Gray Market for Charter More Persistent in Middle East than in Other Regions

 - May 2, 2014, 2:45 AM

The Middle East’s gray market for charter is more active than in other parts of the world, despite efforts to crack down on it, and can represent up to 20 to 40 percent of bizjet flights, depending on the time of year, aviation officials said at MEBAC in Riyadh last month.

Ali Al Naqbi, founding chairman of the Middle East Business Aviation Association, told MEBAC in Riyadh, “There is no specific percentage [on the size of the gray market]. We all know it is active in the region. Other parts of the world recognize our region is active.” Ghassan Hamdan, CEO of NasJet, Saudi Arabia’s biggest charter and private aviation operator, estimated the gray market constitutes between 20 and 40 percent of all charters, depending on the season.

“We are trying to put a mechanism in place to reduce the percentage. I know we are not in a position to kill it totally, but we aim to reduce the percentage to a minimum,” said Al Naqbi.

The General Authority of Civil Aviation (GACA) has been working for the last several years to address the issue of illegal charter, but international cooperation is needed to reduce the number of such flights. “Over the past few years the GACA has performed a commendable job trying to tackle the problem. Many civil aviation authorities around the world are also encountering this issue, but the percentage of gray-market movements is significantly higher in the Middle East generally, including Saudi Arabia, which is why it needs more attention,” said Sulaiman Al Hamdan, Group CEO of NAS Holding. He noted that the illegal flights put insurance coverage in jeopardy, create unfair competition and hinder the growth of legitimate operators.

“We…need to work as partners to educate the end users about the dangers of the gray market; perhaps a marketing campaign by MEBAA addressing the issue will have meaningful impact over the long term. We greatly welcome GACA’s forthcoming operating rule changes, which will not only simplify the regulations but will also provide further confidence to legitimate operators to continue investing.”

Mohammad Jamjoum, GACA vice president for safety and economic regulation, said a set of standards similar to bilateral and service agreements between countries for commercial and non-commercial traffic is required. “The lack of procedures is obvious. The U.S. presented a paper at ICAO last March and encouraged ICAO to put forward standards. Regional agreement might be useful, but we need a more global agreement.”

Kurt Edwards, director general of the International Business Aviation Council in Montreal, told participants that governments everywhere are struggling to understand and deal with the charter gray market.

“There is a lack of familiarity among government policymakers about the needs of business aviation. I am here to help with that in this region, especially on safety practices and international standards for business aviation operations. Illegal flights are a difficult concept for everyone to get their arms around. There are different definitions. It is difficult to establish the number of illegal flights out there.”