Sales in Asia and Africa drive market recovery

Jennifer Harrington-Snell
May 5, 2010
Business Aviation

The business aviation market appears to be recovering from the economic downturn, propelled by increased sales in Asia and Africa, according to Jahid Fazal-Karim, co-owner of Jetcraft Corporation, and former senior vice president of worldwide sales for Bombardier. However, signs of continued economic instability in parts of Europe could have “a serious effect” on the Western markets.

Sales of long-range business jets, in particular, have increased approximately 15 percent in Asia over the last year, Fazal-Karim told AIN, adding that the market in mainland China has been “extremely active.” Demand has also increased in Russia, where the industry was “all but dead” in 2009. “The Asian market in general is pretty good, especially for aircraft on the higher end of the market,” he added. “They need the range.”

In addition, the increase in sales within the Indian market has been in the double digits, while the Middle East remains steady, in spite of the crisis in Dubai. “Countries such as Kuwait and Saudi Arabia are stable,” Fazal-Karim said.

Africa, meanwhile, is beginning to show signs of increased activity because of oil production in countries such as Nigeria. “No one should ignore Africa,” said Fazal-Karim. “The continent has a lot of resources that haven’t been exploited yet, and the oil industry is creating a lot of wealth. It’s going to be the next El Dorado.”

The U.S. market, meanwhile, is in a transition phase and should start improving over the next year. “The U.S. is cleaning up its issues. Wall Street is making money again, and the Dow is almost back to 2007 levels,” he concluded.

The U.S. is traditionally the best market for small and mid-size aircraft, but at the moment, the used market remains flooded, and prices have not recovered. “There are still a lot of bargains to be had,” Fazal-Karim said, adding that it’s going to take a while for the market, especially among the smaller aircraft, to recover.

The UK is also in a transition phase, but Fazal-Karim said he expects a much slower recovery due to the overall economic instability in Europe. “I’m worried about Europe, and we’re watching it very carefully,” he said. “Unemployment in Spain is at 20 percent, Portugal is in shambles, and Italy and Greece are in a crisis.

There is a real possibility of another recession in Europe, and if they go down, it’s going to have a serious effect.”

The UK might come through unscathed, however, due to its position as a financial center. “The financial sector is making money, and when bankers make money, they spend money,” Fazal-Karim said.

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