Sun, May 15, 2011
High Fuel Prices, Carbon Taxes, User Fees All Part Of The
Equation
While conditions in other areas of the world slowly become more
favorable for a general aviation rebound, the European environment
keeps getting more complex.
Against the backdrop of the EBACE conference getting set to kick
off Tuesday, industry consultant and investor Brian Foley
(pictured) notes that the combined effects of Europe's high
fuel prices, user fees, carbon taxes, airspace issues, new
regulations, and airport slot restrictions are themselves enough to
limit general aviation growth. "And when you factor in sustained
economic weakness, a near-term robust market outlook just isn't a
reasonable expectation."
But Foley is not totally pessimistic. "Europe will remain a
significant market and account for roughly 20% of all worldwide
deliveries over the next decade, down slightly from the historical
average of 25%. And we see an interesting opportunity in that a
disproportionate share of deliveries will go to new customers in
Eastern Europe, while Western Europe becomes more of a replacement
market for aging aircraft."
European economic factors will gradually force a downward shift
in cabin-size mix towards small and midsize jets. "Today, 38% of
Europe's business jet population is large cabin," Foley says. "Over
time, that should normalize to the worldwide average of 33%. Buying
behavior will continue to change as operators embrace the benefits
of smaller aircraft, from fuel savings to lower user fees and other
taxes. Carbon footprint is important, too. This will encourage
Europeans to be even more practical. They'll buy the business tool
they need as opposed to the more capable jet they might want, and
be content to make that extra fuel stop once or twice a year if it
means saving money."
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