BUSINESS AVIATION INTERNATIONAL CHALLENGES AND ISSUES. A presentation to the ICAO Council

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1 BUSINESS AVIATION INTERNATIONAL CHALLENGES AND ISSUES A presentation to the ICAO Council 10 June 2010

2 Today s Aim o To familiarize you with the aims and activities of the IBAC Council and the business aviation family of Associations. o To provide an update on the status of business aviation globally. o To summarize business aviation challenges and issues. Purpose

3 Contents 1. Introduction to Business Aviation 2. Global Demographics 3. Economic Stimulus Value 4. Aviation Safety 5. Security and Facilitation 6. Environment 7. Air Traffic Management 8. Conclusion, Questions and Answers Contents

4 Introduction to Business Aviation

5 IBAC and Members o IBAC: A Council of global Business Aviation Associations o Governance: Governing Board, with each Association having one Member on the Board o 15 Member Associations Introduction to Business Aviation

6 IBAC Member Associations Introduction to Business Aviation

7 Professional Representation 1. IBAC Policy: Set by the Governing Board. 2. Secretariat provides program management (Director General and Directors for ICAO Liaison, Standards, Audits, Regulatory Affairs and Environment). 3. Business Aviation is represented on significant number of ICAOP Panels and Work Groups. 4. Member Associations work with respective national/regional governments with help as required by IBAC. Introduction to Business Aviation

8 Demographics of Business Aviation

9 Business Aviation Landscape o 30,000 turbine business aircraft globally o Jet 17,500 o Turboprop 12,500 o Range of sizes: small single engine to large airline aircraft o Most prevalent: middle size corporate jet aircraft o But new growth includes VLJs and larger intercontinental jet aircraft o Approximately 17,000 operators worldwide Demographics of Business Aviation

10 Aircraft Types Demographics of Business Aviation

11 Aircraft Manufacturers Unlike airline aircraft, business aviation has a large number of manufacturers, with a wide variety of types, including Boeing and Airbus, also builders of dedicated business aircraft. Demographics of Business Aviation

12 Global Jet Distribution by Region Demographics of Business Aviation

13 Forecast Growth Demographics of Business Aviation

14 Operational Sub Sectors Business Aviation consists of four primary sub sectors: 1.Commercial on demand charter 2.Corporate 3.Owner Operated 4.Fractional Ownership Demographics of Business Aviation

15 Operational Characteristics o Point to point, specific purpose routes (without inefficient hub and spoke.) o Departure times based on specific requirement o Short takeoff distance, short time to altitude, high cruise altitude, fast descent/landing o Use of large number of airports (local & regional airports relieving traffic impact on high density areas) Demographics of Business Aviation

16 Aircraft User Profiles o Priority is on time management, efficiency and flexibility o 79% of operators have only one aircraft o Executives and high worth passengers, but 78% of passengers middle management and lower (e.g. engineering & audit teams etc) Demographics of Business Aviation

17 Economic Stimulus Value

18 Piloting the Economy o Business aviation is a PROVEN PRODUCTIVITY TOOL used by corporations worldwide. o 75% OF FORTUNE 500 COMPANIES operate their own aircraft. o Studies show that corporations NOT utilizing business aircraft are at an ECONOMIC DISADVANTAGE. One independent assessment study found that aircraft operators EARNED 141 PERCENT MORE in cumulative returns than non operators. Economic Stimulus Value

19 Business Advantage Economic business advantages include: 1.Flexibility and immediate response 2.Travel time savings for executives and staff 3.Efficient use of time for high net worth individuals and high salaried staff 4.Total cost savings in many examples 5.Face to face business deals 6.Corporate security Economic Stimulus Value

20 Economic Value to Communities o Business aircraft are symbolic of successful corporations; where business aircraft go, jobs and prosperity will follow. o Business aircraft fly to where business is conducted. They operate to the closest airport, usually a local or dedicated business aviation airport. o New business means jobs and economic stimulus. Economic Stimulus Value

21 Economic Value to Nations Economic value through job creation, spending and business success. Studies demonstrate significant societal benefits. Impact of Business Aviation Examples EUROPE approx 19.7bn gross value added to the European economy. USA contribution of $150 bn to U.S. economic output, and employs more than 1.2 million people. Economic Stimulus Value

22 Socio Economic Benefits o Business aviation is not in competition with airlines o Business aviation provides an effective air transport option when CAT not cost and/or time effective o A vast number of city pairs are served by business aviation where no scheduled service exists. Economic Stimulus Value

23 Socio Economic Benefits o Business aviation airports contribute extensively to local economic health. For example at one airport (Teterboro near NY) a study showed airport generation of 15,554 jobs, $670 million in salaries, and $1.8 billion in sales annually. Economic Stimulus Value

24 Socio Economic Benefits Productivity tool for corporations Economic Stimulus Value

25 Socio Economic Benefits Important contributor to society e.g. emergency medical services, medical transfers and humanitarian aid (Haiti) Economic Stimulus Value

26 Socio Economic Benefits Recent Press Release in US:.. The U.S. House of Representatives today, RECOGNIZING G the entire e general e aviation community, INCLUDING BUSINESS AVIATION, IN EFFORTS TO PROVIDE RELIEF FOR THE PEOPLE OF HAITI, following the devastating January 12 earthquake that struck the island nation. The Senate passed its version of the bill last week. Economic Stimulus Value

27 Socio Economic Benefits.from COMMUNICATION FROM THE COMMISSION: General and Business aviation provides closely tailored, flexible, door to door transportation for individuals, enterprises, and local communities, increasing mobility of people, productivity of businesses and regional cohesion. Economic Stimulus Value

28 Aviation Safety

29 Safety Strategy o Business Aviation coordinates safety actions through a Business Aviation Safety Strategy o Strategy updated semi annually, safety problems are routinely identified and new initiatives added o Strategy serves as business aviation input to ICAO Global l Aviation i Safety Plan Aviation Safety

30 IS BAO The International Standard for Business Aircraft Operations (IS BAO) is the industry code of best practices. Aviation Safety

31 SMS Assistance to Operators SMS was established as a foundation of fthe ISBAO IS BAO safety standard, d giving i business aviation extensive SMS experience over last 10 yrs. Wide knowledge of SMS used to develop SMS Tool Kit and elearning training program. Aviation Safety

32 Business Aviation Safety Record Aviation Safety

33 Challenges and Issues 1. Importance of Annex 6 Part II for Corporate Aviation global harmonization. 2. Need to increase use of industry safety standard by on demand charter operators. 3. Need for safety regulators to apply safety indicators in regulatory oversight. 4. Need for safety regulators to recognize the value of utilizing industry safety standards. Aviation Safety

34 Security & Facilitation

35 Security & Facilitation Business aviation was impacted dramatically by the tragedy of September 2001 similar to other aviation sectors. Following 2001, business aviation obtained status on the Aviation i Security Panel and Facilitation i Panel. Many industry recommendations have been made. Security and Facilitation

36 Challenges and Issues 1. Need to recognize that security provisions must be effective for specific operations (one size does not fit all). 2. Lack of harmonization States continue to diverge in security provisions and there are too many local security rules. 3. EU Security Directive example of how divergence is facilitated. Security and Facilitation

37 Challenges and Issues 4. API provisions must allow operational flexibility. 5. Local un harmonized charges for border clearance have become a burden. 6. Importance of keeping local and regional airports open to business aviation to relieve large hub airports and provide operational efficiency i and environmentally friendly movement of business travelers. CIQ is very important for local airports to avoid additional congestion at major hubs. Security and Facilitation

38 The Environment

39 Environmental Stewardship Support for ICAO Policy o Business aviation supports ICAO position on post Kyoto targets. o Business aviation has established policy on aircraft noise and emissions. o Policies are applied to input to ICAO and education of business aviation i operators. Environment

40 Business Aviation Statement on Climate Change Business aviation operating community (IBAC and Members) and the manufacturing community (General Aviation Manufacturing Association) combined to issue a joint statement on climate change. Environment

41 Business Aviation Statement on Climate Change Business Aviation Targets: o Carbon neutral growth by 2020 o An improvement in fuel efficiency averaging 2% per year from today until 2020 o A reduction in total CO2 emissions of 50% by 2050 relative to 2005 Environment

42 Emission Realities o Business Aviation contributes only 2% of total aviation CO2 and.04% man made CO2. o 40% fuel efficiency improvement achieved over the past 40 years. o Typical operator flies 500 hrs per year, producing small amounts of fco CO2 (approx 1,200 1,500 1 tonnes per year). o All business aviation equivalent to one fossil fuel powered electrical l plant. Environment

43 Business Aviation and CAEP o Business Aviation granted status at CAEP in o Since then business aviation increasingly active in CAEP. o Business aviation position at CAEP established by IBAC Environmental Issues Work Group (EIWG). o EIWG meets twice per year to establish input to CAEP. o IBAC now has dedicated environment specialist to chair EIWG and provide input to CAEP. Environment

44 Challenges and Issues 1. Improve education re low impact of business aircraft on the environment. 2. Enhance best practices for operators. 3. Accelerate research and development. 4. Input to high level policy making. 5. Effective CO2 Certification standard. 6. Meaningful fuel efficiency metric. 7. MBM framework relative to small operators. Environment

45 Non Harmonized Regulations o Globally harmonized regulations are critically important for business aviation given aircraft are dispatched to all corners of the world with a moments notice. o EU Directive adding aviation to EU ETS example of the discriminatory application of regional rules, diverging from principle of international harmonization. Environment

46 EU ETS Issues 1. EU ETS starts in 2012, but operator monitoring plans now required. Each EU country with their own regulations. 2. Confusion prevails ,000 tonnes CO2 minimum inclusion threshold applies to commercial but NOT non commercial. 4. Threshold very low compared to Directive provisions for non aviation fixed facilities (25,000 tonnes). Environment

47 EU ETS Issues 5. All non commercial operators included, even if contribution is 1 tonne CO2 per annum 6. Simplified provisions for small emitters not yet agreed to by EU 7. Extremely high administrative burden on small emitters 8. Free allowances of essentially no value to business aviation Environment

48 UK as an Example of High Costs UK Regulations are example of very high administrative burden on business aviation. Regulations include: o$1, fee to file a plan and $660 to change it oannual small emitter fee of $3,800 olarge fines for being even a day late oadministrative fees for a typical non EU business aircraft operator making an annual trip to the UK are approximately 6 TIMES THE COST OF THE EMISSION CREDITS. Environment

49 Air Traffic Management

50 Business Aviation CNS/ATM Plan o IBAC Coordinates input to the ICAO Global Air Navigation Plan through the Business Aviation CNS/ATM Plan. o Plans and activities are coordinated by the IBAC CNS/ATM Advisory Group, consisting of Business Aviation Associations and a number of aircraft OEMs. Air Traffic Management

51 Challenges and Issues o Air Navigation fees and charges must recognize the size of aircraft (weight factor) o Fair charging needed globally o Global Air Navigation Plan should recognize business aircraft time constraints on equipage o Business aviation must be involved in planning Air Traffic Management

52 Conclusion Business aviation is a STRONG SUPPORTER of the ICAO mandate. Probably its strongest. The industry places critical importance on HARMONIZATION OF POLICIES, RULES AND PROCEDURES given its global operations. The Business aviation community is PREPARED TO HELP AND CONTRIBUTE.

53 Conclusion We are happy to answer any questions...

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