EBACE Convention News

DCAF Mulls Entry into Saudi Market

 - May 16, 2019, 3:00 AM
An aircraft at DCAF's Dubai South Facility (DCAF).

Dubai-based management and MRO specialist DC Aviation Al-Futtaim (DCAF) is exploring the possibilities for entering the Saudi market, managing director, Holger Ostheimer, told AIN on the eve of EBACE.

“There have been discussions over time at the group level about an engagement of DCAF in Saudi Arabia over the last couple of years; I am sure this will come to fruition at the right time,” he said. “Our commercial team has been to Saudi during the Saudi Airshow and came back with very positive feedback. That's also confirmed with the amount of maintenance activity from Saudi clients, particularly in the ACJ bracket, which provides work for our cooperation with Lufthansa Technik.”

He sees the situation “gathering momentum,” and looks to “hopefully [firm] up our presence there” in the near future. “For Saudi Arabia, we are looking into all areas of service that are provided in Dubai: aircraft and technical services, maintenance, management, and hangarage,” he said.

“We are considering increasing our presence, not just in the public domain, which would lead people to use our facilities in Dubai, but also looking into having a physical presence in Saudi Arabia to provide services on the ground from within.”

A new ruling by the General Authority for Civil Aviation at the beginning of the year, broadly mandating in-kingdom aircraft registration, has implications for DCAF’s plans. “If we were present in Saudi, I'm confident that we would be able to provide management services from within the country,” he said. “That has to be the objective: being able to [manage aircraft] both from Dubai as well as in Saudi Arabia.

“At [a recent] management meeting…with our commercial and quality teams, we were discussing the regulations in Saudi, and the AOC requirements. From an operator's perspective, this still isn't clear. We are carefully monitoring the progress on the subject so that we can plan together with the authorities a presence in Saudi Arabia.” Regarding a possible location for the new office in Saudi Arabia, Ostheimer said, “Details will be revealed once we have a full picture.”

Ostheimer added that geopolitical factors were weighing on activity in DCAF’s Dubai business. “We are in a steady state at the moment,” he said. “What's been happening on a global scale over the last two years, geopolitically, and in terms of the politics of trade, has really changed the ballgame. We've lost a lot of the dynamics globally, [but] not here in the region. I believe that this region will continue to be more attractive and a little bit more successful than other areas.”

The number of high-net-worth and ultra-high-net-worth individuals, particularly in Dubai and Saudi Arabia, gives Ostheimer cause for optimism. “There may be financial strains, but…there is enough financial capability left for the parties to consider upgrading or purchasing aircraft,” he said. “And that leaves us with opportunities for aircraft management or service proposals to try to win entities and organizations or people over, that are purchasing or upgrading [this year] and have them join our clientele.

“If we consider the last 18 months in Saudi Arabia, since October, November 2017, a significant number of aircraft have been [sitting out of service] on the ground. There are now only two options [for them]: significant maintenance to either restart operations; or to make [the aircraft] a saleable asset. If it becomes a sellable asset, that results in the [owner purchasing] a more attractive preowned aircraft; or even a new-aircraft purchase.”

DCAF has six aircraft under management. “We always target winning one or two new managed aircraft per year. This year, the objective remains the same: bringing one or two additional managed aircraft into the fleet, while at the same time increasing our maintenance footprint, more certified aircraft, more activities both within the area of the strategic partnership with Lufthansa Technik, targeting the A320 and BBJ, as well as outside that strategic operation, on all other procedure types.”

'Expo Effect'

Analysts looking to see an improvement in Dubai’s bizav performance in recent months and years have been keenly watching "the Expo effect," he said. “Expo 2020 is still about a year and a half away,” he said. “It kicks off in October 2020. I cannot see an exorbitant increase, but I'm pretty confident that business is going to benefit from the Expo through more activity.”

He was less willing to comment on the number of business aircraft expected for the event.I don't think you can predict that, whether it's going to be 100, 400 or 500. We'll see, as it happens.”

Bizav activity in the Middle East and Africa outside the Gulf Cooperation Council remains slow. “Once in a while, we have stakeholders reaching out for potential opportunities in those markets,” he said. “Those discussions tend not to go very far. A lot really hinges on regional political developments. So the situation in Lebanon never really goes away.

“Africa—Central Africa, Southern Africa—remains a potential contender for developing its structures, its infrastructure and, as a result of demand for bespoke lift, corporate and private jets. It hasn't taken off yet, given the number of people living in this part of the world and the accumulated wealth. President Paul Kagame has led very promising development in Rwanda. Look at Kenya and Nigeria, both countries with a good level of wealth, particularly Nigeria.

“It will continue to take time for structures to mature and become standardized if we can speak of international standards. But a country like Rwanda demonstrates that you can develop a prospering business culture. We can develop an environment to foster business, and when markets develop, corporate aviation isn't very far away.”