The traditional image of business aviation in the Gulf is of airborne palaces catering to the travel whims of royalty and the ultra-rich. These gold-plated transports – including converted Airbus A330s and Boeing 747s – are still very much in evidence. But the real growth in the market is in the corporate sector, with vibrant economies driving an increase in not just aircraft sales but charter businesses and fixed base operations (FBO). Local investors and established global players such as ExecuJet and Jet Aviation have entered or increased their presence in a region which has seen the private aircraft fleet double in the past five years. Many believe it could double again before the end of the decade.
On the eve of next week’s air show, the Gulf’s first business aviation conference is being held in Dubai. The event – sponsored by Abu Dhabi-based charter and medivac specialist Royal Jet – will look at emerging opportunities in maintenance, financing and leasing and charter. Royal flights aside, which tend to be operated by each country’s air force or a division of its state-owned airline, business aviation in the Gulf is still a young market, with most operations coming into being only in the past few years.
Royal Jet, for instance, was founded in May 2003. Owned by the Abu Dhabi government’s amiri flight division and offshore helicopter operator Abu Dhabi Aviation, the company has carved a near-unique niche in upmarket medical evacuation, from Abu Dhabi citizens requiring medical treatment in Europe to repatriating ill or injured tourists or business executives. The company, which started with a single Boeing Business Jet, now has four BBJs, two Gulfstream G300s and a new Bombardier Challenger 300. Some 40% of its business comes from medivac and two of the BBJs and the G300s convert to airborne medical rooms.
The rest of the business is standard VIP charter, providing flights to Europe and around the region, mainly for locals. It is a growing market, says new chief executive Christopher Crum, who has a background in US business aviation services. “There is a growing general acceptance of the convenience and security of business jets within the Gulf,” he says.
Plans include acquiring a fifth BBJ and adding a BAE Systems Avro RJ70, currently being outfitted in “utilitarian VIP” style at FlyBe Engineering in Exeter, UK, and pitched at the leisure market. Its ability to land on short, rough fields makes it ideal for weekend hunting trips, says Crum. There will also be a Bell/Agusta AB139, owned by its sister company Abu Dhabi Aviation, for VIP tours and shuttles between Abu Dhabi and Dubai, which are 200km apart.
The company, which employs 230 people, also wants to build its maintenance capability – it performed its first C check on its G300 in September – and look at getting into third party aircraft management. As the local fleet grows, there will be an increasing need for these services, says Crum. “But we won’t grow at the expense of our core business,” he adds. “We’ve made a big jump to get here and we have to make sure we don’t out-run overselves.”
European standards
Jet Aviation is probably the biggest international player in the region, with operations in Jeddah and Riyadh in Saudi Arabia and a new flagship FBO and maintenance facility at Dubai airport. The latter opened in May and is the first in the region to offer heavy maintenance “to European standards”, says manager Philip Balmer. The centre’s 4,200m2 hangar can handle four aircraft and Jet Aviation is notching up approvals from a range of manufacturers and authorities. “There is a huge interest from OEMs for representation in this part of the world,” says Balmer, who previously managed Jet Aviation’s Singapore maintenance facility. “We already are an official centre for Honeywell engines and we are in talks with Rockwell Collins.” The facility’s catchment area extends to India and Pakistan, both fast-emerging business jet markets.
Although its Saudi centres do not offer as wide a range of maintenance services as Dubai, and are predominantly FBOs, Swiss-based Jet Aviation is an established player in the kingdom, opening its first joint venture business in the capital Riyadh 22 years ago, and adding the Jeddah operation a decade later. The country’s vast expanse and under-developed civil airline network mean Jet Aviation is kept busy, handling up to 30 flights a day, mostly for Saudi nationals flying between the two cities, says general manager Toni Gisler. The operation also serves as a “shop window” for Jet Aviation’s Swiss-based aircraft sales and completion businesses. Kuwait and Lebanon are on Jet Aviation’s list of potential new markets, but the company says it has no firm plans to open FBOs there.
South African-owned ExecuJet is another veteran Gulf player, opening in Dubai in 1999, as an aircraft management and charter operation and sales agent for Bombardier’s Challenger and Learjet ranges. The company manages nine aircraft of which three are available for charter, and manager Mike Berry sees the charter sector as one of the biggest opportunities in a market where owning a status symbol aircraft was once key. “We were the first in the UAE with an AOC to operate charter flights and we have more than doubled our charter hours in the past year,” he says. The surge in interest in chartering has seen a rise in numbers of competitors. “Two years ago, there was only us and Royal Jet in the whole of the UAE. Suddenly, we’ve got five out of Dubai,” he says. “The environment is changing and there’s been a flood of tourists and investors. The day of the Bahrain Grand Prix, we couldn’t supply enough aircraft. You’ve now got guys who rather than take a week to do their series of business meetings in the region, can charter an aircraft and sweep through in a day.”
Aircraft sales are thriving too. In three months, ExecuJet has sold a Learjet 40 and 60, and a Challenger 604. “There has been a turnaround in the past 18 months. After 9/11, it was a struggling industry to sell aircraft. Now there is a new breed of buyer seeing it as a business tool,” he says. The Indian subcontinent, as well as Middle Eastern states such as Jordan, are strong potential markets.
From his rather drab tower block office on the perimeter of Dubai airport, Berry can also look out at ExecuJet’s latest venture in the region, a 3,500 sq m maintenance centre for Bombardier, which opens in November at a cost of $8 million, and also includes an FBO. With a quarter of the region’s market, and a lot of older aircraft in the fleet, the Canadian manufacturer is keen to step up its local service offering, says Berry. “No longer will operators have to wait for North American or European parts, or fly to Europe for servicing,” he says. The centre will also be a magnet for operators in India and Pakistan, he believes.
In Saudi Arabia, frustrations with the state-owned carrier among businessmen who wanted to travel flexibly and in comfort but were not in the aircraft owning league created an opening for Jeddah-based National Air Services (NAS). It owns a fleet of 25 mainly Gulfstream aircraft and operates on behalf of fractional ownership provider NetJets Middle East. Because part-ownership of an asset is forbidden under Saudi Arabia’s strict Islamic law, the company instead offers block charter programmes to companies and sports teams. It also operates two Airbus A319 corporate shuttles thrice-daily between Jeddah and Riyadh, and is the first company to be permitted to fly domestic services. Although the government has said the status of state-owned Saudi Arabian Airlines’ air transport monopoly is under review, change happens slowly in Saudi Arabia, says one diplomat. “Progress only happens at the pace of the most conservative prince” in the country’s ruling council, he notes.
Tapping the lucrative Saudi market from just beyond its borders is one solution. Charter operator Bexair, based in tiny Bahrain, launched four years ago with backing from Saudi businessmen. It gets round Saudi bureaucracy by filing flight plans in the more economically-relaxed Bahrain and the UAE.
Other operators see Lebanon as a strong market. German business aircraft management specialist Cirrus Aviation has opened an office in Beruit to offer its mainly European-based aircraft to Arab customers for whom the cosmopolitan Mediterranean city serves as a hedonistic weekend retreat.
MURDO MORRISON/DUBAI & ABU DHABI & JUSTIN WASTNAGE/RIYADH
Source: Flight International
