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Business Air News
Business Air News
The monthly news publication for aviation professionals.
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Modest business aviation growth swells the crowd at EBACE
If I buy a business aircraft now, will it hold or increase its value in the coming years? If I need to sell, will there be a willing buyer? If I charter, will there be enough customers to keep it flying? In truth, nobody knows.

If I buy a business aircraft now, will it hold or increase its value in the coming years? If I need to sell, will there be a willing buyer? If I charter, will there be enough customers to keep it flying?

In truth, nobody knows. In a strongly growing market there is a margin of error to limit the risk of prudent investments. When recovery is only modest, then it takes a braver buyer to take the calculated risk.

But that buyer may be rewarded with discounted acquisition cost and a head start when business builds up. Maybe that is why attendance at this year's EBACE show was the second highest ever, with key players keen to take the pulse of the industry. There were certainly plenty of opinions available from all quarters.

George Galanopoulos, md of London Executive Aviation, expects European charter demand to maintain gradual growth in 2011 and to gather significantly more pace in 2012. He believes that this year will see the continued erosion of some of the uncertainties that have held back charter demand. "We aren't out of the woods yet, but perhaps we can see the edge of the forest creeping into view," he says.

Of course there will be variations across the continent, and between categories of aircraft. Consultant Brian Foley believes that European economic factors will gradually force a downward shift in cabin size mix towards small and midsize jets. "Today, 38% of Europe's business jet population is large cabin," he says. "Over time, that should normalise to the worldwide average of 33%. Buying behaviour will continue to change as operators embrace the benefits of smaller aircraft, from fuel savings to lower user fees and other taxes."

Aoife O'Sullivan of Gates and Partners warns that growth may slow down owing to the lack of uniform treatment of tax across the region. Specifically, there is still a lack of clarity on application and interpretation of the new UK VAT rules, which is slowing transaction progress.

"Other regions such as Denmark, the Isle of Man and Malta are offering their own 'solutions' to the VAT problem which may see deals move to those regions," she says.

The manufacturer-eye-view, from Bombardier, is that business aircraft deliveries will continue to grow in 2012, and that Europe along with North America and China will account for the lion's share over the next 20 years.

Aircraft buyers and operators will want to weigh up the risks and opportunities for themselves. Nobody saw the global banking and credit crisis coming, and equally nobody knows for sure when to start riding the wave again.

David Wright Managing Editor

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