Business Jet Industry Takes Off — Will Interest Remain Aloft?
Demand Boosts Hiring of Pilots and Others
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Because of the global recession, Cessna was forced to lay off half its workforce between January, 2009 and September, 2010.
“Three years ago there was a three-year wait on business jets,” Oliver said. “There was huge demand from Eastern Europe—Russia, specifically. We couldn’t build them fast enough. All of a sudden, one thing led to another and the economy was depressed. Fortunes vanished and people were walking from hundreds of thousands of dollars they’d put down.”
Oliver notes, while there’s still a little hesitation on the part of buyers, he’s definitely seeing an uptick in interest.
“The December we had last year was phenomenal, especially when you compare the year over year,” he says. “Demand from China and the Middle East has been very good. South America— Brazil—is our second biggest market outside the U.S. because of oil and exploration. The bottom line is business had been devastating, but, gradually, we’re climbing back out.”
Woody Harford, senior vice president and chief revenue officer for Citation Air, a wholly-owned subsidiary of Cessna,which offers a range of business aviation services, says, “Broadly speaking, I’d say that we are feeling much more bullish about where we, as a company, are headed and broadly, the industry, and Cessna, as a leader in it.”
The biggest indicator that business is moving in the right direction, according to Harford, is the fact that over the past 12 to 14 months Citation has offered employment contracts to all of the 85 pilots that were furloughed during the economic downturn.
Montreal-based Bombardier , began revving up for recovery in March thanks to a record order from Citation’s competitor NetJets, the business-jet operator owned by Warren Buffett’s Berkshire Hathaway.
The plane and train maker received a firm order for 50 jets, with options to purchase an additional 70. The deal could be valued at as much as $6.7 billion if the options are converted to firm orders, making it the largest business aircraft sale for the world’s third largest aircraft maker.
Heidi Fedak, senior manager for social media and external communications for Gulfstream Aerospace Corp, says the company, with more than 1,950 business jets worldwide, is seeing an increase in demand for their large-cabin aircraft.
Gulfstream projects delivering 90 “green” (those that have finished the initial phase of manufacturing and are moving into the final phase) large-cabin aircraft in 2011 up from 75 in 2010.
“We are also beginning to see renewed interest in our mid-cabin airplanes; this segment was more impacted in the recession and in the current economic environment,” she says.
“About 70 percent of our sales recently have gone outside the U.S., so emerging global markets have certainly been a key factor in our continued success. Our large-cabin, long-range jets are especially well-suited to Asia because of their intercontinental range, high cruise altitudes—for more direct flying—and speeds.”
“It’s a mixed picture right now,” says Hubbard. “There are signs that give us cautious optimism, but, like the broader economy, you don’t see a consistent, full, robust recovery back to the levels of activity on a couple of fronts that we saw three or four years ago.”
Industry insiders are hopeful that with more cash on company balance sheets and greater interest from global markets, business jets will prove to be time-saving, high-flying successes once again.
“That’s ultimately what this business is about. It’s about being able to do more things, more effectively in less time. If there’s one currency everyone shares the same restraint on, it’s time,” says Harford.
While it might not be all blue skies for the business jet industry just yet, the horizon is looking a bit brighter.