The market for corporate jets, which came to symbolize conspicuous consumption before the recession, is staging a timid recovery ahead of what should be a profitable future, analysts say.
The sector will be in the spotlight at a meeting from tomorrow until Thursday of the European Business Aviation Convention Exhibition in Geneva, with experts debating prospects for an industry that before the crisis was worth about 20 billion euros (US$26 billion) to the European economy.
The market for corporate jets shrank sharply between 2008 and last year, when deliveries fell 24.3 percent as strapped companies imposed spending cuts and had trouble securing credit, according to US research company Teal Group.
In the previous five-year period the sector grew 17.2 percent.
“The good news is that the market has stopped falling and some of the leading indicators offer encouragement,” Teal Group vice president Richard Aboulafia said.
“The bad news is that this a three-year downturn. The key driver, corporate profits, show only limited signs of a recovery,” he said.
Deliveries of business jets should not start to rise until 2012, he said.
For Max Kownatzki, an aviation expert at the Oliver Wyman research group, the recession of last year, unlike that of 2001, “created a widespread public perception of business jets as symbols of ‘excessive and unreasonable’ spending, which led many companies to actually sell their aircraft as opposed to just canceling existing business jet orders.”
In North America, where US President Barack Obama publicly criticized the use of corporate jets at a time of crisis, deliveries plunged 39 percent last year.
“Business jets have always triggered emotional reactions,” said Oliver Fainsilber, also of Oliver Wyman.
“Public opinion often links them with a glamorous life style … However, managers who travel on these jets do so because there is a real need and in most cases they have no choice,” he said.
In a globalized economy, companies must look further and further afield for business opportunities, sending personnel to relatively remote locations little served by traditional airlines.
“The market remains extremely challenging but we are seeing tentative signs of some recovery in the fourth quarter,” Air Partner, a provider of private aviation services, said in a statement.
Phil Matthews, Air Partner director in Britain, added that “if we look at who is chartering we see that some of the big name banks and financial institutions are returning, although it is still very early days.”
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