Will revolt spell the end of Egypt's bizjet boom?

 - March 1, 2011, 7:15 AM

Business aviation flew to the rescue of several thousand people fleeing Egypt during protests that led to the overthrow of long-standing President Hosni Mubarak last month. But prospects for continued business aviation growth in the country are now largely dependent on the extent to which Egypt's political revolution affects its economic life.

With scheduled airline services severely disrupted in late January and early February, charter brokers scrambled to line up charter flights to evacuate, mostly expatriates wanting to get home. Brokers such as Air Partner and Chapman Freeborn assembled a diverse fleet of aircraft ranging from midsize business jets to Boeing 757s. In some cases, bookings were made on behalf of governments looking for ways to rescue their citizens from the threat of violence.

Accounts of how badly the protests–and the governmentπs response to them–disrupted flying activity varied significantly. For the most part, business and private aircraft were able to operate internationally–albeit with some delays and significant restrictions.

During the second week of February, U.S. pilot Bart Gault was instructed by his Egyptian employer to move his Bombardier Challenger 604 to Amman, Jordan. On February 14, three days after Mubarakπs resignation, Gault told AIN that he considered it safe to return to Cairo with the aircraft.

The most serious disruption was that caused by a 5 p.m. to 6 a.m. curfew at the height of the unrest. Gault said that this had made life especially hard for handling providers, but that the situation had improved once the curfew was shortened to midnight to 6 a.m.

Before his departure for Jordan, he found the general aviation area in Hall 4 of Cairo International Airport to be busier than he had ever previously seen it. Several waiting passengers anxiously stopped Gault to ask him whether he was booked to fly them out of Egypt.

Several pilots reported restrictions on who could fly out of Egypt. The authorities do seem to have prevented Egyptian citizens from leaving the country, but it is unclear how uniformly this was applied.

One expatriate pilot, speaking on condition of anonymity, said that officials had allowed private aircraft to be flown out of Egypt by foreign crew, but insisted that no Egyptian passengers could be on board. Evidently, officials had indicated that wealthy Egyptian citizens were being required to stay in the country in case the government decided to pursue criminal charges over alleged corruption during the Mubarak Administration.

The same pilot said that operators had received unclear and changing instructions from local officials as to how and where they could fly. He said that the normally easy process for getting flight permits had become protracted, with approvals taking up to five hours. "Overall, though, it was little more than a nuisance," he said, adding that he expected to fly his Egyptian-owned aircraft back into the country sometime during the third week of February. "We [expatriate flight crew] will have to accept that there is going to be something close to martial law in force there for some time to come," he concluded.

Gault reported increased security around the perimeter of Cairo International Airport. He said that military officials were fairly obviously monitoring ATC clearances. He also said that flight planning was more restrictive in that if a departure was delayed it became necessary to refile a flight plan.

At times, there were reports of difficulties in getting aircraft refueled. Finding cash to pay for support services also proved hard for some since the banks were closed for long periods of time.

Bizjet Clients Under Scrutiny

Cairo-based executive charter and handling company Smart Aviation reported a steep decline in activity during protests that spanned almost three weeks. Chairman and managing director Wael El-Maadawy told AIN that uncertainty and concerns about allegations of corruption had discouraged his mainly Egyptian clients from flying privately.

However, El-Maadawy predicted that political change in Egypt will lead to a better economic environment in which business aviation can thrive. "With democracy there will be more trust in the country and this will encourage new investments," he said. Smart Aviation is owned by a group of state-backed interests, including flag carrier Egyptair.

As recently as November, when Egypt held elections that effectively provoked the revolt against Mubarak, most business aircraft manufacturers highlighted the country as one of their strongest prospects for fueling the growth of business aviation in the Middle East market. But with widespread resentment of a perceived trend for private wealth to be concentrated in the hands of a relatively small clique close to the Mubarak regime, could the former president's overthrow provoke a shift in business conditions?

According to Professor Salwa Ismail of London University's School of African Studies, private wealth in Egypt is largely concentrated in the hands of just 1,000 families. She has accused Mubarak and his followers of presiding over what she characterized as "crony capitalism" in which the Egyptian economy has been manipulated for private gain. Wealthy Egyptians have bought significant numbers of business aircraft in recent years and so a shake-up in the country's power elite could, at least in the short term, spell trouble for the industry.

But Robert Powell, economist and editor with The Economist Economics Unit, does not expect a strong political backlash against Egypt's business community. He told AIN that the country has been successful in diversifying its economy through inward investment in sectors such as the pharmaceutical industry and he expects this to continue.

Powell indicated that there could be some slowing in the free-market trend that has seen Egyptian state assets privatized and that political reform could lead to an increase in some costs, such as labor. Referring to the political landscape anticipated after the next Egyptian election, he concluded, "It is unlikely that they [the new government] will seek to make [the Egyptian economy] a less attractive place to do business because they want to ensure employment and steady wages." He also predicted that if the new administration proves to be serious about reducing corruption this will lower the cost of doing business in Egypt, which could make it an even more fertile new market for business aviation.