May 19, 2011 By: Robert Evans
Business aviation plane manufacturers and experts at the industry’s annual EBACE show voiced doubts on Wednesday that it would emerge soon from the slump brought by the 2008-09 world financial crisis.
And despite hopes that East Asia and the Middle East might inject strong new life into the aircraft market, analysts said the outlook had dimmed with the tsunami and nuclear disaster in Japan and the political and social turmoil in Arab countries.
The shakiness of global economic recovery “certainly has an effect on the potential for new sales,” Claudio Camalier, vice-president of Brazil’s Embraer (EMBR3.SA), one of the world’s top planemakers, told reporters.
Brian Humphries, president of the European industry grouping EBAA, said that although aircraft deliveries in the multi- billion dollar sector were picking up, the business aviation market was tough and operated on small margins.
Business aviation, which is totally separate from the commercial airline industry, ranges from large corporate jets built by firms like Airbus Industrie EADS.PA and Boeing (BA.N) down to small air taxis and two-seater short-range planes.
Employing hundreds of thousands of people, it incorporates a broad spectrum of specialist suppliers of communication equipment, furnishing, leasing and financial support services, as well as dedicated airports and servicing centres.
FLIGHTS UP THIS YEAR
Figures issued in advance of EBACE, now in its 11th year, showed that business aviation activity picked up last year with an increase of 5.5 per cent in flights after a huge decline in 2009 amid corporate cost cutting.
Industry association chiefs expressed confidence that an upturn was under way as China, Russia and Middle Eastern countries began to show interest in expanding their own part of the market for moving businessmen around the globe.
On Monday, North American association NBAA.L president Ed Bolen announced that a new annual show — like its yearly event in the United States and EBACE — would be held in Shanghai next March to tap into the nascent Asian scene.
But Jean Semiramoth, chief operating officer of the long- established Altair aviation finance procurement company based in Cyprus, said the optimism that big new markets could now emerge was for the moment misplaced.
“In North Africa and the Middle East, we are seeing many projects being postponed across all aircraft types, including the large business jets and the bizliners,” he said. Some owners and operators there were likely to start selling off planes.
And even though China’s economy looked strong and finance was available, Semiramoth said, national laws there made it very difficult to bring in second-hand planes — a significant part of the business aviation sector.
Other analysts said that movements around China were still heavily restricted as much of the country’s airspace was still reserved for the military and that promised moves to ease the problem had yet to materialise. (Editing by Barbara Lewis and Jon Loades-Carter)