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Corporate jets look to tap into Middle East demand

Tuesday, 19 Nov 2013 | 10:36 AM ET
Kiran Moodley | CNBC

As Dubai establishes itself as a center for commerce, with a new airport scheduled to accommodate 160 million passengers per year, the UAE's airlines are gearing up for even more business traffic. And that includes the corporate jet market,

The appetite to fly with certain comforts is returning after the financial crisis. And many of the corporate jet manufacturers and charter airplane firms are keen to tap into that market.

(Read more: What do you get in a private jet?)

Currently, the U.S. dominates the private jet market, taking up 49.7 percent of the sector, according to the General Aviation Manufacturers Association (GAMA). Europe holds 20.8 percent, Asia Pacific 11.8 percent and South America has slightly less at 11.6 percent. The Middle East and Africa holds 6.1 percent of the market, which means there is a huge amount of potential to grow.

Mike Berry, Middle East managing director for ExecuJet, a group which offers chartered jet services and has operated in the region for 14 years, said the region was a neglected market that had remained resilient through the financial crisis.

"Well, even through the recession, those long-range aircraft of 14-plus passengers, there was always demand for them," he said. "So I'm not surprised that with a recovery that is still the mind-set. That is what business class wants.especially with large families wanting to travel far. We see that type of aircraft being delivered to the region."

In a sign that the UAE's corporate jet market is strong, Royal Jet, the Abu Dhabi-based operator which has the world's largest collection of Boeing Business Jets as well , announced at the Dubai Air Show that it will completely renew its fleet by the year 2020, which will reach a total value of $700 million at current list prices.

(Read more: World's 10 most expensive corporate jets)

Furthermore, Private Jet Charter (PJC), one of the world's largest independent private jet charter brokers, also announced at Dubai that it wanted to expand its Middle East market. On top of this, Jordanian business aviation and training group International Wings Group launched what it claimed was the Iraq's first domestic private jet service, called Iraq Gate.

There is also a large family aspect to business aviation in the Middle East, with customers looking fly with family and members of staff.

"The Middle Eastern and Russian customers like to travel with larger entourages," Ernie Edwards, president of Embraer Executive Jets,"More friends, relatives, and they take a hell of a lot of bags."

Berry added that there were huge plans for the expansion of aviation travel in Dubai in particular. Al Maktoum International,a central piece of the Dubai World Central commercial complex (where the Dubai Air Show is being held), can handle 7 million passengers a year for now. By 2030, the facility will have five runways and accommodate 160 million passengers per year, making it the largest airport in the world in terms of passenger capacity.

(Readmore: The Middle East: The new aviation hub?)

"With the activity we are seeing, that is back to the 2008-2009 levels in terms of aircraft movement through Dubai, this market is only going to get bigger," Berry said.

That is why Dubai's plans to move its airport to a new location that could accommodate 160 million passengers is crucial. "I think it's key for overall aviation," Berry said. "Dubai International is congested and passengers no longer want to get in a jet and wait 30 minutes for a take-off slot, so this is key to take on the growth in demand that is coming into Dubai."

Edwards is set to leave his post as president of Embraer Executive Jets soon and Marco Tulio Pellegrini, the current COO, is set to take his place. Both men see the Middle East market as crucial for their operations given the future planning made by the leaders of the UAE.

"They're planning 20 to 25 years ahead, they know what their future is and their future includes transportation, and they need aircraft because there is going to be more people in the region, to visit or stay," Edwards said. "Business jets offer privacy, flexibility, more security. Every flight you catch nowadays is full and that's not good for the businessman that needs to get from Dubai to London tonight to close a deal."

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