Considerations in Expanding the Corporate Air Taxi Market
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Considerations in Expanding the Corporate Air Taxi Market in Europe Gary Crichlow Aviation Analyst 19th March 2009 AGENDA Ascend — who we are Defining the European corporate air taxi market Considerations in expanding the market Summary 2 AEROSPACE INFORMATION REDEFINED Provider of specialist information and consultancy services to the global air transport industry. “The information contained in our databases and used in this presentation has been assembled from many sources, and whilst reasonable care has been taken to ensure accuracy, the information is supplied on the understanding that no legal liability whatsoever shall attach to Ascend Worldwide Limited, its offices, or employees in respect of any error or omission that may have occurred.” www.ascendworldwide.com AEROSPACE INFORMATION REDEFINED Data & advisory services Ascend Online Fleets 100,000 aircraft Ascend Online Values (V1) Historical, current and forecast values Market studies on a range of different aircraft types Demand forecast projects Detailed market outlook analyses www.ascendworldwide.com AEROSPACE INFORMATION REDEFINED Regulatory OEM Finance Insurance Leasing MRO Components Publishing Operators 5 AGENDA Ascend — who we are Defining the European corporate air taxi market Considerations in expanding the market Summary 6 Corporate air taxi market On-demand charter Whole aircraft Per-seat Branded operations New technology (VLJs) 7 Corporate air taxi market Flight cost by distance using a range of business jet models Traditional business jet charter Price VLJ air taxi (whole aircraft) VLJ air taxi (per seat) Commercial Airline: - Without hubbing - With hubbing Journey Length Source: Embraer 8 AGENDA Ascend — who we are Defining the European corporate air taxi market Considerations in expanding the market Summary 9 Considerations in expanding the market DEMAND SIDE SUPPLY SIDE Access to funding Economic environment Public perception Customer characteristics Aircraft type European Aviation Market Geography Price & scheduling Operating model Infrastructure Regulatory compliance Competition 10 Demand side—European economic environment 2.95 20 2.90 19 2.85 18 2.80 17 EU27 GDP (€bn) Business aircraft departures (000) Sources: Eurocontrol, Eurostat, Ascend analysis 11 Q408 21 Q308 3.00 Q208 22 Q108 3.05 Q407 23 Q307 3.10 Q207 24 Q107 3.15 Q406 25 Q306 3.20 Q206 26 Q106 3.25 Business a/c departures (000) EU27 GDP (€ billion) Business aviation and the economy European economic environment Reduction in corporate travel “… At the moment, we have a “no travel” ban in place. This calls for only essential travel to be undertaken. We are being steered towards phone and video conference as much as possible to avoid travel …” Business Executive, mining company Trading down “… For flights less than five hours the policy is the cheapest economy ticket …” Corporate travel buyer, investment bank Source: Ascend research 12 European economic environment Cost differential between commercial and corporate aviation increasing Traditional business jet charter Price VLJ air taxi (whole aircraft) VLJ air taxi (per seat) Economy Business class Journey Length Source: Embraer, Ascend analysis 13 Supply side—Aircraft type Performance & operating cost Acquisition cost Seating capacity Manufacturer 14 Aircraft types Operating costs Variable costs Entry-level jets (CJ1+, Premier 1A) Single turbines (PC-12, TBM850) VLJs Single pistons (SR22) Typical range Matching performance, capacity and cost to demand is critical 15 Aircraft type There is a known backlog of 542 VLJs for European customers … Citation Mustang 122 Adam A700 96 Eclipse 500 204 HondaJet 2 PiperJet 8 Source: Ascend Online Fleets 16 Phenom 100 102 D-JET 8 Aircraft type … however, there is cause for concern Citation Mustang 122 Adam A700 96 Eclipse 500 204 HondaJet 2 PiperJet 8 Source: Ascend Online Fleets 17 Phenom 100 102 Diamond D-JET 8 Aircraft type The established players Cessna: 130 Mustang deliveries planned for 2009 30% increase over 2008 Major European customers: Blink, Jetalliance 18 Aircraft type The established players Embraer: 110 Phenom 100 deliveries planned for 2009 Major European customers: JetBird, JetForYou VLJ deliveries largely unaffected by production cuts—for now 19 Access to funding Funding is critical A primary reason behind market failure BIKKAIR, DayJet, Eclipse Financiers not willing to accept lengthy timescale before ROI Shortened window to break-even Competition from other sectors and industry for limited financing 20 AGENDA Ascend — who we are Defining the European corporate air taxi market Considerations in expanding the market Summary 21 Summary points Commercial airline price benchmark moving down Choice of aircraft type becomes even more important Managing the funding issue is critical Expansion investment needs to generate positive cash flow sooner rather than later 22 AEROSPACE INFORMATION REDEFINED Provider of specialist information and consultancy services to the global air transport industry. THANK YOU! “The information contained in our databases and used in this presentation has been assembled from many sources, and whilst reasonable care has been taken to ensure accuracy, the information is supplied on the understanding that no legal liability whatsoever shall attach to Ascend Worldwide Limited, its offices, or employees in respect of any error or omission that may have occurred.” www.ascendworldwide.com
