Europe’s business aviation industry is finally emerging from one of the gloomiest periods in its history, and its rebirth is being greeted with a mixture of relief, optimism and, perhaps understandably, a little caution.
The region is a significant market. Flight Fleets Analyzer data shows that Europe has accounted for some 20% of global business jet shipments worldwide over the past decade and 13% of turboprop deliveries. It is also home to the world’s second-largest installed base of business jets, with around 2,700 units, and the third-largest inventory of turboprops, with 900 examples.
But sales in Europe of new turbine aircraft have slowed considerably over the past decade. The financial crisis of 2008-2009 was crippling, with business jet deliveries plummeting from a market peak of 339 aircraft in 2008 to just 121 in 2017. Shipments of business turboprops more than halved during the same period, from 76 to 37 aircraft.
Cost-conscious buyers still maintained a relatively healthy appetite for pre-owned models during this challenging time – and there were rich pickings because of a huge oversupply of aircraft being sold at historically low prices. This activity has helped to keep Europe’s installed base of jets and turboprops relatively stable over the past 10 years.
All-new Pilatus PC-24 superlight jet will enter service in Europe imminently
Pilatus Aircraft
Richard Aboulafia, aerospace analyst at the Teal Group, describes European buyers as “value shoppers”. He says they have “little problem buying used aircraft, and therefore may act as canaries in the coal mine in reverse”. Now that this market has “passed the bottom, in terms of pricing”, he says, “demand is starting to shift to new aircraft”.
His view is supported by European Business Aviation Association (EBAA) chair Juergen Wiese, who pitches the inventory of used aircraft for sale at a “healthy” level of around 10% of the global fleet, helping to “firm up” prices and stimulate demand for new models.
“People ask me if the industry is over the hump, and I say: ‘I think it is’,” says Wiese, who also heads BMW’s corporate flight department. “We are certainly in a sweet spot now. The economy is doing well, and there is a good balance [in the used aircraft sector] of supply and demand.”
Aerospace analyst Rolland Vincent agrees. He describes the market as “bullish”, and notes that relative to the rate of economic growth over the past decade, Europe’s business jet fleet has performed well. “Just imagine the fleet growth we might see if Europe can sustain the current GDP growth momentum,” he says.
According to EU statistical office Eurostat, during 2017 GDP rose by 2.3% in the euro area, compared with 1.8% in 2016. The 28 EU member states registered growth of 2.4% in 2017, versus 2% in the previous year.
While aircraft sales are on the rise, so too is flying activity; European travellers are turning to business aircraft in increasing numbers to meet their transport needs. “There has been 16 months of sustained growth in charter sales and movements across Europe’s airports,” says Wiese. “It’s been over 10 years since such a long spell of uninterrupted growth was recorded.”
Adam Twidell, chief executive of PrivateFly, one of the continent’s largest and oldest online charter platforms, believes a range of innovative, affordable programmes are helping to sustain this growth.
Programmes such as members-only venture Surf Air and scheduled business jet shuttle JetSmarter are lowering the bar to entry and encouraging a new generation of European travellers to sample private aviation: “The charter industry is benefiting from their high-profile, multimillion-dollar marketing campaigns. Once people have experienced the convenience and flexibility of flying by private jet – compared with the headache of travelling on a commercial airline – they don’t look back.”
And, says Twidell, Europe’s new wave of high-tech, user-friendly booking platforms such as Stratajet are attracting a younger, “digitally literate clientele who want the power to access various services at the touch of a button – from taxis through to Uber to seats on a private jet”.
PrivateFly figures support this assessment, showing a fall in the average age of the typical European business aircraft user, from 41 years in 2016, to 38 today. “As millennials continue to enter the workforce, this younger generation will become the next private jet audience – demanding more choice, customisation and personalisation,” says Twidell.
Bombardier is upbeat about Europe’s business aviation market – the Canadian airframer’s largest territory outside North America, with a 25% share of its annual deliveries. “The key drivers – economic health, strong aircraft activity, and a low used aircraft inventory – are boosting buyer confidence, persuading previously indecisive consumers to come off the fence, and helping to expand our pool of potential customers,” says the company’s director for market analytics and customer insight, Thomas Fissellier.
This “pool” includes the growing population of ultra-high-net-worth individuals. He points to recent research by wealth information services company Wealth-X, which records a 9% hike in the number of Europe-based billionaires between 2016 and 2017 to 650 – with the UK, France and Germany home to the largest concentrations.
“We are seeing a pretty nice increase in order activity this year, and expect that momentum to continue,” says Fissellier.
Bombardier’s most popular model in Europe is the Challenger 300/350, followed closely by the Global 6000. “There is a healthy appetite for aircraft with large cabins and long ranges,” says Fissellier, adding that he expects the 7,700nm (14,200km)-range Global 7000 to be “very popular”, when it enters service in the second half of 2018.
Bombardier’s ultra-long-range flagship is one of a host of new designs entering the market over the next few years, which EBAA chief operating officer Robert Baltus believes will help stimulate buyer interest.
Europe is not short of new product. Pilatus Aircraft’s PC-24 superlight business jet will enter service in Europe in the coming weeks, and Gulfstream’s super-large G500 and G600 are expected to follow later in 2018 and in 2019, respectively. From Textron Aviation, the super-midsize Cessna Citation Longitude will arrive late this year; its Denali single-engined turboprop is due in 2020. By 2023, Dassault’s recently launched wide-cabin, long-range Falcon 6X should be gracing Europe’s skies. “Innovation is the key,” says Baltus. “Customers want their aircraft to be an extension of their home and office, and these technologically advanced cabins do all that and more.”
Cessna Citation Longitude will be entrant to bouyant super-midsize market late this year
Textron Aviation
Textron Aviation’s vice-president of sales for Europe, Tom Perry, says that while the Longitude has only performed a handful of demonstration flights on the continent so far, the reception for the 10-seat business jet has been “fantastic”.
He describes Europe as Textron Aviation’s “second-strongest market” for its Citation jet family, noting that the company completed “a great first quarter” for new orders. For the Beechcraft King Air and Cessna Caravan turboprop series, Europe ranks fourth for new aircraft sales and deliveries. Perry says the continent has taken “relatively few” commercial turboprop deliveries in recent years, but orders for its special mission variants have been strong. Perry points to a 2017 order from Norway’s Babcock Scandinavian Air Ambulance for 10 King Air 250s and a single Latitude jet. Deliveries are scheduled to begin this year.
While European business aviation continues to recover and evolve, EBAA’s focus is to create a thriving market and an unfettered operating environment for its 750-plus members and supporters. Baltus believes the “true value” of the industry is not recognised by many regulators and key decision-makers, so the needs of the community are often overlooked. He says an EBAA-sponsored study by Booz Allen Hamilton and the German aerospace research centre DLR is helping to change perceptions and bolster its profile.
The report, published in March, presents business aviation as a bulwark of Europe’s economy, supporting 374,000 jobs and contributing €32 billion ($40 billion) – or just under 0.2% – of the total value of goods and services produced in the region each year.
This influence is becoming more important. Baltus notes that the latest report follows a similar survey in 2016 of the 28 EU countries plus the Channel Islands, Iceland, the Isle of Man, Monaco, Norway, San Marino and Switzerland, which concluded business aviation was behind 371,000 jobs and boosted the continent’s economy by €27 billion.
The report also claims business aviation vastly improves connectivity within Europe, serving more than 25,000 city or area pairs not linked by direct airline flights – or almost one in three of all air connections.
France, Germany, Switzerland and the UK are the four countries with the largest business aviation sectors, contributing 76% of the industry’s “gross value added”, or its value to the economy each year.
The EBAA report also makes the case for the increased productivity business aviation offers companies and their executives, allowing them to devote time to working that would otherwise be unproductively spent transiting through commercial airports and flying in cramped airline cabins.
Using a complex formula that takes into account flying times and an assumption that it is easier to work on a private aircraft, the study maintains that business aviation users generate an average 153min of productive time by taking a business, rather than commercial flight. “Without business aviation in some regions, business connectivity would simply not be possible, and new ventures and opportunities would never be realised,” says Baltus.
The study seeks to demystify the image of business aviation as a preserve of the wealthy and privileged. “We want to grow this market by making it more accessible to the wider community,” says Wiese. “Our job is to get out there and help make a compelling case for business aviation with lawmakers and company decision-makers.”
As part of the initiative, the Brussels-based trade association is rolling out in the next few weeks an online comparison tool that allows users to assess the productivity and time savings of using business aircraft to fulfil a travel requirement, comparing it with other options such as commercial flights.
While refining the public image of business aviation is an imperative for the industry’s long-term prosperity, so, too, is securing enough airport capacity. Wiese notes that for major hubs such as Berlin, Frankfurt, Geneva and London’s Heathrow and Gatwick, commercial airlines are typically more lucrative than business jet operators, which thus struggle for access.
This pattern is repeated at small regional airports such as London Luton – the top destination in the UK for business aircraft traffic in 2017, with over 30,000 movements – thanks to a rise in low-cost carriers at the site. The UK capital is, however, one of the few cities in Europe with a variety of airports – including Biggin Hill, Farnborough, London City and Northolt – serving the sector outside the major slot-controlled hubs.
“With increasing pressure placed upon business aviation from regional airlines and feeders of all sorts at major hubs, Europe must find alternative solutions to avoid aggravating the current gridlock,” EBAA says.
The answer lies in Europe’s vast network of secondary airports. EBAA is calling for the wider and faster adoption of satellite-based approaches for business aircraft, which will open up more tertiary airports. It says procedures such as localiser performance with vertical guidance allow operators to fly precision approaches using EGNOS, the European geostationary navigation overlay service, down to a 200ft decision height and 800m (2,600ft) visibility.
“A quicker adoption of EGNOS-based technology will enable regional airports to be part of the network that could accommodate all types of aircraft,” says EBAA.
While airport access is a key priority for the region’s operators, avoiding any detrimental impact from the UK’s exit from the EU – set for 29 March 2019 – is a priority for the industry.
The UK is an important market. Fleets Analyzer records a based fleet of over 400 business jets and turboprops, making it the second-largest inventory after Germany. The country accounted for around 100,000 business aircraft departures in 2017, according to EBAA. This represents the third-highest tally within the EU’s 28 states, with Luton to Paris and Nice the most flown city pairs in 2017.
EBAA also shows that the UK industry supports more than 41,000 jobs and contributes €8.3 billion to the nation’s economy.
The association points to uncertainty surrounding the post-Brexit aviation relationship between the UK and the EU. So, it reckons, the challenges for business aviation, in particular its 155 UK-based members, lie in four key areas: traffic rights for commercial flights; ownership and control of operators providing commercial air transport services; VAT and customs; and the UK’s membership of the European Aviation Safety Agency.
An EBAA report analysing the possible effects on Europe’s business aviation community of different Brexit scenarios is intended to be “almost like a toolbox for the people at the table”, Baltus says. “For our members, the most important thing is that we retain a high level of flexibility across Europe.”
Source: Flight International
