FT SPECIAL REPORT Corporate Aviation Tuesday October 21 2014 www.ft.com/reports | @ftreports

Inside Political climate chills Anxious sector awaits upturn demand in China Private jet industry is years behind global It is unclear whether 2013, Shawn O’Day, manager of busi- norms for service ness aviation marketing for GE Avia- Page 2 negative publicity or tion, the aero engine maker, says. “We’re in 2014,” he says. “It’s still not the business cycle is comingbackinthewaythatwehoped.” Market still thinks that behind weak demand, There are certainly some reasons for big is beautiful optimism. Pat Gallagher, head of sales Global trade dictates reports Robert Wright for NetJets, which offers customers “fractional ownership” of aircraft – the need for longer range hen the corporate avia- right to use aircraft for set amounts of aircraft and larger cabins tion industry execu- flying annually – points out that flight Page 2 tives gather in Orlando hoursforbusinessjetsworldwideareup for the National Busi- 5percentonlastyear. Ukraine crisis casts W ness Aviation Associa- “The market is doing quite well year tion’s annual conference today, a single on year,”he says, although he notes that pall over Europe Gulfstream G550 owned by Tesco, the levels are nowhere close to their peak in Region is unlikely UK’s largest retailer, will feature in 2005or2006. to return to its manyconversations. According to Kriya Shortt, head of Tesco took delivery of the aircraft, its sales and marketing for Textron Avia- 2006-08 heyday fifth corporate jet, this month. Yet, tion, which builds jets, the pau- Page 3 when the Financial Times reported the city of second-hand aircraft available aircraft’s delivery at the beginning of could push would-be buyers towards Interview October, it heightened shareholders’ new aircraft. Only 2 per cent of Cessna uneaseabouthowthestrugglingretailer Citations 10 years old or less are cur- Textron’s Marine wasmanaged. rently for sale, against more than 10 per Eugene on meeting Tescowasquickttoannouncethatthe centin2013. customers whose new jet and the rest of the company’s “That’swhatreallydrivesthenewair- fleetwereallupforsale. craft market,” Ms Shortt says. “If [cus- fortunes The controversy is reminiscent of the tomers are]having a difficult time are row that erupted in November 2008 sourcing a pre-owned aircraft, their rising after it emerged that the chief execu- attention is very focused on the new air- tivesofGeneralMotors,FordandChrys- craftmarket.” and ler, the automakers, had used a corpo- Dustin Dryden, chief executive of falling rate jet to travel to Washington for a Hangar8, a corporate aviation charter Page 4 congressionalhearingwheretheywould and management company, suggests ask for government rescue money for the continuing robustness of demand GMandChrysler. for the largest, longest-range jets might The question for the corporate avia- fit a pattern from previous business tion industry is whether public scepti- cycles. cism about the value of private aircraft The issue is critical because industry ingtotheGeneralAviationManufactur- Economies: proponents of corporate “The big market grows, then the mid for corporate customers is acting as a activity levels remain so far below those ers’Association,onlyjustupfrom672in jets say they utlimately save thenthelight,”hesays. On FT.com significant brake on demand. Alterna- at the 2008 peak of the industry’s last 2012andbarelyhalfthe1,313in2008. companies time and money – Alamy Yet the continued bias in demand For regular updates and tively, the industry might simply be cycle. Everyone in the industry is still wait- towards the larger aircraft can also be analysis of the aviation industry go to: High Flying slumped towards the bottom of a nor- There were only 678 business jets ingforamorerapidrecoveryindemand readasasignofthemarket’sproblems. malsupply-demandcycle. delivered worldwide last year, accord- that had been expected in 2012 and continuedonpage3