Grey market seen as biggest obstacle for ME business jet sector
- Middle East: Thursday, December 13 - 2012 at 11:32
Experts say the persistence of a thriving grey market for business jets in the Middle East remains the biggest hurdle to the growth of the sector in the region.
However, he acknowledged that the sector still faces several challenges, with the grey market being at the top of the list. "We consider it the biggest enemy of the growth of the market in the region," he told AMEInfo.com.
He says many factors contribute to the problem, including lack of awareness by passengers and indifference by governments to the potential dangers that the grey market poses. Complicating matters is the fact that there is no clear definition of what an illegal flight is, he adds.
Dave Edwards, managing director for the Middle East and Asia for Gama Aviation, estimates that illegal flights gobble up as much as 40% of the industry's profits. He says there are two categories of unlawful flights. "First you have the black market, which is people who behave utterly illegally. They are private aircraft and are not allowed to receive reward for that flight. And that's simple to police. It just requires the authorities to allocate more inspectors to do ramp checks. If that would happen, the black market would die tomorrow, it's as simple as that," he said.
The grey market falls into the second category, which he says are licensed operators who are operating outside of an area where they are supposed to be contained. But he says the authorities make little effort to police these flights. "In addition, there are clauses in the air charter lease contracts which state that the aircraft cannot be used for illegal purposes, but the enforcing of that by the financing company doesn't happen," he said.
Edwards says passengers often are unaware of the risks they are taking as these illegal flights typically have not received the required safety checks and will be flown by less experienced pilots. "I guarantee if the insurance companies were to say that they will not pay out in the event of an accident caused as a result of an illegal flight, you would stop the black market tomorrow," he said.
Both Al Naqbi and Edwards recognise that aviation regulators in the region already have more on their plate that they can handle due to the rapid rise of the big three carriers. Adding to the challenge is the fact that there are at least 22 civil aviation authorities in the Middle East and North Africa.
Al Naqbi pledged that MEBAA will step up its efforts to combat the issue, and his association has agreed to join a working group aimed at halting the illegal charter market in the region. The working group, proposed by Dr Mark Pierotti, COO of Al Jaber Aviation, has the remit to "stamp out the grey market within three years". Gama's Edwards is also on the group, along with representatives from the legal and insurance industries.
Al Naqbi also said his group will soon launch a new website to raise awareness with the theme: "Is My Flight Legal?" The site will explain key aspects such crew qualifications, safety standards, and requirements for permits and certifications.
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