Business aviation flight activity worldwide grew faster than the global gross domestic product (GDP), and for the first time since 2008, deliveries of business jets were higher than the previous year. In Europe, flight activity was down slightly (two per cent) overall in 2013; however, there are signs of promise – after three consecutive monthly increases, activity in the first quarter edged up by 1.6 per cent from the same period a year ago. Jet Support Services Inc’s (JSSI) annual year-end business aviation index showed a four per cent increase in the number of business aircraft hours flown globally, higher than the 2.9 per cent GDP estimates by the International Monetary Fund.

By region, the JSSI analysis showed a 25 per cent jump in traffic in the Middle East and Africa, 22 per cent in Asia, and 12 per cent in Europe. The world’s largest bizjet market, the United States, grew by about six per cent, which some attribute to anti-bizav rhetoric in recent years. Latin America was flat. Neil Book, JSSI President and CEO, said, “The global growth in flight hours is a positive indicator for the health of both the aviation industry and the economy as a whole.”

Growth rates by aircraft category were similar: small cabin eight per cent, medium cabin five per cent, and large cabin seven per cent. The General Aviation Manufacturers Association said its members delivered 678 business jets in 2013, six jets more than 2012.

Hamburg-based aviation data firm WingX Advance said business aviation flying jumped 22 per cent in March 2014 compared with the previous year to nearly 53,000 flights. WingX said the increase was due both to private flight activity, up eight per cent (particularly business piston aircraft, which rose 28 per cent. For the still-struggling business jet fleet, activity was down 1.1 per cent and charter activity down 3.9 per cent.

Business aircraft flights rose in the UK, Italy and France, but declined in Germany, Turkey and Russia. For 2013, the bright spots included Spain, Ukraine and the Benelux countries. There was increased activity in flights headed to Europe from North America, the Middle East and Asia.

Roger Whyte, former senior executive with Cessna Aircraft for nearly 30 years and now Chairman of the Central European Private Aviation Association, told SP’s Aviation that “CEPA countries have outperformed those of the non-CEPA regions” since 2008, “whereas most other markets in Europe are still to recover.” He cited Hungary, Slovenia, Slovakia, the Czech Republic, Poland, Bulgaria, Romania and even Ukraine as having increased activity (at least before the current political turmoil).

“The Central and Eastern European (CEE) market is developing well, even though all of its countries were hit by recession, causing a slowdown in the rate of development. The difference with these countries, compared to those in the west, is that they were better equipped to deal with recession and the change in the economy as their growth had previously been comparatively slower. The whole economy is now recovering and developing.”

Growth Signs

“The business aviation market in Europe is now growing again,” PrivateFly CEO Adam Twidell told SP’s Aviation. “This growth is modest, but there are much more confident signs, and we are currently moving into summer, which seasonally is also the busiest time for Europe’s fleet.”

Twidell is an active private jet pilot, flying the Citation XLS, and a former UK Royal Air Force and NetJets pilot. Launched in 2007, PrivateFly claims to be the fastest-growing global booking service for private jet charter and private aircraft hire. They use websites and applications for iPhone, iPad, and Android devices to connect customers with a network of over 7,000 accredited aircraft, arranging charters within 90 minutes or less.

Twidell said the path to continued business aviation market improvement includes educating people about business aviation on two levels. ”First, it’s about shifting attitudes: from being seen as wealth and opulence to being viewed as a business tool. The majority of our customers are using business aviation to fill gaps in airline schedules, or when their itinerary is simply not possible with scheduled airlines (for example, they have several meetings in one day).For a company, it’s often about weighing up whether they want their CEO spending hours at an airport or taking him there and back and refreshed in the same day. Ultimately it’s about efficiency.”

“Second, it’s about making private jet booking more transparent and accessible. The market is often seen as confusing, complicated and intimidating. Private jet booking platforms like PrivateFly give the customer more control, speed and transparency.”

Twidell sees polarised future growth in Europe – primarily in the ultra-long range and very light jet categories. “The midsized jet market is contracting. In today’s climate, the customer is choosing efficiency or luxury, but increasingly avoiding the middle ground. I think the middle ground will recover as people are able to upgrade their jet choices as the market recovers.”

In terms of business segments, charter has seen the most growth since the recession, versus fractional and full ownership. “Fractional ownership is struggling to continue to appeal, especially to the new breed of private jet user who wants to be more in control of their costs.”

Desire For Brand New Jets

CEPA’s Whyte said, “There is a clear increase in the desire of the business aircraft buyers for brand new jets,” based on research his organisation recently conducted of private aircraft preferences and desires of the ultra-high net worth individual (UHNWI) in Central and Eastern Europe. He quickly added, “There is also a very healthy demand for pre-used, mid-sized aircraft, which continues to grow.” Whyte said price is “not the overriding factor in the decisionmaking process. The manufacturer of the aircraft has a huge influence.” The research also showed that “one person alone makes the decision,” not altogether surprising in uber-wealthy circles. CEPA’s role in the CEE region, according to Whyte, is to help create “more understanding and bridging the differences that may exist between the methods of doing business. An example of this is when transactions take place between companies and individuals from the east and the west; there can be cultural differences and/or erroneous expectations affecting the transaction. Another example is financing, which requires different structuring than in other parts of Europe. A big part of what we do is connecting banks and institutions to aid financing.”

Whyte said there is also the misconception that the workforce is unskilled in the CEE, which is not the case. “The CEE has a highly skilled aviation workforce.”

“All of the economic data shows this is a market to have confidence in,” Whyte emphasised. “We know that the number of air operator certificate (AOC) holders being created is growing, which means that aircraft are being registered in their own countries, staying in the CEE, rather than being moved to outside of the region.”

Even critical geographical areas like Ukraine have a major potential which will drive successful growth of the industry. The CEPA countries will find ways to manage their way through ecominc cycles and transient political upsets.

Whyte added, “Many countries in the CEE have high additional potential for growth in aviation, including Bulgaria, Romania and the Czech Republic, as well as Poland. Compared to the rest of Europe, I believe the CEE is a key market for the future, despite its complications.”

Euro Challenges

The private jet industry is highly fragmented in Europe. There are over 2,500 aircraft available to charter, which are managed by around 600 AOCs, typically with just two or three aircraft each. Twidell predicted, “I think we will also inevitably see market consolidation with small companies not being able to compete with the resources of those with larger managed fleets.”

Twidell lamented that one area restricting business aviation growth is, “the burden of bureaucracy,” which has exponentially increased over the last decade, making it almost impossible for small companies to remain profitable.” He listed air passenger duties (APD), limitations on airport access, carbon trading, safety management systems, and operational challenges such as crew duty restrictions.

The UK, for example, plans to raise the ADP by 50 per cent or more (effective April 2015) for aircraft weighing more than 20 tonnes and with fewer than 19 seats on flights of more than 3,200 km. The British Business and General Aviation Association has warned that the APD changes could “damage corporate business aviation and the inward investment it brings to the UK.”

The carbon trading, or emissions, issue has created a firestorm with the European Union attempting to implement its own fees on intra-Europe flights (and possibly international flights into and out of Europe) without waiting for global “market-based measures” which the International Civil Aviation Organisation (ICAO) is attempting to formulate by 2016.

“With all of this expense for AOC holders, the customer often finds a way around these limitations by going to the ‘grey’ market and flying commercially on a non-AOC aircraft,” Twidell said. “This, of course, is dangerous for both the passengers and the industry.”

OEM Highlights

Following are highlights of recent developments among the major business aviation aircraft manufacturers.

Beechcraft and Cessna to Touch $4 billion in Revenues
Textron which already owned Cessna, acquired Beech Holdings, parent of Beechcraft and Hawker, and has reorganised them into Textron Aviation, which together is expected to produce more than $4 billion in annual revenues. Scott A. Ernest, Cessna’s President and CEO since 2011, will lead the Textron Aviation segment as CEO.

Cessna’s Citation Latitude prototype is currently in flight test mode since its maiden flight in mid-February. The twinjet is said to have already achieved its “full performance envelope.” The aircraft features a new, larger fuselage with the wings, tail, and systems of the Citation Sovereign+, Garmin G5000 avionics, and is the only Cessna jet with a flat floor. US Federal Aviation Administration (FAA) certification is anticipated in the second quarter of 2015.

“We have several exciting products launching in Europe this year – we expect the Citation M2, Cessna Grand Caravan EX, and Cessna TTx to all achieve European Aviation Safety Agency (EASA) type certification in 2014,” said Tom Perry, Cessna Vice President of Sales, Europe. “Each aircraft brings distinctive capabilities to the European market and we anticipate they will be extremely popular with our customers.”

Bombardier’s Learjet Programme
The Bombardier Aerospace Learjet 85 aircraft successfully completed its first flight in April. All flight controls were said to be exercised with the systems and the aircraft performed as expected. Éric Martel, President, Bombardier Business Aircraft, stated, “Incredible hard work and dedication from our people went into this aircraft development programme. This includes our sites in Wichita, United States; Querétaro Mexico; and Montréal, Canada, as well as our facility in Belfast, Northern Ireland.”

Dassault Falcon 5X on Track for Early 2015 Delivery
Dassault Falcon says progress of its new Falcon 5X business jet is going well with the first flight still on track for early 2015. The company hopes to certify the new type in 2016, followed by a first delivery in 2017.

Dassault has delivered its 250th Falcon 7X. Eric Trappier, Chairman and CEO of Dassault Aviation, said, “The Falcon 7X has become our fastest selling business jet ever.” The fleet has accumulated more than 2,50,000 flight hours since it was introduced in 2007.

Embraer’s Strength
The business aviation strength of Embraer has been in the very light jet category. They recently delivered the 300th copy of the Phenom 100, and are approaching the 200-mark for the larger Phenom 300. “The [Phenom] 300 is really performing well, selling well, and has a strong pricing. We have this perfect situation in the 300 where we have the market leadership and the highest price in the segment,” President and CEO Frederico Fleury Curado said.

When Embraer’s new Legacy 500 finally debuts later this July, it will be the first fly-by-wire aircraft in the midsize business aviation class. Embraer has been rounding out its executive aircraft line, adding the Legacy 450 and 500 models in between the Phenoms and larger Legacy 600/650 and Lineage 1000 types.

Gulfstream
Gulfstream delivered 39 aircraft during the first quarter of 2014, a 34.5 per cent increase from a year ago, including 33 large-cabin and six mid-size jets. Phebe N. Novakovic, CEO of Gulfstream parent General Dynamics, said, “Over the last decade, we’ve been heavily investing in Gulfstream, and that investment is beginning to pay off.”

The new flagship, the Gulfstream 650, is the world’s fastest private jet (it broke the city-pair speed record for New York to Mumbai, making the 6,754 nautical mile trip in 13 hours and 49 minutes). There’s a three-year waiting list with more than 150 buyers already. However, the G650 is now available for charter in Europe for the first time – only £99,000 (about $1,66,000) for a roundtrip from London to Dubai. The high-tech luxury interior includes a full bar and kitchen and accommodates up to 18 passengers. PrivateFly’s Twidell said, “The G650 is creating enormous interest and is the ultimate VIP status symbol, with some very high-profile buyers waiting in line to own one.”