Regional unrest drives demand for private aviation in the Middle East

Middle East's private aviation market is going through its own age of enlightenment, experts aver. This is due to the soaring demand for private jets, which has been necessitated by the growing need to transport officials and delegates attending the numerous meetings, being held to discuss political and security situation in the region.

Honeywell Aerospace forecasted that sales and delivery of new business jets worldwide will reach approximately $230 billion from 2011 through 2021. This represents approximately a two per cent increase in total expected industry sales value compared to the prior ten-year horizon the company forecasted in 2010. In the 20th edition of its annual "Business Aviation Outlook", the company also expected that Asia, Africa, and Middle East regions will be ranked the highest in purchase expectations regardless of the economic environment. According to Honeywell, Asia, Africa, and Middle East regions are ranked the highest in purchase expectations regardless of the economic environment. Their purchase plans have moved up from 2010 levels and once again exceed the overall world average. Purchase expectations of nearly 38 per cent recorded in Africa and the Middle East were up almost nine points from 2010 levels. Asian purchase plan rates rose about five points over 2010 levels in the current survey, and at 45 per cent, lead all world regions. "The level of caution continues to be tied to concerns specific to each region," said Rob Wilson, president of Honeywell's Business and General Aviation business unit, in a company statement. "This year, operators outside North America displayed mixed attitudes about the strength and pace of this nascent recovery," he added. For 2011, Honeywell Aerospace estimated deliveries of 600-650 new business jets, down approximately 15 per cent from 732 in 2010 due to continued slow global economic recovery. A thriving market for private aviation It comes as no surprise that forecasters look positively at the Middle East private aviation market. Despite the unstable political situation in most countries of the region, the Middle East and North Africa region (Mena) is considered as one of the fastest growing private aviation markets in the world, and one of the most attractive markets for companies operating in this field. The above was strongly personified in Royal Jet's business performance. In 2011, the luxury flight services company, which is jointly owned by "Abu Dhabi Aviation", a publicly listed company on the Abu Dhabi Stock Exchange, and the "Presidential Flight Authority", the royal flight service, has recorded a revenue increase of 32 per cent.

"We have seen an increased demand for private aviation this year, and 2011 is the best year for us," says Fahad Karmostaji, Vice President for Commercial Affairs at the Royal Jet Company. In an interview with "Alrroya Aleqtissadiya", Karmostaji confirmed that the frequent meetings of ministers and diplomatic missions due to the current regional unrest have had a positive impact on the volume of Royal Jet's regional business this year. "Flight hours increased by 30 per cent, while our revenues have increased by 32 per cent," he said. Royal Jet's positive revenues may come as no surprise. The United Arab Emirates, where the luxury jet operator is based, holds the second largest private aviation market (following Saudi Arabia), with an overall market volume of $200 million (Dh736m). Having said that, the UAE's market share is equivalent to 40 per cent of the total private aviation market in the Middle East, which is equal to $500m. Taking into consideration the growing number of private jets, and the operators' strive to take on new challenges, Ali Al Naqbi, Founding Chairman of the Middle East Business Aviation Association (MEBAA) anticipates that the UAE private aviation market will maintain an annual growth rate of 12 - 15 per cent. As for Fahad Karmostaji of Royal Jet, the above numbers reflect "a positive leap for the UAE private aviation market within the Middle East region," adding that his company accounts for about 23 per cent of the total UAE market share. On a similar note, MEBAA forecasts that the private aviation market in the Middle East will witness an annual growth rate of 15 - 20 per cent over the next six years, and the market value is expected to reach $1bn by 2018. "The combined market value of the Middle East private jet charter market is about $700m annually," comments Bilal Yousuf, Head of Strategy and Business Development at Al Jaber Aviation LLC (AJA) in Abu Dhabi. According to Yousuf, the GCC tends to be a market for mid-sized jets and larger as light jets are not practical. By seating capacity, private jet models are typically in the 6, 8, 12, 15, 19 and above. By range, private jets in the GCC can fly 4, 6, 8, and 12 hours. "Popular models are Airbus A318/319 ACJ, Boeing BBJ, Bombardier Global Express, Challenger, and Learjet, Cessna Citation, Dassault Falcon 7X, 900 and 2000, Embraer Legacy and Lineage, Gulfstream G650, G550 and G450, and Hawker 900," he said.

"These models range in price from $14m to $85m. There are a number of custom-built large aircraft for the ultra-rich costing a $100m and more," he added. Jet operators follow an hourly-based pricing Pricing-wise, most private jet operators follow an hourly-based pricing method, depending on the aircraft model, extra operational costs and whether the client prefers to keep the aircraft for a longer period. "Private air travel is both a vital business tool and lifestyle choice for those living in the region," explains Ian Moore, Chief Commercial Officer at VistaJet. "Whilst Saudi Arabia is currently driving 70 per cent of our traffic in the Middle East, we expect demand to increase from across the region particularly from UAE and Qatar, so that by end of 2012 I would see the Middle East representing around 15 per cent of our revenue," he added. The other optimist is Mark Hardman, ExecuJet Middle East's Operations Director, who described 2011 as a "very positive year in terms of aircraft sales and charter sales." In an interview with "Alrroya Aleqtissadiya", Hardman explains that business is every competitive and access to a private jet often gives the competitive edge on big international deals, so "a private jet is essential if you want to do top level business in places the airlines do not service with any real frequency." "Examples of these are Afghanistan, Iraq and parts of Africa. The private jet opens up thousands of airports and means business can be completed within a day," he added. Despite the market's strong performance, Bilal Yousuf of Al Jaber Aviation LLC believes that the regional private aviation market witnesses a number of operational challenges, one of which is maintenance. "The support infrastructure in the Middle East remains weak and does not meet the market demands," he explained. "This is true in maintenance as well as catering and handling services. Some operators have their own maintenance organisations to satisfy at least some of their own requirements, and major maintenance work is still done outside the region," he added. But according to ExecuJet, whilst we remain cautious the financial recession in the region has principally passed, the regional market continues to show strong performance.

"In the last 12 months we have seen a tripling in aircraft maintenance capacity and 20 per cent plus growth in our FBO and Charter businesses. So we remain confident in the market for our professional services and products," Mark Hardman of ExecuJet said. Consider also reading: Volatile oil prices 'big threat' to global aviation Middle East air traffic down 3.6pct on unrest: Iata Iata airline outlook down 54pct on oil hike, Mena unrest