EBACE 2009 Report

 - June 3, 2009, 10:18 AM

It might surprise some to hear this, but the state of the economy was not on the minds of everyone at last month’s European Business Aviation Convention & Exhibition (EBACE). With attendance reaching the third highest level of any EBACE show, a healthy number of exhibitors and more aircraft on the static display than at last year’s event, EBACE’09 easily surpassed the nervous prognostications of those who worried that the show would seriously decline in keeping with the ongoing negative news about the business aviation industry.

Europe and European attitudes about overcoming the relentless obstacles to conducting aviation activities, however, never fail to surprise visitors from the U.S. And the dismal economy is just one more obstacle–albeit a significant one–that has developed and that European aircraft owners, operators and aviation service providers have determined to take in stride.

ETS and Security Measures
The opening general session on May 12 featured key European officials offering support for business aviation, but not much good news on implementation of the new emissions trading scheme (ETS), set to take force in 2012. Daniel Calleja, director of air transport for the European Commission (EC), expressed his organization’s interest in helping smooth the road to ETS. “The Commission is willing to work with you,” he told the opening-session delegates. “We need to find a workable system, and we are keen to find a solution that takes into account the concerns of business aviation.”

The industry can hope that Calleja was able to spend time at EBACE’09 getting his arms around business aviation and understanding the benefits it offers– bringing new business opportunities and generating manufacturing, operational and support jobs. But Brian Humphries, president and CEO of the European Business Aviation Association, is concerned that the EC is applying commercial aviation standards to general aviation without regard to the unique operating capabilities of business aircraft. Among the concerns he expressed at the opening general session were the ETS, “inappropriate blanket security proposals” and constrained business aviation access to airports that are increasingly being used by low-cost airlines. Unlike the U.S., where all aircraft have the right to use any portion of the aviation infrastructure, priority in European and other countries is given to the aircraft carrying the most passengers. The issues facing business aviation in Europe are critical, according to Humphries. “The situation is as challenging as any we’ve ever seen.”

NBAA president and CEO Ed Bolen joined the opening session panel and expressed his organization’s concern about how Europe’s ETS will affect U.S. operators flying to Europe. He cited the example of a business aviation flight from Los Angeles to London, noting that the operator would have to pay to offset the carbon emissions for the entire flight, not just the portion flown in Europe. Bolen said that “is unconscionable.”

Worse yet, complying with the ETS will cost operators a significant amount of money. In an earlier interview, Humphries told AIN that developing an ETS monitoring, reporting and verification system would cost a small operator about $60,000 per year. An EC official told Humphries, “Well, that’s not very much, is it?”

“They absolutely do not appreciate the realities of this business,” Humphries said, “and the fact that many of these operators have small profit margins despite the fact they seem to have expensive-looking equipment like jets and helicopters. To suddenly add a cost like $60,000 per year just to handle emissions trading and another $30,000 a year for the increased [regulatory] oversight charges, plus security cost increases, just shows a complete lack of awareness and sensitivity of our business to cost.”

On the last day of EBACE’09, a session was held on security issues for business aviation operations in Europe. The session addressed the question of whether or not business aviation will have security requirements different from those of the airlines.
The answers weren’t too clear on that issue, but those who attended the meeting learned that increasing regulation of general aviation security is expected in Europe and the scope of such regulation might look a lot like airline security unless business aviation interests get involved with the process.

Mireille Dorr, the EC’s directorate general for energy and transport, explained that current European security regulations apply to airline operations, but “in this regulation, we do not have specific rules for business aviation. However, what we do have is a provision under which member states maintain national rules for general aviation.” These states have the authority to develop their own security rules for business aviation, she said.

The EC has been working on revising aviation security regulations for the past two to three years, according to Dorr, and a vote on a new rules proposal is due next month, with entry into force of the new rules scheduled for next year. Dorr said that the EC has been working with EBAA to solicit input on European Union (EU) security rules for business aviation, “to ensure that all business aviation flights in the EU are covered by the same security regime.” However, she added, “it was impossible to get agreement from all the member states.”

What this means is that if an EU member state does not develop its own business aviation security regulations, the EU will likely impose the commercial aviation rules on business aircraft operators. This includes the same type of baggage and passenger screening that airline passengers undergo. “We do recognize that this may not be appropriate for the types of flight that you have,” Dorr said.

While the new rules will allow EU member states to develop their own rules for business aviation, they also create a path for future harmonization with EU regulations. Dorr anticipates that European security rules, like the proposed large aircraft security program rules in the U.S., will have a weight threshold, but she didn’t specify what that might be.

An example of the onerous security regime that European business aircraft operators and service providers might have to endure was offered by Hervé Laitat, general manager of Brussels FBO Abelag. In July 2005, an EC audit found that Brussels Airport was not secure and required creation of a new “security restricted area” at the FBO. This area basically consists of a line between the airside and the landside, but extending through the interior of the FBO’s hangar and terminal facility. To get from one side to the other, all people, including employees, must undergo full security screening.

In practical terms, the restriction means that some employees have to be screened as many as 25 times per day. Abelag had to hire more employees because of reduced productivity, and it’s difficult to keep employees when they are subjected to such misguided efforts when they are just trying to do their job.
The EC security program seems intent on eliminating all risk. “We feel that no risk assessment has been taken into account,” he said. “I would say that zero risk does not exist.”

Abelag supports the security recommendations issued by EBAA last year, Laitat said. “The principles are good, and we like the idea of setting up a security program for our activity. FBOs are ready to take this responsibility.”

Bogus Class War
The ongoing battle between business aviation bashers and an industry that has seen a dramatic drop in deliveries and flight activity was highlighted at the “Business Aviation: Perception Versus Reality” session held on the second day of EBACE’09. While politicians are starting to get the message that business aviation is not all about luxury travel but contributes substantially to the economy and provides tens of thousands of valuable jobs, said EBAA leader Humphries, the media still appears to be on the attack.

Pete Bunce, president of the General Aviation Manufacturers Association, provided details of the GAMA/NBAA “No Plane, No Gain” campaign, which is focused on defending business aviation. The industry contributes more than $1.5 billion to the U.S. economy and employs almost 100,000 people. Bunce explained how business jet operators can fight back against the negative perception of business aviation, citing JPMorgan as an example. The troubled financial services giant defended its order for two Gulfstream G650s by saying that the jets would help it compete globally and promising not to take delivery until it had repaid federal bailout funds. The media initially latched onto the story but backed off when JPMorgan took a stand. “They did it right,” Bunce said.

At the opening session, Yael Selfin, head of macro consulting at Pricewaterhouse
Coopers, provided results of a study commissioned by EBAA on business aviation’s impact on the European economy. “Business aviation contributed ?19.7 billion [to the European economy] in 2007,” she said, which includes €5.6 billion of direct, €4.8 billion indirect (financial benefits through the supply chain) and €9.3 billion worth of induced (the effect of employee expenditure related to the sector and its supply chain) gross value added. The most active countries in terms of business aviation are France, the UK and Germany, while the impact of Eastern European countries remains small, she said.

Unlike last year’s EBACE, this year’s event was devoid of announcements of new aircraft programs and big orders. Notably absent this year were the Eastern European operators who bought into business aviation in a big way last year. But Middle Eastern companies remain strong buyers and accounted for a moderate amount of business at this year’s EBACE show.

On the eve of the show, Jordanian operator RayaJet and its sister company Ayla Aviation Academy signed a contract for a Hawker Beechcraft Premier II, the updated version of the Premier IA announced at EBACE’08. Premier II certification remains on track for the second quarter of next year, and the upgraded jet offers 20 percent more range, increased payload and higher cruise speeds.

Embraer has its hands full with development of the new Legacy 450 and 500 midsize jets and thus had no announcements of new programs. But the company did bring four of its jets to EBACE’09, emphasizing Embraer’s rapid growth into the major leagues of business jet manufacturing. The Embraer fleet included the in-production and recently EASA-certified Phenom 100 very light jet; the recently FAA-certified Lineage 1000; the company’s first business jet, the super-midsize Legacy 600; and the next in line for certification, the light Phenom 300.

Certification of the Phenom 300 remains on track for the end of this year. Although Embraer has experienced some order cancellations and deferrals of the Phenom models, the backlog still accounts for about 800 airplanes, according to the company. This year’s schedule calls for delivery of 115 Phenoms and 17 Legacy 600s and Lineage 1000s.
The fly-by-wire Legacy 450 and 500 remain on the same certification and delivery schedules Embraer originally announced. The seats and tables shown in early mockups are being changed based on customer feedback.

Cessna said at EBACE’09 that it expects to deliver 290 to 300 jets this year, down from 467 last year. “We may be a little disappointed,” said chairman, CEO and president Jack Pelton, “but we have a backlog worth $13 billion, and 2009 will still be a good year.

“We’re seeing a lot of positive news,” he said. “The stock market is rising, consumer spending is improving, housing activity has stabilized, general inventories are declining and the chairman of the U.S. Federal Reserve is becoming optimistic. We expect the U.S. GDP will become positive in the third quarter of this year.”

Cessna has cut spending by suspending development of the large-cabin Citation Columbus (see story on page 6) and closing its Bend, Ore. factory, where the Corvalis composite piston singles are made, and moving that production line to Independence, Kan. The state of the economy will determine when the company resumes development of the Columbus.

Bombardier briefed EBACE attendees on the progress of the all-composite Learjet 85, emphasizing that the program remains on schedule following cancellation of the company’s contract with insolvent Grob Aerospace for preproduction prototype design and production. “We jumped in quickly after Grob announced it was in [financial] trouble,” said Bob Horner, senior vice president of Bombardier Business Aircraft sales. The Learjet 85 is slated to enter service in 2013. Horner also announced two range extensions for current designs, an added 400 nm for the Global 5000 and a 15-percent increase for the Learjet 40XR.

Airbus’s VIP division is riding out the recession relatively unaffected, with a backlog of 40 jets. This includes orders during 2008 for a mix of 25 narrow- and widebody VIP jets valued at about $3.4 billion. Airbus is on track to deliver 12 Corporate Jetliners this year, up from 10 last year. Among the 10 widebody orders last year, eight were for the VIP variant of the new A350 and two for the four-engine A340-500. The A350 is scheduled for certification and entry into service in 2013.

While Gulfstream Aerospace has had to resort to layoffs and other cost-cutting measures, deliveries, revenues, earnings and backlog showed a relatively strong performance in the first quarter. Gulfstream delivered 31 aircraft and completed 34 in the first quarter, compared with 37 delivered and 36 completed in the same period last year. At the end of 1Q/09, Gulfstream’s backlog was $20.769 billion, down from $22.479 billion at the same time last year. The new G250 and G650 remain on track for first flights later this year.

Piaggio Aero Industries has received a few requests for delayed delivery but no cancellations, according to CEO Alberto Galassi. This year’s deliveries should be the same as 2008’s, at about 30 Avanti IIs.

Daher-Socata has deferred to the end of the year a decision about launching a new eight- to 10-seat twin-engine turboprop or jet. The company is still in “a business plan mode,” said Nicholas Chabbert, senior vice president of the company’s airplane division, at EBACE’09.

For OEMs that had no new aircraft to announce, they at least had some modifications to highlight. Boeing Business Jets revealed a cabin modification to the 747-8 VIP, adding an extra 807 sq ft of floor space above the main deck of the aft cabin area between doors three and five. This “overhead space utilization” mod was designed by Greenpoint Technologies and adds a second floor in the aft cabin by moving wiring, hydraulics and air-conditioning components to the aft cabin sidewall. The overhead space will be accessible via a stairway and could be used as a lounge or accommodate up to 16 enclosed berths.

Dassault unveiled a new interior for its Falcon 7X trijet at EBACE, designed by BMW DesignworksUSA and on display in S/N 44 at the EBACE static display. Available as an option in the first quarter of 2011, the new interior offers subtle curves throughout the interior. A single-arc carpet element visually stretches and links the front and back ends of the cabin. Curved bulkheads give the main cabin area a roomier feel, and curved surfaces make it easier for passengers and crew to move about.

An Emivest Aerospace SJ30 occupied its usual space on the EBACE’09 static display; this jet is S/N 7, owned by Action Aviation chairman Hamish Harding. Action Aviation is an SJ30 distributor, and Harding expects his company to receive its first SJ30 built under the Emivest banner later this year. The next airplane off the line, S/N 8, is scheduled for delivery in the third quarter, followed by S/N 10, slated for actor Morgan Freeman, then Action Aviation’s S/N 9. According to Emivest, positions are sold into 2011.

Farnborough Aircraft has found new ownership and brought the prototype single-engine turboprop Kestrel to the EBACE static display. Business development director Adrian Norris said that he is looking for a U.S. partner to help bring the Kestrel to market. The goal is to seek FAA certification first, because single-engine IFR rules in Europe still constrain the market for aircraft such as the Kestrel.
Certification should take three years once the program is launched.

In its native Switzerland Pilatus Aircraft was well represented on the EBACE static display and in the exhibit hall. The sales success of the PC-12 has yet to generate
a serious competitor in the single-engine turboprop market, but companies such
as Comp Air, Epic Aircraft and Farnborough Aircraft have all announced plans
to build competing airplanes. None of those companies has come close to certification, so Pilatus will own that market for some years to come.

BAE Systems Regional Aircraft said that “sales have taken off” for its executive-configured four-engine Avro Business Jet. There are about 25 ABJs in service or undergoing conversion thus far, and BAE still builds new aircraft for government customers.

Avions de Transport Régional has also joined the business aviation market, with executive versions of the ATR 42 and 72 airliners. Corporate ATRs seat 10 to 50 people in a six-foot, three-inch stand-up cabin and offer better fuel efficiency than most similar-sized turboprops, according to ATR. Seven corporate/VIP operators currently fly ATRs.

Aerion’s goal to develop a supersonic business jet could be bolstered by a plan to encourage a major manufacturer to participate in a joint design study. Aerion’s hope is that this design study, essentially the nine- to 12-month proof-of-concept phase of the program, would result in a decision by the partner to proceed with full-scale development and production of the Aerion SSBJ. “We are confident we will reach an agreement with an OEM,” said Aerion vice chairman Brian Barents. “The challenges are many, but there is a desire on the part of all parties to make this happen.”  

Despite Flagging Economy, Operators are Still Flying

The growth of business aviation since EBACE’s first show in 2001 has been impressive. The recession, while it is affecting the industry, has not dampened the enthusiasm for business aviation among existing and new operators throughout Europe and the Middle East. Some of the activity includes the following:
•  Lufthansa Private Jet is growing, with the addition of the new Cessna Citation XLS+ to its fleet.

•  VIP completions specialist Lufthansa Technik has had no cancellations since the recession began and received three new letters of commitment from customers in the last six months.

•  CharterX Wyvern launched CharterX Europe, serving European charter brokers and operators with region-specific trip-booking opportunities, empty legs and industry news.

•  Requests for charter aircraft rose significantly between April and July last year then dropped sharply in the second half before rebounding again this year, according to charter information provider Avinode.

•  VistaJet, while slowing its rapid growth, will still take delivery of a handful of new airplanes this year and is targeting a 100-strong fleet by 2012. The company also cut round-trip rates by 25 percent in a bid to lure price-sensitive customers to its guaranteed-availability service programs.

•  Ocean Sky has added a new FBO at London Luton Airport, having signed a lease on the facility formerly occupied by Harrods Aviation. Steve Grimes, CEO of the new Ocean Sky Jet Centre, said that traffic levels have slowly started to recover after a steep and sudden downturn in the final quarter of 2008.

•  Germany’s Aero-Dienst has expanded its fleet to 12 aircraft with the recent addition of a new Learjet 45. While the company has seen a decline in business, the drop was smaller than it could have been because it didn’t do much flying in the Russian and Eastern European market, which has suffered a more severe downturn than the rest of Europe.

•  Bahrain-based Rizon Jet is opening a new FBO at the UK’s Biggin Hill Airport in September. The FBO will cater to Middle Eastern passengers and will comply with Islamic Sharia law by providing Halal catering on-site, a prayer room and private booths in which female passengers can unveil for immigration checks.

•  Icejet has placed two of its 328Jets at Oxford Airport in the UK, one at Paris Le Bourget and another at Riga, Latvia.

•  Jet Aviation’s Basel completions and maintenance facility continues to expand and backlogs are large enough that the company will have as much work this year as it did last year. The Basel facility recently celebrated its 100th Falcon completion.

•  Spanish charter/management firm Gestair has added six new aircraft to its fleet and saw a better than expected first quarter. Gestair and Iberia recently created Corjet Maintenance Europe as a new maintenance
joint venture.

•  Gestating European fractional provider Jet Republic said it is receiving more inquiries than it had anticipated from people who previously owned their own aircraft. Jet Republic’s first of an order for 110 Learjet 60XRs is due for delivery in September. Jet Republic also announced an order to equip its entire fleet with Aircell’s SwiftBroadband satcom system.

•  For the third year in a row, Bombardier Aerospace staged the European edition of its well received Safety Standdown, underscoring the message that no matter what happens to the economy, it’s never a good time for operators to fail to invest in safety.

•  DC Aviation announced a Loyalty Club available to customers from June 1, 2009, through May 31, 2010. Benefits include special pricing and guaranteed availability
for midsize jets.

•  RayaJet and Ayla Aviation Academy signed a memorandum of understanding to form a new business aviation services group in Jordan and other parts of the Middle East.

•  Arab Wings added a new Challenger 605, and the company is applying for an aircraft operator’s certificate in the United Arab Emirates, where it plans to launch a sister company called Gulf Wings.

•  StandardAero and Tag Aircraft Interiors announced a joint venture for completions with interiors designed by the House of Versace.

• CMC Electronics highlighted its new FronTier integrated avionics suite, targeted at Part 25-certified business aircraft. CMC expects FronTier to enter service in 2013.

•  Elbit Systems announced that it plans to compete in the integrated avionics arena
with a new product line, the Oria integrated display system, designed for airliners and business aircraft. A unique Oria feature is a dual-pointing device interface that can be used simultaneously by the pilot and copilot, with two independent pointers moving in separate sections of the same display.

• Palm Aviation is building an FBO at the new Al Maktoum International Airport in Dubai, and the company plans to expand to other regions.

•  ExecuJet Aviation has restructured its charter operations in Europe so that customers can call on any of its aircraft, regardless of where they are based.

• FlyingGroup has opened two new charter bases, in Rotterdam and Luxembourg.
The company operates 23 aircraft.

•  Hadid International Services has expanded its aviation support network
with a new branch office at Karachi Airport in Pakistan. Hadid International considers Pakistan the gateway to the Far East and is considering expanding in that direction, with possible future locations in China, the Philippines, Singapore, India and Bangladesh.