Airline Markets
The Changeable Nature of Air Transport Markets
Air transport markets are very changeable by nature. The aviation industry in general is usually the first industry to be affected by periods of economic instability and recession and the last to rebound back. Two markets that this report will focus on are that of Fractional Ownership Markets and Cargo Markets.
Fractional Ownership Market
This involves more affluent customers purchasing a share of an aircraft. It gives these customers/owners the benefits of ownership of a private aircraft, but with much reduced costs and less commitment that outright ownership of the aircraft would otherwise entail. The notable companies in this market include NetJets, Flexjet and Flight Options.
Even though operators are increasing their fleet numbers after they generally declined by 14% overall from a peak in 2008, it was stated as recently as August 2011 that Flight Options achieved a 467% increase in fractional share sales when compared to the previous year. In addition, Flexjet saw a 64% increase in its fractional aircraft share purchases in Quarter 1.[1]
During the period September 2010 to September 2011, fractional jet industry sales are up 16%, and at Flexjet the sales of its fractional aircraft shares are up by 92%, with its market share during this period of time increasing from 14% to 21%. [2]
After making a loss of $720 million in 2009, Netjets managed to return a rather impressive profit in a tough environment of $200 million in 2010. [3]
Looking further East, Gulfstream have stated that the Indian market will need another 250 aircraft to satisfy demand in the next 10 years [4], so it is clear there is confidence for future growth. Back in the West, this can be said to be true again especially when considering their latest aircraft, the G650, currently has an order back log of more than 5 years . Very impressive considering that the aircraft has not even entered service yet.
Overall, things
Air transport markets are very changeable by nature. The aviation industry in general is usually the first industry to be affected by periods of economic instability and recession and the last to rebound back. Two markets that this report will focus on are that of Fractional Ownership Markets and Cargo Markets.
Fractional Ownership Market
This involves more affluent customers purchasing a share of an aircraft. It gives these customers/owners the benefits of ownership of a private aircraft, but with much reduced costs and less commitment that outright ownership of the aircraft would otherwise entail. The notable companies in this market include NetJets, Flexjet and Flight Options.
Even though operators are increasing their fleet numbers after they generally declined by 14% overall from a peak in 2008, it was stated as recently as August 2011 that Flight Options achieved a 467% increase in fractional share sales when compared to the previous year. In addition, Flexjet saw a 64% increase in its fractional aircraft share purchases in Quarter 1.[1]
During the period September 2010 to September 2011, fractional jet industry sales are up 16%, and at Flexjet the sales of its fractional aircraft shares are up by 92%, with its market share during this period of time increasing from 14% to 21%. [2]
After making a loss of $720 million in 2009, Netjets managed to return a rather impressive profit in a tough environment of $200 million in 2010. [3]
Looking further East, Gulfstream have stated that the Indian market will need another 250 aircraft to satisfy demand in the next 10 years [4], so it is clear there is confidence for future growth. Back in the West, this can be said to be true again especially when considering their latest aircraft, the G650, currently has an order back log of more than 5 years . Very impressive considering that the aircraft has not even entered service yet.
Overall, things
Bibliography: [1] National Business Aviation Association 2011, Fractional Aircraft Ownership Grows As Added Programs Drive Value Perception [online], Available from: http://www.nbaa.org/news/2011/20110808-fractional-aircraft-ownership-grows.php [Accessed: 28.01.2012] [2] Elite Traveller 2012, Flexjet Reports Strong Private Jet Trends [online], Available from: http://www.elitetraveler.com/news_detail.html?nid=3706 [Accessed: 28.01.2012] [3] NetJets 2011, BUFFETT DROPS IN ON NETJETS´‹ˆÅ TO HELP CELEBRATE 2010 PROFIT [online], Available from: http://www.netjets.com/Learn_More/Press_Releases/2011/pr2011_01_27.asp [Accessed: 28/01/2012] [4] FractionalLife.com 2010, Business jet market set for growth in India [online], Available from: http://www.fractionallife.com/news_business_jet_market_set_for_growth_in_india1051.asp [Accessed: 28/01/2012] [5] IATA Economics 2011, CARGO E-CHARTBOOK Q4 2011 [online], 3, Available from: http://www.iata.org/whatwedo/Documents/economics/eChartbook-Q4-2011.pdf [Accessed: 29/01/2012] [6] Emirates 2011, Complete Annual Report 2010-2011 [online], 40, Available from: http://www.theemiratesgroup.com/english/facts-figures/annual-report.aspx [Accessed: 29/01/2012] [7] Emirates 2011, Complete Annual Report 2010-2011 [online], 6, Available from: http://www.theemiratesgroup.com/english/facts-figures/annual-report.aspx [Accessed: 29/01/2012] [8] Air Cargo World 2011, Top 50 Carriers in 2010 [online], Available from: http://www.aircargoworld.com/Air-Cargo-News/wp-content/uploads/2011/09/Top-50.jpg [Accessed: 29/01/2012]