Another lost decade for European business aviation? Or is the sector on the cusp of a revolution in more affordable private aviation? Ahead of this year's EBACE, TIM ROBINSON reports from a RAeS event on 'Time to rethink Business Aviation'.

The event saw a wide-ranging debate on the future of business aviation in Europe and the UK. Click to watch the video debate

On 25 April the Royal Aeronautical Society organised a milestone debate for business aviation - with a varied panel to discuss the current challenges and future opportunities of this sector. Though tiny in comparison with commercial airlines, it nonetheless is significant in the jobs it directly supports (some 400,000 in Europe) - as well as being a valuable productivity tool that indirectly stimulates commerce. Yet the industry (which also includes medical evacuation flights and NGOs using private jets) struggles with its image - seen as elitist and only applicable to VIP fat cats and rich celebrities. Since the 2008 financial crash, some in the industry have described it as a 'lost decade' - with sluggish sales and a reluctance by some users (ie corporations) to defend their essential use of business aviation. The result has been pressure on all sides.

Opening the RAeS debate on the challenges of business aviation - Richard Koe, WingX-Advance, noted that today UK/European business aviation faced three big issues - regulation, access to airports and bringing in new users. 

Stifled by regulation?

Keeping up with latest avionics regulations may be mandatory - but do customers notice? (Dassault Aviation)

One challenge highlighted by more than one panellist was keeping up with constantly changing and highly expensive aviation regulations - which more often than not are targeted at airlines. Charlotte Pedersen, CEO of Luxaviation Helicopters noted that type ratings for a business jet can be eight times more expensive than an airliner rating - imposing huge costs on the industry. Steve Varsano, founder of the The Jet Business showroom, agreed, pointing out the costs of avionics regulations to the sector. Frequent updates to stay current meant quicker depreciation of new aircraft, with much of the improvements or operational benefits invisible to the customer or user.   

Access denied

GA and business airfields in the UK such as Fairoaks are under threat and could disappear. (Synergy Aviation)

Another key challenge to business aviation in the UK and Europe is in access to small airports. Brian Humphries, President of the European Business Aviation Association (EBAA), noted that allocation of airport slots is still held up in EU wrangling over Gibraltar and Spain - a complaint in common with Europe's Regional Airline Association. Humphries observed that the problem was not a shortage of airports in Europe, but it is a shortage of airports with the required navaids that can be accessed in all weathers. Meanwhile, Pedersen noted that despite urban growth and gridlocked traffic problems in many major cities, there were still very few urban heliports. A further pressure on smaller business and GA airfields in the UK, said Dave Edwards, Synergy Aviation, is from the fact that airports have now been reclassified as 'brownfield sites' and thus eligible for redevelopment into lucrative housing. Ironically, despite business aviation’s image as only for the rich, it is the lure of short-term greed in the form selling airfields to property developers that is now threatening the sector.

Bringing in new users

ACJ318 Corporate Jet. Publicly listed companies now are extremely wary of owning expensive assets like business aircraft (Airbus) 

It is also evident that the industry has had a hard time attracting new customers since the global financial crash of 2008 - with both less money being available, and companies wary of anything that smacks of  'luxury' to shareholders - despite statistics from the US that found 70% of business aviation flights were for middle managers, not top executives or CEOs. Said Humphries: "We need to change the perception of business aviation." Charlotte Pedersen agreed, saying that it was either a 'crash or a scandal' when business aviation or VIP helicopter services made it into the news. This means that there are now the same amount of aircraft (approx 640 per year) being sold as there were 20 years ago. What had changed though, is that the majority of these are now pre-owned, with 4-5 more used aircraft than new being sold each month. Partly this is due to extreme depreciation of brand new business aircraft ($2m per quarter said one speaker) and partly this is down to bad experiences of owning aircraft, where the sheer cost and keeping up with regulations means that charter is now the preferred option.  

The elephant walking slowly into the room

What effect might Uber Elevate have on VIP and Corporate helicopter charter sector in the future? (Uber)

Finally, while regulations, access, and attracting new users may be current challenges, the sector may also be facing new challenges ahead from technology and disruptive business models. Steve Versano, for example, described the emergence of 'flying car' or 'aerial taxis' technology - much in the news recently, as 'the elephant slowly walking into the room'. Though these concepts currently are in very early stages and unlikely to offer the continent-spanning capabilities of a large-cabin business jet, what effect will urban aerial taxis, flying short distances and taking the customer directly to their destination have on business aviation in the future? Another threat may come from the ultra-cheap GA 'flight-sharing' services that like Uber, may start eating into the lower end of business aviation's market share.

Opportunities ahead

Single engine turboprops could stimulate new customers in Europe for business aviation. (Cessna)

If the first half of the event painted a gloomy picture of business aviation in the UK and Europe, the second part saw a much brighter outlook. In particular, Brian Humphries argued that the introduction of new European single-engine turboprop (SETP) rules are set to make business aviation much more affordable and introduce private flights to a much wider audience. Could the democratisation of business aviation with aircraft such as the PC-12NG, Cessna Caravan and Piper M600 and ticket prices comparable with airlines (or even trains) lead a resurgence in European bizav? 

Cutting red tape

What will be the effect of Brexit on the UK business aviation sector? (EASA)

Meanwhile, Mark Swan from the UK's CAA addressed concerns about excessive regulation. He described the work the UK CAA, had put into cutting red tape and simplifying rules for the GA sector in Britain. Can a 'risk based' approach to aviation safety allow 'light touch' regulation and relive some of the burdens for business aviation? At the event he offered to host a 'regulations day' workshop to meet with and explain how regulators and industry could work better together. Another elephant in the room, here, is of course, Brexit and the effect that might have on UK business aviation operators. Swan, however said that Britain moving away from EASA would be “disastrous for regulations" adding he "can’t envisage it". 

Understand the customer

Could greater visibility and simplification of business aviation prices and options draw in new customers? (PrivateFly) 

Another solution put forward by Murray Law, Leaburn International, was that (drawing an analogy with Coca Cola) the business aviation sector was too focused on the 'tin can' (the aircraft) and not on the contents of that can (the user). "This is a people business - and we need to get our act together" says Murray Law. Part of this, it was noted, was the confusing nature of business aviation and the options available - from owning outright, to charter, to fractional ownership etc. Another point made was that for many people who might be able to afford to use a business aircraft, booking one still seemed to be a dark art and was not as visible as to the consumer as the multitude of airline websites and price comparison sites.  

Updating the image

No doubt here that this user of business aviation is not shy about proclaiming they like private jets. (YouTube)

Finally, effort must be put into changing perceptions. At EBACE, expect to see a new initiative from EBAA said Humphries, highlighting the jobs and everyday uses of European business aviation. Meanwhile, Steven Brown, Chief Operating Officer from the US NBAA, thought that what was needed was 'role-models' to speak up for and promote and defend business aviation. In the US, of course, one of the loudest proponents for business aviation is now in the White House. But can similar role-models be found in Europe? It is interesting that despite the negative image of business aviation in some quarters, studies by the EBAA found that decision makers were strongly supportive of the sector, once it had been explained to them. Is more education and communication simply the answer? 

Summary 

In short, the RAeS panel discussion provided a useful forum for discussion and debate on the current challenges facing the business aviation sector. In the UK and Europe this industry faces a different social and political environment than in the US, which, in the past has been much more supportive of corporate jets. It is clear it faces significant challenges, yet paradoxically it may be that if the 'low-end' of business aviation, through SETP, gains traction, that itself may do the most to stimulate sales, keep airfields open and introduce new users to private flights. 

Save the date for 2018...

Save the date for RAeS BizAv event

Tim Robinson
2 May 2017

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