Time-pressed executives fuel boom in Gulf private jets - Emirates24|7

Time-pressed executives fuel boom in Gulf private jets

(IMAD ALAEDDIN)   

 
 

The number of private jet operators in the GCC will double from the current 22 driven mainly by demand from Saudi Arabia and the UAE, an industry executive has forecast.

 

“The Middle East charter market is currently worth nearly $500 million (Dh1.83 billion) a year, with business coming mainly from Saudi Arabia, which accounts for a majority share of the market, and the UAE, with a market valued at around $176m (Dh645m),” Ammar Balkar, Chief Executive of the Middle East Business Aviation Association (Mebaa), told Business 24|7.

 

His claim is backed by research conducted independently by Royal Jet, which says the Middle East business aviation sector is growing at a compound annual growth rate of 40 per cent in terms of aircraft movements and fleet growth.

 

The value of the region’s charter market has achieved 23 per cent annual growth over the past two years. According to data available with Mebaa, there are 22 private jet operators in the region and Balkar predicts this number will double by 2010.

 

“Some Saudi businessmen start their day flying to Kuwait at 0800 hours in jets and then flying back to different cities within the kingdom to follow up on their business,” says Taher Agueel of Riyadh-based Nas Air, which launched a business service in February.

 

“Another factor is the kingdom is a big country and travelling from the north to the south is definitely much more time efficient in a privately hired aircraft.”

 

Nas Air plans to invest over $4bn (Dh14.68bn) in the next five years to expand its business-class and regular passenger carrier services.

 

At the Middle East Business Aviation event held this year, $907m (Dh3.32bn) worth of on-site orders were signed in two days by manufacturers of business jets. Last month’s Dubai Airshow saw the largest order value and expansion plans announced by charter carriers from the region.

 

“Business aviation has become a need both regionally and internationally, because it addresses a gap that is being felt now more than ever before, especially here in the Gulf,” says Shane O’Hare, Chief Executive of Royal Jet – one of the region’s business jet carriers.

 

“The magnitude of growth here across all industrial sectors in the past five years is phenomenal. That has left executives looking for travel options that service their unique and specific business requirements. Part of the reason is also the fact that frequent business passengers and clients have recently experienced a dip in the services offered by commercial airline companies internationally,” says O’Hare.

 

Mebaa’s Balkar attributes the business jet market’s growth to the security situation post 9/11. Since then, the Middle East has recorded major growth, with the six GCC states accounting for 80 per cent of the total business aviation activity in the Middle East and North Africa region.

 

With more business aviation providers entering the market, competition to offer affordable rates has increased. Therefore, demand for business jet providers will continue to rise, said Balkar. “The industry is expected to expand by 15 per cent year-on-year, generating more than Dh3.67bn by 2010. In the next five years, the number of business jets bought by private owners will go past 100,” he says.

 

“With growth outpacing the surging markets of Asia, business aviation has an exceptional opportunity for advancement,” says Philip Pottisou, Vice-President for market analysis at Bombardier, the France-based maker of business jets.

 

ExecuJet, a private jet operator headquartered in Switzerland, believes prices for chartering a business jet and the availability of smaller planes have widened the customer base.


“Earlier, there were only high-end aircraft. Customers now have flexibility,” says Mike Berry, Middle East MD at ExecuJet.

 

Q&A with Shane O’Hare

 

Abu Dhabi-based Royal Jet is one of the largest beneficiaries of the region’s business aviation boom. Chief Executive Shane O’Hare says the Gulf is still awash with opportunities, unlike Europe and North America. “It’s still a virgin marketplace. The business aviation market in the Middle East could reach $800 million (Dh2,936m) by 2012,” he tells Business 24|7 in an interview.

 

What is Royal Jet’s market share?

Our fleet has grown from two aircraft in 2003 to 12 today. We have 16 per cent share of the Gulf’s business aviation market.

 

What factors are driving growth?

Safety concerns, airport delays and lack of high-frequency routes are among the key drivers of growth in this segment. Unlike Europe, where there are many cities that offer daily flights between them, there are very few high-frequency routes in the Gulf, especially non-stops, making it difficult to fly in and out of a destination on the same day. Another reason for demand is the development of airports in the Middle East. More than $40bn (Dh146.8bn) is being invested in projects to develop facilities such as Dubai World Central and the new Doha International Airport.

 

Who are your main customers?

Of course, business jets go well with business executives who value privacy and confidentiality as well as convenience. A lot of multinationals also use services when it requires business jets in the Middle East.

 

How do you see the sector growing?

This is only the beginning of the boom. As economies expand and businesses grow, it will leave executives looking for travel options that service all their specific business needs. (Nitin Nambiar)
 
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