Business as usual

02 November 2001

While civil airlines have been rocked by market turbulence, manufacturers of business jets are enjoying a smooth ride. 'Demand has been steady,' says Patricia York, international sales director for Boeing Business Jets (BBJ). 'We haven't seen any negative effects.'

The Middle East remains one of the most reliable markets for corporate aircraft, and industry stalwarts Bombardier Aerospace and Gulfstream have enjoyed a steady flow of orders from the region. Oil companies account for a high proportion of the demand for standard mid-range jets. Bombardier has delivered three Q200 aircraft to Saudi Aramco this year, and in late October signed a contract with Egypt's Petroleum Air Services to supply two 50-passenger Q300 regional aircraft, with an option for five more.

New players have arrived on the scene as customers develop a taste for long-distance travel. The appetite for larger, long-range business aircraft has opened up the market to traditional manufacturers of commercial airliners. The Airbus Corporate Jet (ACJ), launched by the European Airbus Industrie in 1999, is essentially a reconfigured version of Airbus' smallest A319 commercial airliner. The advantage works both ways, says Habib Fekih of Airbus: 'ACJ is the only private aircraft on the market that can be converted to an airline. This pumps up the value for investors.'

The boundaries between commercial aircraft and private jets are beginning to blur. Airbus now markets the ACJ together with its A340 commercial airliner, and the relatively small Middle East carriers have seized on the package. 'There are at least three cases in the region where we have sold a combination of the two,' says Fekih.

Demand for the Boeing product is also particularly strong in the Middle East, according to York. 'At 26 per cent, the Middle East is our second largest market after the US,' she says. About 80 BBJs have been sold so far; more than 60 have been delivered and 38 are in service. However, the demand for long-range jets has come from unusual quarters. BBJ originally marketed its aircraft to large corporations, says York, but market profiles reveal that 62 per cent of sales to date have been to private individuals, heads of state and government departments. The customers have clearly not been intimidated by the size of the aircraft, or the $37.5 million price tag that goes with it in its unfurnished state. Quite the reverse, says York: 'We have seen increasing demand for more cabin space and space for cargo.'

In response, the BBJ2 was unveiled in February - 20 feet longer than the original model and $10 million more expensive. Seven BBJ2s have been sold this year, six of them to customers in the Middle East. However, the new aircraft had an inauspicious launch. 'The first models came out of the hangar in Seattle and were sitting on the runway when the [28 February] earthquake hit,' says York. An omen for the corporate airline market, perhaps? Not according to York. 'I'd say it's stable,' she says.

Digby Lidstone

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