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Asia Pacific's Ground Handling Market Revenues Poised to Double by 2018 – Opportunities Soar for FBO's Says Frost & Sullivan - For over two decades, the Asia Pacific region has been at the helm of the aviation hustle in the Eastern world
Asia Pacific's Ground Handling Market Revenues Poised to Double by 2018 – Opportunities Soar for FBO's Says Frost & Sullivan

 

NewswireToday - /newswire/ - Jakarta, Indonesia, 2010/11/12 - For over two decades, the Asia Pacific region has been at the helm of the aviation hustle in the Eastern world.

   
 
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The country's participation and emergence as an aviation hub has opened up various avenues of business and employment. The region currently accounts for 21 per cent of the global air traffic in terms of Revenue per kilometer and as an region that houses over 3 million High Net Worth Individuals (HNWI), Asia Pacific is expected to grow by 6 per cent each year over the next decade. This translates to an expected robust growth in revenues for maintenance repair and overhaul (MRO) and ground handling service providers.

The increasing population of high net worth individuals (HNWIs) and improving government regulations are slowly but surely making their mark on the business aviation market. As a result of these trends, a greater adoption rate of private business jets can be seen in Asia Pacific. There is significant latent potential in the market for original equipment manufacturers (OEMs) to form strategic partnerships with local participants to ensure local presence and reduced turnaround times.

The Asia Pacific market for fixed base operators (FBOs) is set to witness stable growth in the maintenance and ground handling segments as service providers prepare to tap the potential from VIP completions in the future.

The major airports in Asia Pacific, where most of the business jet movements occur, are Singapore, Malaysia and Hong Kong. These airports are expected to gradually expand because of the growing traffic. Gautam R Kanal, Research Associate, Aerospace & Defence, Frost & Sullivan says that such infrastructural upgradation will provide more service providers with an opportunity to cater to the airlines and business jets across various segments. Of particular importance is the ground handling segments' growth since it generates constant revenue with every landing and take-off.

According to Kanal, ground handling revenues account for 25 per cent of the cost incurred on a business jet throughout its life span. "Although ground handling as a term also applies to commercial aircraft, the business jet segment generates proportionally greater average revenues due to a greater average cost of handling. The region had 291 business jets as of 2009 and with a compounded annual growth rate (CAGR) of 5 per cent until 2018, the region is expected to have a fleet of 454 jets" he explains.

Frost & Sullivan has analyzed that the demand for ground handling services in the future is directly dependent on the business jet deliveries coupled with the movement of business jets. Its primary dependence on the business jet movement makes it vital to state that the movement of business jet will increase due to an increase in demand, spurred by the number of HNWI's in the region. "The aircraft movement is expected to grow at a CAGR of over 4 per cent and increase from 33,000 aircraft movements in 2009 to 48,000 by 2018. This translates to a growth in revenues from $11 million in 2009 to about $20 million by 2018" elaborates Kanal.

"In addition to this, government regulations on private participation and airport infrastructure developments are expected to drive the ground handling market revenues sky wards. As a result of private participation, the market is expected to witness increased competition with the fleet operators being the beneficiaries. Any shortcomings in forecasted revenues can only be a result of the lack of skilled labour and airspace restrictions" states Kanal.

"The region currently faces a challenge of availability of technically skilled labour which is further amplified with the Middle East providing higher monetary returns and invariably attracting labour from its Asian competitors. In addition to that, different governments in the region function differently as a each country has their unique trends. In order to preempt this, it is imperative that FBO's in the region have strategic tie-ups with operators in other regions and liaise closely with the respective governments" Kanal continues.

In conclusion, Kanal adds that the aviation industry in Asia Pacific is poised for steady growth and the ground handling market revenues are expected to grow at a stable pace. Business aviation is gradually growing in the region. As increased aircraft movements lead to congestion at airports, the need for business jet travel is set to soar. Greater acceptance of the business jet operational model in the region and the emergence of Chinese aviation will ensure that the FBO market functions smoothly and grows amidst competition.

Jet Aviation has been the leading market participant in the region despite the market for ground handling in Hong Kong being monopolistic. Other noted market participants that provide FBO services in the region are Hawker Pacific, MetroJet, TAG Aviation, KBAC, ASA Group and JAMCO.

As the numbers of HNWI's grow, the corresponding demand for private and business jet travel will increase, translating to opportunities for FBO's. China, Japan and Korea are likely to be markets that will provide a plethora of opportunities. In addition to the three, it is also expected that Hong Kong may break-free from its monopolistic outlook as the demand and air traffic increases.

About Frost & Sullivan
Frost & Sullivan (frost.com), the Growth Partnership Company, enables clients to accelerate growth and achieve best-in-class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best-practice models to drive the generation, evaluation and implementation of powerful growth strategies. Frost & Sullivan leverages over 45 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from 40 offices on six continents.

 
 
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Asia Pacific's Ground Handling Market Revenues Poised to Double by 2018 – Opportunities Soar for FBO's Says Frost & Sullivan

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