By: Rohit Jaggi April 28 2011
In the run-up to Ebace, Europe’s main business aviation show, in Geneva in May, everyone is looking for signs in the sky of where the sector is going.
The number of used jets on the market has been a drag on new sales since the global financial downturn first hit the business aviation sector. Taking a long-term view, over the past two decades the percentage of the global fleet on the market has averaged 12.5 per cent, but shot up to about 17 per cent at its peak in May 2009. It was still at 15.5 per cent in September last year, according to Amstat, the business-jet data provider.
But it is fair to point out that those figures were artificially inflated by “phantoms” in the market – jets put up for sale by corporate owners as a public relations exercise, but priced at a level that was almost guaranteed not to find a buyer. Also, a fall to 14.7 per cent at the end of last year seemed to point in the direction of a recovery
There is still a long way to go, however, says Tim Barber, managing director of JetBrokers Europe, a fast-growing company with ties to long-established JetBrokers of the US. “I don’t think we’ll be seeing a turnround for some time yet, but my gut feeling, and our activity levels, indicate there is definitely some life in the market,” he says.
Alireza Ittihadieh, chief executive of UK-based Freestream Aircraft, agrees. “The market is holding its breath,” he says.
Reports of prices of some used jets plunging to new lows continue to indicate a split in the market between large aircraft costing more than $25m, whose values are more robust, and smaller aircraft whose values are proving more resistant to recovery. The slide in the prices of some older jets has also brought closer the point at which it will be uneconomical to overhaul their engines or update their avionics.
“There are still aircraft that everyone is struggling with, but in the mid to heavy sectors, there are a good number of buyers advertising for pre-owned aircraft and new aircraft positions,” says Mr Barber. “At Ebace, I suspect you’ll actually see a few brokers and manufacturers alike starting to put a spring back in their step.”
London
Farnborough to the south-west of London, one of the leading business aviation airports serving the UK capital, earlier this year won at appeal its long battle to increase aircraft movements from 28,000 a year to 50,000 by 2019. The former military airfield, owned by TAG Aviation, has specific restrictions at weekends, and before the economic slowdown had to husband its slots very carefully.
By comparison, fast-growing London Oxford Airport, which is wholly owned by the Reuben brothers, the billionaire property developers, now handles 7,000 business aviation movements a year, with a rise of 31 per cent in jet movements compared with 2010, and an 18 per cent rise in all business aviation movements.
The blight on these Oxford figures, backing up my comments in my column earlier this month about the decline of light aviation in Europe, is a fall in recreational aircraft movements of 11 per cent.
That decline will hardly be helped by drastic curbs on flying planned for the London Olympics next year. A zone measuring 40 nautical miles by 20 nautical miles in which flying is banned will be imposed from July 13 to September 12 – a full two weeks before the Olympic Games start, running to three days after the Paralympics end, with no let-up in the gap of more than two weeks between the two events. A much larger zone in which flying will be restricted will surround this no-fly zone.
Aircraft operators are complaining of what many see as excessive requirements for prior clearance to fly within the restricted zone, and helicopter operators continue to be amazed by the plan’s prohibition on helicopter movements around the Olympic stadium. The roads will be busy, one can safely assume. So presumably time-pressed presidents, prime ministers and other heads of state will be using public transport.
Los Angeles
Contrast the situation in London with that in California. Two airports in the Los Angeles area, Van Nuys and Bob Hope, last month escaped a ban on general aviation night flights after the US House of Representatives rejected a proposal to impose a nighttime curfew.
John Mica, head of the House transportation committee, said such a ban would be the first step on the road towards destroying the national aviation system. Van Nuys in the San Fernando Valley and nearby Bob Hope in Burbank are both busy, but despite the profusion of airports in the Los Angeles area, the Federal Aviation Administration accepts that they are fulfilling a need.
Meanwhile, around London, in spite of some downwards revisions of expected aviation growth as fuel prices continue to soar, responses to an obvious need are still mired in decision-making that appears more political than practical.
Wingtip to wingtip in a line alongside the taxiway to the east of Van Nuys’s Runway 16 Left are fleets of former military aircraft, mostly two-seat, piston-engined Texan trainers – bearing witness to the enthusiasm for aviation that is still rife in California.
In between indulging my passion for two-wheel land vehicles in the Los Angeles basin, I did as much flying as I could from this general-aviation-only airport, which has played a supporting role in a number of movies, including Humphrey Bogart’s 1942 classic Casablanca.
With the Mojave desert, its poppies in rare colourful bloom, just minutes away by air, there were endless opportunities for practising precision manoeuvres away from people who might be offended by the distant noise of an aircraft at altitude – and for covering ground away from the perpetually busy freeways.
A few years ago I came across a business owner who commuted every day by light plane from Long Beach, just a few miles further south, to one of the northern Los Angeles airports. Each day, that flight of a few minutes each way represented a saving of hours over the same trip by road. Those sorts of figures are as significant, and as hard to ignore, as the proportion of used jets on the market. .Copyright The Financial Times Limited 2011. You may share using our article tools. Please don’t cut articles from FT.com and redistribute by email or post to the web.
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Source: FINANCIALTIMES
Date: 2011-04-28