
To date, Signature’s record of expansion in Europe has been somewhat checkered. In the mid-1990s it established a bridgehead operation at Switzerland’s Zurich Airport, where it built a brand-new executive terminal with local partner Zimex Aviation. Within a few years the alliance fell apart and Signature walked away from the location.
Undeterred, and with the backing of its UK-based parent company, BBA Group, Signature got a foothold in the lucrative London market by acquiring the well respected Magec Aviation FBO from the Lynton Group, as well as Osprey Aviation at Southampton Airport on the south coast of England. Soon afterward it bought the former Air Luxor facility at Paris Le Bourget Airport.
Last year Signature’s empire builders started work on a prospective new FBO development at Toulon Airport in the south of France. This deal has now been in the works for more than 18 months and recently hit fresh legal obstacles over local government approval for the construction work.
Despite the difficulties encountered to date, Haskins said that, once the right location can be found, Europe can actually prove to be a more competitive marketplace for prospective new entrants than the U.S. Her feeling is that, just as a new wave of costly environmental regulations drove FBO consolidation in the U.S., a similar trend (made more intense by tough new security requirements) will likely force some of Europe’s independent FBO owners to sell because they do not have deep enough pockets for the required investments.
Strong branding continues to be an important goal for Signature, and this has been physically achieved at the Luton, Paris and Southampton bases. By year-end the group intends to extend its staff-training programs into Europe, although Haskins stressed that this will by no means be a one-way re-education process emanating from North America. “In many respects, our European colleagues have a lot to teach us about service,” she concluded. For example, Signature Luton boasts the lowest ground-incident (ramp rash) rate of any FBO in the company’s network.