NBAA Convention News

Gama sees positive signs for charter

 - October 13, 2010, 7:34 AM

It is just more than two years since Gama Aviation (Booth No. 927) acquired PrivatAir and a foothold in the U.S. aircraft management and charter market. The timing of the deal may not have been entirely auspicious–closing before the full impact of the U.S. subprime mortgage crisis was understood–but the UK-based group has no regrets about seizing the opportunity to move into the mother of all business aviation marketplaces.

“The U.S. is a very mature market and we have focused on delivering the core values that we stand for and have had a very good response from the American client base,” Gama CEO Marwan Khalek told AIN.

Gama is now well on the way to being a global business aviation group, with operations in the U.S., Europe and the Middle East.

So how does it view market conditions as the industry approaches the start of what could be the fourth year of an historic slump?

“It’s slightly better than it was twelve months ago,” said Khalek. “At that time we were wondering whether the market was bottoming out…Now we see a gradual trend in the right direction, but it will be a shallow climb, and there won’t even be a steady time for some time to come–there is simply no consistency in the market.”
According to Khalek, de­mand has risen slightly in recent months and this has improved flight activity volumes and charter rates to some degree. “But over the past twelve months rates have been crazy,” he said. “People were buying cash flow and that’s just not sustainable. It’s not right for the [aircraft] owners, and management companies should be more responsible.”

Business Uptick Expected
Gama’s response to the challenges thrown its way in the wake of the financial crisis has been to decelerate its growth plans to the extent that expectations and targets originally set for next year have been pushed back to 2012 or 2013. The company opted not to cut back on the size of its operation during 2009’s difficult trading conditions, and it still operates more than 72 aircraft. “We have been through a very testing situation that has made us take a hard look at the business and fine-tune things,” said Khalek.

Gama broke into the promising Middle East market early this year, securing a commercial air operator’s certificate in the United Arab Emirates in February. It has four aircraft based in the region and expects to add one or two more by year-end.

“When things started to go south [in the charter market], there was a lot of nervousness and uncertainty as operators went into a defensive survival mode,” said Khalek. “There are enough signals now to suggest that [current market conditions are] business as normal and that 2006 to 2008 was a boom period and it is not realistic to expect that we will come back to that.”

What will it take to turn things around more conclusively? “We would have liked to have seen better performance in terms of the general health of the corporate world,” concluded Khalek. “The traditional corporate groups are now in reasonable health, but there is not enough [business activity] going on. As soon as this picks up we will see better-than-expected demand because there isn’t a lack of appetite for [business aviation].”