The private jet sector in the United Arab Emirates appears to have put the turbulence of the past couple of years behind as their business operations post double-digit growth even despite the volatile fuel prices, according to industry sources.
Abu Dhabi-based
Royal Jet said it is poised to register record growth by end-2011 after achieving a 32-per-cent revenue hike in the first nine months of this year. Dubai-based
ExecuJet Middle East, meanwhile, has seen its business expanding by about 20 per cent month-on-month.
Asked how they are coping with fluctuating oil prices and the economic slowdown, Shane Jeffree O’Hare, President and Chief Executive Officer of Royal Jet, said their company has taken the market conditions head on.
“With the recession of course everybody’s been affected. Charter business globally has been affected by up to 30-per-cent reduction of business, particularly in the [United States], which was the hardest hit, followed by Europe. The Middle East managed to maintain some growth levels because of [the region’s] economy, and also because there are countries here such as Iraq and Afghanistan [ that are undergoing massive developments],” O’Hare said on Sunday during an interview at the
Dubai Air Show.
Even the political turmoil in the Middle East and North Africa, which erupted in the first quarter of 2011, failed to dampen Royal Jet’s market sentiments.
“The Arab Spring swings in roundabouts, if you like. In some ways it reduced our business because of the turmoil in certain places, in other ways it increased our business. The net effect was a leveling off,” he said.
The Royal Jet executive has attributed their bullish performance to the strategic and innovative improvements they have put in place in response to the challenging business environment.
Aside from luxury charter services, the company’s products and services have also been diversified to include four other key segments such as medical evacuation service, exclusive fixed-based operations (FBO) facilities, aircraft management and charter brokerage.
“We decided to continue a measured growth programme through [the recessionary] period. We felt [this scheme] was necessary to make sure that when we came out of the recession, we’re in a very strong position to catapult off again,” O’Hare said.
The company has also expanded their business reach beyond their hub in the UAE capital by opening new offices that serve as their general sales agents in Oman, India, Saudi Arabia and the United Kingdom.
“This year, those investments have started to pay off [with our] revenues increasing by 30 per cent and our flight hours, which is the measurement of the operation, increasing by 32 per cent. These we managed to achieve after only eight years of operations so we’re very pleased with the growth,” O’Hare said.
Business aircraft market seen stabilising
Mike Berry, managing director of ExecuJet Middle East, said the private jet sector has been a buyers’ market since the financial meltdown of 2008 amid the aircraft glut and relatively weak business travel demand.
However, recent market indicators reflect a more promising environment for the regional chartered aircraft industry.
“It certainly has been a buyers’ market since the downturn. It has bottomed up now and prices are no longer falling like they were. I think the fire sales of aircraft have now gone and we’ve seen a little bit of an upward trend especially on the big wide-body aircraft that are in demand on a global basis. So I think [the sector] has stabilised and if anything, we look forward to growth going forward now,” he said.
As a private company ExecuJet does not disclose their finances to the public, but Berry said they have seen steady monthly growth of around 20 per cent across their business comprising FBO, aircraft management, maintenance, sales and acquisitions, as well as completions consulting.
The company recently added two aircraft in its fleet, making its total number of aeroplanes under management across the Middle East at 22. ExecuJet’s business model focuses on providing comprehensive solutions to aircraft owners who are looking for operators who will manage all the relevant aspects of a private jet business.
Berry added that their business model has helped them to gain significant market share in the highly competitive regional private jet industry.
Royal Jet looks to grow its fleet ‘organically’
Royal Jet’s chief executive O’Hare said they are expecting to increase their fleet organically over the next two to three years as the business travel market shows steady signs of an uptrend.
“There’s enough demand to require at least one larger unit per year in the current climate. But as you know the current market is quite uncertain as well so we’re taking a fairly conservative outlook,” he said.
Royal Jet, which is jointly owned by the Abu Dhabi Aviation and the Presidential Flight Authority, currently has six Boeing Business Jets, two mid-range Gulfstream 300s, one long-range Gulfstream IVSP, one Lear Jet 60 and an Embraer Lineage 1000.
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