Level flying

Part of Bell’s optimism is the continued growth of the industry in Australia, with local customers continuing to order and take delivery of new aircraft over the past year.

“There have been approximately eight to 10 aircraft ordered over the last year, mostly for for the long range, intercontinental business jets,” he said. “On top of that there has been a consistent pattern of new aircraft that are still being delivered, and more to come over future years. ” That reflects a continuing resilience for the local business aviation sector, which has been able to avoid the malaise that has taken hold in the larger global market. That has forced some manufacturers and other service providers to cut output, suspend development work on new aircraft and introduce initiatives to help support the market.

In 2011, deliveries of business aircraft remained low, with Honeywell reporting that corporate jet deliveries for the full year are expected to decline 15 per cent compared to last year. This is corroborated by the General Aviation Manufacturer’s Association, whose figures for the first nine months of the year show a 13 per cent decline in shipments of business jets and a 5. 9 per cent decline in turboprop deliveries. Those overall contributed to a 9. 8 per cent decrease in GA deliveries over the same period.

Nevertheless, there is light on the horizon. At the recent National Business Aviation Association (NBAA) Convention in Las Vegas, Honeywell released its Business Aviation Outlook report, which is forecasting that deliveries during 2012 will increase, as will intentions to purchase new aircraft, particularly in the key North American market.

For local dealers, signs are encouraging despite the last year proving leaner for corporate jet sales than the strong few years prior to the global financial crisis.

“We’ve certainly seen a pickup in the last 12 months in interest in corporate aircraft,” said Steve Padgett of Aeromil Pacific, the Cessna Citation dealer for Australia. “On the corporate side of things, we are seeing more enquiries than in the previous year. ”However, Padgett notes that the large inventories of used aircraft still available on the global market has pushed interest in new aircraft towards the smaller types.

“We’re not seeing a lot of interest in the larger aeroplanes like the Citation Ten, and that is purely because there are a fair few pre-owned aircraft on the market,” he said.

Interest is continuing to come from new clients who have not previously operated their own aircraft. “We are seeing a lot of new people that we wouldn’t have seen in previous years, particularly from the mining industry or other businesses that have been successful,” said Padgett.

A number of those businesses have not been deterred by the economic volatility being brought about by the European debt crisis.

“Because of all these economic blips all the time, people are starting to get used to that a little bit,” said Padgett. “Previously if you had a couple of hundred points drop in the stockmarket people would tremble.

Now it seems to be a bit of a norm, and I think people are pressing on – not everybody but some. ” In spite of that uncertainty, some manufacturers have been moving ahead with development of new aircraft. Bombardier continues to work on the latest aircraft in its Global range, the 7000 and 8000, which have gained AVWest as a local customer at the Paris Airshow in June, with an order for two of each model.

Cessna has also added to its product range, announcing two new models in October, the small cabin Citation M2 and the larger Citation Latitude.

The two crew, six passenger M2 has been positioned to fit between the existing Citation Mustang and the larger CJ series, while also giving it an answer to the wildly successful Embraer Phenom 100. The aircraft is expected to have strong appeal to Australian operators, given the popularity of the Mustang as an entry level jet in recent years.

“We’ve had some fantastic interest in that aircraft and we expect to be signing up a few orders before the end of the year,” said Padgett.

The mid size Latitude caters to a different market, with seating for two crew and up to eight passengers in a 1. 95m wide cabin. The aircraft, which Cessna says will slot between the Citation XLS+ and the Citation Sovereign, is expected to make its first flight in 2014, ahead of entry into service in 2015.

Padgett notes that there has already been interest in the Latitude. “It has had a lot of interest, particularly because Cessna have not had an aeroplane in that category with a very big cabin,” he said. “We have a number of people who are just waiting on more information. ”

Think global, act local

The past year has also seen some major global moves in sustainability and safety for the business aviation sector, which are being adopted and endorsed by local operators.

“The International Business Aviation Council (IBAC) released a statement around 12 months ago saying that business aviation has established an excellent record of consistently improving fuel efficiency,” said Bell. “There has been a 40 per cent improvement over the last 40 years in business aviation aircraft. ” “Business aviation’s worldwide carbon emissions are approximately two per cent of all aviation emissions, and 0. 4 [per cent] of global man-made carbon emissions,” he added.

Nevertheless, the IBAC has put forward goals of carbon neutral growth by 2020, as well as two per cent improvements in efficiency of business aviation aircraft every year between 2010 and 2020.

Improving the environmental credentials of the industry comes as both locally and globally, business operators adjust to taking part in carbon tax and emissions trading schemes.

Despite pressure from the US to soften its stance towards aviation, the implementation of the European Union’s emissions trading scheme will have an impact on some local operators who regularly fly into Europe. As such, Bell notes that there are some Australian operators who have already registered their aircraft to take part in the scheme.

At a local level, the recent passing of the carbon tax will increase costs for operators, although that will primarily come through the additional levies on aviation fuel rather than a direct taxation. Nevertheless, Bell does not expect that the cost additions will present a barrier to new operators using business aircraft or force a reduction in utilisation.

“Th e tax that is paid on the fuel will double in the next few years, which is going to lead to increased operating costs for our members,” said Bell. “It’s just another cost, another burden, for business operators to bear. ” Another key area where the ABAA has been active over the past year has been assisting operators to move towards the International Standard – Business Aviation Operations (IS-BAO) safety standards.

Th e adoption of IS-BAO has been driven by the IBAC, which helped to develop the global standards. Th e keystone of the standards is the implementation of a safety management system, bringing business aviation into line with global best practice used by airlines and other major operators. IBAC is also working over the next year to add similar standards for helicopter operations, work that is being done in association with the US Helicopter Industry Association.

Following its fi rst workshop of IS-BAO in May last year, the ABAA hosted another workshop in Sydney in March this year. As a result, there are now fi ve local operators who have adopted IS-BAO.

“It’s not cheap, you have to go through a process and it is audited. It’s not going to be for everybody, but it certainly sets a worldwide benchmark for safety standards,” said Bell.

Airport Angst

An emerging issue which could place pressure on some business aviation operators is access to Australia’s major airports, along with other infrastructure issues which are being highlighted by the ABAA as part of the Productivity Commission’s inquiry into Australia’s airports.

Th e Commission fi rst released its draft report in August, but since then the ABAA has made submissions and been involved in hearings to put forward its concerns ahead of the release of the full report later this year.

“Th e draft report did not mention much about business aviation at all, but since then we’ve had a very good hearing from the Commissioners, and we’ve appeared before the Commission in the public hearing in October,” said Bell.

One of the major issues it raised in those hearings was a concern that some of Australia’s major privately operated airports appeared to be moving towards trying to move business aviation operations to the smaller secondary airports.

Bell cites Sydney as a key example.

“Sydney Airport is talking about moving business aviation to the south of the control tower, and there is nothing there at the moment so it is going to cost a huge amount of money to do that. We can’t see the point of that,” he said.

He adds that any move to push business aviation into secondary airports would not be viable, particularly for members who operate large aircraft such as Gulfstreams and the Bombardier Global series.

“Our airplanes are getting bigger, more sophisticated and heavier, which means that we just can’t operate from secondary airports, whether it be Bankstown, Moorabbin, Archerfi eld or Parafi eld. ” Th e ABAA also discussed at length with the Commission issues its members have had in trying to gain approval for their aircraft to be able to fl y in and out of Sydney and Adelaide Airports during the curfew.

Th is has been an ongoing issue that the Association has been lobbying government about, so far to no avail.

“Th e list of approved aircraft to operate at Sydney past the curfew has not been amended since 2005, and we have put forward four submissions to the federal government since 2007 and they have been knocked back each time,” said Bell.

Th e ABAA has consistently argued that this stance ignores the fact that most new business aircraft are much quieter, while operators need the fl exibility of being able to fl y into Sydney and Adelaide airports past curfew times in some circumstances.

Since engaging with the Productivity Commission on these issues, Bell is pleased with the reaction and expects that when the fi nal report is released later this year it will adequately represent the issues put forward by the ABAA.

“I thought that we had a very good hearing from them and I do expect that in the fi nal report which is coming out later this year will give a good hearing to business aviation. ”

Outlook

Although Australia remains a small market overall for business aviation, Bell remains positive that it will continue its steady growth over coming years.

“For Australian business aviation it’s really full steam ahead,” he said. “We see business aviation continuing to grow because there is a need for it due to our geography and airline system, which is increasingly going no-frills. ” Similarly, the global outlook for 2012 has also improved, with Honeywell estimating the deliveries of business aircraft over the year will be higher than this year. Further down the track, its research shows that a number of respondents to a global survey of fl ight departments are expecting to purchase new aircraft from 2013 onwards.

Increasingly, the manufacturers are turning to the rapidly developing economies of Brazil, Russia, China and India, as well as Latin America. For many of their prospective clients, they are potential fi rst time operators of business aircraft.

Locally, the ABAA is predicting growth of fi ve to 10 per cent over the next 10 years, albeit on a relatively small base.

“Leading businesspeople are turning more and more to business aircraft to cover the continent and to go overseas,” said Bell.

And although continuing economic uncertainty could have a major impact, Bell doesn’t believe that it will have a great impact on the local business aviation sector.

“It’s certainly here to stay and here to grow,” he said.