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Problems , Threats and Opportunities in Global General Aviation

Updated on September 14, 2016

Global Travel Trends

Trend


The emerging trend is the industry is the burgeoning growth of Middle Eastern Airlines with names like Etihad, Emirates and Qatar Airways leading the growth index. They have been able to consolidate their growth by developing capabilities for connecting flights which syncs with their global geographical positioning. It is easier to access most places on earth from the middle-east within 8 hours and this is really an added advantage.

Challenges in Traditional Markets

While regulation, taxes and low cost carriers are giving traditional carriers in developed economies a run for their money and squeezing their margins, carriers in emerging markets seem to be doing a lot better. The profitability of long-haul flights which ends up in aviation hubs of emerging economies means that the focus of western carriers needs to shift to these new markets through partnerships with local carriers through mixed equity consolidation with local players in such markets.

Growth Figures

In terms of passenger turnover and airport traffic stats,for 2014, the busiest aviation hub was USA but in terms of real growth, the biggest numbers came from the BRICS bloc, which is dominated by the emerging markets encompassing Brazil, Russia, India,China and South Africa. In terms of capacity, the UAE has sustained its investment in aviation facilities making it possible for it to continue its interconnection of long-haul flights and strategize for the future that is sooner expected than later.

The Path to the future

The reality shows that with the inability to turn a profit comes business failure, directed effort therefore needs to be in place to explore how to make western carriers more profitable with exploration of international business aviation potentials of emerging markets. The global flyer- Lufthansa already has taken the lead in this trend of international general aviation with their partnership with Ethiopian Airlines which is effectively redefining the efficiency of this erstwhile struggling African carriers. It has become profitable and has succeeded in declaring a profit of $175 million USD for fiscal 2014/2015.

The Future of General Aviation Infrastructure financing

The developed world already is littered by a plethora of General Aviation facilities but experts project that going forward, efforts will be geared towards maintaining the existing facilities and the operational demands. More public-private sector partnership is envisaged as government departments are expected to provide commitment and meaning in facilitating these expected forays. Multilateral and big-ticket funds are expected to continue to play a pivotal and more prominent role as the path to the future emerges.

The sustainability of these projections will be reinforced by transactional capacity and stability of policies and evident commitment. More capital market forays are expected so that existing bank debt financing can be converted for both sustainability of investment and wellbeing of lenders.

Private Jets Sales Data

The world of business aviation has kept up its surge with the data made available for the 2015 Q3 beginning from the 2014 resurgence in unit sales. This is against the background of over 23 % drop in sales figures between 2012 and2013. Cessna has been rated as the industry leader for the year 2014 and it recorded sales of 473 units of private jets.

In terms of facilities, the US, rates highly with 4,000 paved general aviation airstrips and these are accounted as responsible for 23 million annual flight hours across the country. The demand for business travel has been largely recognized as the driving force behind this data.

In response to market demands, Gulfstream developed the G500 and G600 with mid-range and longer-range capacities. The G-600 was developed with 4,800-nm range at Mach 0.9, making it easy to reach New York from Sao Paulo. The need to introduce fast-pace aircraft was recognized by the company to fill a market void.

General Aviation Apps

The innovations in the General Aviation market has given rise to the GA Apps that provide a ready data on luxury travel and private jet bookings. These apps provide information on aircraft details, fees, operator and other relevant information. This makes it easy to use aircraft on-demand and recreates Uber in the sky. The surge in the number of websites and mobile apps that can be utilized for luxury travel bookings is an expanding frontier making it easier to access private air travel services.

Fixed Base Operations

The recovery of the general aviation market is expected to spur the recovery of this industry over the next five years. Rising cargo and passenger volumes is expected to be the anchor for profitability in the industry.

The obvious cannot be overstated and this surely brings to the fore, the need for airlines in developed countries to commence talks with aviation consulting firms so that possible partnership opportunities can be explored in these emerging markets which already show how stellar the opportunities for growth in the industry appears over the next two decades.

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