As the U.S. and European economies sputter along, aircraft manufacturers have had to rely on other geographic markets to realize any growth. The BRIC countries (Brazil, Russia, India, and China) have received a lot of attention in the last few years, but now it seems that manufacturers’ attention has turned to Africa.
- Cessna toured Africa in January 2013, showing its Cessna Citation Jet 3 and Cessna Sovereign.
- Dassault Aviation took a business tour of Africa in November 2012.
This interest in African markets makes sense—the private jet market is growing in Africa! Oil-rich Nigeria is second only to China in rate of growth in the sector. Nigeria has spent $6.5 billion on private jets since 2007. In five years, the number of jets in that country has increased from 20 to 150.
However, a new roadblock has cropped up. Rumors are going around that the Nigerian government has halted importations of private jets as of Jan. 21. This should be a temporary hold while officials reformulate the country’s policy on private aircraft. Considering the fast, significant growth in the last five years, previous policies are now outdated or irrelevant.
But there is promise for aircraft manufacturers throughout Africa, not simply in Nigeria.
To promote the African private jet industries, the African Business Aviation Association (AfBAA) was introduced at EBACE in May 2012. Its mission: “AfBAA will promote the understanding and benefits that Business Aviation provides for the continent’s economic development and prosperity through its unwavering commitment to the organization’s Guiding Principles, thus offering assistance and support to enterprises, entrepreneurs, business leaders, governments and their respective Civil Aviation Authorities.”
Africa is a huge continent, with diverse geographies, politics, cultures, and resources. As a result, intra-Africa air travel is extremely low, and this fact affects economies all over the continent. For any type of emerging market to grow here, people need to be able to go between locations within Africa without having to fly to London. Because traveling by road is often either dangerous or impossible, air travel is frequently the only way to get to a destination. The growing private jet market will likely lead to improved commercial flights intra-Africa and consequently, better business.
Industry analysts appear to be upbeat about the business aviation market, both new and used business jets. Here’s a breakdown of the factors supporting this position:
- Lower used business jet inventory and 5.7% growth in pre-owned jet transactions from November 2011 to November 2012
- Extension of U.S. 50% bonus depreciation on business aircraft. This incentive can apply to aircraft under contract by Dec. 31, 2013, but not put into service until 2014.
- Regional airports seeing large increases in general aviation flights (example: Long Island MacArthur Airport reports 33% increase in private plane flights in 2012 compared to 2011)
- Especially strong December 2012 for Bombardier (11 contracts for Learjet 75 and Global 6000)
Things are looking up for the private jet market, which is a good thing. Aviation is a significant part of the U.S. economy; it’s not simply a luxury market. The business aviation sector has far-reaching, significant effects:
- Employs 1.2 million skilled, high wage jobs
- Inserts $150 billion in U.S. economy every year
2013 promises to bring increased improvement in business aviation. It’s about time!
The holidays are a time to enjoy the present and celebrate with friends and family. But as the hustle and bustle of the year’s end subsides, the focus shifts from festivities to resolutions and predictions for the new year. And with all the ups and downs of 2012, the question arises: What will happen to the jet market in 2013?
As we look ahead to the coming year, the future isn’t clear. One factor influencing 2013 jet market predictions is the instability and unrest in North Africa and the Middle East. Another element for consideration is the uncertainty in European markets. The fuel cost rollercoaster has also added to the unpredictability.
With all the uncertainty, predictions of a brighter year ahead are all the more sweet. Industry leader Honeywell predicts slow, steady growth in the jet market. Although sales growth won’t be instant, 2013 will hold steady at flat growth or a slight increase. Over time, the sales picture will grow sunnier: Honeywell forecasts the sale and delivery of 10,000 jets worth $250 billion by 2023.
The company attributes the uptick in part to new wealth in developing nations, like those in Latin America. However, North America will still dominate the purchasing market, as it is expected to generate more than half the projected worldwide demand for the next five years.
Another possible bolster in steady growth is the diminishing inventory of used jets: Aircraft 10 years or older make up less than 20 percent of planes for sale. With fewer used jets available, the market is looking toward new aircraft offerings. Honeywell is seeing demand for new models in the light-medium class and sustained interest in jets with big cabins.
Predicting market behaviors and undertaking business planning during such uncertain economic times is not an easy task. However, it looks as though 2012 was at the bottom of the recent economic cycle. Generally, most companies are anticipating moderate growth in corporate travel demand in the coming year. With this promise of steady or a slight increase in growth, there is reason to celebrate this New Year’s Day!
At the end of October, Allegiant Airlines pulled out of the Fort Collins-Loveland Municipal Airport (FNL). The airline provided commercial service from Fort Collins, Colo., to Phoenix and Las Vegas. Travelers loved driving 15 minutes to the local airport and hopping on the always-full airplanes for a quick flight to their destination.
Of course Denver International Airport (DEN) is about an hour away, but the parking, waiting in security lines, and getting around in the airport add hours to the trip and complicates everything, from luggage to on-the-ground transportation.
This problem is not isolated in Colorado, certainly it’s happening everywhere. People want to fly to their destinations. It’s safer than long-distance driving, takes less time, and for many people, more fun! Businesses are spread out, and businesspeople fly several times a week. Flying is simply a way of life for many people.
So why is flying still so difficult? I think travelers will start demanding more local airports. The supercenter airports like LaGuardia, Dulles, and Atlanta, are outdated for the most part. It seems anymore that getting to the airport and around the terminals are the most frustrating parts of travel. These facilities don’t really seem feasible for many trips, especially in small and midsized cities. Business still thrives in these areas even if they can’t support a major airport.
We need to start rethinking the aviation system in the U.S. Smaller, regional airports are more accessible and easier to get through, even if you’re just making a connection at a larger hub. There is definitely a demand for more local flights in some circles, and we all know that aviation is a huge part of the U.S. economy.
It’s exciting to think about the possibilities of more local airports and airlines. Private aircraft would have even more options, and individuals might consider flying to destinations that they previously thought they’d have to drive to. Less road traffic and congestion and faster travel times. Sounds good to me!
It’s December, which means it’s the season of giving. If you’re looking for ways to use your jet for charity, you can first look to the Air Care Alliance, a nationwide league of humanitarian flying organizations. Its members are dedicated to public benefit through flying. For further inspiration, consider these other organizations.
The Corporate Angel Network helps cancer patients access the best treatment for their cancer type by orchestrating free travel to treatment facilities through the country using empty seats on corporate jets. This service not only offers patients a greater chance of survival, but also helps lighten the emotional, physical, and financial burden of patients and their families. This amazing organization has coordinated more than 40,000 flights since it was founded in 1981.
Animal Rescue Flights (ARF) is an inspirational organization for animal lovers. Volunteer pilots transport healthy spayed and neutered animals from overcrowded shelters where they face certain death to happy homes with families who can’t wait to adopt them. The team of pilots, volunteers, and friends plan and promote this service at no fee to either the sender or receiver of the animal.
Aerobridge is another group that employs aviation to give back. This organization was formed when a group of aviators recognized that business aircraft often aren’t needed for their normal duties, and a charity could help arrange for them to be available for disaster relief flights. The goup has grown to offer additional services, all with the goal of making emergency response more efficient, more effective, and safer.
Even if you don’t own a private aircraft, you can still help out by booking your chartered flight through Charter for Charity. You simply book your travel through the organization, and the charity of your choice will benefit. Charter for Charity coordinates the donation of a portion of the proceeds from private jet charters, hotel bookings, airline flights, rental cars, and even cruises to your cause.
For additional information and inspiration, check out the “Humanitarian Side of Private Jets.”
Lots of cool stuff is happening in the aviation world. Reports released last week include everything from storm statistics to positive forecasts for the aviation market. Both a huge long-range jet and a brand-new 5-seater made headlines this week. Some of the numbers are pretty impressive. Here’s a quick digest of the varied reports.
19,574 — This is how many flights were cancelled due to Hurricane Sandy, the immense storm system that came ashore on Monday and wreaked havoc across the northeastern U.S. (as of 11/1/12)
4.5 million — The price tag on the tiny 5-seater HondaJet, which investors are hoping will be the “Civic of the Skies.” Although behind schedule, manufacture of the fuel-efficient aircraft has begun in Greensboro, N.C.
65 — The age of the NBAA annual meeting and convention going on right now (10/29-11/1) in Orlando. Here’s the photo gallery.
3,500 — The price of a one-way ticket on a new service from BlackJet. Fly between New York and California or Florida with the new business headed by Uber co-founder Garrett Camp.
250,000,000,000 — The value in dollars of new corporate jets Honeywell predicts to be delivered by 2022.
35 — The number of Boeing 737 Max jets ordered by Rostech in a $3 billion deal.
1,193 —The fastest speed (in m.p.h.) ever reached by an aircraft. This record was set in 1976 by a Lockheed SR-71 Blackbird. The National Aeronautic Association (NAA) has verified records since 1905, and it has a booth at NBAA this week.
Now you’re ready to impress your friends with not only statistics, but also super cool aviation trivia!
The European Union is losing support for its Emission Trading Scheme, which requires aircraft companies and owners to track their carbon emissions and pay fees for emissions over a set amount. The “Airbus ministers,” representatives from U.K., Spain, France, and Germany, publicly asked the EU to either postpone or be flexible about implementing the ETS.
U.S. position
It’s becoming clear that both the administration and Congress oppose the ETS. Secretary Clinton and Secretary LaHood sent letters last December requesting European leaders to change ETS requirements or face U.S. action. Republican John Thune and Democrat Claire McCaskill are sponsoring a bill that will be brought to a vote in the Senate this week. This bill already passed its committee, and it would keep U.S. airlines from having to comply with ETS requirements.
If passed, the House of Representatives can either pass the Senate bill or combine it with the version the House passed last year. At the time, ranking members of the Committee on Transportation and Infrastructure urged representatives to support the House bill.
They offered numerous reasons to reject the EU ETS:
- Violation of international law
- Many other countries oppose the scheme
- Infringes on U.S. sovereignty by taxing U.S. aircraft for travel over U.S.
- U.N.’s International Civil Aviation Organization (ICAO) is correct forum for such regulations
We should know by the end of the week if this crucial bill for aviation will move forward or stall until mid-November. In the meantime, the NBAA offers step-by-step compliance instructions for members.
Here’s a recap of a couple of important stories happening right now in the aviation world.
Forecasters Worry Jet Deliveries to China Won’t Live Up to Expectations
China has been a bright spot on the horizon for private jet sales. Jet manufacturers expect high deliveries there in coming decades. Boeing says China will need 5,260 new airplanes by 2031. Sounds great! The stumbling block may surprise you: a severe shortage of certified pilots and technicians.
EU Reconsiders Airline Emissions Law
Many countries dislike the European Trading System requiring all airlines to purchase permits for the carbon they release en route to and from European airports. In fact, the controversy has become quite heated; China has refused to allow European jet sales in the country, which is a very promising market for Airbus. Something’s gotta give!
Shuttle Endeavour Prepares for Last Flight
Ever wonder how a space shuttle travels across the country? It’s not as simple as you may think. It requires a crane, a scaffolding structure called a Mate-Demate Device (MDD), a 15,000-foot concrete strip, and a Boeing 747 Shuttle Carrier Aircraft. The trip from Florida to California, Sept. 16-20, includes special flyovers and overnight stays at important landmarks, like Cape Canaveral and Edwards Air Force Base.
A July article in the New York Post reports that private jet owners are taking a big hit to their wallets as the resale values of their jets lose as much as 50 percent. As a basis for comparison, many industry experts previously estimated aircraft depreciation at just around 2 percent a year.
While the news is a bitter pill for those looking to sell, it’s a great time to be in the market for a private jet. This optimal buyer’s market for private aircraft persists for a few reasons. Fueled primarily by an emerging class of wealthy buyers who prefer newer planes, the market for new jets is recovering faster than the one for pre-owned models.
BRIC is buying
Additionally, demand from BRIC countries (Brazil, Russia, India, and China) is supporting an otherwise ailing pre-owned market. Aviation experts predict that, for the first time this year, demand from these countries will surpass that of the U.S.
If you’ve been putting off the move toward purchasing a used jet for fear the market will continue to decline, don’t worry. High inventory and low demand continue to indicate near-perfect conditions for acquiring a pre-owned jet. There are plenty of good bargains to be had.
The rush is on
However, a bargain basement price on a pre-owned aircraft doesn’t necessarily signal a good deal. The old rules still apply. Do your homework, and above all, reach out to an experienced broker who understands the intricacies of the pre-owned jet market. The right partner will help you navigate this turbulent market and will have established key relationships that pave the way for a smooth buying process.
There’s no way to predict where the market will go next, but signs indicate that a recovery is imminent. By the time you read this, the best deals on pre-owned aircraft could already be gone.
Just last week, Brazil hosted the 9th Annual Latin American Business Aviation Conference and Expo (LABACE) in São Paolo. The record attendance at LABACE 2012 is indicative of the rosy prospects for business aviation in the region, especially Brazil.
Brazil has demonstrated significant growth in private aviation in the past couple of years.
- Traffic at general aviation airports within 100 miles of São Paolo has doubled in the last 5 years.
- Embraer is opening a new center in Sorocaba, which is already home to the Dassault Falcon and Gulfstream centers.
- The number of private jets in 2011 increased to 623 — 77 more than in 2010. That’s a growth rate of nearly 14 percent!
As is common in emerging private jet markets, the infrastructure to support aviation is not adequate and needs serious improvements. Earlier this year, Secretary of State Hillary Clinton worked with Brazil minister of external relations Antonio Patriota to develop the U.S.-Brazil Aviation Partnership. The memo of understanding allows private and public entities from the U.S. and Brazil to work together to improve airport security, technology, and infrastructure.
Brazil is very close to allowing the private construction of business aviation airports, and this would alleviate the considerable traffic at congested commercial hubs. Check out the plans for a new general aviation airport, Catarina Aeroporto Executiva, in the São Paolo region.
There’s a sense of urgency, too, for Brazil to ramp up its aviation infrastructure. The country hosts the World Cup in 2014. In 1950, the last time the World Cup was in Rio de Janeiro, more than 1 million people attended. Rio also is the location for the 2016 Olympic Games; more than 9 million seating tickets were sold for the London games this summer.
People (and jets) get ready!
