Taking off

Business aviation is growing rapidly in the Middle East with operators investing in new aircraft, and airports and private companies building new fixed base operations.

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By  Neil Denslow Published  February 1, 2004

I|~|bafeature_m.jpg|~||~|The business aviation market in the Middle East is growing rapidly, with a number of operators, led by Saudi Arabia’s National Air Services (NAS), ExecuJet and Royal Jet, expanding their fleet. The level of service for business jets is also improving, as the market becomes more mature and increasingly competitive; for instance, three fixed based operations (FBOs) are set to open in Dubai within the next year alone. Globally, the business jet industry is in the doldrums, but their use in the Middle East is rapidly increasing. Executive Flight Services at Dubai International Airport, which serves private aircraft, handled 3526 movements in 2003 up from 2422 in the year before, a rise of 46%. The air show, which was held in 2003 but not in 2002, helped boost these figures, but the underlying figure is of clear growth. “This business has always increased,” says Mohammed Ahli, member of executive board & director of operations, Dubai, Department of Civil Aviation. “It has never gone down since we created a service provider for this kind of aircraft in 1985.” Business jet use, including both charter flights and private ownership, is becoming increasingly popular due to a combination of global and local trends. Worldwide, the use of private aircraft by corporate leaders and high worth individuals has been driven by the flexibility they offer. Passengers can take off whenever they want, as there is no need to wait for a scheduled departure. This comes at a price, roughly six times the cost of a first class seat, but for some, the convenience offered by private jets makes it worthwhile. “There is a group of customers who want the full flexibility that having a business aircraft will provide in terms of having an aircraft and crew at their full disposition,” says Horm Irani, managing director, ExecuJet Middle East. “Their schedule is not tied to the other 200 people in the back of a jetliner, and they have got an aircraft to wait for them. So, if their business meeting takes an extra half an hour, they do not have to cut it short to make a scheduled flight,” he explains. This flexibility is an especially important factor locally, as the lack of regular commercial services within the region means that chartering can significantly cut down the time needed to travel round the region. A Dubai-based businessman, for instance, recently needed to attend a series of four hour meetings in Beirut, Jeddah, Riyadh, Doha and Bahrain. Travelling on commercial services it would have taken 10 days to do all this, but with a charter jet it took only five. The speed of service for business jet customers also makes it an attractive option for making short hops. “If you want to go from Dubai in the morning and then come back in the afternoon, it is advantageous to use a charter flight, as you don’t have to wait for two hours in the airport,” says Elie Abdo, sales & marketing manager, Middle East, for charter broker, International Air Charter. “You get to the airport and are onboard the aircraft in 10 minutes.” Privacy is also a key consideration for this breed of traveller, and using a business jet enables them to fly unseen into the country and then be whisked through a VIP lounge, straight into a waiting limo. Similarly, onboard the aircraft, passengers can discuss business deals, for instance, without being overheard. However, while these factors have all helped boost the use of private jets, the key issue, especially since 9/11, is security. The terrorist attacks on New York and Washington greatly highlighted the advantages of private chartering and travelling with just personal associates. “In a business aircraft all the passengers and crew are known, and that eliminates any security risk,” comments David Ovey, a commercial aviation pilot.||**||II|~|ammar_m.jpg|~|Ammar Balkar of Royal Jet|~|Alongside these wider trends, specific factors within the region are allowing the Middle East’s business jet sector to outpace global trends. The most significant is the region’s developing economy, especially within Dubai, as this is encouraging senior corporate personnel to visit the Middle East more frequently. “Previously, the companies here were run by local managers who didn’t need charter flights. The CEO or the owner of the company is the one who will mostly use charter services, but they were all in Europe in the head office,” says Abdo. “Now, a lot of European companies [have large presences] in Dubai and Abu Dhabi, so the CEO of the company comes here more often.” Many of the large family companies in the Middle East have also changed from being based and operating in just one city to being truly region-wide players, which has therefore boosted the management’s need to travel. “Executives who are used to using corporate planes are also coming from the West to work in Dubai,” adds Ovey. The increasing number of charter operators within the Middle East is also encouraging the use of business aircraft, as the industry is now more open. Previously, those looking to charter had to turn to private individuals who were not legally registered as an operator, which meant that charter flights were uninsured and unregulated. “Historically, people would have to fly with a Part 31 operator who did not have the legal right to fly them, but some would fly and take their chance,” says Rob Dicastri, corporate development director, NAS. The only alternative would be to hire an aircraft from a European operator and then pay for the cost of flying it empty to the Middle East on top of the cost of the journey they actually wanted to make. However, doing that, notes Dicastri, would make taking a charter flight within the region “unbelievably expensive.” Now though, the region’s charter fleet is large and growing fast. At December’s Dubai air show, for instance, Qatar Airways, Bexair and NAS all announced large business jet orders, while ExecuJet and Royal Jet have also grown their fleet quickly as well. Royal Jet, for instance, only began operations in May 2003, and it already has three aircraft and plans to add one or two more this year. “Business has been excellent,” says Ammar Balkar, director of sales & marketing, Royal Jet. “We have exceeded all of our business plans and targets.” Yet, while the region’s fleet is beginning to grow, some of the surrounding framework needed to make the industry truly thrive is still lacking. For instance, while most of the GCC countries are able to process requests for overflight and landing permissions inside an hour, Saudi Arabia officially requests three days’ notice. Charter companies with good connections are able to get permissions faster than this, but for operators outside of the Kingdom getting the paperwork cleared is a major problem. “It’s difficult for them [non-Saudi companies] to capture the customers here, as they can’t guarantee service,” says Dicastri. “There are definitely barriers to entry for companies coming into Saudi.” The level of service offered to business jet customers within the Middle East, especially at smaller airports, is also often less than ideal, as they lack dedicated facilities and are not responsive enough to customer needs. As such, aircraft can be left waiting on the apron for clearances to come through or for catering to be delivered. At the major cities, though, the level of service is generally up to global standards. Large airports, such as Dubai, Jeddah, Riyadh and Bahrain, have dedicated FBOs and they have become accustomed over the last few years to handling business jets. “Customers can see a very nice change in Cairo, [for instance] where originally they [the airport] were used to handling military VIP aircraft, which would not really require much in the way of VIP handling. Now though, they are used to handling true business aircraft and high worth individuals who expect the VIP service they get worldwide,” says Dicastri.||**||III|~||~||~|Competition between FBOs at some airports is also driving up the level of service. Saudi Arabia is leading the way in this regard, with two companies, Jet Aviation Group and Arabasco, operating facilities at both Jeddah and Riyadh Airports. As customers now have an alternative, each facility is striving to offer the best service level at the lowest rates. “Jet Aviation and Arabasco do compete with each other pretty hard,” says Dicastri, “and you’ll see customer flip-flopping back and forth between them.” Other airports are yet to reach this same level of competition, but Dubai is on the way. It currently only has the DCA’s facility, but Jet Aviation and ExecuJet are both now building FBOs. The DCA is also set to replace its existing private terminal with a larger facility, which will open next year. “The demand is too much [for the current facility],” says Ahli. For charter operators, the increasing competition is welcome, as it should boost the level of service. Once the new facilities open, “we can ensure the quality is top notch and the price is reasonable,” says Dicastri. “Because, right now, you don’t have a lot of choice when you go into Cairo or to Dubai or Bahrain… Competition is going to be healthy,” he adds. The FBOs in Dubai will largely offer the same services and facilities as other centres around the world. For instance, they will have VIP lounges, meeting rooms and crew rest rooms, as well as staff to handle requests, such as for hotel accommodation or city transportation. The service providers will be competing with each other, but they are convinced that there will be enough traffic at the airport to keep them busy. “Business aircraft movements [in Dubai] have grown from nine or 10 a month about three years ago to 10 to 12 a day currently. That’s significant growth, and I think that is only going to continue,” say Irani. The number of FBOs at Dubai is also likely to increase beyond these three, as other companies are also looking to build facilities at the airport. “We will have even more,” says Ahli. “We have got a lot of applications in process.” The Dubai FBOs, as well as Royal Jet’s FBO in Abu Dhabi — which is also set to open next year — will also increase the availability of maintenance within the region. This is important, as presently operators need to send their jets to Europe or the United States for heavy maintenance work, such as C-checks and D-checks. This then significantly increases the cost of operating jets and it also means they are out of service for longer. “If you look at all the maintenance centres in the [Middle East] area, they are all taking care of commercial aircraft. They do maintenance on big widebody aircraft, but who is taking care of the small private jets?” asks Balkar. “Now, we and the other FBOs will be providing this,” he adds. The exact maintenance services to be offered by each FBO are yet to be finalised, but the service providers are talking about supporting a range of manufacturers. ExecuJet will have a Bombardier service centre handling maintenance up to C-Level checks, while Jet Aviation is talking to a number of other aircraft-makers including Gulfstream, Dassualt and Embraer. “We are bringing a group of people down there [to Dubai] who already have the skills and are licensed mechanics for all these aircraft, so it is a natural choice to become a service centre for those manufacturers,” comments Markus Inäbnit, vice president, strategic planning & corporate development, Jet Aviation Group. These facilities in Dubai and Abu Dhabi will only ever be used by a very limited number of people. However, the status of these customers, all of whom will be high net worth individuals or corporate leaders, means that these facilities should have a big benefit for the whole economy. “In a modern country like Dubai, if you don’t meet these [VIPs] in an excellent way… it will actually reflect on the whole country,” says Ahli.||**||

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