PrivateFly.com's top 10 industry predictions for 2012

The private aviation industry begins 2012 on a turbulent recovery flight path. 2011 figures showed growth of just 1.9 percent in overall industry traffic movements for the year, but with an unsettling 5 percent drop in December1. Here private jet hire booking platform, PrivateFly.com, compiles a list of predictions for the industry in the coming year.

PrivateFly's CEO and founder, Adam Twidell, comments: "The continuing economic downturn will present a challenge for sales growth over the next 12 months. Yet 2012 still promises to be an exciting year ahead.

"Compared to other travel sectors, our industry is still relatively underdeveloped in terms of its distribution and integration – presenting exciting opportunities, even in such difficult economic conditions. I believe we will see some real changes and advancements in 2012."

1. The impact of the London 2012 Olympics will be a life-saving cash injection for many private jet aircraft operators. Demand will be very high and, as slots will be severely limited, there will be many disappointed private jet customers. 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.

2. RAF Northolt to become London's premier VIP hub. With the UK Ministry of Defence almost bankrupted, the Royal Air Force's crown jewel of airports will need to generate cash. The current slot limit of 10 private jet landings per day will be challenged and increased significantly. With ideal road links into London, RAF Northolt could become the equivalent of Le Bourget in Paris.

3. Private aviation will fight back against regional TAX incentives. 2012 has started with Italy declaring that non-Italian jets parked for more than 48 hours will be heavily taxed - an incentive that will simply drive business away to neighbouring countries. 2012 will see UK industry work out the practicalities of collecting Air Passenger Duty (APD) on private aviation flights. The proposal to use an average passenger count, rather than actual headcount, will go some way to easing the administration process. But other operational challenges remain – such as collecting revenues from overseas operators for their UK flight departures.

4. The industry will address pilot shortages. Several factors are causing a reduction in the pilot pipeline into business aviation including reduced flow of ex-military pilots (due to the global reduction in military personnel); difficulty in securing training funds; and a lack of focus and investment in attracting pilots to business aviation. Training schools report that 96 percent of new pilots are interested in an airline career, which offers clear career progression and stability, while only 4 percent are considering a career in business aviation2. This could become a critical barrier to future industry expansion, however I believe 2012 will see organisations such as EBAA and BACA working hard to find solutions.

5. Customer response speed will become paramount. With operators competing so fiercely for business in this climate, response speed will become a critical element of any successful business model in 2012. 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. The industry will embrace mobile apps. Despite many raising doubts about the value of mobile and tablet applications for private jet users, the industry is now engaged in the development of many interesting apps for both customers and flight crew. Major strides will be made in 2012 on post-booking apps, to communicate flight details and updates in a highly personalised way.

7. More new and experimental business models. 2011 saw some new business models entering the market, focussed on jet sharing and empty legs. This trend is likely continue in 2012, as entrepreneurs look for potential solutions to industry inefficiency and to the perceived high costs of business aviation in these difficult trading conditions. However the success of some of these concepts remains to be seen. The core benefits of business aviation are flexibility and privacy - not easily achieved with multiple customers.

8. New aircraft trends. Embraer will continue to increase their market share of private jet manufacturing. The new $18m Legacy 500 launch will be one to watch with Embraer's military technology ‘fly by wire' flight controls setting new standards within the medium sized cabin class. At the top end of the market the Gulfstream G650 will become the ultimate purchase for the savvy 2012 private jet setter.

9. Rise of the charter segment. Ad-hoc charter will continue to gain share as a sub-sector of the industry as existing private jet users migrate from other options that involve an upfront commitment of cash. Increased transparency of pricing and improved VIP service levels within the charter segment has increased its appeal to those trading down from fractional/full ownership or card schemes.

10. Emerging markets. Aviation growth in Asia will continue to support global private jet manufacturers. New deliveries will be dominated by Asian customers who are not afraid to exploit the business benefits of private flying. These new aircraft will boldly display company and individual names on their external paint work, leaving Europe's widely un-branded fleet of private jets looking very plain!

Twidell continued: "2012 will continue to be a year of highs and lows. Our industry will spend much of the year battling the red tape of new government tax regimes but the Olympics will be a great business opportunity, despite the shortage of airport slots within the London area".
-Ends-

Notes to Editors 1.
EBAA Traffic Tracker, December 2011.