Airlines vs Business Aviation

Boeing have admitted to a furher delay with the delivery of their first Dreamliner, now scheduled for the last quarter of 2009. Low Cost carriers seem to be hitting financial difficulties, the FAA investigation in maintenance procedures of some of the major US carriers have resulted in more than 1,500 scheduled flight cancellations. With the air of doom and gloom, the US and possibly even the UK heading towards an economic slowdown possibly even a mild recession, the airline industry is surely not going through a rosy period. On the other hand, business aviation seem to be continuing to experience growth, especially in Europe, the Middle East and Asia. Farnborough predominantly business aviation airport, increasing movements, Embraer recently launching new business jets, Lufhansa purchasing business jets and setting up their own corporate aircraft wing. Jet Alliance experiencing growth through their Austrian airlines partnership. So what is happening? The aviation industry is a heavily regulated industry and requires huge amounts of capital to set-up and maintain an operation. New equipment has not exaclty become cheaper, the oil crisis has not really aided the industry, and as ticket prices became cheaper, it was in my opinion inevitable that the airline industry would struggle. As the major hubs became more congested, unprofitable routes dropped, new security measures at all major airports resulting in long queues and discomfort for the frequent traveller, the continued economic growth of the Asian markets, all this provided a platform for the growth of the business aviation. As more users afforded, and this is a key word, afforded, to buy business jets, the operating costs, even with the increase in oil prices, came down, this is especially true in Europe and Asia. This made a business jet charter flight more affordable to more high net worth individuals and corporations. The major difference between the airline industry and business aviation are the end users, the end user is not shopping around for the cheap ticket, forcing the airline to operate with negative margins, but the corporate jet user either affords the business jet or queues at Heathrow's spanking new so far dysfunctional Terminal 5, or with struggling Alitalia. The airlines problems are the business aviation strengths; SAVING EMPLOYEE TIME. Business aircraft can have longer ranges, flying non-stop between airports, which the end user wants to go to, not that the airline chooses, based on slots, costs, etc. Flying into London City, a short drive or helicopter flight from that meeting. INCREASING PRODUCTIVITY EN-ROUTE. Rather than writing off travelling time, studies have shown productivity on business aircraft is actually higher than in the office. Choosing with whom you fly allows for onboard meetings. EFFICIENT, RELIABLE SCHEDULING. The near total flexibility inherent in business aircraft is a powerful asset. Business determines the schedule - not the airlines. REDUCING HOURS AWAY FROM THE OFFICE AND HOME. Both business and the individual benefit when family time is not lost to non-productive travel. ENSURING INDUSTRIAL SECURITY. Use of business aircraft reduces travel visibility and eliminates unwanted and unnecessary interruptions. HIGH PERSONAL SAFETY, in a society threatened by terrorism, choosing whom you fly with has become of significant importance. INCREASING ENTERPRISE. Business aircraft allow opportunities especially those in remote regions to be more readily considered and acted upon. Studies have put access to business aircraft in the top three drivers for business relocation decisions. PROJECTING A POSITIVE CORPORATE IMAGE. As studies continue to show increased profits for corporations using business jets, we are now experiencing a scenario where using a business aircraft shows a company to be progressive with a keen interest in efficient time management and high levels of productivity. As long as the economic slowdown does not significantly impact mainland Europe, as long as the economic growth in countries such as Russia, China and India is maintained, I expect business aviation to stay on course and continue to grow.

History of Maltese Business Aviation

In some of my earlier posts, I have mentioned that the Maltese Department of Civil Aviation has issued the first AOC to a foreign based Lear 60XR. Further to the interest that the Maltese infrastructure is soliciting in the Business Aviation community, I thought that I expand a little further on this niche industry in Malta. Due to Malta's strategic geographical location, this island at the heart of the Mediterranean has always played an important role in international trade, even before the advent of the aircraft, in fact Malta has always played an important role in the maritime trade. Having been a colony of all the major empires, Phonecian, Roman, Arab, Knights of St. John, French and the British Colony, Malta has played an important part in the history of the Mediterranean. Having been a colony of the British Empire during World War II, Malta was introduced early first to military and then to commercial aviation. Malta had its aircraft register established in the sixties. Because of Malta's strategic importance, maritime industry, as well as our association and influence by the United Kingdom, although not a Geneva, London or Paris, Malta always had a steady flow of private and general aviation aircraft passing through. As Malta started to aspire to become a member of the European Union, and established itself as a respectable and stable democracy, with sound legal and financial legislation framework in the early nineties, Malta started seeing a number of business entrepreneurs who flew to our shores in their business jets. One can describe Capt. Lino Xuereb as a pioneer in this industry, having been the first person to set-up a company with a business jet based in Malta. Capt Xuereb got the first busness aircraft in the early nineties, a Citation II, which served both the local community of businessmen and individuals and corporations in the surrounding Mediterranean countries. Having got the first Maltese AOC with a business jet on its licence, Capt Xuereb never looked back, today he is the most experienced Maltese business jet pilot, and still is flying and running the only company with a business jet, a Lear 60, based in Malta. On the otherhand, myself at Sierra Aviation, established in 2002, Sierra Aviation, which todate remain the only company dedicated to business aviation services. As Malta became a full member of the EU, adopted the Euro and is a member of JAA/EASA, I feel Malta has a lot to offer to the business aviation community. Malta is not only strategically located in the heart of the Mediterranean, offering a bridge between Europe and North Africa, but our 300 days of sunshine (no icing conditions), relatively low labour cost(in comparison with mainland Europe), excellent fiscal infrastructure within an EU environment, and of course internationally recognised aircraft operating infrastructure such as JAR OPS 1/EU-1. If one is shopping for an aircraft register Malta has a lot to offer, aircraft can be operated commercially and privately (Isle of Man on aircraft in the private category are allowed), freedom of movement (Swiss registered aircraft are not allowed to fly between Moscow and France, and are restricted with regards to internal flight in some EU countries), excellent fiscal benefits and yes why not great weather.

Why Charter a Business Jet?

Research conducted by the London Business School shows that companies with business aircraft performed 11.3% better than the industry average. Another performance study undertaken in America by Arthur Andersen, came to the same conclusion: "On average, among the 766 companies studied each year, those that acquired business aircraft experienced greater sales growth in the years following the purchase than those that did not."Three years after purchase, aircraft buyers achieved an average sales increase of 8.5 percent. Business aircraft not only bring financial success to their operating companies, but also contribute to national and regional economies." In a fast moving world, in this era of globalisation, large airports have become congested, scheduled airlines run on anything but a schedule, and road traffic to from these airports has become a nightmare, this not to mention the security aspect, where it is a known fact that all major European airports are feared to have become threatened by terrorisim, inflicting rigorous security checks which inevitably lenghten the check-in process as well as restrict the average passenger when it comes to what items one can take onboard. Chartering a business jet not only saves one time and increases productivity, give back a huge amount of control on an individual’s/organisation schedule, but it gives back peace of mind, unparalled levels of comfort and flexibility. When one charters an aircraft, one has total control from the most important things, such as which aircraft to fly in, which airport to fly to or from but also the trivial yet important aspects of one’s journey such as confidentiality, exclusivity, catering, inflight entertainment, all of which exceed even the best first class on the most reputable of airlines.

First Business Jet Manufacturer Visits Malta

April, 4th July 2008, Malta International Airport. Malta is fast gaining ground in the business aviation scene. Late in 2007, the first JAR-OPS AOC was issued for a company which will operate a Lear 60XR in Moscow. Last Friday, we experienced another first in this niche industry. Embraer, a Brasilian aircraft manufacturer, through the Executive Aircraft arm, landed in Malta with a Legacy 600. In collaboration with Sierra Aviation the aircraft was shown to a number of businessmen residing in Malta, both local and foreign. Christophe Fantapie, regional sales director for Embraer Executive Jets, stated that he definitely sees Malta's potential as very competitive institution where one could register, operate or manage a business jet. In view of Malta's now world renowned yacth register and Malta's maritime history, Embraer also sees the potential to showcase its executive aircraft. The existing Legacy 600, shortly the lighter Phenom 300 and Phenom 100 which will be released to service this year and next respectivley, Embraer offers high end business jets at very competitive prices, also banking on its experience as an aircraft constructor. Embraer boasts of a 99.98% dispatch reliability on its Legacy 600. A record which is second to none. Although Embraer, is expected to launch small mid size jet at EBACE in Geneva this year, once Embraer has demo aircraft of available in Europe for either of its Phenom line, Malta is sure to be on the agenda.

Malta, Fiscal Incentives, Business Aviation and Embraer

Malta a country with a population of just under 400,000, with one of the lowest GDP's in Europe surely cannot be a huge market for business jet aircraft? Here is the surprising part, Malta joined the EU in 2004 and the Eurozone in January 2008, and in the last weekend of March it has become also a Schengen Country. I here you say, "So?". Malta has a unique tax infrastructure approved by the EU whereby, anyone could take tax residence at very interesting fiscal incentives not only for individuals but also for organisations. A foreign individual who takes tax residence in Malta, is taxed at 15% on the income brought into Malta, whilst 0rganisatons who set up a real office in Malta, although still attract a corporate tax of 35%, the foreign shareholders are refunded 30% of the tax within 20 days. Malta is the first EU country to licence online gaming companies and has one of Europe's largest Super Yacth registry. Combine all of that with a legal framewaork based on British and European laws, English is not a second language but an official legal language together with Maltese, and the let's not forget the 300 days of sunshine all year round, Malta has seen a huge influx of high net worth individuals, organisations and foreign investment. Sierra Aviation, had forseen this potential back in 2002, and became the first company and is still todate the only company which is dedicated to business aviation. As the number of these individuals and organisations grow, and as Malta's profile through its EU connection continues to come to the forefront the more such people will travel to the island of Malta and call it home. Embraer is the first manufacturer to recognise this and will on the 4th April demo its flagship aircraft the Legacy 600 at Malta International airport. If you happen to be in Malta and are in the market for a new business jet contact Sierra Aviation for an appointment.