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Editorial: Start the Revolution

Canada’s corporate aviation community is gathering in Calgary for the
annual Canadian Business Aviation Association (CBAA) convention and
trade show at a challenging – and opportune – time in air transport
development.

The market has never been so polarized. The survival of Air Canada (the
shrinking giant in the centre) never so much in doubt as the country’s
only major full-service airline shifts from pillar to post to attract
low-cost volume while preserving its premium fare base. What motivates
so-called legacy airlines to want to capture every market segment when
upscale retailers such as Holt Renfrew can exist quite nicely without
poaching from Wal-Mart remains a mystery, but I digress.

Business aviation in Canada did not fully realize the growth first
expected of it post-September 11 2001. It has a better chance of doing
so in 2003 and beyond, and not just due to security considerations and
the turmoil in Canada’s airline industry – although both have helped.

The future looks bright for business aviation in this country because
there are signs of a minirevolution on the horizon. A revolution fueled
as much by changes in traditional ownership patterns as by technology.

The fractional ownership concept (flexible timeshare by another name),
so popular in the United States, is gaining traction in this country,
albeit with some regulatory hiccups and logistical challenges linked to
having such a small population spread over a long but thin geographic
band.

Meanwhile, a new generation of low-cost and entry-level
business jets as defined by the Eclipse 500 (estimated at less than
US$1 million per aircraft, with 10 Canadian orders to date), the
Citation Mustang and Diamond D-Jet, has the potential to do for
business aviation in Canada what WestJet did for commercial air travel.
There is a positive Canadian connection to each of these aircraft. Both
the Eclipse and Mustang will be powered by Pratt & Whitney Canada
(PW&C) series 600 turbofans, while Diamond’s North American
manufacturing facility in London, Ontario is certain to share in the
benefits of D-Jet design and production.

The most immediate
shift, however, will be corporations relying less on expensive in-house
flight departments and costly underutilized airplanes and more on
management companies that will transport executives and provide
revenue-generating charter services to other companies when the
aircraft are not needed. This explains why executive charter is up, but
new-aircraft sales remain sluggish. And why FBOs are hesitant to expand.

As the trend to third-party aircraft management gains momentum, expect
more corporations to undergo the arduous process of Transport Canada
recertifying aircraft (proof that no revolution comes without pain).