Regional business jet market ready for takeoff

"In terms of business jet travel, the Gulf is a virgin market compared to the west," said Ammar Balkar, President and CEO of the Middle East Business Aviation Association. In the late 1990s there were only one or two private jet operators in the entire region, but today there are 22, and that number is likely to double by 2010, he predicted.

Several factors are driving the growth of business jet travel in the region:

1) Time savings - By avoiding long lines and connection hassles, executives can hop quickly from one city to the next, in some cases flying to meetings in two Gulf cities in the same day.
2) Economic strength - The region's economy is strong, which means companies have more money at their disposal for travel.
3) Privacy - Corporate jet travel offers privacy and confidentiality, which is a high priority for many executives in the Gulf.
4) Security - Since 9/11, demand for private jet travel has risen 40 per cent, largely due to fears about travelling on commercial flights. Some companies now require their executives to fly on private jets to minimise safety risks.
5) Influx of western companies - US and European companies that offer corporate jet service for their executives are increasingly moving their operations to the Gulf.
6) More airports - A growing number of secondary airports in less populated areas are now available in the region, making travel to remote areas much easier. This is especially valuable to oil and gas companies.

Chartering a business jet

Prices for chartering a business jet in the region have remained relatively unchanged over the past few years, but there are now smaller planes in the market to choose from, whereas previously there were only high-end aircraft. Therefore customers now have more flexibility when they are negotiating for a charter, Balkar said.

One development that will help bring prices down will be the availability of new economical 'light jets' in the region, according to Jason Martin, commercial director for Abu-Dhabi based Falcon Aviation Services. These planes, which are now being flown in the US, are made of lightweight composite materials that reduce fuel consumption. Light jets are expected to hit the Gulf market in about six months, Martin said.

Other than purchasing a plane outright, customers typically have several options for obtaining a jet:

1) Charter - A charter flight involves no ownership or other commitments. The customer simply pays for the flight on an ad-hoc basis.
2) Jet Cards - These are pre-paid credit cards used for time on a corporate jet whenever you need it. For example, Saudi Arabia's NetJets offers a jet card that provides 25 hours of flight time for one year starting at about $120,000 for their smallest planes.
3) Fractional ownership - Fractional ownership provides many of the advantages of owning a whole aircraft, but at a fraction of the cost. For example, a 1/16th ownership stake with NetJets, starting at about $400,000 per year, would entitle the customer to 50 occupied hours per year.

The best option to choose will vary for each customer. "If you fly over 400 hours per year, you are better off buying your own plane," Balkar said.

"If you fly less than that, there are now more options to choose from, but each customer will need to decide what is best based on their individual needs and budget."

Royal Jet flies high

One company that is benefiting from the growth of the regional market is Royal Jet, which has emerged as the largest business jet operator in the Gulf with a 16 per cent market share. Over the past four years, its fleet has grown from two aircraft to 12, and its year on year revenues have grown 30 per cent, said Shane O'Hare, president and CEO of the Abu Dhabi based firm.

He attributes the growth of the region's business jet market to a variety of factors, including safety concerns, airport delays, and lack of high frequency routes. "Unlike Europe, where there are many cities that offer daily flights between them each day, there are very few high frequency routes in the Gulf, especially non-stops, making it very difficult to fly in and out of a destination on the same day," O'Hare said.

Royal Jet offers several different services for prospective clients. For customers who wish to own their own planes, the company will serve as a consultant on the purchase, then manage, maintain, and fly the aircraft. As part of the arrangement, other customers will be able to charter the plane when it is not in use, which helps the owner save money and enables Royal Jet to boost its fleet.

Customers can charter a Royal Jet aircraft starting at about $3,500 per hour for a round trip flight on one of the company's smallest planes. At the high end, travellers can expect to pay $12,000 per hour for a jet carrying up to 58 people. Each charter is totally bespoke, with amenities such as VIP terminals, executive chef, comfortable beds, and in-flight entertainment.

See also:
UAE's Royal Jet in tactical move to broaden private charter appeal
Executive Flight Services creats hub for private aviation at Dubai International Airport