ASQ7 EN (20170705)

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INDUSTRY INSIGHTS FACTORS IMPACTING BUSINESS AVIATION AIRPORT INFRASTRUCTURE Contributed by Aviation Consultant, David Best According to the International Air Transport Association (IATA), “the complex problem of traffic peaking at airports has been the subject of increasing concern for airlines and airport operators around the world.” With passenger traffic expected to double over the next 20 years, the issue of aviation infrastructure has been forced into the spotlight. As aviation infrastructure already struggles to handle the increasing demand, the challenge now is to identify the weak points and move forward productively. Infrastructure in Asia Pacific Within the Asia-Pacific region we have some great facilities where investment has been made or is growing, but in many cases the infrastructure demands and expertise are focused around growing capacity for the needs of commercial aviation traffic growth. Dedicated facilities like Seletar in Singapore and Subang in Malaysia are seeing investment in MRO and FBO facilities in a hub-like basis, while others are focusing on commercial needs. The commercial aviation demand growth in Asia has been a huge challenge for airports and freeing up space for business aviation has mostly taken second place. The issue with infrastructure is that it is demand push and not pull. By building great hangars and facilities you will not necessarily get traffic to come. People own business jets because they want convenience, privacy and a business tool. That demand therefore usually migrates towards major cities. International airports with slot restrictions and high demand on airport capacity fill this space too, however both sides do not fit together. As you look across the world, many major international airports have capable business jet infrastructure but the beneficial investments in the industry have come at secondary airports located near business centers. A few examples are Teterboro in New Jersey, Farnborough in London and Le Bourget in Paris. CURR<strong>EN</strong>T INFRASTRUCTURE STATUS - BUSINESS JETS Ratio of business jets to airports, FBOs and MROs Shortage Airport Capacity 1 Standard 140 FBO Shortage FBO Capacity 3 80 60 India Hong Kong 40 Singapore South Korea Japan China Thailand Macau 4 20 USA New Zealand Malaysia Taiwan Philippines Australia Indonesia MRO Shortage 0 10 20 30 40 50 60 MRO Capacity 2 1 Number of business jets / airports = the average number of business jets each facility currently handles. Larger circles indicate airports working over capacity. 2 Number of business jets / MROs = the number of business jets each facility currently handles. Countries closer to the right of the chart are dealing with a lack of facilities. 3 4 Number of business jets / FBOs = the number of business jets each facility currently handles. Countries closer to the top of the chart are dealing with a lack of facilities. There is no MRO facility in operation for business jet in Macau currently. 20 | ASIAN SKY QUARTERLY — SECOND QUARTER 2017
INDUSTRY INSIGHTS Physically there is no space to build expansive business aviation infrastructure with access flexibility at major international airports, but clients need access to these airports, making secondary airfield development a key need to improve capacity and facilities for this industry. We cannot wait for the demand to arrive, but the developments must be relevant to the industry and therefore located near business hubs. given the great growth both commercially and business jet wise. There is no easy solution in Hong Kong beyond seeking parking at receiver airports. Shanghai has had good investment from its FBO and has developed new infrastructure. Singapore focuses its business and general aviation at Seletar Airport, where great facilities and provisions of OEMs and other MROs exists. However, the need to discourage business jets from Singapore’s Changi Airport leaves operators of larger jets having to make fuel stops, due to runway length at Seletar, in addition to several jets unable to get hangarage because of the need to industrialize the land. Comparing More Developed Markets Asia Pacific does have unique challenges and is more akin to Europe than USA. In the US, the FBO mostly provides the infrastructure on long leases with agreed rights to provide fuel on an airport (unlike HK). The investment payback is therefore secured in the stable business at that airport over the life of the lease. The key income streams are fuel and property from hangar and office rent. Industry Challenges The industry has had a difficult few years regarding depreciation of aircraft and demand for new jets. This makes developing markets, like Asia, attractive. As an OEM, however, to access a market you need to be able to provide effective services and support to your clients, but setting up expensive support system in advance of a viable fleet is very challenging. The large OEMs and manufacturers are mostly present in Asia now, but one of the unique challenges of this region is its vast geography and over 1,000 jets. This means that infrastructure demands are focused around pockets of activity, with some congested and oversupplied key locations where everyone competes. However, the market beyond these hubs often does not have viable support when an aircraft has technical issues or cannot provide appropriate hangarage with experienced handlers when they are away from these main areas. Issues and Opportunities An expanding business jet market is usually focused around main cities in the region. Looking around the main finance and commerce centers a very mixed scenario can be found. There are a lot of issues and opportunities in these markets. By way of investment, a few of the main cities can be looked at as examples. Hong Kong has a professional, purpose-built FBO and MRO facility, but struggles with capacity in a very busy airport. The market for business jets grew way beyond the strategic capacity intent and it has been a difficult logistical airport for business and general aviation for several years, In many cases in Europe, the FBO operates from a general aviation area, terminal or leases a building or land from the airport (like Singapore). This model does not give you the surety of business that some of the US-type businesses have and therefore the infrastructure investment is less easily measured at inception. The US and Europe have a longer history of business jet use and has a more mature system to support a larger fleet. One of the unique challenges within Asia, however, is the size of aircraft and the way the fleet has ‘arrived’ as opposed to ‘evolved’. Many US locations have grown up over time, getting larger and making changes in their business, unlike within Asia, where the arrival of many ultra-long range jets, to be based at a few key locations, has driven a set of unique infrastructure demands. Future Expectations In Asia, proper solutions need to be found at the key international cities. Hong Kong, Beijing, Jakarta, Singapore and many others all have business aviation solutions - some better than others, but roll forward 20 years and the region currently does not have the infrastructure to cope with future demand. As an industry, it is incumbent on us, through bodies like the Asian Business Aviation Association (AsBAA), to engage with the authorities and help them understand how business is evolving and help them with the challenges ahead. The economic benefit of business aviation is significant. Ensuring we help educate and contribute to long-term strategic infrastructure plans to support this industry is our responsibility. COMING SOON Showcasing the capacity the Asia-Pacific region has for business aviation through a detailed look at infrastructure. www.asianskymedia.com SECOND QUARTER 2017 — ASIAN SKY QUARTERLY | 21
Page 1 and 2: SECOND QUARTER 2017 PRE-OWNED SPOTL
Page 3 and 4: PUBLISHER’S NOTE Are we there yet
Page 5 and 6: A BREEZE. FLY WE MAKE IT It’s no
Page 7 and 8: BUSINESS JET FLEET AND GDP BY COUNT
Page 9 and 10: MOOD & INTENTIONS: ASIA-PACIFIC REG
Page 11 and 12: MOOD & INTENTIONS: ASIA-PACIFIC REG
Page 13 and 14: olls-royce.com CorporateCare ® Rel
Page 15 and 16: COUNTRY PROFILE: MALAYSIA MALAYSIA
Page 17 and 18: COUNTRY PROFILE: MALAYSIA “ExecuJ
Page 19 and 20: COUNTRY PROFILE: MALAYSIA FLEET GRO
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Page 25 and 26: MARKET DYNAMICS AVERAGE ASKING PRIC
Page 27 and 28: MARKET DYNAMICS MARKET POSITIONING
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Page 31 and 32: MARKET DYNAMICS MARKET POSITIONING
Page 33 and 34: PRE-OWNED SPOTLIGHT PRE-OWNED G450
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Page 37 and 38: INDUSTRY INSIDER organization. On t
Page 39 and 40: UPCOMING SPOTLIGHT VERSATILE LAYOUT
Page 41 and 42: AIRCRAFT POSITIONING BUSINESS JETS
Page 43 and 44: MARKET SUMMARY -- JETS ACJ319 AIRBU
Page 45 and 46: MARKET SUMMARY -- JETS BBJ2 $67.0 $
Page 47 and 48: MARKET SUMMARY -- JETS GLOBAL 5000
Page 49 and 50: MARKET SUMMARY -- JETS FALCON 7X $2
Page 51 and 52: MARKET SUMMARY -- JETS FALCON 900DX
Page 53 and 54: MARKET SUMMARY -- JETS LINEAGE 1000
Page 55 and 56: MARKET SUMMARY -- JETS G450 $17.4 $
Page 57 and 58: in more than 27 countries, and a fl
Page 59 and 60: MARKET SUMMARY PER MODEL — CIVIL
Page 61 and 62: MARKET SUMMARY -- HELICOPTERS AS332
Page 63 and 64: MARKET SUMMARY -- HELICOPTERS BELL
Page 65 and 66: MARKET SUMMARY -- HELICOPTERS A109E
Page 67 and 68: MARKET SUMMARY -- HELICOPTERS S-92
Page 69 and 70: MARKET SUMMARY -- HELICOPTERS FEATU
Page 71 and 72: AsBAA Icons of Aviation Awards 10 t

ASQ7 EN (20170705)

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