Home' Asian Aviation : AAV June 2010 Contents Andrzej Jeziorski
Business aviation trade shows over the past two years
have had a characteristic air of desperation about them as
executives did their best to give the impression that things
were nowhere near as bad as they in fact were.
At the 2009 European Business Aviation Convention
and Exhibition (EBACE) in Geneva, companies were
trumpeting a revival that was still a way o . is year,
however, there was some evidence that the worst of the
slump in demand for business aircra triggered by the global
nancial crisis is behind us.
Attendance at this year's show in Geneva in early May
was only slightly up from last year, at 11,106 from 10,917,
but, signi cantly, there were fewer un lled spaces on the
exhibition oor, which our correspondent described as being
"like gaps in a prize- ghter's teeth" at the 2009 event.
When industry leaders this year issued their messages of
cautious optimism, there was some substance to them.
Things are improving, it was understood, although a
complete recovery may be a year to 18 months away.
e atmosphere at this year's EBACE was industrious and
gone were 2009's gaping holes on the exhibition oor,
reminiscent of gaps in a prize- ghter's teeth.
e European business aviation sector is looking at a faster
recovery than its US counterpart, exhibitors said. With
the US market long-since overtaken by international sales,
manufacturers said they were going to focus more and more
on emerging markets to bolster their revenues.
at means more e orts are being focused on Asia and
Africa, while manufacturers also tap continued growth in
the Middle East. e current economic troubles a ecting
euro zone countries remain a cause for concern, however,
since they have the potential to drag down a recovery.
Honeywell and Embraer predicted that Europe would
account for just over 25 percent of global demand in an
industry that will experience slow growth from 2011 to
2019. Bombardier was more bullish, predicting that Europe
would increase its business aviation eet by 2,800 jets to
4,500 by 2018.
e show saw several announcements from China, which
has long been seen as a market where there is huge pent-up
demand for business aviation. Growth of the sector there
has up to now been hampered by draconian regulations that
all but eliminate the exibility of private aviation, as well
as a lack of infrastructure and punishing import taxes on
overseas-built aircra .
But these problems are progressively being dealt with, and
the market's potential will one day be fully exploited by those
who position themselves carefully -- and in good time -- to
Speaking at the show, Teal Group aviation analyst Richard
Aboula a said the global industry could even see a return
to pre-2008 growth rates as high as 17 percent from 2012,
driven by the market for aircra priced at US$25 million
and above. e biggest obstacle to such recovery, he said, was
the available number of used aircra in the market.
It will take another year to work through the backlog of used
jets available for sale, although the number of such aircra
has fallen to about 14 percent of the global eet from 16
percent last year. With demand for such aircra on the wane,
prices are also falling.
Aboula a -- never one to shy away from brutal honesty --
underlined that rising corporate pro ts and the return to
business aviation of large companies such as automaker Ford,
which grounded its jets because of the crisis, are all reasons
Business aviation has su ered far more than the larger
commercial jetliner sector, which was saved from a
potential 30 percent or greater plunge in aircra demand
by government stimulus packages that "probably saved the
world from economic calamity", Aboula a said. Instead,
combined aircra production rose 7 percent in 2009 as the
larger jetliner segment expanded 13.5 percent.
Although Teal Group's outlook for aircra manufacturers is
more optimistic now, Aboula a highlights that two causes
for concern remain.
e rst of these is that government action has a greater
influence on the industry now than before the crisis.
Previously, government action directly a ected about 40
percent of the industry. at gure has now risen to 65
"Political risk, unlike market or macroeconomic risk, is
much less forecastable or quanti able," Aboula a said. If the
US Troubled Asset Relief Programme (TARP) had been
cancelled on a political whim, jet nance would be in deep
trouble and there would have been no way to see it coming.
The analyst highlights the Airbus A350XWB as a
programme that remains highly reliant on government
" e second risk is that today, we really are all in," Aboula a
said. In other words, governments have inter vened once
and do not have the means to do so a second time.
"If this European crisis spreads, or if there's any kind of
double-dip recession for whatever reason, there's not much
the governments can do," he concluded. ●
EBACE show offers
reason for optimism
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