Five top business aviation insights from 2022: Martyn Fiddler Aviation
Five top insights from last year will help to inform business aviation this year, according to aircraft ownership and leasing specialist Martyn Fiddler Aviation.
The five insights were: War and sanctions, Living with Covid, Sustainability and carbon neutrality, Lessons in governance, Booming values and looming recession.
“Business aviation can now be considered post-pandemic,” said the company. “However, despite the relief at leaving Covid behind, we have entered a new era where events – war, sanctions and recession – which we all thought were confined to history are back.”
War and sanctions, after the Russian invasion of Ukraine, is having a big impact on business aviation. “Restricted flying for all Russian nationals across Europe, America and Australia, together with asset seizures and sanctions has resulted in significant cuts to income streams for many in the business aviation industry.”
Sanctions sparked record business for specialist legal counsel to understand the restrictions and how these apply between jurisdictions, said the company. Attempts to circumvent the rules have led some to incur fines, confiscations and other penalties. One recent example, in Malta, was aircraft operator, Emperor Aviation sanctioned by the US Office of Foreign Assets Control (OFAC) along with eight related aircraft.
Despite hopes for a speedy resolution of the conflict, the company warns business aviation should expect sanctions to be a continuing theme throughout 2023 and beyond. “Sanctions, restrictions and the damage to business aviation in Russia will likely only worsen in the short term.”
Living with Covid will remain a key trend this year, as in 2022. “Kicking off with CJI London in February over 500 colleagues from around the world were eager to meet in person, catch up and generate new business,” said the company. “In May, following a two-year hiatus, EBACE saw over 12,000 visitors and over 300 exhibitors at Europe’s flagship business aviation event.” Also, the Isle of Man Aviation Conference celebrated its tenth anniversary in its 12th year with “bumper numbers of attendees and sponsors”.
But questions have been asked whether the lessons of the global pandemic have been forgotten in the rush to reconnect, said the company. “The next few years may see a balancing between in-person events and video interactivity to develop relationships and get deals over the line.” Martyn Fiddler believes face-to-face meetings and conferences will continue to be the preferred form of networking.
Sustainability and carbon neutrality was another insight from last year. While business aviation is not the only industry to be placed in the spotlight by climate groups, it does attract considerable media attention due to high profile aircraft owners. “While many in the industry correct misleading media claims about emissions – business aviation only accounts for 0.2% of global CO2 output – some leaders are now saying it is not enough simply to be reactive in such situations,” according to the company.
Although a proactive approach is needed to defend business aviation’s sustainability record, the company also highlighted the need for care when reacting to climate critics on social media platforms. “This warning comes after posts from commentators on LinkedIn regarding the Schiphol protests [last November] were taken as direct quotes from the industry by leading newspapers and media outlets. While the authors of the posts most likely did not think this would happen at the time of writing, this is the danger of the digital age.”
Sustainability and reducing emissions was at the forefront of every business aviation event last year. Continued progress in 2023 depends on taking the initiative in messaging and being “mindful of how the industry presents itself to the rest of the world”.
Lessons in governance learnt in 2022 will continue to apply in 2023. The fallout from the collapse of Greensill Capital caused significant damage to Credit Suisse, and lawsuits continue to hurt Boeing’s rehabilitation, noted the company. KPMG received a multimillion-pound penalty in relation to its audit of Rolls-Royce, and Airbus faced a class-action lawsuit in the Netherlands regarding claims it failed to adequately disclose information.
The promotion of ESG (environment, social and governance) by prominent business leaders and high profile investors is at an all-time high, said Martyn Fiddler. Also, there are regulatory and social initiatives to encourage better corporate governance around the board table internationally. “Often the problem businesses experience with governance is implementation; businesses either don’t understand the benefits of good governance or consider lip service to governance sufficient to avoid scrutiny – ‘governance washing’.”
Booming values and looming recession was the final insight likely to shape business aviation this year. Last year saw rising aircraft prices and higher numbers of first-time buyers coupled with falling global inventory. This resulted in manufacturers boosting production and the second hand market experiencing unprecedented demand, said the company.
“Peaks and troughs are nothing new for business aviation, however, 2023 will expose which businesses have learnt lessons from the crazy highs and dismal lows of the last decade,” said the company. “Have businesses put in place mechanisms to safeguard themselves as demand diminishes?”
Recession may benefit those well placed to see opportunities and bargains, but many businesses, both new and established, will suffer, predicted the firm. “We believe that economic gains will shift during 2023 – as they do in each recession period -–and those that benefit will look to business travel to further their returns.”
The company concluded the five insights with advice to expect the unexpected during 2023. “We can only face the future if we have a flexible (rather than fixed) mindset,” it said.
Five top business aviation insights from last year
- War and sanctions
- Living with Covid
- Sustainability and carbon neutrality
- Lessons in governance
- Booming values and looming recession.
- Source: Martyn Fiddler Aviation.
