News Article

Private Aviation Market on Its Way to Disruption

Wed, 11/09/2016 - 16:18

An improvement in the country’s infrastructure and regulatory conditions could boost the use of private aviation, a group of experts told the Mexico Aerospace Forum 2016 on Wednesday in Mexico City.

Samuel García, Director of Sales at Honda Jet Mexico, Francisco Navarro, Director General at Airbus Helicopters Mexico, Bernardo Moreno, Director General of Redwings and Andrés Arboleda, Co-Founder & COO of Privé Jets, participated in the panel “Private Aviation Market: Ready for Disruption?” at the Sheraton Maria Isabel hotel.

“Considering executive aviation’s fragile utilities, its biggest challenges are complying with Mexican regulations and international best practices,” said García.

A big part of that challenge is cost. “Complying with all regulations is very expensive,” said Moreno. “Though the industry in our country enjoys healthy competition, there are many companies that would like to compete but do not comply with the normativity.”

Following the criteria established by the government and offering superior quality services is also a challenge that needs to be tackled by educating customers to choose quality over price. “Passengers need to be very conscious of the advantages of choosing superior services even if they are US$100 more expensive,” said Moreno. For Arboleda, education is key but other processes, such as audits, can also help clients choose superior services. “Even though in some cases audits have become a marketing strategy, it is undeniable that they inspire confidence in clients.”

Having a state of the art fleet plays an important role. “Consumers prefer flying on planes from the 2000s, with commodities such as Wi-Fi,” said Arboleda. While OEMs contribute by offering products and services at a competitive cost, as Navarro noted, it is not enough to ensure newer fleets. “In Mexico, financing options for new aircraft are more expensive than those offered in other countries,” continued Arboleda.

New aircraft also come with the challenge of depreciation. “Before the 2008 crisis, you could buy a plane and it would take 10 years to notice a significant price depreciation,” said Moreno. “Now it only takes five years for the value of an aircraft to depreciate 50 percent.”

Even though new aircraft might be preferred by some clients, there is a significant challenge with these models in Mexico because the country lacks the necessary infrastructure to support the technology. “The infrastructure the country has does not help us to mitigate the costs operators incur when we have new planes. We do not experience sound benefits from operating modern aircraft,” said Moreno.

The lack of infrastructure not only affects technology adoption but also the implementation of new mobility options. Navarro believes that services such as Cabifly can help its users reduce the time they spend in traffic by almost 70 percent. Should the infrastructure needed for helicopters be in optimal condition, the city could enjoy mobility flexibility akin to that in Tokyo or New York. “Helicopters provide flexibility in a way highways cannot. An ideal solution would be to join air and land transportation,” said Navarro.

For helicopters to function as a mobility option, heliports are key. García said that improving the heliport infrastructure represents a business opportunity for the private sector.

Mexican regulation for airports is complicated but its complexity is related more to urbanistic conditions than aeronautic specifics, Moreno added. Having less complicated regulations would lead to solutions that could connect Mexico City with cities such as Queretaro, Cuernavaca, Toluca and Morelia, alleviating highway congestion.

Using private aviation to alleviate mobility problems would lead the industry to explore new business prospects. The use of mobile phones and apps could even produce a more widespread use of private aircraft, said Arboleda. “The use of apps could help in the creation of shuttle flights, which would be commercial flights on executive aircraft,” he said. This type of service could definitely lead to a change in the user profile, added Moreno.

Until that day comes, the panelists agreed that its customer service will continue to make executive aviation unique. “Commercial aviation’s business is transportation. Executive aviation’s business is 100 percent customer service,” said Moreno.