The business of success

Business jet travel has exploded in popularity in the GCC and the sector is expected to be worth US$1 billion by 2012. BMME asks Ammar Balkar, co-founder and CEO of the Middle East Business Aviation Association (MEBAA), why.

“Currently, there is still a serious lack of dedicated airport infrastructure and handling-agent monopolies need to be broken up to ensure better service levels”
-Ammar Balkar

BM: MEBAA has increased its member database significantly in the last six to 12 months. What in your opinion, is the reason for this success?
Ammar Balkar: Between 1975 till 1998 there was only one operator in the ME and the GCC, today there are about 14 operators in the same region; 14 only in the UAE. The market was up by more than 30% from 276 to 359 jets and turboprops over 12 months between 2007 and 2008. Saudi Arabia tops the region with 114 aircraft. The UAE had the sharpest growth up 40% from 54 to 78 aircraft, up to US$500 million worth of charter flights in 2007.

Massive growth is predicted over the next five years worth up to $1bn by 2012 with a yearly growth rate of 15-20 percent. The business aviation sector in the Middle East and the GCC region will more than double in the next six years. The total number of operators of business jets worldwide has been estimated at 17,993 in 2007 and it has been estimated that the total business jets in Asia and the Middle East is around 1,043 in 2007.

MEBAA was established in 2006 to promote safety, security, efficiency and expansion throughout the region's business aviation sector. The right mix of strategy, vision, mission, values and the active contribution of the founding members addressing the hot topics of the region has created this success.

BM: How is MEBAA reaching out to the international business community in order to bring business to the Middle East?
AB: Today, MEBAA boasts over 110 members worldwide including charter operators, FBOs, vendors of spare parts, insurance and finance, legal advisors and the media. For many of our members, the prime benefits are networking opportunities, but mediation and representation are important going forward. Membership is expected to rise to over 300 by 2012. Being a member of the International Business Aviation Council (IBAC) and networking with industry leaders enables us to reach the international business community.

BM: In 2007/2008 several business class only airlines – Maxjet, EOS and Silverjet collapsed. What do you think were the reasons for these failures and what can your members do to ensure they remain profitable – particularly given current economic conditions?
AB: I can’t speak on behalf of these companies because they are scheduled airlines and are not considered part of the business aviation industry. Lowering your prices is not a guarantee to stay competitive, or remain profitable. This is not a price-driven but a value/service-conscious market. I believe that companies that can offer true value-for-money, reliability, integrity and quality will succeed over their competitors.  

BM: How is the aviation industry in the Middle East being affected by the global economic downturn?
AB: In my personal opinion, the economic downturn could affect our industry either up or down. The current global situation is bound to affect the GCC/ME countries but when, how long and how strong the effect will be is yet to be seen.
More owners/operators of aircraft in US are bound to be looking for a home base in the Middle East, Russia and Brazil just to name but a few. High demand has been seen on the light jets and the mid-size jets as clients become more careful about their spending hence down grading from big to small. However the off balance sheet clients have made a life style decision to use private jets and they are not willing to go back to commuting otherwise

BM: The Middle East commercial airline sector has been affected by a shortage of pilots – is the business aviation sector similarly affected?
AB: Little over three months ago, I would have said “Yes, most definitely, there was a shortage”. But that is not the case and the scenario has changed, since the number of CVs received here in the region from pilots applying for jobs has significantly increased.  However, with regards to sourcing professional trained pilots to run a VIP charter operation – there are a few challenges that set us apart from commercial airlines. Several key points must be taken into consideration upon hiring, such as pilot’s type- and class-rating for the specific aircraft type, JAR or CAR OPS certified, and advanced people skills ranging from management and leadership to customer communication skills and administrative skills.
BM: What would you say is the ME business aviation sector’s main customer base at present?
AB: Most aviation companies, brokers and operator have a particular niche market offering a range of services from the low-end to the high-end market, such as: VVIP, royalty, heads of state, diplomats and government officials; corporate executives of multinational corporations and regional executives; celebrities from the sports and entertainment industry ;wealthy individuals and their families; high-end leisure travelers; seasonal & group Charter (Haj & Umrah; ) air ambulance and Medevac.

BM: How is MEBAA working to improve technical support and maintenance services for the business aviation sector in the region?
AB: A couple of years back, regional Government authorities hadn’t really anticipated this increase in such a short period of time. Operators struggled with maintenance providers. Handling was also limited and monopolised at many airports in the region. Airports were also very limited.

Today there are still no dedicated airports for private jet aircraft movement and operators have to use international airports – which means that sometimes they have no slots for landing and take off. This has not been a major problem so far but we anticipate an issue in the next four or five years with the increased number of private jets.

Currently, there is still a serious lack of dedicated airport infrastructure and handling-agent monopolies need to be broken up to ensure better service levels.  However, the UAE government is committed to supporting industry demands and appealed to industry players to be flexible in a changing current climate. MEBAA is meeting with several regional Government authorities to discuss these issues and we have been invited to submit our reports and proposals. We have worked very hard with the Abu Dhabi Airport in keeping Al Bateen Airport – the old international airport – and converting it into a purely business jet airport.
A good example of the outcomes achievable by a strong industry body is the recent agreement reached with the Bahraini government, which allows for blanket yearly air clearance for all MEBAA members.

BM: What issues is MEBAA going to be focusing on in 2009?
• To grow membership to over 300 by 2012.
• Establish a data bank for gathering useful & relevant industry data to achieve an effective means for communicating and share perspectives and best practices.
• Help MEBAA members to obtain access to airspace and airports (Open-Sky Policy)
• To be a focal point for representing the region’s business aviation community and create an overall positive environment for regional and international business.
• Host a biannual business aviation event, MEBA. Next MEBA show will be hosted on the 7-9 November 2010 in Dubai.
• Take on a regional leadership role and liaise with government and business to facilitate operating procedures and standardize regulations affecting business aviation.
• Communicate with other business aviation associations and gain world wide recognition through IBAC – the International Business Aviation Council.
• Promoting the next MEBA show, schedule to be held in Dubai 07-09 December 2010.
• To address and work on some of the hot topics & challenges concerning business aviation in the region. Some of the challenges in the Middle East are to name just a few:
   • Legislation of Business vs. Scheduled Aviation, for example Crew Duty / Flight Time
   • Grey Market: private aircraft owners without AOC, operating illegal charter flight for revenue
   • Financial Support/Aircraft Financing from regional bank for regional aircraft owners/operators.
   • Monopoly of services, such as airport ground handling, and airport/airline catering
   • Environmental Challenges
   • Lack of MRO, AMO and Maintenance providers