AIN FBO Survey 2014: Europe, Middle East, Africa and Asia

 - May 1, 2014, 6:00 AM
Reception Desk in the Terminal at TAG Farnborough Airport.

While the North American business aviation market has shown signs of recovery of late, for many other parts of the world fortunes have continued to fluctuate, making for a mixed outlook for the global FBO industry. Emerging bizav markets across regions such as Asia and Africa have seen encouraging traffic growth, even if opportunities to expand FBO services in these places have been somewhat limited. Meanwhile, service providers in Europe’s more mature market have yet to see sustained recovery from flight activity dips in recent years, but there are some notable exceptions.

“These have been interesting times for us as an industry, parts of which remain in distress while others are recovering,” said Mark Abbott, group FBO director with ExecuJet Aviation. “Statistics on the geographic contribution to the traffic we’re seeing through our FBOs show that a considerable amount is U.S. traffic.”

Indeed, according to the FAA, U.S. business jets logged a record 666,798 international movements last year, up 1.7 percent over 2012.

“We’ve seen the renaissance of business aircraft coming from the U.S.,” said Brandon O’Reilly, chief executive of TAG Farnborough Airport in the UK, who noted the beginnings of an uptick in inbound transatlantic traffic in 2011.

But despite the flights from the U.S., private jet traffic in Europe over the past year has remained largely flat. The most recent Departures, Arrivals, Internals and Overflights Report from the European Business Aviation Association and Eurocontrol shows that business aviation traffic in Europe is down approximately 1.8 percent over the past year. “I think everybody is tied to the general market conditions,” said Jonathan Howells, senior vice president international with Universal Weather & Aviation. “When the markets are up, people are flying more.”

At major European business aviation airports such as Paris Le Bourget and Farnborough, FBOs have reported a growing percentage of large-cabin aircraft on their ramps. “Europe is important because other than the U.S., it’s the one place where you still get higher-frequency, smaller-cabin [traffic], whereas from the Middle East or Asia it’s the big iron, which isn’t as good from a frequency standpoint,” said Richard Aboulafia, vice president for analysis with U.S.-based research firm Teal Group. “Of course it speaks to a local indigenous market that’s just not showing signs of a full recovery or anything like it.” With medium and light jets constituting a large slice of Europe’s business jet fleet, continued underutilization of such aircraft is clearly affecting businesses. “So much of an FBO’s activity depends on the small and midsize cabins getting out and flying,” Aboulafia told AIN. “That’s where we haven’t seen a recovery in the numbers.”

BBA Aviation subsidiary Signature Flight Support operates bases worldwide, including its facilities at Le Bourget and London Luton. “In EMEA [Europe, the Middle East and Africa] we are still behind the improvement curve that we have seen in North America, and I think it’s fair to say the amount of business and general aviation activity there is still down,” noted Maria Sastre, Signature’s president and COO, adding that the company hopes to see signs of a recovery there in Fiscal Year 15. The UK GDP grew strongly last year, and the prediction for that country and most of the larger EU nations is for continued growth this year, but there are still some headwinds pushing against the region’s economic rebound. “There are peripheral countries around Europe still in recession, such as Greece, Italy and Spain, and I think that is reflected overall in business aviation’s performance throughout Europe,” said TAG’s O’Reilly.

Landmark Aviation, a predominantly North American operation, made a splash in the UK business aviation market last month with the announcement that it had acquired RSS Jet Centre, which operated the former Ocean Sky FBOs at London Luton Airport, Manchester Airport and Glasgow Prestwick International Airport. “We are excited to expand our operations into the United Kingdom,” said Dan Bucaro, Landmark’s president and CEO. “This acquisition increases our presence in Europe, and is representative of our commitment to the strategic growth of our network.”

The Houston-based company, which now operates 57 FBOs (including eight under license), has had a presence in France since 2006 and now has bases at 10 airports there, including Paris Le Bourget, where a new $4.1 million terminal is set to open. “We still look at Europe as a good market,” Bucaro told AIN. “While it’s a lot smaller than the U.S., it can have significant growth if the economies get moving and the EU starts moving in a positive direction.”

Beyond Europe

Farther afield, the picture becomes more fractured. While the worldwide average breakdown of the business aviation fleet is 26 percent heavy, 34 percent medium and 40 percent light jets, for both the Middle East and China those statistics are turned upside-down, according to industry analyst Brian Foley. For the Middle East, the breakdown is 68 percent heavy, 22 percent medium and 9 percent light, while the numbers for China are 63 percent, 25 percent and 12 percent, respectively, reflecting the mainly long-range missions originating from these regions. “There are important reasons for this–including culture, politics, geography, trade and infrastructure–whose effects will be long lasting,” Foley noted.

“We have the Middle East, where we see moderate growth, and then of course Asia,” said Monica Beusch, Jet Aviation’s head of FBO services in EMEA and Asia. “I would say growth in Asia is not as high as in the past, but it’s still the region outside the U.S. showing the most growth.”

While most cosmopolitan areas in the Middle East are now well served by FBOs, the private aviation industry in general is still waiting for Asia, particularly mainland China, to hit its stride. “It’s a chicken-and-egg thing, especially in Asia,” noted Aboulafia. “You need FBOs and infrastructure to drive growth and you need growth to drive the development of FBOs and infrastructure.” Complicating matters in the region is the high level of regulation from the Chinese government, which serves to slow business aviation growth. “That affects a lot of the nearby markets that would love to use business aviation to access Chinese markets and factories,” Aboulafia said.

Another region that has high potential is Africa, according to ExecuJet, which operates three FBOs there. “Apart from its natural resources such as oil and gas and minerals such as diamonds and gold, the economies of the continent as a whole are certainly fueling growth in the business aviation market,” Abbott told AIN. While the continent has long been a retirement home for older business aircraft, he has noted a recent influx of late-model Globals, Gulfstreams and even bizliners such as the Boeing Business Jet. At the company’s FBO in Lagos, Nigeria, which opened in late 2012, the 54,000-sq-ft hangar is already at capacity. “The level of operational activity in African-owned domestic traffic has increased significantly, and obviously worldwide interest in Africa is on the increase as well,” Abbott added.

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2014 FBO Survey-International (630K)

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