NBAA Convention News

Jet Aviation poised to ride out economic storm

 - October 1, 2008, 7:12 AM

Economic conditions in major Western countries are not looking good. To
what extent is this impacting business aviation activity in markets such as the U.S. and Europe?

The short answer is that there is reason for caution in some areas. In the U.S., economic conditions are being seen to have an impact from the standpoint of charter, which has been affected, and fuel volumes are down a bit. This is not unexpected. Completions is unaffected because it is driven by less immediate dynamics, and so this work and maintenance will continue to be strong.

Business aircraft operators are facing rising costs. What can service companies like Jet Aviation do to ensure that business aviation remains viable?
The viability of business aviation is not in question. We should step back and remind ourselves that global economic trends will continue to support the growth of business aviation overall. The geography of this growth has shifted but the viability is not in question. If anything, globalization makes it more viable. In the U.S. there are key indicators that now are rising, such as improving productivity figures. If we look at how we fit into the overall marketplace, our role is to ensure that business aircraft operators can operate within a support network that is as efficient globally as it is in U.S. and Europe. We feel we can be continuing facilitators of international growth.

Demand seems to be growing fast in emerging markets like the Middle East, Asia and Russia. What progress you are making with Jet Aviation’s new operations in Beijing and Moscow?
There are complexities in every new location. Some we expect, but there are always surprises. Our efforts [to respond to rising global demand for business aviation services] are on track in the new geography of the industry. In Moscow at Vnukovo Airport we are now authorized by Gulfstream and Bombardier for maintenance and will expand this to other OEMs. We are also looking at new strategic partnerships in the Moscow area and beyond.

In particular, do you think the influx of business jets at the recent Beijing Olympics will result in a more constructive attitude to business aviation on the part of Chinese officials?
It was a very exciting Olympic period. We handled a lot of aircraft, about 400, and had to do a lot to be ready after we got approval for handling on July 16
and then signed a cooperation agreement with Capital Airport Holdings. We have opened the new FBO and we are now looking at a second phase, which is the development and construction of a maintenance facility with Deer Air.

China’s growth will outpace the growth worldwide and it will become a cornerstone for business aviation in the Asia market. The Olympics did have a positive impact on the Chinese authorities. We had an excellent relationship with them under challenging circumstances. The partners came away feeling it was a success. The authorities were able to put a good foot forward and wanted to prove that Beijing is operator friendly. It was a win-win but mainly for operators themselves. We were able to facilitate technical responses to aircraft issues.

In the Middle East, why have you launched a strategic partnership with Elite Jets in the United Arab Emirates and how will this work?
Jet Aviation has a significant presence in the Middle East. Many clients have approached us to provide a solution for aircraft management there. Concurrently we have been focusing on how we provide further resources in Dubai, where we already have an FBO and a flight dispatch center. It made sense to seek a local Dubai solution for management and charter. Elite Jets allowed us to immediately offer a Jet Aviation managed solution. We work with them on sales, marketing, management best practice and quality assurance, with them as the certificate holder. It allows us to get to market more quickly without having to develop an [operating certificate] there ourselves.

What plans does Jet Aviation have to develop its business in the U.S.?
Our main outlook is western U.S. growth, which has been an under-addressed part of our footprint. We will focus on this opportunity through initiatives such as our new facility in Ogden, Utah.

You have recently extended your completions center in Basel, Switzerland.
To what extent have you been able to increase Jet Aviation’s overall capacity for completing aircraft?

First, the capacity has expanded significantly along with the workforce at the Basel site. It will continue to expand as we fulfill the potential at that site. As for reducing the cycle time on aircraft, a lot of that depends on the aircraft type. Narrowbody aircraft, including BBJs, are now moving through the process quickly and we are benefiting from our growing experience in this area. What has evolved more dramatically is the large scale demand for widebodied aircraft [such as VIP versions of types such as the Airbus A340]. This plays to the core engineering and project management strength of Jet Aviation and it extends the product cycle.

What prospects for growth do you see in Latin America?
Latin America is clearly emerging. We look at Brazil in particular. Our observation is that this economy will be driven largely by the 50 billion barrels in oil reserves discovered offshore. It will lead to dynamic growth in the energy sector and have a knock-on effect on business aviation activity in aircraft sales and support services. We are having a careful look at this now and expect to expand there in the future. It is complex and it is the local side of it that will take the work.