Thursday, March 17, 2011

Crises place high demand on private aviation

Private aviation has been kept busy in recent weeks by a string of crises, both natural and man-made.

A rapid-response flight was organised by UK-listed company Air Partner, for example, to take equipment as well as rescue and medical experts into Japan last weekend following the devastating earthquake and tsunami. That flight, run on behalf of the UK Department for International Development, was followed by another ordered by German companies to evacuate foreign staff.

Although flights into New Zealand carrying stores and equipment to help cope with the effects of the earthquake that hit Christchurch last month are also still taking place, the Japanese disaster in particular is likely to place heavy demands on private aviation, especially as a number of airlines have scaled back their services to the country.

Away from natural events, a pattern has started to emerge in the unrest-hit countries of the Middle East and North Africa. Demand for private aircraft to evacuate people from Tunisia, Egypt and Libya rocketed, according to statistics from Avinode, the air-charter marketplace and data provider.

The number of private flights departing from Tunisia and Egypt “increased heavily after the first full day of turmoil and then dropped off significantly, as soon as leadership changes had been achieved”, says Magnus Henriksson, manager of Avinode Business Intelligence.

The crisis in Libya has been complicated by difficulties in obtaining permits and clearances. At an aviation industry meeting in the UK at the end of February, all the talk was about how personal contacts were the only way of obtaining the necessary authorisation to land – but even then did not guarantee success.

The patterns of demand were also different, according to charter operators. Requests for flights from Egypt came mainly from individuals seeking to flee the country. The profile of flights from Libya has been weighted towards governments – from the Philippines to the UK – and organisations such as BP, the oil company, seeking to fly their employees out of the country.

As a result, Tripoli became the busiest airport in the African continent during the last two weeks of February, just as Cairo was in the last two weeks of January, according to Avinode’s log of charter requests.

Air Partner’s figures tell the story. The UK-listed company alone has, in just six weeks since January, organised 63 flights evacuating more than 12,000 people and delivering 300 tonnes of aid.

Bigger fractions

The past few weeks have also been a busy time for fractional operator NetJets. The US-based organisation, with offshoots in Europe and the Middle East, has put in the biggest order yet for business jets, and confirmed the renewal of a link with a leading European airline.

The moves set the operator more firmly on a return path from the dark days of the downturn when clients were deserting, pilots and staff were being laid off, and aircraft were being mothballed rather than ordered.

“Growth has resumed,” said Luis Pinto, chief financial officer at NetJets Europe, at Corporate Jet Investor’s well-attended conference in London last month. “We’re cautiously optimistic but we do not see a sustained underlying trend yet.”

NetJets’ $6.7bn order for 120 Global business aircraft from Canada’s Bombardier is also a move away from Gulfstream products in the large, long-range class of business jets – a sector that has remained resilient during the global downturn. The first of the 50 Bombardier jets that are the subject of a firm order are due to be delivered at the end of 2012. NetJets has an option on a further 70 aircraft.

The Bombardier order follows hard on the heels of another big, ground-breaking order. Last October, the fractional operator announced a firm order for 50 Phenom 300 light jets from Embraer of Brazil, with a provisional order for 75 more. That $1bn order was NetJets’ first order from the Brazilian manufacturer, and marked a move away from the Hawker Beechcraft and Cessna aircraft that NetJets currently operates in the same category.

NetJets’ partnership with Lufthansa Private Jets is a different sort of deal. It gives passengers of the German airline access to the 150-strong fleet of NetJets Europe aircraft at as little as 10 hours’ notice. The move, which Lufthansa says is needed to cope with increased demand, follows the German airline’s closure of its Swiss Private Aviation subsidiary.

But this is not the first time that NetJets Europe and Lufthansa have worked together. Their previous alliance dated from the launch of Lufthansa Private Jets in 2005 to late 2007, when Lufthansa decided to go it alone.

The return will certainly be seen as confirming the position of NetJets Europe as the foremost private aviation company on the continent. But it also follows other moves by airlines to capitalise on the high margins of private aviation.

British Airways and CitationAir, the Cessna-owned operator, last year launched PrivateConnect, which gives BA customers access to one of the biggest fleets of business jets in the US, paying on a per-trip basis.