Sean McGeough is president of Europe, Middle East and Africa (EMEA) for US-based aircraft manufacturer Hawker Beechcraft. The Middle East now represents more than one-fifth of the company's total deliveries into the EMEA region, equivalent to a three-fold increase compared with five years ago. This has translated into deliveries of more than 50 turboprop and jet aircraft to Middle East-based customers over the past three years, comprised mainly of Hawker 900 business jets and King Air 350 turboprops. McGeough talks to Flight Daily News about Hawker Beechcraft's hopes for the show and the Middle East market in general.
How does Hawker Beechcraft's presence at the show differ from two years ago?
 |
|---|
| The best retail show for us right now in the world bar none is EBACE, and if I had to pick one in the world, it would be Geneva, followed by Dubai |
How badly has Hawker Beechcraft been hit by the downturn?
I think we've been very fortunate, because we have such a broad product range. From a sales perspective, we had $2.8 billion of sales in 2010, which was slightly down from 2009. Yes, it was slightly down, but we have such a diverse product line, which includes the special mission platforms, that we had a great product mix to offer customers a wide variety of solutions, whereas our competitors could not. So in 2010 we actually sold more airplanes than our closest competitor. Yes, we build the King Air, yes we build the Hawker jet, but they are turbine aircraft, and they're business aircraft, so when you take the total population of aircraft we sold, we outsold Cessna, our closest competitor in the region.
Who are your turboprop customers in the Middle East?
Primarily governments, for special missions. But we've also been able to sell to a number of sheikhs who want to go on their hunting trips. No different than the company chairman in South Africa who may use his aircraft during the week for business, but who on the weekend wants to go hunt the big game. The King Air is so versatile and reliable, and in the desert, it's the only airplane that will quite simply turn on and go.
Is there still a stigma attached to turboprop-powered business aircraft?
I don't know if there's a stigma attached, but when you talk to customers that operate King Airs, they love it. There is a misconception that they're not as reliable as a jet aircraft, but it's a 'jet' engine. When you look at where a King Air can go versus a jet, at the end of the day, you buy an airplane because it's convenient, so if you can't fly into the airport you'd like to go to, regardless of what the airplane looks like, or whether it's a jet or a prop, you're not really doing what you want to do. So the King Air really fits that segment, which is unique.
Has the Arab Spring boosted market potential for you in the defence and security sectors?
We were selling airplanes long before the Arab Spring. Whether or not the governments were anticipating something like this, we had Medevac applications, aerial surveillance and flight inspection, which does a lot of calibration for the airports around the region to make sure they're safe. Our airplane has offered a very cost effective solution versus an airplane that may be two or three times more money. I think the Arab Spring has also given us a great opportunity in Dubai because we can offer the AT-6, which is the attack version of the T-6 trainer airplane, which the US military uses. You can now have maybe a loitering King Air 350ER which can sit up in the air for about eight hours and you can to do surveillance similar to what they're doing in Afghanistan right now with Project Liberty. They identify who the bad guys are, but now you have a solution where not only do you find who the bad guys are, but you have a cost-effective solution to take out the bad guy, which is the AT-6. We will show that for the first time at Dubai, so we are now a company that can offer a comprehensive solution to a number of governments in the Middle East to protect their borders.
How are you splitting your presence at Dubai between VIP and military exhibits?
We have eight airplanes here, and we have a King Air 350ER which is branded as a special mission airplane, so it actually has a lot of equipment on there such as flight inspection and Medevac, and then we also have the T-6 trainer so those two government or special mission aircraft are on the line. Then, we also have all the commercial airplanes, the Hawker 4000 and 900 and the Premier, and we are blending the two segments together.
How strong is the Middle East market for VIP aircraft right now?
Demand is consistent, but it's not strong by any means. It's certainly not where it was before the financial crisis, but our pipeline is healthy. Saudi Arabia is very strong right now and I think because of our government business in those parts of the world it is getting a lot of attention from other parts of the business such as the retail segment, so we're talking to a number of operators in that part of the world about replacing aircraft and adding additional aircraft. The conversations I would say have increased probably in the last 4-5 months. I don't know if that's in anticipation of the show or the economy feels a little bit better but I also think it has to do with the flight movements. In Europe alone, on average they're up about 9% year-over-year. I just had a lunch with a European operator that's expanding into Africa and they're also in Dubai and they're very bullish on the traffic that they've seen in the last year, and not only this year but the years ahead. We look at a lot of leading indicators - aircraft movements, pricing and especially the resale market and then we also look at corporate profits and we tie corporate profits to the property market right now because the people who are making money, they're out there making investments. Two of the three things are really strong right now - the aircraft movements and the corporate profits. What hasn't really returned yet is the residual values of the airplanes. That's no different in Dubai, but it's improving steadily every week and every month. I wish it would improve dramatically, but that's the market-place right now.
Do airshows still represent good value, from a manufacturer's point of view?
You can never quantify it, but quite frankly I think there's too many. Any time I hear of a new aviation organisation being established, like they're trying to do right now in Africa, I'm saying: 'Why are you trying to reinvent the wheel?.' Why don't they grab onto the coat-tails of an established organisation like MEBA [Middle East Business Aviation], because quite frankly, they have similar issues? They also operate in remote and very difficult environments. So if you were to tell me there's another great show coming to Africa, I wouldn't get very excited about it. I'd rather that they come to Dubai and they combine their collective resources and they get a great show as opposed to these mediocre shows. The best retail show for us right now in the world bar none is EBACE, [European Business Aviation Convention & Exhibition] and if I had to pick one in the world, it would be Geneva, followed by Dubai, over Paris and Farnborough. It's very expensive for us to go to a show, so we've got to pick the shows where the market is.
Is lack of finance still having a detrimental impact on aircraft sales?
The finance sector is probably one of the biggest obstacles we face today. If there was finance out there, we'd be selling a lot more airplanes, and there's a lot of restrictions today for even those that can get finance, such as large down payments and personal guarantees. Prior to the crisis, you could put zero percent down, and you could say who you were and the bank took your word for it, which was ridiculous. Now it's gone to the complete opposite end of the spectrum, where some banks that were financing airplanes before aren't in the business any more. Those banks that are, their requirements are much higher. But the banks are beginning to lend again, which is encouraging.
Source: Flight Daily News
