EBACE Convention News

EBACE’10 could mark turning point

 - May 4, 2010, 11:08 AM

Austrian politician Jörg Leichtfried cut the ceremonial ribbon for the official opening of EBACE yesterday, and industry leaders speculated, with good reason, that the event could mark the start of a gradual economic recovery after two years of severe difficulties.

Leichtfried, who sits on the European Parliament’s influential Committee for Transport and Tourism, said he is impressed with what he’s seen. “I congratulate the organizers of this really impressive event. Why am I here? I want to tell you that it is essential that you engage with the European Parliament. Although the Commissions suggest laws, the Parliament and Council [of the EU] decide them. Ninety-five percent of suggestions from the EC are changed or dismissed.” He also said that “the Parliament and in particular the transport committee doesn’t look just at big airlines. We have to look at everybody, so if you have some expertise to bring, we are very interested to discuss key issues [such as] SESAR [Single European Sky ATM Research].”

Brian Humphries, EBAA president and CEO, also addressed the audience at the opening. “Welcome to a very special EBACE, which has as its theme celebrating the global reach of business aviation,” he said. “As well as reflecting on the achievements of the last ten years, we must focus on the challenges and opportunities of the future. For example, the European emissions trading scheme [EU ETS] will impose a whole host of requirements and unwieldy bureaucracy. We want to play our part, but ETS is constructed without an appreciation of how business aviation works.” He also referred to airport and ATC access/slot issues and EASA rulemaking, flight time limitations and security, which would all be discussed in the EBACE conference sessions during the coming three days.

“The fact is that business aviation is essential,” said NBAA president Ed Bolen. “It is essential to jobs, the community, productivity and efficiency, and to our humanitarian efforts.” These are the four key messages of the “No plane, No gain” mantra that NBAA and others have rolled out in the U.S as their protective cry in the face of what was an aggressive and indiscriminate backlash against business aviation.

Green Shoots
As if to underline this message, the other opening session speaker was Richard Aboulafia, v-p of analysis at the Teal Group. He said that the number of used aircraft that had been in the market was a false reflection of reality as companies had come under pressure to put aircraft up for sale. “The problem is not as bad as it seems. Many felt shareholder or political pressure and put aircraft up for sale, knowing that they would need them. It was completely insane that this pressure was put on [for example] Ford. Those aircraft weren’t in reality on the market,” he asserted.
“We are seeing the green shoots and definite signs of recovery,” said Aboulafia. “And there is a growing recognition of the importance of business aircraft.”

He then gave an overview of what had happened to the business aviation sector. After growing by 17.2 percent between 2003 and 2008, the sector hit 2009, which was a “painful year [with] an unprecedented bifurcation between aircraft costing $25 million or more, which did just fine [falling only 4 percent], and the bottom half, which fell 43 percent. That was extraordinary, and reflected the softness in the wider economy.”

Used jet availability increased to a peak of 16.3 percent of the worldwide business aircraft fleet being available for sale, a figure that has now receded to 14.7 percent (with the caveat as discussed earlier with respect to aircraft that are not in reality for sale). “But we are still seeing softness,” Aboulafia continued. “We are not seeing the improvement the industry would like to see as there is still a big backlog, or overhang,” which he predicted would take at least another “year to year and a half” to clear.

Aboulafia concluded by saying that economists were using various letters–W, V or L-shaped, for example–to represent the shape of the recovery, but he thought a division sign was more appropriate, with the industry now moving sideways “with a lot of uncertainty.” Yet he added, in conclusion, that the market fundamentals and the trend toward globalization indicated that after a “difficult” 2011, the industry “could see 15-, 16- or even 17-percent growth post-2012.”