Despite the industry’s troubled times, the European Business Aviation Association (EBAA) now has more members than in its entire history–425 companies–and proportionally more of them are aircraft operators than ever before. Thanks almost entirely to income from the EBACE show, the industry group hasn’t had to raise its membership fees since 1991 and its international profile has been made more diverse with the affiliation of new national business aviation groups from Russia, Malta, Austria, Belgium and, soon, Spain.
Ahead of this week’s 10th EBACE show in Geneva, EBAA president and chief executive Brian Humphries sat down with AIN for an update on the state of the industry and the main tough issues it is facing.
What is the current state of the European business aviation community going into the 2010 EBACE show? How damaging has the economic downturn been? Is the impression that a recovery has begun well founded?
In terms of the overall market, it has turned out to be better than we thought. We projected a 15-percent downturn in European flight activity levels in 2009, which some thought was optimistic, but that is what it ended up being, taking us back to where we were in 2005.
This year, January was slightly down, February was slightly up and March was a whopping 10 percent up on a year ago. So, we think we are going to see a slow but erratic recovery during the year. The biggest problem is that although flying activity has increased, our members are telling us that [charter] rates are down. People are not getting the income they need, in some cases rates are down by as much as 30 percent.
From 2001 to 2007 we were the fastest growing sector [of air traffic] in Europe after the low-cost carriers. The latest figures from Eurocontrol show that we were one of the worst-hit sectors last year. We were 15 percent down, which means that we have gone from being 7.9 percent of IFR traffic in Europe to 7 percent. But they are projecting that by about 2013 we will probably go through 8 percent, so Eurocontrol is projecting a return to growth.
How damaging has it been? Well, we have lost very few members. Most are still trading but there is no question that people are finding it quite damaging and quite tough.
But in some cases aren’t aircraft still out there just because they can’t be sold? Is there any concern that when prices pick up people might feel they can get out of business aviation and not get back into it, writing it off as a bad experience?
It is possible, but people are still buying aircraft. There are some great bargains to be had. Someone told me that he had sold an aircraft for $47 million in 2007 and bought it back in 2009 for $24 million. You can get a nice Falcon 2000 for $11 million; you can get a GV for under $25 million.
Most commercial operators are operating aircraft that don’t belong to them; in other words they are managed for their owners and if the owners’ businesses recover, then your scenario is unlikely–but I wouldn’t rule it out. We are probably through the worst, but there is a long struggle ahead. We don’t expect to see people selling aircraft in significant numbers. But you do have the very largest operators with aircraft in storage, and they will need to rationalize and
restructure their fleets and this could still be painful.
So do people out there still see the value in business aviation or has this perception changed during the economic crisis?
The automakers in the U.S. did us a huge disservice because they showed these aircraft to be apparently a disposable luxury. However, companies like Shell Aircraft would not say this. Having had corporate aircraft since 1927, Shell has just rationalized and replaced its entire fleet. Most people who use corporate aircraft properly like this will say that it is the only way to effectively grow your business. The worst thing to do when a business is going down is to get rid of the tool that will help you take it back up again.
Interestingly, in Europe we have not seen the political negatives about business aviation. One of our greatest achievements has been to have the European Commission, the European Parliament and the Council [of European Union transport ministers] recognize that business aviation has a particular role in the aviation infrastructure of Europe. It is not in competition with the airlines. It is providing a particular service to help people grow their businesses and connect them.
At last this is officially recognized and we have officials saying that we need to have fair access to slots, rather than saying that this is a luxury and we should get out. Although we have pressure from the environmental lobby and also from some of the low-cost carriers, politically business aviation is in better shape than it has ever been.
Is it surprising that there seems to have been relatively little public backlash in Europe against business aviation as an extension of public anger over sectors such as banking?
One of the factors is that we have had very low-key business aviation in Europe, compared with the U.S. You will never find a logo on the side of a corporate aircraft here. People here use the smallest aircraft they can, rather than the largest aircraft to show that they have arrived. It has always been a very low profile activity here and that has stood us in good stead.
There still seems to be confusion and inconsistency over how the new EC300 security regulations will apply to business aviation. What is the latest situation on this front?
The news from the new team at the UK’s Transec [the security division of the Department of Transport] is that for the first time they are recognizing that you can have different standards for business aviation, and separate demarcated areas for security. We have put in an enormous amount of work with the European Commission on this, and [getting] the derogation for business aviation to apply rules tailored to its operations was a big success.
However, it does mean that the derogation applies to 27 different states, so the danger is that we could have 27 different sets of rules. We have developed an acceptable means of compliance for security and we have submitted this to the authorities. They are looking at this and want more clarity on the detail, which we are supplying. Having consulted users, brokers, operators and FBOs, we think this is a good, robust mechanism.
The key thing is that security really matters to us. It has always been one of the key drivers for using business aviation. But we have a different requirement; we don’t sell seats, we sell the whole aircraft and our security begins with who boards the aircraft.
Of course, conventional screening still has a key role to play, but we look for more than that and think we have developed good, robust protocols. As always, the UK tends to take the lead, so I would say watch what is coming out of Transec [because it could influence other European states].
What is business aviation doing to demonstrate its commitment to improved safety? Is European business aviation embracing the ICAO mandate for safety management systems (SMS) even though European authorities do not seem to have set a clear timetable for this?
We have now sold 900 copies of IS-BAO [International Standards-Business Aircraft Operations] and some 300 operators are registered. It is an SMS-based industry best practice based on ISO [International Organization for Standardization] principlesagainst which operators are audited.
Authorities in Bermuda and the Cayman Islands have said that they will accept IS-BAO as an acceptable standard. EASA has indicated that it will accept it as meeting the standard for regulation of noncommercial, complex motor-powered aircraft.
We are also find that commercial operators are getting more interested in IS-BAO because it can mean they operate to a defined standard of best practice and so don’t have to have numerous audits done to guarantee safety. A lot of big corporate charter clients insist on an audit.
EASA will mandate SMS only from April 2012 and by then I would expect that most of our members will already have it. For audits to be worthwhile there has to be some set standard to audit against and this is where IS-BAO meets the need.
We now want IS-BAO to be developed for helicopters, too, and we are working with EHA and IBAC to get a protocol established. Globally, helicopters do not have a good safety record and this could create an industry standard that would raise the bar.
With IS-BAO we have also developed some modules, such as a standalone SMS module that is tailored for small operators. We have also run a series of training courses for operators buying the SMS module. Over three days it will help them put together a framework for their SMS. We have also developed an SMS video with FlightSafety International. This is part of the interactive training with a pass-or-fail test for a good grounding in SMS.
Finally, EBAA has developed an emergency response planning manual which is required as part of SMS. In a survey, we found that 30 percent of operators don’t have an ERP at all and 50 percent of the ones that do never exercise it. This excellent tool costs just ?300 for EBAA members and is supplied as part of our role in helping members to increase safety standards.
And at practical level we run the Safety Standdown every year at EBACE. It is sponsored every year by NBAA, EBAA and Bombardier. It is free of charge.
If you are a small operator then SMS does not have to be very complicated. Using the simple model provided by IS-BAO is simply a way of managing your risk and assessing this risk against your operation. As we move into EASA rules, which will likely be performance-based, then operators will need to have an SMS.
As EASA prepares to take direct responsibility for regulating aircraft operations are there signs that rethinking its approach to regulation could result in a more workable arrangement for business aviation?
We are waiting for the output from working groups, which are preparing a new comment response document (CRD). The revised version is expected any day, but I have a fear that EASA is grossly overworked and is really struggling with this. However, it has at least accepted that if EASA doesn’t have the new [operating] regulations ready by April 2012, there will be a need for transitional arrangements.
There is also real concern we will have very little time to comment on the new rules and that they could be railroaded through. The European Commission will not move the April 2012 date but it will allow transitional arrangements. We are concerned that today’s good set of rules could be replaced with some that are worse. And when EASA takes over ATM [air traffic management] there may not be enough time for any consultation.
We have been very encouraged by our work with EASA on flight- and duty-time limitations. This has been one of our most successful working groups and it has produced new draft regulations for our sector. We have been working closely with EASA to make sure it thinks it is reasonable. We have a new study from Dr. [Mark] Rosekind, who has done a survey of more than 500 sample pilots, which should provide the scientific evidence that the new rules are safe.
The last discussion we had with EASA suggests that it accepts it may be necessary for us [business aviation] to have a completely different set of rules. The fact is that [existing] EU OPS Subpart Q absolutely does not work for our sector. The particular issues are split duty, standby, in-flight rest and down-route rest. In general we are trying to manage tiredness more than fatigue, whereas the airlines are trying to manage fatigue more than tiredness. A typical [business aviation] sortie will be out in the morning, then six hours rest and then back late at night.
We are not suggesting that the crew should then be on early the next morning. They definitely need to have the right rest from the time they finish until they start again, but they don’t need a whole day’s rest. If they have had several days rest down-route, they don’t then need to come back and have ten more days rest. The flight- and duty-time regulations need to be ready from April 2012 and we see no reason why that can’t happen.
For noncommercial complex aircraft we don’t have any rules, but if EASA stands by its support for IS-BAO, then the job is done.
I still hear complaints about burdensome and anti-competitive barriers to operators wanting to fly into the U.S. Is any progress being made on this? In so far as this does represent an uneven playing field, shouldn’t Europe start to be tougher on U.S. operators?
We have had more meetings with the U.S. authorities. We had one in March, meeting with TSA [Transportation Security Administration] and its manager for general aviation. We met with the DOT [Department of Transportation] and its foreign air carrier licensing division. The NBAA has been very helpful on this.
There are two issues: security and regulatory. The current confusion is that at the meeting we had last year, they said it should be possible to replace the waiver system with APIS [advanced passenger information system], that this should be working by May and that they will notify operators through notams.
However, there is a problem because this is just for aircraft just going into the U.S. For aircraft flying multiple legs in the U.S. the TSA’s large aircraft security program would have to be adopted. There is still a lot of concern and we don’t think that makes sense if you have already been cleared to fly into the U.S.
Some European national authorities are starting to be more difficult, and I don’t blame them. If you want to operate an aircraft heavier than 27 tons into France you will have to show that you have a flight-data-monitoring program in place. We have been clear with the Americans that if they continue to make life difficult for us they will start to see barriers erected against U.S. aircraft coming into Europe.
As far as the DOT is concerned we did get the six-flight limit raised to 12 without a Part 129 license. They also say they are removing the delay in getting approval for this. It is no longer taking three days, but it is a very slow process.
We also have to deal with the issue of the Customs bond. We would prefer to eliminate the bond based on reciprocity or replace it with a flexible, centralized procedure so that one bond applies to all operators.
Is airport access a less pressing issue in view of declining airline traffic or are there still significant obstacles to business aviation?
It is easier, but now is the time to take the issue forward. We are very encouraged that as a result of various positions taken by the Council, the Commission and the Parliament, which have accepted that business aviation must have fair and equitable access to airports.
We have just put in a paper to the European Commission on how business aviation should be accommodated at slot-restricted airports. We had a meeting with airlines and the low-cost carriers but they were not at all helpful. All we are looking for is grandfather rights. At an airport like Luton, new airlines starting up will automatically get slots taken from us, even though we [business aviation] have invested in infrastructure such as FBOs.
They key difference is that many of our operators have only one aircraft and most others fewer than five aircraft. We want business aviation to be treated as a single entity. If we have traditionally had five slots per hour at a place like Luton then we should get that many slots as a combined entity. We would still be subject to the use-it-or-lose-it rule. It is not right to have no security of tenure after making investments in establishing infrastructure.
The EEC 93/95 slot regulation is being reviewed and we think we have made a good case. This will become more important as we move on with SESAR because with satellite-based augmentation systems we should have Cat 1 operations to any airport, and with enhanced-vision systems there should be Cat 2 to any airport. This could mean that airlines become more interested in using the larger secondary airports, which we have traditionally used. They will be chasing us down the market and out.
