Positive Outlook for RoyalJet and ME Business Aviation

Speaking at the Aviation Outlook conference in Abu Dhabi last week, experts from the region’s business aviation sector expressed their confidence that the market would continue to grow during this year.

A panel moderated by Ammar Balkar, CEO Middle East Business Aviation Association (MEBAA) Mohammed Al Bulooki, VP of Airline Marketing and Aeronautical Revenue at Abu Dhabi Airports Company (ADAC), David Hernandez, (Vedder Price), Dr. Mark Pierotti (COO, Al Jaber Private Jets) Steffen Harpoth (Silver Air CEO) and Shane O’Hare, President and CEO of Royal Jet, agreed that the industry had enjoyed exceptional growth in past years. And while the current economic climate will inevitably restrict similar growth levels this year, all agreed that the signs are there for a very healthy 2009.

From Royal Jet’s perspective O’Hare explained that there were a number of reasons why the company was in a particularly favourable position, not the least of which is the fact that the Middle East region itself is well situated to quickly come out of the economic downturn.

“To a certain degree the Middle Eastern market has been isolated from the overall worldwide downturn, not least because of the high level of liquidity in the region and a strong GDP which is forecast to remain at around 7%,” he said. “Moreover as a company our strategy of product and market segmentation, protects us from the worst of the economic turbulence.”

O’Hare also highlighted how long term opportunities can arise out of difficult economic conditions. “Part of our growth strategy to the year 2020 is to increase our fleet in the super mid range by aircraft management as a major part of our business and we are firmly on track to more than double our fleet to more than 20 aircraft by the year 2012,” he said.

“Prices of aircraft are falling dramatically and corporate jet brokers are telling us that a year ago, there would be 30 people looking for one airplane. Today there are 30 airplanes looking for one buyer, pushing prices down by 30-40%. We are looking to add another Boeing Business Jet (BBJ) to our fleet and as such an aircraft which was priced at $75 million last year is expected to break through the $50 million price range by year end.”

Similarly aircraft management is another area that is presenting Royal Jet with growth opportunities.

“Optimizing an aircraft’s usage for a private or corporate owner within the difficult economic climate provides a win-win situation both for private jet operators and for aircraft owners,” O’Hare said.

All of the individual companies’ strategies are underpinned by the UAE Government’s confidence in the sector.

Mohammed Balooki, ADAC told delegates at the Terrappin organised event, that the development of the City Airport (formerly Al Bateen), continues on schedule and all prospective tenants at the new airport were continuing with their plans for facilities and there had not been any cancellations.

“We are also witnessing a growth in Fixed Base Operations (FBO) traffic and as a consequence we are gearing up to meet this demand,” he said.

The panelists also agreed that demand for private aviation is much less price sensitive, due not least to the fact that, for high net worth individuals and corporate executives, the flexibility they get with private jet travel allows them to travel when and where they want. As far as they are concerned it is well worth paying the premium in order to have their needs met.

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