Archive for the ‘Investment’ Category

UK airport consultation: A pilot’s view

Thursday, January 19th, 2012
Thames estuary airport

What the proposed Thames Estuary airport could look like

Yesterday it was announced that the government’s consultation on a new UK aviation hub will begin in March. The process will focus on the need to retain the UK’s status as a major aviation hub and the options for siting a new airport close to London – including a detailed assessment of the ‘Boris Island’  Thames Estuary airport proposal.

This is welcome news –  given we have previously built our biggest London airport in exactly the wrong spot from a safety perspective. Here’s why.

  • In order to reduce the ground speed required for flight and the length of runway required, aircraft take off and land into the wind. This means that, at Heathrow, aircraft are predominately flying low and slow over Greater London to land on the two westerly runways – as 80% of winds in the UK are westerly.
  • Heathrow, like most airports, has a mandatory 3 degree glide slope approach. This results in a descent of 300ft per mile on the ground – and given Heathrow’s position, means aircraft over the centre of our capital city are descending through 1500ft over our most populated areas.
  • Taking these factors into consideration and looking at London as a clock face, the worst possible position for an airport is therefore at 9 o’clock – where we have inadvertently built our biggest airport. Far better to have aircraft descending and landing at airports in the 12 o’clock (Luton), 3 o’clock (proposed Thames Estuary) or 6 o’clock position (Gatwick) where their approaches will not affect such large areas of population.
  • Landing is the most critical stage from a safety perspective – accident data shows that the majority of incidents occur on the approach. This is when an aircraft is most vulnerable, flying low and slow. As we saw with BA 777 crash in January 2008, an incident over London is an accident waiting to happen. Not to mention the nightmare scenario of a ground-to-air missile attack on low-flying aircraft coming into Heathrow.

The majority of pilots agree: We have in inadvertently built London’s major airport in the worst possible position. In their consultation for a new UK airport hub in London, the government should consider Manston (in Kent) or the Thames Estuary as the only viable locations.

Posted in Air Traffic Control, Aircraft, Airlines, Airports, British Airways, Closest airports, Investment, Pilot, Politics, Travel trends, Weather | No Comments »

Private Jet Predictions for 2012

Monday, January 16th, 2012

Despite the continuing economic downturn, the next 12 months promises some exciting times for the private aviation industry.

Key factors in 2012 will include London’s Olympics, the global economy and advances in technology, all of which look set to have an impact on the private aviation industry as a whole.

 

Here are my predictions for the year ahead in private aviation:

1. London Olympics
Demand for private jet flights, helicopters and (most importantly) parking; will be very high. London’s regional airports such Oxford, Southend and Lydd will become medium stay parking for large numbers of private jets that inner London Airports cannot accept. Customers wanting a flight to or from London during the Olympics need to book early to guarantee availability. London Olympic Flights

2. RAF Northolt Airport
RAF Northolt will become London’s premier private airport. As the UK’s Ministry of Defence increasingly needs to generate cash from its assets, the current limitations of 10 private jet landings per day at Northolt will be increased. As RAF Northolt is within the M25 and a short drive from the centre of London, RAF Northolt could become the equivalent of Le Bourget in Paris.

3. Aviation Taxes
In 2012 there are two key aviation tax issues:
i) Regional taxes: The Italian government has started 2012 by announcing that non-Italian jets parked for more than 48 hours at Italian airports will be heavily taxed, which means that private jets will simply park in neighbouring countries.
ii) Air Passenger Duty: The UK government will work out how to collect Air Passenger Duty (APD) on private aviation flights. The current plan is to leverage Air Passenger Duty on the average passenger count (rather than actual number of passengers on each flight). However the government also needs to plan how to collect the tax from overseas operators for flight departures from the UK.

4. Pilot Shortages
Currently private aviation is facing a future of pilot shortages. Many factors are causing private jet charter pilot shortages including less ex-military pilots (due to the global reduction in military personnel); scheduled airline pilot demands and planning; and lack of training scheme and funding availability for private pilots.

Pilot training schools currently estimate that 96 percent of new pilots are interested in an airline career, compared to just 4% planning a career in business aviation. Whilst this has the potential to limit private aviation industry expansion, in 2012 industry bodies such as EBAA and BACA will be looking for solutions. Private Jet Pilot Shortages

5. Speed of Response
In the current competitive market, with aircraft operators competing for every flight, a vital customer requirement is how fast the flight quote is returned. Obviously price is a crucial factor in private jet charter Along with increased price transparency, customers now expect increased responsiveness at every stage of the process – both through instant online pricing or by 24-hour telephone.

6. Private Aviation Goes Mobile
Increasingly customers and flight crew expect to be able to request, book and manage private jet charter from their mobile or tablet device. Despite doubts about the value of “apps” for high value transactions we see the private aviation industry as a whole concentrating on developing mobile and tablet apps to for post-booking management. Expect to be able to view and change flight details on your way to the airport soon.

7. Experimental Business Models
In 2011 the private aviation industry saw the development of “social jet-sharing” and new empty sector business models. In 2012 we expect entrepreneurs in private aviation to come up with different private jet models to produce solutions to the traditional issues of industry inefficiency and the perceived high costs of private jet charter. We’ll also see how successfully the new business models address the issue of maintaining customer flexibility and privacy whilst satisfying multiple customer flights.

8. Aircraft Trends
Look out for military technology in corporate jet designs. Embraer’s Legacy 500 (possibly coming to the market at around $18m) uses “fly by wire” flight controls in a medium sized corporate jet. Meanwhile the new Gulfstream G650 promises to be an exciting option for the private jet set.

9. The Rise of Private Jet Charter
Again due to difficult global economic conditions, we expect to see private jet users increasingly move away from cash upfront card, fractional and ownership options towards ad hoc jet charter. As the charter industry matures and offers clear price transparency and reliable VIP service, charter becomes a viable option for those trading down from aircraft owning or factional and card schemes.

10. Emerging markets
Private jet manufacturers are seeing strong demand from the Asian market. The trend in Europe is generally for unbranded aircraft, whereas in Asia expect to see corporate and individual names emblazoned on the side of aircraft.

So in summary I expect to see some highs and lows, but the Olympics promises a fantastic opportunity to showcase the industry.

Posted in Aircraft, Emerging markets, Innovation, Investment, iPad, iPhone app, London 2012 Olympics, Pilot, Politics, Price comparison, Private jet charter, Recession, Top 10 | No Comments »

Ed Miliband’s view on Private Equity

Thursday, September 29th, 2011

After his flagship ‘new bargain’ conference speech earlier this week, the labour leader Ed Miliband is attracting accusations of being anti-business, given the speech included an attack on corporate ethics. He described Private Equity companies as ‘asset strippers’ with the ‘wrong values’ who do not create jobs.

I have been given a different ‘bargain’. We were pleased to announce yesterday that PrivateFly has achieved its goal of reaching £2 million of investment funding, which will fund our expansion into international markets.

£1 million of this was from Private Equity company Foinavon Credit Fund. The capital injection will allow us to start exporting our unique, online private jet booking software into new European markets and will generate employment for 10 new UK-based staff and additional UK agency spend (we are currently looking at bringing back some of our outsourced agency resource to the UK).

Thanks to Private Equity, PrivateFly.com has been given a flying start. Maybe Mr Miliband would prefer other UK start ups were left queuing at the gate.

Posted in Business, Ed Miliband, Innovation, Investment, Politics, Private jet charter | No Comments »

Streamlining the security process

Tuesday, July 5th, 2011

Streamlining security screening for private jet passengers, while maintaining impeccable private jet safety levels, is an ongoing area of development for the private jet industry. Of course, even private jet passengers must undergo security checks, many are reassured by this part of the departure process (though would of course want it to be as rapid as possible).

At PrivateFly we are able to pre-screen private jet passengers. The operator of the flight undertakes full security and passport checks prior to the passenger’s arrival at the airport. This is then usually followed by a further, quick ID and baggage check before boarding, which means that the passengers are able to move through the FBO very quickly once they arrive – without the security delays so often experienced at main airport terminals. Depending on the country, these final checks can often be undertaken by the staff of the FBO or handling agent.

However there is increasing pressure from agencies, including the UK Border Agency (UKBA), to implement a consistent security process for private jet flights which is more in line with commercial airline flights. This could mean checks undertaken at the point of departure – particularly in the run up to high profile events such as the London 2012 Olympics.

Of course this presents practical and economic problems for the average FBO. It would be expensive to hire full-time security staff for the relatively small passenger throughput of a private jet terminal – compared to the huge flow of passengers moving through a commercial airport terminal. And there would be unwelcome delays if the passengers had to wait for the security officers from the main airport to arrive.

Recently Signature Flight Support at London Luton airport has invested in new technology for security screening. This is a video link system which allows security staff to remotely check and clear passengers and their baggage at the point of departure, using the latest technology to perform high-quality visual ID, security and passport checks.

Signature have been testing this for some time now and it appears to be quick and seamless – it’s not offputting to passengers, while providing a more economical staffing solution.

It will be interesting to see if other private jet FBOs follow suit – and indeed other main airport terminals could also consider using this technology, particularly as a back-up system when experiencing peak demand or for smaller airports where the staffing balance is more difficult to achieve.

The private jet industry often proves to be a test bed for innovation in aviation and this is another advancement which may well become adopted as best practice in the industry at large.

Posted in Aircraft, Airlines, Airport security, Airports, Business, Business travel, FBO, Innovation, Investment, London 2012 Olympics, Prices, Pricing, Private jet charter, Safety, Time-saving, UK Border Agency strike | No Comments »

The Chinese Private Jet Industry – Set to Soar

Tuesday, January 11th, 2011

The Chinese economy is now the world’s second largest and is likely to overtake the US in as little as 20 years. With this, personal wealth has increased dramatically yet demand for private jet travel is still waiting to take off. However the aircraft manufacturing industry is emerging and may well prove to be the catalyst for the Chinese private jet set.

Until now, China’s private jet charter market could be described as ‘embryonic’, worth less than $1bn, compared to $20bn in the US and $3bn in Europe. Reasons for the seemingly stuttering growth of the market have included a bureaucratic Civil Aviation Authority, high import duties on foreign aircraft and under-developed airport infrastructure. Things however, are changing. Some  regulations are loosening, such as the reduction of lead times needed for flight plans, and expansion of private jet airports and infrastructure is being seen around the country, particularly in key business hubs.

More high net-worth individuals has meant the growth in the number of aircraft buyers. This, in turn, will be good news for the private jet charter market as a whole, as owners turn to aircraft management companies in order to maintain the value of their investment.

Air traffic in China, which has doubled in the past decade, is again expected to double by 2020, with the number of airports set to grow from 160 to 240 according to industry forecasts. The head of China’s civil aviation administration said that the country would have up to 5,000 aircraft to transport passengers and cargo by 2015, state media reported at the end of last year.

Plans to ease controls on low-altitude flights is a move that could be a particular boost for the nation’s fledgling private aviation sector. Current regulations are strict, requiring private pilots to apply for hard-to-get approval to fly in low-altitude airspace. The official People’s Daily said the reform was expected to encourage more people to own private jets and give a boost to other civil aviation missions such as the use of disaster-relief helicopters.

In aircraft manufacturing, it was recently announced that the Commercial Aircraft Corporation of China (COMAC) has won orders from Chinese airlines for 100 of its domestically-built C919 passenger jets, challenging industry giants Airbus and Boeing. The C919 is due to make a trial flight in 2014 and should be delivered to clients in 2016. The plane is a key part of China’s plan to break the duopoly of Airbus and Boeing in the production of large commercial jets, which it currently relies on to fuel its domestic aviation market.

 The growth in Chinese aircraft sales spells interesting prospects for both Chinese and Western private jet  manufacturers. Airframers are beginning to realise the huge potential of partnering with Chinese manufactures to build their aircraft under licence. Embraer have been manufacturing the larger commercial variant of the Legacy in Harbin for several years, and other manufacturers are beginning to follow suit.

A couple of months ago, Zhang Xin Guo, CEO of Aviation Industry Corporation of China (AVIC), indicated that they were looking into the feasibility of developing their own business jet model. There is further potential in the idea that AVIC could purchase an existing manufacturer or programme such as the Eclipse 500 or the PiperJet in a ‘short-cut’ that could lead to full scale Chinese production reasonably promptly.

What is certainly clear is, as the world’s fastest-growing economy a Chinese business aviation revolution looks set for take off.

Projected Growth Potential of the Chinese Private Jet Market

Region / Country Current GDP $ Trillion Number of Private Jets Number of Jets per $Trillion GDP Growth Potential by 2030
Europe 18 2500 =138 x 3.8
USA 14 7500 =535 Base
China 9 200 =22 x 24.3

 Growth factor is based on USA as the base market

Posted in Aircraft, Aircraft manufacturers, Airports, Business, Business travel, China, Dasalt, Embraer, Emerging markets, Investment, Private jet charter, Travel trends | No Comments »

Phenom 300 strikes killer blow to Hawker 400

Thursday, November 18th, 2010

The battle of the light jets has produced another casualty – the Hawker 400 is bowing out of the fight and ceasing its production.
 
This month’s surprise announcement from NetJets – that it had placed an order for 120 of the new Embraer Phenom 300 (50 firm orders with 70 optioned) – was probably the final blow.  The two aircraft are very similar:
 

Embraer’s Phenom 300

Embraer's Phenom 300

Purchase price: $8.14M
Cost per flying hour: £1,900 (estimated)
Range: 1971nm
Seats: 7

Mustang’s Hawker 400

Hawker 400

Purchase price: $7.4M
Cost per flying hour: £2,900
Range: 1400nm
Seats: 7

 The very successful introduction of the Phenom 100, which has been widely praised, has shown that Embraer has found the winning formula. The 100 model has certainly proved popular with our customers at PrivateFly.com who have been almost universally positive about the aircraft, commenting as follows: 

  • “The best cabin design I have seen. Such a lovely flight – thank you!”
  • “Yes, we managed to fit all the bags into the hold with ease, the crew and aircraft were perfect for the trip. I would like to use the Phenom again please.”
  • “The Phenom was a significantly bigger aircraft than the Mustang but at a fairly insignificant increase in cost”

It seems Brazilian manufacturer Embraer is the one to watch.

Posted in Aircraft, Aircraft manufacturers, Business, Embraer, Fleet, Hawker 400, Investment, Mustang, Phenom 100, Phenom 300, Price comparison, Prices, Pricing, Private jet charter | No Comments »

Hangar8 Lists on AIM

Saturday, November 13th, 2010

Congratulations this week went to one of PrivateFly’s suppliers, Hangar8 who listed on AIM; London’s Stock Exchange for small but rapidly growing companies. Placing 1.3 million shares at £1.50, Dustin Dryden (Hangar8’s md) pulled in a £2m investment for further growth and expansion.

With many much larger companies such as Ocado struggling this year list on AIM, many would have suggested last week that Hangar8 could not justify their £9.5m market Cap.

Exceeding all expectations, the Hangar8 AIM listing was over-subscribed and insiders in the AIM market told me that ‘private aviation is proving to be a strong rebound stock that has a magnetic X factor for investors’   

Hangar8 has been a trusted supplier of private jets to PrivateFly members for the past 3 years. They have been prepared to accept thin margins to keep their aircraft and crews airborne, while competitors have remained on the ground.

Not surprisingly, Hangar8’s policy of aggressive pricing has made them disruptive and unpopular amongst others aircraft management companies in the industry. What their competitors need to know is that the fragmented private jet market has been changed dramatically by the recession. Smaller aircraft management companies are now facing their 3rd year of tough economic conditions combined with increased regulation costs. To survive these companies will need to reduce operating costs by merging or forming alliances – like the airline industry has done.

Watch this space for further growth from Hangar8.

Useful Links:  

Hangar8 –  First Day of trading

Hangar8 – Admission Document

Posted in Business, Investment | No Comments »