A surge of players entering a market could threaten oversupply but, so far, there seems to be enough business for all
A business aviation village is emerging along the eastern perimeter of the construction site that is Dubai's international airport. Swiss business aviation services company Jet Aviation was the first to open its 6,200m2 (66,700ft2) fixed-base operation, workshop and maintenance hangar on the Dubai Airport Free Zone 18 months ago. Six months later it was joined by Swiss rival ExecuJet which, along with its partner Bombardier, has moved into a similarly sized facility nearby. Between them is an even bigger unit - the airport's own new Executive Flight Services terminal - and another plot, where Gulf Jet intends to open offices and a Cessna maintenance operation later this year.
Airside of the security fence, Challengers, Hawkers, Falcons and Gulfstreams jostle for space on the apron, arriving for maintenance or picking up or depositing passengers through one of the FBOs.
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Elite Jets is the local distributor for Hawker aircraft in Dubai, such as the 850XP |
Boom in business travel
The bustle is testament to Dubai's status as the hub of the fastest-growing region for business aviation, the Middle East. The emirate's thriving economy - based on tourism, trade and real estate - its open regulatory environment, and its location, almost equidistant from the Maldives, Moscow, Mumbai and Munich, has attracted an influx of business aircraft.
Along with ExecuJet and Jet Aviation, a flurry of locally-owned charter and aircraft management companies has emerged to tap into the growing demand for ad hoc business travel. As well as Gulf Jet, they include Elite Jets, which is local distributor for Hawker as well as managing and chartering clients' aircraft.
In neighbouring oil-rich Abu Dhabi, capital of the United Arab Emirates, the most notable operator, Gulf Jet, is a veteran by local standards at almost four years old. It has been joined there by Falcon Aviation Services, a helicopter operator offering, among other services, VIP flights from UAE airports to Abu Dhabi's grandest hotel and to holiday islands off the country's coast.
Beyond the UAE, Saudi Arabia is the most vibrant market, although strict regulations there mean there are few domestically based private aviation businesses. Riyadh-based privately owned National Air Services, already a major Gulfstream operator, says it is going to invest $2 billion in 75 new Airbus Corporate Jets, Gulfstreams and Hawkers by 2010. Bexair of Bahrain is among established players in other Gulf states.
The region's royals and VIPs have traditionally operated their own aircraft, and local airlines Emirates, Etihad, Gulf Air and Qatar Airways offer impeccable premium services. However, there is a growing constituency of business and leisure travellers who want the privacy, speed and flexibility of on-demand private aviation without the hassle and expense of owning and operating their own aircraft, or who only occasionally use business aviation.
Charter demand
This, along with the opening up of commerce among Gulf Cooperation Council (GCC) states, has seen a growing demand for ad hoc charter - fractional ownership has, for various reasons, yet to take off - provided by both dedicated and managed aircraft.
The number of operators now servicing this market has expanded from a tiny handful three years ago to double figures today. This might lead to the conclusion that consolidation and weeding out of weaker start-ups will inevitably follow, but that does not seem to be the case: the market appears to be growing faster than companies can service it. "We are still only scratching the surface," says Paras Dhamecha, managing director of Elite Jets. "There is still a huge educational process needed for the market."
Around half of Elite's customers are from Europe - mostly executives from banks, real estate developers and IT companies doing business in the Gulf, although there are growing numbers of wealthy Russians chartering aircraft from Dubai for holidays to the Seychelles and Maldives.
With Indian entrepreneurs also big investors in the Gulf, the subcontinent is another common destination for Elite's pilots, says Dhamecha, an ex-pilot and native of Dubai who earned his spurs in business aviation working in New York for several years. Much of the company's contracts, he says, come from referrals by international brokers.
Despite the large numbers of operators competing for business, there seems to be little rivalry. In fact, co-operation seems to be the order of the day, with companies frequently relying on a competitor to supply an aircraft at short notice to meet a customer's requirement. "Everybody has to work with everybody else," says Mike Berry, managing director of ExecuJet's Dubai operation.
ExecuJet has seen "phenomenal growth" in its business since opening its facility a year ago. "To be honest, it has caught us unawares," says Berry. The Dubai operation - jointly branded with Bombardier - manages a fleet of nine aircraft, as well as operating a maintenance hangar for Bombardier aircraft and the FBO. It is the sales agent for the Learjet brand and the new Grob SPn business jet in the Gulf, and has a workforce of more than 100.
Bombardier has its own regional sales office in the building, offering the Challenger and Global ranges as well as the Skyjet charter programme, although the two organisations work hand-in-hand. "We present one face to the customer," says Berry.
Room to breathe
He feels the best is still to come in terms of business. "There is still a few years' growth in this market. We are aware of a lot of AOCs [air operator certificates] being awarded in the region, but there is still not sufficient hardware to meet the demand." To help fill the gap, ExecuJet intends to add another Bombardier Challenger 604 to its charter fleet. It already operates one 604, together with a Global Express, a Learjet 60 and a Cessna CJ3, but Berry says many customers want the stand-up cabin the 604 provides, even for trips of two hours.
Other plans include taking the FBO "to the next level" and expanding the maintenance operation by increasing the number of approvals from national regulatory authorities. This would cast the net further in terms of attracting scheduled maintenance contracts, says Berry.
Attracting heavy maintenance work is "why we're here", according to Berry's counterpart at neighbouring Jet Aviation, general manager Philip Balmer. Although the facility has a two-storey FBO, which includes offices rented out to other charter operators, maintenance is key and the Swiss company sees Dubai's location as ideal to attract business not just from the Middle East, but eastern Europe, Africa and the subcontinent.
"It's all about providing local support. We're not just here to kick tyres," says Balmer. The 4,200m2 hangar is big enough to take four Gulfstream GIVs, and Balmer intends to increase his team of maintenance technicians to 15 shortly. "We want people to be able to come here for anything without having to go to Europe. Our goal is a self-contained heavy-maintenance facility," he says. "We have one aircraft coming in tomorrow. It's no big deal, but these guys used to go to Europe."
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Helicopter operator Falcon Aviation Services offers VIP flights from UAE airports to Abu Dhabi's hotels and holiday islands |
Gulf Jet currently occupies an office on the first floor of Jet Aviation's FBO with a panoramic view of the airport runway. Later this year the company - set up a year ago by the hotels and property company AlMulla Group - will move into a new-build centre next door and begin to ramp up its fleet. Gulf Jet expects to obtain its AOC next month until now it has been running its fleet of a Challenger 604, Hawker 800XP and Citation XLS on another charter company's certificate. Once it does, it plans to take delivery of a Cessna Sovereign and three XLSs.
Further down the line, the company is looking at the air ambulance segment with a Hawker 1000, and is considering taking on two Bombardier CRJ200s as corporate shuttles, targeting sports teams and groups of actors or musicians, says managing director Yousef Al Ghareeb. In the future, he wants to launch a spin-off operation, Q Jet, in the Gulf state of Qatar, where business aviation is only now beginning to get off the ground.
"We are only 30% of where we want to be," he says. "In five years, we plan to have 12 to 15 aircraft on charter, with a separate aircraft management operation." Like most of his counterparts, Al Ghareeb does not view Dubai's other charter providers as a threat. "We don't look at our competitors. It's a big enough market. We have come in and we will take our chances," he says.
Ninety minutes along the coastal highway, Abu Dhabi is a very different city to its bustling neighbour: Washington DC to Dubai's New York. The more sedate UAE capital's economy has until now been based on oil exporting, but its rulers have made a concerted effort in recent years to emulate their fellow emirate with the launch of the Etihad airline, and placed a new emphasis on tourism with construction of a spate of new hotels and golf courses. Investment in these areas has seen a surge in demand for corporate flights both to and from the city.
Owned by the government's royal flight department and offshore helicopter operator Abu Dhabi Aviation, the city's leading business aviation operator Royal Jet made its name in the medevac sector after being formed in 2003 - providing luxury transport for UAE nationals and expatriates travelling abroad for medical attention. But as its executive charter business has grown, medevac services have now shrunk to just a fifth of its business, says chief executive Christopher Crum.
Operating at the premium end of the market, it has four Boeing Business Jets (BBJ) and plans to add a fifth. It also hopes to have a third Gulfstream G300 by the end of the year. "Demand has been very consistent," says Crum. "That's why we're so confident. We have more requests than we can handle." With very few charter providers able to offer an aircraft with the size and range of the BBJ, Crum says Royal Jet is "getting business from all over the world".
The company is also taking on a 42-seat BAE Systems Avro RJ85, which has a short field take-off and landing capability, making it ideal for hunting expeditions and for transporting teams of engineers to remote airstrips. It has also added two Learjet 35s for medevac in response to demand from insurers for a more economic transport.
The aircraft use modules which can be swapped to convert it to VIP configuration. Also on the cards is a third-party maintenance facility at a new facility at Abu Dhabi's international airport.
Customers' wishes
Despite having one of the strongest brands in the Gulf business aviation sector, two of Royal Jet's aircraft carry no livery. "It means we can add decals if the customer wants to make it their airplane, or leave it blank if the customer wishes to travel incognito. We are proud of our logo, but we have to go along with customers' wishes," says Crum.
The business aviation market in the Gulf may still be in its infancy. Between Dubai and Abu Dhabi, the world's biggest airport, Dubai World Central International airport, is under construction at Jebel Ali. Although not scheduled to open until the next decade, the amount of available land and airport access is likely to prove a magnet for business aircraft operators and owners.
While world demand for oil and natural gas is likely to keep the region rich for the century to come, GCC rulers are keen to follow Dubai's example and diversify their economies, albeit at a different pace. The region's location at the crossroads of Europe, Russia and much of Asia could make the Gulf the global hub of business aviation in the decades to come.
Source: Flight International
