Chapman Freeborn blog

Saudi Arabia’s private jet industry could soar higher

Saudi Arabia is one of the largest and most mature private jet markets in the Middle East region – and if the issue of the grey market is successfully tackled its business aviation industry will only go from strength to strength.

According to recent reports, there are now 300 private jet aircraft owned in the Kingdom at an estimated value of SR 20 billion (US $5.3 billion).  With an impressive 20 per cent annual growth rate, the private aviation market has seen some dramatic changes and continues to boom into 2013.

Analysts say the estimated number of private business jets in Saudi Arabia is expected to more than double to over 800 by 2017 and to 1,420 by 2032.

“In Saudi Arabia private jet ownership is increasingly viewed as a business necessity rather than a luxury by the region’s elite” says Sandra Gilles, Senior Charter Manager at Chapman Freeborn Aviation Services.

“Many private flyers in the Kingdom are now viewing charter as an attractive alternative to full or part-ownership of a jet – partly because it affords greater flexibility and access to a wide range of jet aircraft.”

While small and midsize jets are regularly used for domestic requirements, Chapman Freeborn reports the greatest rise in charter demand for larger private jet types suitable for key international routes such as Saudi Arabia to London and Moscow, as well as other key business and leisure destinations in the region.

Some of the most popular aircraft include heavy jets like the Gulfstream G450, Challenger 605 and 850, as well as VIP airliners including the Boeing Business Jet and Airbus Corporate Jet types.

Regionally, there has also been an increase in the fleet of midsize jets such as the Hawker 900XP, which typically carry 6-8 passengers and offer a flight range of over 3000 miles.

“Despite the general economic downturn in the region, we’ve found that our business from Saudi Arabia tends to come from the wealthier sections of society who have maintained high levels of liquidity and recognise the ongoing benefits of business aviation” says Sandra Gilles.

However, Saudi Arabia and the Middle East’s private aviation market is not without its challenges, including business lost to unregulated ‘grey market’ charter activity, when passengers are flown on privately-owned aircraft which are not legally allowed to operate commercial flights.

The rise of the grey market is partly due to pressure on margins and heightened competition in the industry, but unlicensed operators typically offer only a small reduction in price in exchange for a potentially catastrophic reduction in safety standards and invalidated insurance.

If this trend continues, it is likely to have a negative impact on the overall growth of the private jet industry in Saudi Arabia and the Middle East region, since professional companies are unable to compete against distorted charter prices.

“Even if the safety aspect is put to one side, there are also practical considerations to take into account. For example, covering the cost of a replacement if the aircraft goes tech or becomes unavailable because the owner is flying”,  says Sandra Gilles.

This is partly the background to why Chapman Freeborn launched its Global Broker Programme to support smaller brokers and jet operators undertaking charters in parts of the world where they don’t normally operate – including the Middle East.

Customers can suffer a bad experience because their private jet provider simply didn’t have the local market knowledge, whereas working with an established global provider can give the peace of mind that the charter is carried out both correctly and legally.

Safety and security must be the industry’s top priority and one of the key roles of a professional broker is to vet every operator and scrutinise the paperwork for each and every flight. Private jet providers need to ensure that all requirements are satisfied to the stringent legal and safety standards set by the regulatory authorities such as GACA, FAA and EASA.

Photograph: The Gulfstream GIV is one of the most popular large-cabin, long-range private jets in the Middle East.