Leading business aircraft manufacturers are starting to take some encouragement from improving market conditions and more than ever are counting on emerging markets like the Middle East to give them the momentum the beleaguered industry needs to achieve a full-blown recovery.
However, according to the latest Bombardier market forecast figures, the Middle East shows less growth potential than most of the much-vaunted economies of the so-called BRIC countries-Brazil, Russia, India and China.
In its latest projections, the Middle Eastern fleet will increase from 335 aircraft in 2009 to 730 by the end of 2019--representing a compound annual growth rate of 8 percent, which is lower than what the Canadian airframer sees for China (20 percent), India (13 percent) and Russia/CIS (11 percent). This level of growth is about the same as Europe's, and more than that in the whole of Latin America and North America.
The market penetration rate for Middle Eastern countries--as defined by the collective value of business aircraft delivered here as a percentage of combined gross domestic product (GDP)-has remained relatively low, according to the Bombardier figures. It stands at just 0.22 percent in 2010, which is up only slightly on the 0.17 percent recorded in 2000.
Addressing Quaynote's Future of Business Aviation Conference in London last month, Barry MacKinnon, Bombardier Business Aircraft's director of market development, the Middle East is a more mature market than the BRIC states. However, access to it for Bombardier and its rivals is far less impeded by issues such as regulatory restrictions on operating aircraft and inadequate infrastructure.
Hawker Beechcraft also sees salvation in business aviation's new marketplaces. "The drivers of demand are slowly and painfully returning," said Sean McGeough, the U.S. manufacturer's president for Europe, Middle East and Africa, referring to improvements in GDP, the number of high-net-worth individuals (HNWIs) and their total wealth, and foreign investment. "These factors are all stronger in the emerging markets," he concluded, while maintaining that overall order backlogs for new aircraft are stabilizing (with fewer cancellations and deferrals) as the preowned inventory starts to decrease.