By Ivan Gale www.thenational.ae
Optimism is returning to the executive jet travel market after several months of improving demand but a note of caution remains even as the gloom fades.
Discretionary spending for purposes such as luxury air travel was one of the first things consumers ditched during the credit crisis two years ago, forcing operators around the world to cut costs and delay expansion plans.
But now, the UAE operators say they are receiving more enquiries as companies, government delegations and wealthy individuals start spending again.
“We are an upward curve,” said Shane O’Hare, the president and chief executive of Royal Jet, which operates mid-size and large VIP jets. “We are way off calling it a recovery of the market.”
The UAE has almost a dozen companies operating business charters as well as aircraft owned by individuals, giving it the second-largest executive fleet in the Middle East after Saudi Arabia’s.
In the heady days of the mid-decade boom in the UAE, business jet travel took off, spurring new entrants. The year-old Al Jaber Aviation (AJA) launched its executive jet business during the worst of the downturn. Like other operators, it reviewed its growth plans and pushed back deliveries of new aircraft by one year.
AJA is targeting the large VIP business jet category, a space occupied by Royal Jet and just a few other major operators around the world, said Mark Pierotti, the chief operating officer.
“With the market for smaller aircraft, the [profit] margins are tight,” he said. “There are so many small aircraft, it is price sensitive, and there are a lot of operators [charging] under their direct operating costs.”
Mr Pierotti said he was encouraged by the level of business his company had in the spring season and hoped for an even busier summer.
“Certainly, for charters, the last months for AJA have been fantastic,’ he said. “We are getting many, many requests every day.”
Mr O’Hare said the downturn helped weed out some of the weaker companies worldwide.
“In the business jet market, a lot of new competitors come in but, at the end of the day, a lot of those new players fall by the wayside,” he said.
“What this recession has done is accelerate this process.”
In the UAE, no operators are known to have shut down. But last December, Istithmar World Aviation Executive Jets, which managed executive jets on behalf of their owners, closed its doors, citing “commercial reasons”.
With its enormous investments in airport infrastructure, the UAE boasts some of the best facilities for private jet travel. Royal Jet is based at a private terminal at Abu Dhabi International Airport, while Al Bateen Executive Airport opened last year on Abu Dhabi island as a dedicated facility for business jets, after being converted from a military base.
In Dubai, Al Maktoum International Airport opens this month as the emirate’s second flight fa cility and has allotted a significant portion of its space for executive jet travel.
Most of the emirate’s business jet charters currently operate from Dubai International Airport.
UAE business jet companies were recently rattled by sharply higher costs on flights to Iraq, one of the most promising new markets. The increased costs amounted to tens of thousands of dollars per flight, Mr Pierotti said. It is believed the Iraqi government increased the fees to protect its own business jet operators, which were just starting up.
A delegation of the companies visited Iraq’s civil aviation ministry in co-ordination with the Dubai-based Middle East Business Aviation Administration this year, with some positive results.
“We think we have sorted it,” Mr Pierotti said.
“We have not seen high commissions recently but you never know. It could come back.”