The private aviation industry in Europe has undergone a challenging few years, keeping step with the similarly challenging macro-economic environment.
At Europe, we’ve seen this reflected in customer requirements and the accelerated growth we saw through 2007 and early 2008 is no longer evident in our Western European markets. That said, despite the used jet market being at its most crowded for some years, the fractional model has proved remarkably resilient.
We are midway through the recovery process in our view, the market continues to evolve with us seeing much more growth in emerging markets such as Russia, Turkey and North Africa.
Today’s institutional investors and corporations are increasingly focused on accelerating their returns by investing in faster-growing economies. With the increasing amount of business taking place in these regions it’s more important than ever for executives to engage in face-to-face meetings to close deals. A report supported by NetJets Europe entitled Doing the Deal — which looked at global M&A trends in 2012 — revealed that executives still consider face-to-face engagement as the key factor in successfully closing deals.
The economic pressures have led to private jet companies adapting to the changing economic environment. The reluctance of banks to provide financing for corporate jet purchases (amongst other things) has led to NetJets Europe’s launch of Europe’s first direct financing product for the industry, changing the way companies and individuals are able to finance the acquisition of business aircraft.
Given macro-economic conditions, businesses are keen to avoid the large capital outlay traditionally associated with jet or even fractional jet ownership, and — whilst we have and continue to offer a jet leasing service — many of our customers want the financial and tax benefits that come with ownership of an asset.
Reflecting the broader used market surplus, where some owners might perhaps like to move to the fractional model but are struggling to sell their jets, we launched NetJets Aircraft Management earlier this year. This service uses our expertise and scale to deliver some of the savings the fractional model offers to people and organizations that own their own jets.
Key shows such as Farnborough will provide a good indication of the extent of the recovery of the industry and where the opportunities lie, and we’re looking forward to meeting industry players, both old and new. If the mood at recent gatherings is anything to go by, the industry continues to be quietly confident that the market will recover, but with the euro zone crisis still on the horizon, few think this will happen tomorrow.
We’re cautiously optimistic that over the next couple of years the market will begin to pick up momentum again and are preparing for that with careful fleet planning and investment, a real focus on the continued quality and safety of our service, and breadth in our product offering that reflects what the market wants. The recent NetJets global purchase of aircraft valued at around $9.6 billion, one of the biggest deals in the history of private aviation is testimony to this long term confidence across the industry.