The state of MINT and BRIC markets
Countries that form the unofficial MINTs and BRICs groupings have the greatest potential for entering the ranks of the largest economies in the 21st century, and businesses are moving in to try and seize their shares of this growing market.
Not all markets are created equal, only some might be poised to become major players for the business jet market while other might remain small but have the capacity to grow.
We invited seven professionals working in these markets to the Corporate Jet Investor London 2018 stage to discuss how these markets are developing. When asked to give a short summary of the markets they are working in, they had this to say:
Marc Abraham focuses on Africa, a continent he thinks is lagging in comparison with Asia and the Americas. Africa is small as regional markets go, but, for example, in East Africa and Nigeria change is taking place depending on the where you are, your disparate currencies and whether governments are determinedly pro-business and anti-corruption. Several are, and that promises a better year for business aviation.
If you like rollercoasters, Brazil is a good place to be. It’s commercial aviation market is on the mend, but it is not where it used to be. Though, as David Clark told delegates, government again understands that security of aircraft ownership is essential for market development.
The Brazilian government is good at finding new ways of taxing assets. Brazilian owners seeking to limit their tax exposures, tend to declare that aircraft they bring into the country are “in transit”. Otherwise, when a Brazilian buys aircraft, he is faced with paying a 30% ad valorem tax or purchase it through a trading company, which can help cut the rate to 18%. “The hope is that a market-friendly person will become the country’s new president this year.” There are a lot of aircraft in Brazil and the need for aircraft will grow when the market picks up.
David Dixon is based out of Hong Kong – a heavily regulated territory constrained by infrastructure. It is business as usual and Dixon is looking to educate more people on the market, saying: “We are taking aeroplanes back, we have new aeroplanes on order. We want to educate mature markets on what the Asia market is all about.” China is seeing more pre-owned jets and only a few aircraft get imported a year into China compared to how many are in the country.
China is an enormous market where, despite tight regulations, the market has still grown. People are putting aircraft on a foreign register. We are seeing more pre-owned jets, but only a few aircraft are currently officially imported into China, far fewer than the many that are physically in the country.
Corporate Jet Investor 2018 delegates believe that China is the one BRIC and MINT country most poised for growth over the next few years.
Adel Mardini of Jetex Flight Support talked about his interest in the Middle East and Turkey. He said: “We want to keep growing in the broader Middle East, North Africa and Turkey. The area has far fewer FBOs than aircraft, and hubs such as Marrakech and Casablanca could be prime locations for a new FBOs.”
Greg Martin is CEO of commercial operator Siam Land Flyin in Thailand. From an outside perspective, he says that a lot of people are potentially willing to buy aircraft in these regions, but not many know that these opportunities exist.
Ivan Veretennikov of ArcosJet focuses on Moscow but has global ambitions. At present it is estimated that there are some 500 privately owned jets in the region. But that means room for growth, and he remains optimistic for the market’s potential in the long run despite slower business growth and political risks and regulations.
Are sanctions affecting transactions in Russia? Ivan thinks they have helped constrain it. It has been more difficult to finance acquisitions through European banks, particularly if clients are new to the banks or are on sanctions lists – it is easier with long-standing bank clients.
Mike Walsh of Asia Jet has the largest fleet under management in Asia Pacific. Since the Beijing Olympics, the use of privately owned jets has soared, using the same infrastructure as commercial jets. It is a situation with the potential for disputes, so compliance and regulatory reforms are an essential precursor to the next era of growth.