The region, in particular the United Arab Emirates (UAE), is a favourable climate for the market with government supporting a transition to a more sustainable future, according to ArcosJet. The firm made the announce during this week’s Corporate Jet Investor Dubai 2024. ArcosJet is the exclusive deal to handle private sales in the UAE, Israel and Cyprus of German firm Lilium’s eVTOL aircraft which is currently under development.

Mikhail Alenkin (pictured centre), ArcosJet CEO and founder, said the UAE today is the world’s main hub for innovation, finance, transportation and finding solutions to environmental issues. The current economic conditions, the concentration of HNWIs, the high level of urbanisation and, of course, the interest in advanced sustainable technologies are the key drivers for the eVTOL market development in the region, he said.

“ArcosJet sees eVTOLs in general, and the Lilium Jet in particular, as a very effective tool for creating a modern, high-tech and sustainable system of advanced air mobility and last mile transportation in the region. Today, the Lilium Jet is one of the most remarkable and significantly developed programs when it comes to eVTOLs. The technical solutions, scope of work and goals are very impressive and convincing.” added Alenkin.

ArcosJet anticipates that eVTOLs will initially emerge in the UAE as a supplement for existing helicopter services, which are currently considered underdeveloped. The firm is also investing in developing an ecosystem for the operation and maintenance of helicopters and eVTOLs in the UAE.

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The agreement includes a commitment fee payment to Lilium as ArcosJet becomes the German OEM’s first reseller in the Middle East and its fifth dealer globally. The two firms will announce further details of the partnership at this year’s Dubai Airshow, which is taking place next month.

Mikhail Alenkin, ArcosJet founder and CEO said: “At ArcosJet, we appreciate Lilium’s mission as we see tremendous potential in the emerging eVTOL market — especially for jet-powered aircraft, and we are grateful that Lilium is partnering with us. We are sure that combining our experience in selling conventional aircraft with the economic and sociodemographic characteristics of UAE, Israel, and the Republic of Cyprus can result in the region becoming a leader in the sales and operation of the revolutionary Lilium Jet.”

Lilium’s Pioneer Edition is the first planned model of the Lilium Jet and, if and when certified, will  carry four passengers an estimated non-stop flight range of 175km at speeds of 250kph. The first manned flight for the type-conforming aircraft is scheduled for late 2024, with type certification expected in late 2025.

Sebastien Borel, chief commercial officer at Lilium said: “The Middle East offers tremendous opportunity for eVTOLs and we are proud to add a reliable and experienced partner to sell and operate the Lilium Jet in the region. ArcosJet has an impressive portfolio of successful deals, profound knowledge within aircraft fleet management and a huge network of industry connections to help drive firm orders of our eVTOL jet. A new era of sustainable aviation is coming and we are proud to be blazing the trail here alongside our new partners who support our aspirations toward new technologies and markets.”

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Yuri Dzun, ArcosJet, sales and marketing director, Europe, says: “Today, players in the preowned bizjet market find themselves in a unique situation, when the shrinking number of preowned aircraft put out for sale is driving the average price to record highs.”

“This is quite a challenge for the entire industry: brokers, buyers, and sellers alike. Our survey findings indicate that the market expects the situation to change no sooner than in six months,” added Dzun.

The research also found that among local markets, the biggest shortage of supply is observed in the US, with 46% of respondents, and Europe at 40%.

As for selling an aircraft, 47% recommend between five and 10 years of operation; 40% think an aircraft should be sold after 10 or more years of service, whist 13% are ready to sell their jets before they reach five years of age.

Buyer preferences for long-range models cover a wide range of the aircraft offered – 40% said Global 7500, Gulfstream 700 at 40%, and Falcon 10X at 20%.

In the large business jet segment the Challenger and Falcon platforms come out on top. In the midsize and light business jet segments, the situation is similar, with the respondents showing slightly more interest in the Pilatus PC-24 and Phenom 300 models.

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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:

Market Breakdown

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.

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India has become a growth market in the corporate jet sector and the success of India Aviation reflects this. The event is now in its fifth year and is organised by the Indian Ministry of Civil Avaition, the Federation of Indian Chambers of Commerce and Industry and the Indian Government.

The country had experienced significant growth in the corporate jet market until 2008 when the introduction of a new import tax on aircraft, coupled with poor infrastructure and extensive bureaucracy arrested the progress of the Indian business aviation sector.

The local Business Aircraft Operators Association is now lobbying for a change in regulations and taxation, while the activities of the Indian government have recently been aimed at attracting more foreign investments and is drawing more business jet traffic into the country.

Overseas business jet arrivals and departures rose 12% in the second half of 2015 compared to the same period in 2014.

Although currently more than 15% of the active fleet is up for sale (21 aircraft on market officially and a number of others being sold off-market), the Bombardier forecast of 1215 business jet deliveries between 2014 and 2033 looks viable in the long-term.

ArcosJet sees a more immediate interest in sales of Indian-owned business jets abroad.

“Even in today’s soft market, there are buyers out there looking for well-maintained large and long-range aircraft, such as the Global 6000, Challenger 605, and Falcon 7X. And there are some of those in India.”

Ivan Veretennikov, sales director of ArcosJet, said:  “Even in today’s soft market, there are buyers out there looking for well-maintained large and long-range aircraft, such as the Global 6000, Challenger 605, and Falcon 7X. And there are some of those in India.”

“Our extensive knowledge of the BRICs markets with their often complicated transactions and ownership structures, as well as an outreach to customers in the US, Asia, and other active spots on the globe, help us identify prospective buyers and make smooth transactions in this unique multi-cultural marketplace. After all, originating from Russia we know a thing or two about prohibitive taxes, red tape, and complex deals.

“Many of the problems we see in India are something we are having to tackle in other places, and know-how is often the only thing standing between ‘sale’ and ‘fail’,” added Veretennikov.

ALSO READ: ArcosJet compares Chinese and Russian aircraft buyers

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Just by comparing the Forbes figures for the number of billionaires in 2013-2014, the number of billionaires in China increased from 152 to 213, where as the number fell from 111 to 88 in Russia.

ArcosJet also found that both countries have very young fleets, with over 70 per cent of business jets in Russia (of a total of about 500) under 10-years-old and over 60 per cent in China (of a total of about 400) being under five-years-old.

Chinese owners tend to favour Gulfstream aircraft (104 of all 336 Chinese-registered jets are large-cabin aircraft), while there are 128 Bombardier Challenger and Global jets registered in Russia.

Almost half of all business jets acquired in China are bought pre-owned in order to avoid the wait times on new aircraft.

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