Looking skywards
New airport infrastructure is creating optimism among the Middle East’s business jet operators but for manufacturers stagnation concerns remain
Why business jet operators are feeling optimistic for the future
For all the gloom that lower oil prices and falling economic growth in the Gulf has brought to commercial airlines this year, the business aviation market appears to be standing on somewhat firmer ground.
Although now predicting slower growth this year than the 15 per cent originally forecast, Ali Alnaqbi, founding chairman of the Middle East and North Africa Business Aviation Association (MEBAA) says it will still be one of the world’s fastest growing regional markets at 9 per cent.
And he suggests fuel hedging and other factors mean business flyers are not as impacted by falling oil prices as some might expect.
“I was asked the same question when oil prices reached $130 and I gave the same answer, it doesn’t really effect that much,” he says.
“If the price [of a flight] is $95,000 versus $100,000 it doesn’t make a big difference to a businessman but it will make a big difference to the guy who is buying airline tickets who looks at the cost.”
In practice though, lower oil prices are having their own impact on the industry, according to Adel Mardini CEO and president of Dubai-headquartered fixedbase operator (FBO) Jetex.
“We have seen that [less demand] only for the wide body aeroplane,” he says.
“Because the wide body aeroplane is connected to the Russian and Middle East and the oil industry. This is why we can see the medium and low jet has bigger demand compared with this one.”
Mardini holds onto hope that a new production cap agreed between OPEC and non-OPEC members at the end of last year could see this trend reverse in the coming months.
But in the meantime the regional jet
private jet industry continues to expand.
According to data released by market intelligence firm WINGX at the MEBAA Conference in Dubai last month, there were 2,568 business aircraft departures from the UAE in 2016 compared to 2,165 and 2,155 in 2015 and 2014 respectively.
This growth was lead by Al Maktoum International airport at Dubai South, which is now the country’s top airport for business jets.
WINGX data showed YTD departures at Al Maktoum were up 37 per cent in year to date terms in 2016 to 763, compared to 2 per cent growth at Dubai International to 564.
April saw the first private jet take off from Dubai South’s VIP Terminal, a dedicated facility catering to ultra-high net worth travellers.
The 5,600sqm terminal, which is described as the “first and only seven-star private aviation facility”, is expected to handle 20,000 passengers in 2017 and 60,000 in 2020.
But while the new facility does present opportunities, privately there are also concerns.
Among them, Alnaqbi admits some companies are uneasy with having to share the terminal, which is designed to accommodate a number of FBOs with their own dedicated lounge facilities, due to privacy concerns.
“We fully support DWC but we fully believe our market here does not like to share,” he says.
“IF THE PRICE [OF A FLIGHT] IS $95,000 VERSUS $100,000 IT DOESN’T MAKE A BIG DIFFERENCE TO A BUSINESSMAN BUT IT WILL MAKE A BIG DIFFERENCE TO THE GUY WHO IS BUYING AIRLINE TICKETS WHO LOOKS AT THE COST.”
To date Jetex, Jet Aviation and Falcon Aviation, are sharing the facility, which was originally designed with four operators in mind.
Jetex officially opened its FBO lounge, including a fleet of Rolls Royce cars for airside transport and a cigar lounge last month, and will also offer a 5,000 square metre hangar facility for aircraft storage and maintenance in 2017.
“It is our largest facility around the world. We tried before to be in Dubai International but there are no slots and this new airport came with new slots. This is why we are there,” says Jetex’s Mardini, who dismisses concerns regarding the sharing arrangement.
“Travellers like to shop in duty free and this is what the VIP terminal can offer and the rest cannot offer.”
Equally though, several operators are also establishing their own personal space at the airport.
DC Aviation Al-Futtaim broke ground on a major expansion of its facility in October that will add a second hangar with 6,800sqm of covered space. The addition will bring DC’s total landside area at its business terminal in Dubai South to 24,000sqm and apron area to 13,000sqm and is set to open in Q3 of 2017.
Alnaqbi suggests announcements from other operators will follow, although he indicates an agreement is in place that only five operators – DC Aviation, Jet Aviation, ExecuJet, Jetex and Falcon Aviation – can operate from Dubai South until the 20,000-flight mark is exceeded.
“We have to be ready for Expo 2020 and you will see more contracts awarded in the near future about that airport to do with business aviation,” he says.