CJI London 2020

Cautious optimism about the prospects for growth, tinged by fears about environmental criticism and coronavirus, characterised CJI London 2020. Words: Mike Stones

Missing the Florida sun? Embraer Executive Jets’ Michael Amalfitano (left) and Steve Friedrich were among the delegates.

THE PROSPECTS FOR business aviation seemed set fair for 2020, as Corporate Jet Investor staged CJI London 2020 in early February. But a ghost haunted the minds of many speakers and delegates. Its name was coronavirus.

David Coleal, President Bombardier Aviation, set the tone of cautious optimism in his keynote presentation. He highlighted the industry consensus that there will be 7,000 new business aircraft deliveries between 2019 to 2028, representing growth of 28% on the previous nine years.

“The years up to 2028 will see a CAGR [compound annual growth rate] of 2%-2.4%, which is not unusual for a lot of industries,” Coleal told the 500-plus delegates. Large category business jet deliveries would rise by 52%, with light jets increasing by 22%. The medium size category was likely to rise by 14%.

But achieving that growth depended upon convincing younger generations that the sector is part of the solution to climate change not the problem. Business aviation should remind particularly young people that the industry is contributing to climate change solutions – with fuel efficiency improving by 40% over the past 40 years and the development of Sustainable Aviation Fuel (SAF).

A mood of cautious optimism characterised the two-day event. But fears about the impact of Covid-19 worried some speakers and delegates at the London conference.

“The years up to 2028 will see a CAGR of 2%-2.4%.”

David Coleal, Bombardier Aviation President, speaking before the Covid-19 pandemic.

“The years up to 2028 will see a CAGR of 2%-2.4%.”

David Coleal, Bombardier Aviation President, speaking before the Covid-19 pandemic.

Clive Jackson, Fly Victor founder and CEO, said: “Generation Z is driving the debate. When they think about climate emergency, they look up to the skies. So, we have to think about how we project ourselves.”

Adel Mardini, Jetex President & CEO, took part in the panel dedicated to FBOs and infrastructure investment.

Don Dwyer, Guardian Jet managing partner, noted some High Net Worth Individuals (HNWI) were now buying pre-owned aircraft but still spending $20-$30m.

Alasdair Whyte, Corporate Jet Investor’s Editor-in-chief, provokes a moment of mirth while moderating the session dedicated to demand for new and pre-owned aircraft.

What’s it worth? Well that depends, said Steve Varsano (middle left) from The Jet Business. Pascal Bachmann (middle right), from Jetcraft, agreed with him.

Alireza Ittihadieh, from Freestream, said that most first-time business jet buyers typically come from fractional schemes.

The urgency of communicating more effectively with younger generations was also highlighted by Aoife O’Sullivan, Partner with The Air Law Firm. Her message was blunt: “There is a general perception we are flying fat cats about and I don’t think, as an industry, we do enough to combat that view.”

Mark Masluch, Bombardier Aviation’s director of public affairs and communications, advised business jet operators: “Purchase SAF and when you’ve purchased it, purchase some more. You can look at carbon offsetting but, in practice, buying SAF will drive demand and increase supply.” At present, SAF is up to four times more expensive than conventional fuel and is produced in only three or four locations worldwide. But growing global demand is likely to both improve the fuel’s availability and cut its price.

Mike Silvestro, CEO Flexjet, noted big corporate operators are making more considered decisions before expanding their fleets. “We are seeing corporate flight departments become more thoughtful about how they deploy capital,” said Silvestro. “Instead of buying a fourth or fifth plane, they are asking about a shared solution, such as ours, to supplement their existing fleet.”

A feast of ideas: Some of the conference’s 500-plus delegates network during their lunch at The Landmark, London.

“We are seeing corporate flight departments become more thoughtful about how they deploy capital.”

Mike Silvestro, Flexjet CEO

Dassault’s international sales director Anne Devilliers detected a similar trend, as environmental criticism drove some to consider fractional ownership over outright purchase. “We hear people say they don’t want to be on the frontline of the battle [over private jet ownership] and that will increase NetJets’ share.”

Don Dwyer, Guardian Jet managing partner, added that High Net Worth Individuals (HNWI) were now entering the market to buy a used airplane but still spending $20m-$30m.

Meanwhile, Steve Varsano, founder and MD of The Jet Business, was among a number of speakers to worry about coronavirus. Varsano warned: “I don’t think we can understate the effect of coronavirus, it could have major repercussions.” Aside from the health risks, Varsano worried that any big disruption to the Chinese economy would have a far greater impact than the SARS outbreak in 2002 and 2003.

“When SARS struck, the Chinese economy was $1.7trn but now it’s nearly eight times bigger at $14trn a year,” said Varsano, fearing major disruption to the global economy.

Despite worries about coronavirus, a poll of delegates at the end of this session revealed nearly 90% of delegates remained either fairly optimistic (65%) or very optimistic (24%) about the prospects for their business in 2020. ■

Session Highlights:

Cautious optimism about growth – About 7,000 new business aircraft deliveries are predicted between 2019 to 2028.

Sustainable Aviation Fuel (SAF) – Helps to prove that business aviation is part of the solution to climate change.

Alternatives to ownership – Big corporate jet operators are reportedly considering alternatives to the outright ownership of business jets. Interest is said to be growing in fractional ownership and leasing.

Second-hand solution – Some High Net Worth Individuals [HNWI] are entering the market to buy a used aircraft rather than a new one. But they are still spending between $20m-$30m.

Plenty of scope to focus on new ideas.

Right on the money.

Alireza Ittihadieh unusually shows his hand.

The sweet spot for Dealmakers.

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Mike Stones,
Group Editor,
Corporate Jet Investor

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Mike Stones,
Group Editor,
Corporate Jet Investor