Saudi Arabia is the biggest market for business aviation activity in the Gulf Cooperation Council, accounting for some 148 units, or 45 percent of the 330 aircraft based in the region, including 17 ACJs, 33 BBJs, and 31 Gulfstreams, according to data provided to AIN by JetNet Evolution. This is despite the fact that a November 2017 anti-corruption drive, which was also seen as a bid by Crown Prince Mohammed bin Salman to consolidate power, chilled business jet activity there over the past 12 months.
“We have to admit, we faced a challenge, especially at the end of last year, when Saudi Arabia [had] problems," said MEBAA chairman Ali Alnaqbi. "We have to admit: Saudi Arabia leads the [regional] market in business aviation. There were a lot of aircraft on the ground [there]. They were not allowed to fly due to political circumstances. That has been solved. The movement has picked up in the second and third quarters of this year. Definitely, we can see that happening this quarter as well."
The General Authority for Civil Aviation (GACA) continues to improve oversight of jets by mandating that they be registered on a GACA Air Operator Certificate (AOC) under Part 121 Special Unscheduled (SU) (previously known as GACA Part 135) for commercial (charter) operations, or on a GACA Operator Certificate (OC) for non-commercial (private) operations in the Kingdom.
The recent GACA in-kingdom registration initiative is likely to be a success, said Yosef Hafiz, NasJet v-p of sales and marketing, commercial. “GACA set a deadline [for all aircraft in the kingdom to add their aircraft onto a GACA AOC or OC]. They announced these rules in the first quarter of 2016 and gave everyone two years to digest them and comply. It is very simple: they want everybody that has an aircraft based in Saudi Arabia to be under an AOC for charter-on-demand [GACA Regulation Part 121SU], or an operator certificate for non-commercial private individuals [GACAR Part 125],” he said.
AIN understands that GACAR Part 125 is equivalent to U.S. Federal Aviation Regulation (FAR) Part 91 and 125. “The OC is for non-commercial private individuals and is used by the owner to manage—or have someone manage for them—an aircraft when that person does not have certification with GACA, internal or external, outside the individual or company.”
The initial deadline was March 31, but GACA extended that by nine months to December 31, to give people more time to digest the new regulations, Hafiz said.
He explained the problem from GACA’s point of view. “They want to streamline the situation. They want to monitor aircraft. All these aircraft were sitting year-round in Saudi Arabia, but based outside. GACA had no oversight over [them]. It has signed bilateral agreements with many of [the international] registries in order to better control the situation through oversight of the aircraft in Saudi Arabia,” he said.
“[Owners will have to operate] under a Saudi AOC. We have seen Saudi traffic come back through Dubai. Some of the operators or owners that were not flying for many months are now starting to fly. For whatever reason, I would think it is because the heat from the anti-corruption cleanout has slowed down, so it’s safe to fly again. 'We want them to fly again',” Mike Berry, executive vice president, aviation services, Luxaviation Group, told AIN.
“We’ll measure [Saudi bizjet activity] when we are getting a similar number of movements from operators. Yes, some of the guys have been keeping their heads down. I think, similar to what happened in the U.S. [a decade ago] when the [automobile] guys arrived to meet the government in their private jets and got blasted for it, so I think it’s the same soft impact here. They stay low, let things cool down, and then they start flying.”
Lack of Hangarage
Apparently referring to the lack of hangarage and other facilities, Alnaqbi said that due to "serious issues," several aircraft had moved from bases in Saudi Arabia to Dubai.
“[It is an interesting question] whether the authorities could open up the option to lease land to potential investors on a long-term lease. How would investment in hangars be done? How would building work? Would the authorities share revenues, or what would be the lease-rental fee? Hangarage is a big taboo thing here. Everybody wants it, but there is nowhere to put an aircraft into a hangar,” said Hafiz.
“There are very few hangars available in Saudi," said Berry. "I don’t know if it’s [a question of sufficient] investment. I have no idea why. There should be more hangars for the number of aircraft in the country. It is very surprising. I think people are trying to look to the future on hangarage. Saudi has still generally got a very old, aging fleet. I think when a lot of those aircraft get upgraded there will be a bigger demand for hangarage that could drive decision-making."
“There is a huge gap in the market in Jeddah for more FBO support, hangarage, and local aircraft management options,” Oliver Tebbit, a partner at Watson, Farley, and Williams, Dubai, told AIN.
“At the moment, we have stability," said Ahmad Abu Ghazaleh, general manager at Arab Wings in Jordan. "Growth is very much checked. What happened in Saudi Arabia and in general, has resulted in lower movements than usual than in the region. There is probably an uptick in used aircraft sales. More used aircraft are being considered for purchase at the moment, while the new aircraft market is very slow. I am talking about the entire Middle East region, not just the Levant. While new aircraft are exciting for the region, now fewer people are trying to buy that size as opposed to buying used aircraft.”
“We are watching developments in Saudi Arabia, and are confident that flight activity will pick up in the coming months,” said Holger Ostheimer, managing director of DC Aviation Al-Futtaim. He said the company is seeking Saudi operators looking to base aircraft in Dubai for MRO.
“It continues to be part of our due diligence, making sure that we keep in contact with regional stakeholders," he said. "Operators in Saudi are definitely one of them. Fleet sizes in other GCC countries are not as big as in Saudi Arabia and the UAE. Oman, Kuwait, and Bahrain are definitely other targets we are reaching out to in order to expand our maintenance activity and other service areas including aircraft management, chartering as well as ground-handling services."
“We are very committed to Saudi Arabia," said Stephen Chance, counsel at Clifford Chance in Abu Dhabi. "The aviation market is exciting, and the market is changing. We continue to be excited by the 2030 Vision and what that could mean for the aviation sector. We have seen an increasing number of queries about financing aircraft in the kingdom. It is a moving and growing market.”