After all the anxieties and the hard work, it was tremendous for everyone involved to feel the buzz and the excitement that characterised EVA and the industry’s inaugural
Future of Business Aviation Conference and FBO Expo, held at the Heathrow Hilton on 17th and 18th February. It couldn’t have been done without our sponsors, or without the support of the many leaders in the sector who gave up their time to be presenters.
Any event being held for the first time faces an uphill struggle to convince the industry as a whole that it is sufficiently different and relevant to be worth its place on an already crowded calendar. Yet it was always obvious, too, that if we genuinely managed to get presenters who addressed not their own marketing
and sales objectives, but issues of moment and importance to large sections of the industry, we would succeed in getting a ‘thought fest’ launched that could be expected to garner more and more momentum from year to year.
This first event, it is now safe to say, did this in spades! Our presenters did themselves, the organisers, and most of all, the delegates, proud. As our charismatic Chairman, the CEO of Wheels Up, Kenny Dichter, noted, the industry now has a forum where it can come together each year to really explore the issues and challenges that are defining what can be achieved in business aviation. Yes, we know EBACE and NBAA, and ABACE and LABACE all think they do this, but those big events are primarily showcase events and launch platforms. This conference was absolutely not an event that set out to be a platform for product announcements, but one where people genuinely thought about, and reflected on, the future of our industry.
In this article I hope to highlight a fair cross section of some of the great points made, with the aim of sharing at least some of the best ideas and comments of the conference with the widest possible audience. It won’t be comprehensive since squeezing 19 presentations into under 3,000 words is beyond the wit of man, but it will give anyone who wasn’t there a clear enough sense of what they missed, and will remind the 270 delegates who were there in the hall of some of the great ideas and points that emerged over the two days.
We were fortunate to have Zang Peng, Senior Vice President of Deer Jet, the biggest operator in Asia opening the session with a presentation on ‘The Rise and Rise of Asia’. Peng’s presentation was rich in factual detail and very solidly constructed. With China’s economy expected to grow by 6.7% in 2014, slightly outstripping the 2013 growth rate of 6.6%, and with policy changes moving in favour of business aviation, the stage is set for the number of jets in the Far East to rise. There are still barriers and obstacles to be overcome, including infrastructure gaps, and cultural factors that work against the rapid expansion of the charter market, but already impressive gains have been made, he said. For example, the number of jets in the Far East jumped from 396 in 2002 to 753 in 2012, an increase of 90%. In China, while it is easy to generate extravagantly high percentage numbers from a very low base, the percentage increase over that period was 568%. Hong Kong and Malaysia are not far behind mainland China, with percentage increases in their respective business aircraft fleets totalling 104% and 103% respectively.
Turning to the constraints on growth in the sector, Peng pointed to the limits of general aviation infrastructure in the area, with few MROs or FBOs and the limits placed by regulatory structures. The real crunch, however, lies in the chronic shortage of pilots and technicians required for any rapid expansion of the Far East business aviation fleet. China itself has some 96 managed business aircraft and a charter fleet of 91 aircraft. Each year there are around 53 applications for AOCs, but only 12 are issued. There are FBOs in Beijing, Shanghai, Shenzhen, Haikou and Sanya, with an FBO currently being built in Changsha. Many more will be required in the decade ahead.
Among the OEMs, Gulfstream is king, with the G550 and G450 being the most popular models, though we can expect the G650 and the G280 to both make a significant impact in 2014. Bombardier and Dassault have the lion’s share of what remains, but Cessna’s joint venture should see its numbers picking up. Most importantly, over the next 20 years the Far East Business Aviation Market will grow dramatically, with China expected to account for some 2,420 sales and the market as a whole totalling some 3,350 sales of business jets.
Michael Sattler, Vice President of Business Aviation at Ruag, and Christopher Mbanefo, Founder and CEO of YASAVA Solutions, focused on the irony that business jets, which are taken as the epitome of luxury, generally have seating that makes any distance trip a highly uncomfortable experience. “Experienced long-haul travellers on business jets will tell you that your best bet for a comfortable night’s sleep is to spread a blanket on the floor,” Mbanefo told delegates. YASAVA has put a lot of effort into rethinking a truly comfortable chair, the Astral, that is fully electrically driven and that reclines into a bed that is actually conducive to sleep. Ruag and YASAVA have a joint venture that will look to retrofit the Astral into a totally redesigned cabin.
“Why is it that the interiors of so many business jets still follow the same internal layout that you would have seen in the 1960s?”
Sattler asked. Mbanefo pointed out that from an engineer’s and an architect’s standpoint there are two questions that define the constraints on a business jet interior: ‘How many guests does the Principal wish to cater for?’ and ‘How many support staff are required?’ If you are redesigning your interior with Astral seating, expect to pay an additional one or two million dollars for the privilege. But as Mbanefo notes, the seat is where the owner and the aircraft make prolonged contact, and if the seat isn’t comfortable, pretty much nothing else matters. All the aircraft’s other advantages quickly fade to zero.
Delegates were treated to a polite clash of views when Nextant President Sean McGeough and Beechcraft VP of sales for EMEA Scott Plumb were on the platform together addressing the future of light flight in the light jet and turboprop markets. Nextant is excited about applying its ‘reimagined, rebuilt, reborn’ philosophy to the Beechcraft C90 (see the interview with McGeough in this issue). Beechcraft, for its part, is anything but excited by the suggestion that its aircraft require ‘reimagining’. Things got a little frosty when delegates pressed Plumb as to whether Beechcraft would stand behind Nextant’s 400XT and G90XT models as the OEM in the frame.
“We know what we do, we don’t know what Nextant does, so no, that’s down to Nextant,” Plumb said. However, McGeough and Plumb know each other from way back, and both companies are looking at bright futures. Beechcraft is enjoying a spate of orders for its King Air 350i (not least from our conference Chairman, Kenny Dichter’s order for 105 King Air 350i’s for his Wheels Up venture) while Nextant is seeing international demand for the 400XT and has a new proposition for the turbo market to come in the shape of the G90XT.
Thomas Mullarkey, Director, Cabin Systems Marketing for EMEA at Rockwell Collins, addressed the way cockpit avionics have been transformed in recent years and are now en route to providing pilots with synthetic vision that combines the best of visible spectrum optics with short-wave and long-wave infra red, and detailed computer-driven terrain mapping. Better and sharper real-time situational awareness in the cockpit can only raise the bar in aviation safety and every step forward will be welcomed by the whole industry. After his presentation it was clear to all why pilots who have flown with a HUD (heads up display) never want to be without one.
Allied World Senior VP for Aviation, Olivier Marre, achieved what few of the delegates were expecting by making a presentation on aircraft insurance both richly entertaining and highly informative. Clearly nothing flies in our industry without insurance, which, Marre suggested, puts insurance on a par with mothers-in-law. “You never want to deal with them but you eventually have to. They always get involved when you would like them to stay away. They are never there when you really need them and they will never change,” he joked. Marre sketched out the scale of the bet that the insurance industry takes backing the average 13,800 business aviation aircraft that are in the air in any 30-minute period. At a probable maximum loss of $375 million per aircraft, that adds up to a total at-risk of $5.2 trillion. In return the insurance industry gets the equivalent of $85,600 in premiums. Marre took delegates briefly (very briefly – this was an immediate post-lunch session and most delegates were not feeling up to heavy math) through the way statistics work in order to enable this apparently asymmetrical bet to be sustainable. EVA will be running an interview with Marre in our next edition so if you missed his talk, don’t miss our EBACE edition!
Hypermach CEO Richard Lugg’s presentation on the progress being made by his company towards hypersonic flight was undoubtedly one of the star turns of the conference. EVA featured an interview with Lugg in its Summer 2013 edition (available online) but for those who hadn’t heard the Hypermach story before, the presentation was an engineer’s dream. By taking the drive shaft out of the turbine, Lugg and his team have removed what he calls “the central weakness” of the turbo design and created space for 80 super-conducting coils which enable his revolutionary engine to generate around 9 million watts, as much electricity as a small sub-station.
The engine Hypermach has chosen to transform is the GEJ-79-8C, which powered the Phantom during the Vietnam war. Lugg’s target is London to New York in one hour and five minutes. Moreover the new engine will tick all the green boxes. “At present we waste about 75% of fuel energy in heat and emissions – we are working towards a zero emissions aircraft,” he told delegates.
WingX CEO Richard Koe nearly missed the conference, since he was caught up in the bizarre hi-jacking of an Ethiopian airliner by its co-pilot, who diverted the plane to Geneva, from which Koe was scheduled to fly. The lockdown of Geneva Airport that followed gave both Koe and the organisers a few palpitations but by swapping his session for Richard Lugg’s he was able – just – to stand at the lectern at exactly the
right moment. Koe highlighted the relative opportunity for light jets in emerging markets but acknowledged the continuing predominant preference for large aircraft. Several case studies were explored, including Turkey, Nigeria, China and South East Asia. He concluded with analysis of the US market, which WingX claims to be the most interesting re-emerging market, with the influential come-back of very light jets set to provide the benchmark for future light aircraft business models worldwide.
Day One ended with the Gala Dinner and entertainment, sponsored by Rani Awad, CEO of Atlantic FuelEx. The event was a blast and the networking that took place around the bar afterwards confirmed the creative and entrepreneurial juices that the day had set bubbling. With the downstairs bar at the Hilton only emptying around 2.30 we slightly fudged the start of Day Two to give a number of bleary-eyed delegates a chance to take their seats. However, our excellent event Moderator, Clint Cloutre, took things along at a cracking pace and we were soon back on schedule with a full auditorium.
Space precludes dealing with Day Two even as briefly as I have romped through Day One, so what follows is a real summary of the highlights. After another rousing introductory speech by Chairman Dichter, the day opened with a session on the future flying office, with Satcom Direct’s International VP Chris Moore and Steve Sivitz, Business Development Lead at ViaSat, looking at the way business aviation is handling the data tsunami. Sivitz pointed out that we are still years away from satellites providing the kinds of speeds that users around the world are now enjoying on their mobile devices with the likes of the 80Mb provided by 4G, but as Moore explained, a lot can be done with smart caching of information to provide in-flight users with very acceptable quality.
Chris Miller, CEO of aircraft financing specialists Guggenheim Partners and Diego Garrigues, a partner with Kennedys Law, who kindly sponsored the cocktail reception that preceded the Gala dinner, gave delegates a rapid overview of the options and complexities involved in buying and flying business jets. I’m mulling over their presentations, which were detailed and deep, for future features, so watch this space! That took us up to the refreshment break, which, as on Day One, was held in the FBO Expo, giving delegates a chance to get together with our FBO Expo exhibitors. There was always a good showing of top quality executives through the FBO Expo hall during the breaks and pre the start of each day’s session, but next year we could definitely use a bigger footfall through the Expo when the Conference is in full swing. One for us and the industry to work on…
After refreshments the pace really picked up. Oliver King, Managing Director of Avinode, Alex Berry, Global Sales and Marketing Director at Chapman Freeborn and Martin Lener, CEO of Tyrolean Jet Services talked about the future of charter. For me, Alex Berry said it all when he made a passionate plea for business aviation to realise that what it is selling, above all, is not luxury jets or private travel, but time – or rather, the ability to conserve time. When it’s gone, it’s gone, and business jets get you to so many destinations faster, more directly and with less fuss than any other form of travel. For people who value time, business jets are the answer – and if the hypersonic and supersonic options being worked on in the industry come to pass, the transformation will be eye popping. (We have a full interview with Martin Lener scheduled for our EBACE edition. He is, in my view, one of the deeper thinkers in the industry, with a solid grip on commercial reality, so that should be good!)
The future of flight support was tackled by AeroEx CEO Joel Hencks and Dustin Wilden, Area Manager for Air Support. Hencks has a great deal of experience in talking to legislators at the European level. His and the business aviation industry’s main battle is to make legislators see that producing one unitary code of practice that sweeps business aviation in together with commercial transport aviation, is a nonsense. The kinds of edicts you would want to make for commercial transport on issues such as pilot rostering and pilot hours just do not map to any corresponding reality in business aviation, he pointed out. This fight clearly still has a long way to go, but delegates were given much to ponder with respect to compliance and with respect to the gap between the industry and the regulators.
Session 12, ‘The Future of Fuel’, saw Tonya Donaldson, Global GA and Military Marketing Development Manager with Shell Aviation (our silver sponsor) telling delegates both about the value add that Shell seeks to bring to fuel services and about the new generation of bio-fuels the oil major is researching. Here, Shell is focusing on sugar as the feedstock for its biofuel, and is looking to ensure that whatever solution it comes up with has zero impact on world food supplies and definitely produces a positive energy return over the production and lifecycle costs. The difficulty is not in original research, which is largely done, but in solving issues relating to the commercially viable ramp up in supplies. (Again, EVA is planning an interview with Shell shortly on the theme of biofuels, so watch this space.)
Then came what was clearly the second star turn of the conference, Chairman Dichter’s account (delivered without notes or any assistance from the near-ubiquitous PowerPoint) of Wheels Up, his new membership-based venture which aims to more than double the broad base of the business aviation industry. With an initiation (ie joining) fee of $15,750, followed 12 months later by the first annual fee of $7,250 and a per-flight-hour fee of $3,950 Dichter told delegates that he is confident of signing up between 1,200 and 1,400 delegates in the first year and raising that number to 10,000 inside five years. Having been responsible for generating more than $1.4 billion of sales in confirmed flight hours in his previous venture, Marquis Jet, if anyone can do it, Kenny can. For sheer entrepreneurial flair and gung-ho, a Dichter presentation has no equal! You come out of it feeling like you have just knocked back a brimming glass of his Avion Tequila (another highly successful Dichter venture).
Day Two closed with two presentations, one from Robin Dunlop, the Owner of CTM-Design, providing an architect/designer’s eye view of the completions task and one by Glen Heaven, Managing Director of the consultancy Synergy Aviation. Heaven is a noted raconteur and was able to ride easily over the minor speed bump in his path occasioned by the unavoidable absence of his designated co-presenter in the final session, Segun Demuren, Managing Director of
Evergreen Apple Nigeria. Demuren was unexpectedly caught up in a whirl caused by the sudden departure from office of the Nigerian Minister for Transport. Instead of departing for London Heathrow and the conference, he was called on to be part of a small, select group to look at the suitability of replacement candidates for the role! Next year, Segun! Heaven filled the gap in masterly fashion and took delegates on a rapid but thoughtful tour of the future of our industry in the Middle East, Asia and Russia.
For an inaugural event, I think we can be justifiably proud of what was achieved and of the level of support provided by the industry. A number of major players said that they were sufficiently impressed by this first event to want to be a solid part of Year Two. You can bet we’ll be looking to hold them to that! Until next year, more power to you!