Private business jets are the best alternative for executives and HNWI who usually fly first or business class. At a moment when the commercial airlines are cutting routes, while increasing prices but reducing the quality of the service provided private jets / jet charters could prove to be the best alternative for this market segment.
Private jets offer a series of advantages, such as a hassle-free travel at a moment, unfortunately, when there is a growing number of irritations with commercial flights, not last the tighter security controls and restrictions on liquids and the likes.
In fact, the major US and EU airlines are cutting routes and number of flight providing their passengers fewer travel opportunities. At the same time the offer of private charter routes is increasing, and new type of airplanes have the capability to fly longer routes, opening new markets such as those of intercontinental private jet travel.
Private jets can provide better in-flight services as well as an improved experience before flight. Business jets can operate to and from smaller airports helping passengers escape crowded (overcrowded we should say) airports, offering faster security checks, shorter lines for boarding and disembark, shorter waiting time for baggage, lighter restrictions on liquids and baggage.
Photo Courtesy of FlightAware.com
General Aviation: a Brief Market Outlook
General aviation is showing signs of growth thanks to the intrinsic (aforementioned) advantages offered by private business jets and the end of the financial crisis. In 2011 the industry has not yet gone back to the levels of 2007 – 2008, but the number of business jet operations (at least in the US according to the FAA) is increasing steadily, and a full “recovery” is expected for 2012.
Indeed, market studies estimate that more than 10,000 business jets will be delivered in the next 10 years (that is, 1,000 business jets per year) with a total market value of $210 billions with 25% of this figure ($50 – 55 bn) for large cabin aircraft / mid-sized and super mid-sized business jets. This is certainly a good news for the 6 major OEMs: Gulfstream, Bombardier and Dassault Aviation, Cessna Aircraft, Embraer and Hawker Beechcraft; in fact, all of them have recently announced new aircraft being developed (or updated/upgraded) and coming to the market in the coming years. For example:
- Dassault Falcon launched the Falcon 2000S
- Gulfstream is firmly pursuing the G650 certification notwithstanding the Apr. 2 accident, and
- Bombardier announced in October 2010 the new Global 7000 and 8000 for 2016 and 2017, respectively
Who is Driving Demand?
Let us put things into perspective:
- there are approximately between 11,000 and 12,000 business jets in the United States (although we should also ask (i) how many of those are really flying and are not too old or have reached their end of life and (ii) what type and category of aircraft we are considering, small or medium/long range, etc);
- there are around 1,000 in Brazil; and
- there are about 600/700 private jets in the Asia-Pacific region (with just aprox. 120 in mainland China and 40 only in Hong Kong/Macao)
If we cross reference the figures above with the economic growth and wealth creation in some world countries/regions we could see that:
- in Asia Pacific, China could be an important fast growing key market, as well as India (another big market where wealth there is increasing very quickly), and perhaps Indonesia;
- in South America, Brazil, Argentina, and Uruguay are leading the pack;
- in Europe, Russia and Turkey are key markets
In any case, market developments and business opportunities will most likely be linked not just to economic GDP and wealth-creation figures but also to infrastructure and airspace developments (i.e. airports), tax issues and availability of the necessary facilities for maintenance and management of the aircraft.
Useful Resources & Market Data
Recent Interesting Articles