Jet Aviation's group chief executive tells Flight Evening News how the business aviation services company is coping with the economic downturn and outlines its plans for the future
How long do you think the current downturn will last?
This is certainly one of the most severe cycles that we have seen, in every respect. My personal assessment is that it will continue throughout this year and into next. The services sector will probably begin to tick up ahead of some of the other elements of the industry, in part because people will start raising utilisation levels of their aircraft. That will be a lead indicator for the direction the market is moving. I think the overall sales environment will remain tough for the balance of the year, because there's a large accumulation of used inventory that will need to clear. There'll continue to be aircraft sales, but to get back to what we could consider healthy levels I think we've got to see that used inventory burn down a bit. Aircraft are underused at the moment but I think this is a temporary condition.
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Do you think that business aviation has an image problem?
I think that some of the grandstanding in Washington DC was extremely unhelpful. I think that did influence the way that people operate their aircraft. I think it also influenced very negatively certain decisions to continue with ownership or use of aircraft by some companies. But the industry collectively did a very effective job at communicating with the leaders in Washington to ensure that the scope and importance of the business aircraft industry was fully understood, and that they were taking unnecessary shots at a portion of the economy that was very important to preserve and support. I think the message got through. The tone of this is quietening down and people's attention in Washington is turning to other elements of the management of the recovery. I think that the worst of that is behind us. It was unhelpful but I don't think it will have an enduring effect. Business aircraft are clearly tools of growth for industry and it is growth that will pull us through this cycle - not political grandstanding. I think the right messages were conveyed and let's hope that they've been properly received.
Is the Middle East market immune to the effects of the downturn?
It's not completely unaffected. The sharp decline in the price of oil has had a level of effect, but overall the Middle East has proven to be quite resilient. In terms of the operation of aircraft, I was out recently at our centre in Dubai. The ramp at our FBO was absolutely full of aircraft and activity was high. That was very encouraging. The Middle East is an important component of our large aircraft completions business and that has really remained quite strong. In fact we continue to turn aircraft away. The Middle East continues to be a source of strength for the high end of the market and we don't see that changing over the course of this cycle. There's a very long-term cycle that goes with the selection, acquisition and completion of large-cabin aircraft so it really moves quite independently of the current economic cycle. Over the long- term one could presume there would be an effect, but the aircraft backlogs of the key OEMs really continue to stretch out for many years and we see that as a really robust pipeline for the foreseeable future.
Will overcapacity force a shake-out in the completions sector?
The third party completions business is affected. There has been a visible softening. One has to expect that there is going to be a prolonged adjustment in the business aircraft component of completions. On the large [aircraft] side there's really much less of an effect there and I think at least for the first tier players in the high-end completions business there'll continue to be a good level of work for the foreseeable future. But perhaps some of the parties that have less depth and experience may not make it through this period.
Did the acquisition of Jet Aviation by General Dynamics lead to a change in strategy?
Not at all. The business model that attracted General Dynamics to Jet Aviation is a terrific model and it remains fully intact. We have no intention of changing course at Jet Aviation. The adjustments that we have made since the acquisition have been more linked to the market shift, although we have continued to strengthen our operational team and we've drawn on resources, best practices, tools and techniques that have come out of the General Dynamics environment, which we found quite useful.
Has your relationship with Gulfstream, another General Dynamics company, changed?
The relationship with Gulfstream has always been close. We're an authorised service provider for them in many areas of the world but we do not complete aircraft for Gulfstream, nor do we have any plans to do so. Our ongoing relationship is one of trying to be an excellent service-provider to them. We continue to support Bombardier, Cessna, Dassault [as well as] Gulfstream and we try to be an outstanding provider for them in international markets. Despite the structural change at the General Dynamics level our relationship with Gulfstream remains essentially the same.
Were the other OEMs concerned out the change of ownership?
Those questions were certainly asked, and very reasonably asked, by the OEM community and we've worked extremely hard to demonstrate that we intend to make no change to our very neutral approach to how we support each of them.
Is Jet Aviation looking at potential acquisitions?
This is not a priority - we don't see ourselves active in the market at this particular time. I believe there will continue to be consolidation throughout the course of this cycle and I believe this industry is going to look different in a year to eighteen months as a result. We are obviously going to watch it very closely, but there's no fundamental shift in our view and we have no near-term expectations to participate in even fire-sale assets. That's really not our game. We'll be looking at certain things - acquiring an AOC in the USA is maybe something we'll do over the course of this year, simply because of our change in nationality. Beyond that we have no expectations of anything significant.
What will be the focus of Jet Aviation's participation at EBACE?
Our first and fundamental hope is that EBACE proves to be a good show despite the external conditions. We've got messages to communicate: we just completed our 100th Dassault Falcon and finished our 25th Challenger 605, and we've been strengthening our activity in Brazil. But our key intention is to be with our customers and to continue to manage those relationships. We've had a sharper eye with regard to the number of [employee] attendees, but our physical exhibition space is the same.
Source: Flight Daily News
