In view of the recent political tensions, the environment in the business aviation industry within the CIS has recently been somewhat ambivalent. On the one hand, according to data provided by WINGX Advance, the region’s traffic to Europe alone has dropped as much as 23%. On the other hand, with the full-year average oil price for 2015 expected to be $85/barrel, the players might have the opportunity to actually boost their performance efficiency-wise. Therefore, surviving the on-going challenges will depend on the operators’ ability to optimize relevant processes, while offering the most competitive products.
According to data provided by WINGX Advance, while business aviation traffic within Europe has been growing up until October, in November the picture has become grimmer. The experts state that while the leading markets, such as France and Germany, are still showing growth, the traffic within Eastern Europe and Russia has experienced a significant drop (-18% and -14% respectively). As a result, due to the challenges of the few recent months, traffic within the CIS is said to have experienced an overall yearly decrease of 5-to-10%. However, while the economical and political environment will most probably continue to put pressure on the developments within the market in 2015, it is still too soon to start panicking.
“While business travel within the European aviation market has been on the rise for the last few months, the respective drop in traffic figures in the Easter Europe and the CIS has been significantly slowing down the overall growth of the region. Unfortunately, the situation is not expected to become better any time soon, since the political crisis continues to highly affect the region’s connectivity,” says Vitalij Kapitonov, the CEO of KlasJet. „However, as these processes have coincided with the unprecedented reduction of oil prices, it is still too soon to speak about the worsening of the overall business conditions. After all, during the last few months Russia has seen at least one new player – SetFly Group - entering the market, which means that the demand for private travel remains high. What has changed, however, is the portrait of the potential customer.”
According to the executive, the potential clients can be expected to become even more cost-conscious, especially as regards choosing their business travel provider. For instance, local companies have already become more reluctant to pay for short haul business class flights, and this trend can well be expected to become even stronger. As a result, the competition within the segment has intensified, since currently not only business travel operators, but also legacy carriers have started to compete for premium-class clients. Moreover, in an unstable economic situation more business-jet owners are expected to search for an option which would allow them to reduce the risks, associated with such highly costly assets as aircraft. Thus, while some of them will try to sell their jets, some will seek aircraft management providers to make the most of their machines.
„In general, jet owners within the region tend to use as little as 18% of their jets’ possible flying hours. However, while owning a private jet surely offers total freedom and flexibility, crew salaries, scheduled and unscheduled maintenance, hangar rent, insurance, and many other expenses must be paid to keep the aircraft ready to fly when you need it. Meanwhile, considerable money savings can be achieved by entrusting your private jet to a fleet management provider, which has the experience and the capabilities to support the daily needs of the aircraft. There is exactly why such services that can be expected to become of high demand within the region,” shares Vitalij Kapitonov, the CEO of KlasJet. “All in all, while political unrest and weakening of regional economies will undoubtedly present a whole set of challenges for the market players, most consumers will be able to benefit substantially from the stronger industry performance as lower industry costs and efficiencies are passed through. As always, the secret of surviving is simply to be able to offer the best option.”