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Private jets take flight

The Middle East Business Aviation Association (MEBAA) and show organisers F&E Aerospace have again proved the resilience of the Middle East's business aviation industry with their corporate jet extravaganza in Dubai. 

The fourth biannual show attracted 6,200 visitors from 77 countries, a 13 per cent increase on the 2008 event. Some 338 exhibitors from 33 countries attended, including original equipment manufacturers (OEMs) and other service providers, as well as representatives of 15 fixed base operations (FBOs), the industry term for airport terminals dedicated to business aviation. An agreement was also signed for the construction of an FBO facility at Dubai World Central in Jebel Ali.

Ali Al Naqbi, the founding chairman of the Middle East Business Aviation Association, said the show was growing in popularity. "Everybody came to do business," he said. Some 53 aircraft were on show at the static display "around 50 per cent of these were wide-body aircraft," he added. "There were a lot of orders and a lot of discussions, agreements and memorandums of understanding were signed. We are in the Middle East and the nature of business [here] is that a good deal of privacy and confidentiality takes place. From a market point of view, several operators don't want to show others that they have money [to spend]."

However, two European operators were less reticent. Among major orders announced at the show, Bombardier said that Switzerland-based Comlux The Aviation Group, already a major customer with 12 of its aircraft, had signed up for two Global Business 7000 business jets worth $130 million, while Germany's Air Flug had placed firm orders for five mid-size Learjet 85s and two Challenger 605 jets, worth a total of $155 million.[1]

These are exciting times for the Middle East bizjet industry. The regional fleet increased from 140 business aircraft in 2004 to 335 by the end of last year, representing fleet growth of 19 per cent, according to industry data. "The Middle East is expected to be a significant contributor to the expansion of business aviation in the emerging markets. Between 2010 and 2019, the Middle East will receive 450 business jet deliveries. The 2009 fleet of 335 business jets will grow to 730 aircraft by 2019 representing CAGR of approximately eight per cent," said Bombardier's Industry Forecast.

In addition to Canada's Bombardier, the business aviation sector's main manufacturers are France's Dassault, the US' Cessna, Gulfstream and Hawker Beechcraft, Brazil's Embraer, and Boeing (US) and Airbus (France). Although not a like-for-like comparison due to the variation in aircraft model types and size, Cessna appears to be currently delivering the largest number of units. Boeing and Airbus also devote niche units to cater to the VIP market. At the end of 2009, JetNet estimates put global fleet size at 17,200 aircraft, including 3,773 heavy, 4,426 medium and 9,000 small jets. A total of 706, 750 and 939 jets are expected to be delivered each year between 2010 and 2012. Industry forecasts put the total number of business jets coming to market between 2010-19 at 10,500. Not surprisingly, there is a close correlation between the geographical distribution of billionaires by region, and the expected number of business jet deliveries over the next decade. While the Middle East accounts for six per cent of the world's richest people, it is expected to make up only 4.3 per cent of aircraft dispatched to customers.

While less exhibitor space was taken up this year, there is quiet optimism that the Middle East business aviation market will move ahead. After all, typical business jet customers are seldom low net worth individuals. Differing views prevail about the cyclicality of the industry. Some argue that high-end corporate travel is the first to be sacrificed as companies seek to cut costs. On the other hand, because accountability is less of a factor among regional elites, the likelihood is that private and business aviation will remain buoyant.

"Saudi owners are taking advantage of the recession to renew old fleets," says Mohammed Al Zeer, Chairman of Saudi Arabia's MAZ Consultants. "Private jet prices are down around 20 per cent. The market, in my opinion, is back to normal. Everybody wants to win clients. This is just like the good old days."

 "The impact  [of the recession] has been much more severe on small manufacturers than on our end of the product line," says Capt Stephen Taylor, President of Boeing Business Jets, who says his unit accounts for around two per cent of Boeing's overall order book and that aerospace has had a much better recession than many other industries. "We have not seen the same impact in terms of cyclicality." He sees the Saudi market as a key player as well as the Gulf community in general. "These are important clientele."

Todd Taylor, Dispatcher, Flight Operations at Gulfstream, is optimistic that the next 12 months are going to see an improvement on the past two years. "We have seen a shift in sales from 60 per cent US, 40 per cent international to 35 per cent US, 65 per cent international." The Savannah, Georgia-based company sells a range of aircraft seating six to 18 persons costing from $15-$65 million. The smallest is the G150 and the largest is the G650. Middle East and Chinese business is still strong, while Russian orders have fallen off of late, he says. He concedes that dollar weakness could be a factor behind the shift to international sales.

As optimism throughout the industry grows, Dubai aviation events are sure to remain at the forefront of OEM and service provider marketing strategies. Their next opportunity will come at the Dubai Air Show at Dubai Expo in 2011, while the next MEBA event will be in December 2012.



 By Peter Shaw Smith


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