Podcast: Why Business Aviation In The Middle East Is Poised For Growth

Several changes in the Middle East should foster further business aviation growth in the region, especially in the UAE and Saudi Arabia. Business aviation veterans Molly McMillin and Alan Peaford share their insights after having covered the recent MEBAA show in Dubai.

Lee Ann Shay:  Welcome to the latest BCA Podcast. I'm Lee Ann Shay, Aviation Week's Executive Editor for MRO and Business Aviation. And today's topic is Business Aviation in the Middle East. I'm here with two colleagues who just got back from the MEBAA Show in Dubai, Molly McMillin, Aviation Week's Editor-in-chief of The Weekly of Business Aviation and Managing Editor for Business Aviation for Aviation Week, and Alan Peaford, Editor-in-chief of Arabian Aerospace, African Aerospace and Show Business, which are part of the Aviation Week Network. Molly and Alan, welcome to this podcast.

Alan Peaford:   Thank you very much.

Molly McMillin: Thank you. Nice to be here.

Lee Ann Shay:  So to start off, what stood out to you from the MEBAA event last week?

Alan Peaford:   I think apart from the sunshine, which was obviously a very, very nice thing to have, there was a lot going on. I saw there were a lot of high net worth individuals there, something that kind of been missing from some of the business aviation shows we've been to around the world in other points, and serious high net worth individuals.

             But also, there was a lot going on behind the scenes with regulators, with manufacturers that were there. And I think that, to me, were the standouts really coming from the show. It was a small show when you compare it to things like NBAA-BACE, but there was a lot going on in quality terms rather than quantity.

Molly McMillin: There were a couple of things that stood out for me. My first [MEBAA] show was two years ago, it's held every two years. And it just seemed like it had a lot of traffic. The exhibits were busy; they reported being busy. There were a lot of BizAv Talks that went through the day on a variety of topics. The panelists were top-notch.

             It's always fun for me to watch the grandeur of the opening when His Honor Sheik Ahmed bin Saeed Al Maktoum and his entourage comes in. There's music playing; it's a lot of pomp and circumstance, if you will. That's kind of a fun element to watch.

             But as Alan said, the regulatory climate is changing. They really want to grow aviation, business aviation in that region, so they've changed the regulations to help to do that with introducing a new framework for it, simplifying life for the operators in that they're cutting the time to obtain an Air Operator Certificate. They're creating a Business Aviation Advisory Council to improve the links between regulators and the operators. There's a lot going on behind the scenes that were very interesting, plus there were some surprising orders and kind of changes along the way as well.

Alan Peaford:   Yeah, can I just say that thing about Sheikh Ahmed bin Saeed Al Maktoum? He is Mr. Aviation in the UAE. And of course, as well as being the president of the Dubai Civil Aviation Authority, he is also the chairman of the Emirates Group, which of course is quite a large airline. As well as that, he's the president of the Airport's Authority. So, he's at the top of the whole chain as far as the UAE goes.

             But what is interesting there is that we often see the conflict with business aviation, private aviation, corporate aviation, and commercial aviation. And it gets pushed aside in many parts of the world. And I think the difference that you see with Sheikh Ahmed's presence at the show and the opportunity to go around and meet the operators and to meet some of the manufacturers is that it's a clear signal that as far as Dubai PLC is concerned, business aviation is to be taken as seriously as the airline industry.

             Now, there would be some arguments about that because Dubai International, of course, has taken away slots from business aviation, so there was a bit of an opportunity there for some of the operators to speak against that. At the same time, we're seeing neighboring Sharjah opening new FBOs and making a slot-free environment for business aviation 12 minutes away from Dubai International. So, some of the competition that you're seeing within the UAE, and Sheikh Ahmed is very much involved in the whole discussions with other parts of the UAE as well, is that business aviation is being taken seriously and gets a voice at the table. And I think that's been great news from there.

             The same point with the regulators, the regulator GCAA, which is covering the whole of the UAE with those changes that you mentioned, Molly, that's making a huge difference. One of the big ones, as far as I could see, was the dropping the 51% ownership for aviation services, so things like the MROs, FBOs and local operators. To be able to do that creates incredible opportunities for inward investment and for some of the reluctance that we've seen for expansion in MRO for business aviation. So that, I think, was a cracking move, but also matched by Saudi Arabia.

             And of course, one of the underflow, everybody loves everybody else, but in fact there's quite a lot of competition between Saudi Arabia and what it's offering for the world and what the UAE is offering the world. And you think about it, Dubai is now -  just been voted as the world's number one resort, it's the place that, generally, around the world, people want to go to. If you look at Saudi Arabia, that's trying very, very hard to match that with the development of the Red Sea Islands, with NEOM, the new city. So supporting business aviation that brings in the investment, that brings in the people that do the investment, is incredibly important for both of those. To get the high net worth individuals to be on a leisure side on the Red Island Resorts or to be on the leisure side in Dubai or Abu Dhabi, you've got Formula One, you've got the World Cup football coming to Saudi Arabia, a lot of sport going on and sport means a lot of business jets. So, it's putting the plan in place both with visions for 2030. It's happening.

Molly McMillin: It's also a great area for the business jet, bizliners, I guess, if you will. Before the show started, Airbus Corporate Jets had a press conference in which they announced that they are on track for a record year. They have taken eight firm orders with three options this year. If the options turn into orders, it's a record year for them. They said, typically, they'll take four to six orders in a year, so that is double - more than double. And it's the top market for ACJ Business Jets. Traffic in the Middle East is up 30%. And the other thing is, it's a real replacement market. They were talking about in the large business jet fleet is about 40% of the large jets in the region are older than 15 years, so it'll be a real replacement -  kind of a period of renewal, if you will, for that region.

Alan Peaford:   It certainly is. I think it's 67% of the whole market in the MENA region is the large side with the business liners and the wide-body business jets. So, you know that's where the money is being spent, it's available. Of course, there was the hiatus back in 2017, 2018 when a lot of business and politicians and members of the royal family in Saudi Arabia were under a house arrest as part of the whole cleaning up everything that's happening there. It was kind of seen as a bad thing to have a business jet. Many were taken away and sold to put money back into state.

             But that's cleared up now. It's great. You're seeing business people flying those jets again. Remember, there's a lot of 747-800s in the Head of State configuration also used for business people within the region. And for Airbus, I think it's quite interesting that the ACJ 350 is a strong possibility, the 330, of course, is there. But the ACJ220, which they brought to Dubai for the very first time is the one that ticks all the boxes. And we saw that when you talk about that surprise order. We saw that with RoyalJet, RoyalJet, the largest BBJ operator in the world, suddenly coming in with orders for ACJs, something they've never done before. They've always said... We always look around and we judge one against the other, but they've always been primarily a Boeing operator and the largest BBJ fleet. So the order to buy ACJ220s, I know it's only an MOU at the moment, but they're pretty certain they're getting them, plus a few more. So that is a shock to Boeing. Boeing will be stunned by that, I think.

Molly McMillin: Right. That was a surprise to me that the biggest BBJ operator turned to Airbus. And then, the other thing that was kind of a surprise, because it is such a market for the long, ultra-long-range airplanes, there was a Cirrus Vision Jet on the static display. So it's not like it was out of place, but I was surprised at it because it seemed out of place.

Alan Peaford:   Yeah. We've seen Vision Jet there before because obviously, for those people that are autopilot or have got the smaller routings to do inter-gulf, I mean, the flights, if you took a commercial flight to Doha or to Bahrain or to Kuwait City, I mean, they're crowded. I mean, Emirates use an A380 to fly between Riyadh and Dubai or Jeddah and Dubai - well within range for a Cirrus jet. And if you look at a lot of the business jet operations, there's a single passenger, so it makes a lot of sense.

             However, this is where the change in the approach to being GA-friendly is coming with the regulators. It's been incredibly difficult to be able to use anything like a Pilatus or a Cirrus or any of the smaller jets. If you look at Emirates and Etihad, they're using Phenoms as pilot training to do jet conversions. So that was the kind of area that the smaller jets were being used, so Cirrus jet makes a lot of sense.

             But to do that, you've got to have a healthy GA regulation environment that will allow you to use them, airports to accept them in. And it's a real challenge and it's great to see the regional agency, because I think they operate out of Turkey, to come into Dubai again because it's going to happen. As it becomes more liberalized, you will see people being able to fly themselves. You will see more of the GA use coming through, but also, the smaller business jets, the Citations, it isn't all about the big ones, but it's trying to change market attitude. So yeah, I loved seeing it there. I mean, it's a lovely, lovely airplane, and I'd love to see it, and to become available down the line from the principals, coming down to small management teams who need two people to go to Doha for a meeting and come back again. Doing it in a Cirrus jet makes a lot more financial sense than it does flying in a Gulf Stream.

Lee Ann Shay:  Well, then, you also have these regulatory changes, a growing market, and then, you've got advanced air mobility. There's a lot of investment in the UAE, in particular, from various vehicles and Skyport, et cetera. So, is all this sort of enabling the region to be early adopters of advanced air mobility? What do you think?

Alan Peaford:   Very much so. If you look at Dubai Civil Aviation, going back probably nine or 10 years now, they were the first to start working on how drones could be working for deliveries and so on, way ahead of the game. And their regulations are things that you're seeing being put around by other civil aviation authorities around the world now because they put the model together. They've been very much keen to be an early adopter, and you saw a number of tests been going on, but you're right, Joby have signed their deal with Dubai, Archer have done a deal with Abu Dhabi. It's the Dubai, Abu Dhabi, who's going to be first?

             And it was interesting to see that if you look at Abu Dhabi, the Falcon Aviation, which has been helicopter operators and business jet operators, primarily, oil and gas market, are partners in what's happening there in Abu Dhabi.

             At the same time, they were all over the show with a new part of Falcon Aviation. So, it's called Falcon, which is now a Dubai business with plans for another 20 business jets to be operated. But they are very much the ones who think they're going to be the first to be actually operating. The GCAA is already looking at how they're doing it in order to get it certificated and let's get it flying.

             So, I think as we look around the world at what's happening with AAM, I honestly believe it's a kind of a little battle between, obviously, China, Singapore, which has been doing small parts, but I do believe it'll be the UAE who will be first to market.

             The Saudis are also extremely keen because they're looking at the way they can be working with Skyports and other vertical landing ports, but also how they're going to be doing that for the Red Sea Resorts, which will meet their environmental expectations for 2030. So, I think we'll see the Saudis coming along pretty quickly afterwards as well.

             Incredibly exciting times. If it happens, we all know the challenges that these guys get. I mean, they started off saying it was going to be a billion to get certification; it's now looking at 1.2 billion. So there's a lot of funding still required.

Molly McMillin: Joby and Skyports also are developing the first network of vertiports in Dubai. So on the flip, you have to have the infrastructure in place, but that all has to be set up.

Alan Peaford:   Already happening, Molly. I think their plan was to put a vertiport right next to DXB, to the international airport in order to prove it. And I think the whole thing about Dubai is that they build it. They don't faff around for 15 years trying to get an extra runway. They build a brand new six-runway airport. And Dubai has the vision to get the infrastructure in first. And while other centers, other nations might stand back a bit and say, "We're going to watch this." And we haven't actually got the space to put rooftop type ports in, Dubai has, and they will build it as part of the plan. And once they start flying them, you will see the developments coming up that will make it perfectly right for eVTOLs to be able to take you to the airport. And you saw the traffic sometimes getting there.

Lee Ann Shay:  Absolutely. So last question, Alan, you've been covering the MEBAA Show for a long time. What are your predictions? What do you think we'll be talking about in two years at the next show?

Alan Peaford:   Okay. There's been a lot of people talking down whether there's a future for a MEBAA Show. I was actually at the conference that started the MEBAA Show back, I don't know, 15 years ago or whenever it was.

             There's a market there. It's a different market to the one you would have in the States or in Europe. And we are seeing some challenges for shows like the EBACE and events like that. I honestly believe the belief in business aviation in the MENA region is strong enough that the show will certainly continue. And as Molly said, there was a lot of people there. The traffic was busy. There were a lot of people interested in what was going on and getting ready to invest. And having opened the way for more investment to come from the outside world, then I think it's going to be a stronger show.

             I think if we look forward two years, I think we will start seeing opportunities for the smaller jets, to more charter operators who can now own more than 51% of their business. They can actually get in there and operate. The willingness to give them operator's licenses means there will be more competition in the region. But if you've got more competition, then demand will build as well. So, I think it's going to be exciting times. And I think the next two years we'll see a very different Middle East to the one we've got now. And of course, new opportunities will be opening up in [inaudible 00:19:17], places like Lebanon again, like Syria, for example, and that whole wider Middle East region. Business aviation is made for it and I think two years time, we're going to be looking forward to a great show.

Molly McMillin: One of my biggest impressions, this was my second time in Dubai, was that there were cranes everywhere in the city, so obviously, there's a lot of movement going on in an already vibrant city. So, it seems like this is a perfect marriage between business aviation and a city that's got a lot going on.

Alan Peaford:   Absolutely.

Lee Ann Shay:  Good point. Well, Molly and Alan, thank you so much for your time. This has been a great podcast. And listeners, thank you for listening. Don't miss the next episode by subscribing to the BCA Podcast, wherever you listen to podcasts. And one last request, if you're listening in Apple Podcast and want to support us, please leave us a star rating or write a review. Thank you so much.