A sunny day in Hong Kong
Tomorrow will be a sunny day in Hong Kong. A moderate breeze is forecast with temperatures peaking at 27 degrees. It was decidedly less welcoming on Tuesday (October 13th) – the opening day of Corporate Jet Investor’s Asia 2020 online conference. Tropical storm Nangka battered the island, as delegates from throughout Asia and the rest of the world gathered online to take the temperature of business aviation in the region.
The stormy weather in Hong Kong offered a perfect metaphor for the state of corporate aviation in Asia. Sarah Kalmeta, founder of aviation and business consultancy Pivot Point, used it to describe likely consolidation in the sector after “10 years which saw an explosion of growth and new operators”. Kalmeta thought the global Covid-19 pandemic would prove fatal for some small-scale firms.
“The smaller operators – the couple of person teams – probably will not be able to withstand the storm. But the big players realise it’s a storm and that storms pass.”
It could be a long while passing, warned Paul Jebely, the managing partner of Pillsbury’s Hong Kong office. “If we are looking at a few years ago as the high-water mark [for business aviation], it will take at least five years until the good times return.”
Only now was the full impact of Covid-19 on the sector becoming understood, according to Jeffrey Lowe, CEO Asian Sky Group. “Any sort of recovery is being pushed back to the second half of 2021,” he said. “There’s no saving 2020, it’s done and it just will not be a good year for most people. They’ve come to the realisation they are not going to hit their business performance targets for this year.”
Other speakers were more optimistic, heartened by the arrival of new clients in the Asian market and the fact that business aviation is leading the recovery. New entrants were described by Darren Broderick, Asian Corporate Aviation Management, CEO, as “the one bright spot” amid the pandemic.
“People don’t believe airline schedules will recover for several years. And they are scared to travel in an aluminium tube from one part of the world to another,” he said. “These perceptions were forcing people who had the means to travel privately and previously considered investing in private aviation to finally take the plunge.”
Rohit Kapur, JetHQ, President Asia, agreed the Covid-19 crisis was converting “the fence-sitters” in Asia into new clients. Initially, this trend would register as growing interest in charter, fractional and card schemes before eventually graduating to full aircraft ownership – typically for pre-owned aircraft. Kapur already noted many sales in the sub $5m category, with buyers considering Hawkers, Citations, Phenoms and some Learjets. “The whole pre-owned market is a good place to get great deals.”
Kapur went on to highlight the recovery in business aviation compared with holiday travel. “We are still to see elective leisure travel come back. It is business travel that is leading the way.” This contrasts with North America where leisure flights have recovered much quickly than corporate aviation.
Jetex signalled its confidence in region by using our event to reveal its latest FBO, based in Singapore. “We are optimistic about the possibilities for growth in the Asia-Pacific region and very excited to be adding Singapore to our network,” said Adel Mardini, founder and CEO of Jetex.
“Last year, Singapore experienced very strong demand for private jets with an increase of 16% compared to 2018. Therefore, we look forward to meeting the rising demand with an exceptional FBO and exemplary operational support. Bombardier shares our high standards for service, so the collaboration is a natural fit.”
Talk returned to the weather, in the shape of climate change, as Clive Jackson, founder and chairman of jet charter company Victor, warned business aviation and aviation in general should cut its carbon dioxide emissions or risk the imposition of a carbon tax. “If we leave it to the authorities, it will result in a carbon tax,” he said. “Some [environmental campaigners] have even been calling for a carbon tax of $100 per tonne of carbon. That would represent a massive burden in the post-Covid world, when many businesses were trying to survive and many will not.”
At least it will be sunny in Hong Kong tomorrow. Or maybe not. Both weather and financial forecasts can be notoriously unreliable. In the words of the late, great, and much missed, North American economist JK Galbraith: “There are two kinds of forecasters: those who don’t know, and those who don’t know they don’t know.”
Subscribe to our free newsletter
For more opinions from Corporate Jet Investor, subscribe to our One Minute Week newsletter.