BBA Aviation Plc (BBA), the world’s biggest provider of bases for business jets, plans to spend $300 million on U.S. acquisitions this year as demand for private planes in emerging markets remains in its infancy.
London-based BBA is focused on a U.S. market that provides 75 percent of sales, Chief Executive Officer Simon Pryce said, adding that emerging economies are too lacking in big companies and infrastructure to support extensive use of business jets.
“There are more planes on the ramp at Palm Beach on any given Saturday afternoon than there are in the whole of India and China,” Pryce said today in a telephone interview. “We will see lots and lots of growth in India and China and the other emerging markets, but from a very low base.”
Palm Beach International airport, north of Miami, is the world’s second busiest for business jets, behind Teterboro, which serves New York City, according to the 2011 FBO Survey compiled by Forecast International for Aviation International News, while the U.S. market is almost 10 times larger even than that in Europe. That contrasts with trends in the airline industry, where Asia accounted for almost 31 percent of traffic in December, North America 27 percent and Europe 26 percent.
No More Shame
“We’re a mature-economy business,” said Pryce, who reckons there are 10 times more paved airports in the U.S. than China. “You need an economy’s net worth to get to a certain level before you have the right size of company to buy private jets. You also need the right sorts of demographics and geography.”
BBA, which owns the Signature Flight Support brand, will make “slow and steady investments” in emerging markets, reflecting the modest growth levels, Pryce said.
The reluctance to fly by business jet that emerged during the slump after the CEOs of General Motors Co., Ford Motor Co. and Chrysler Group LLC were criticized for using them to attend hearings on bailouts has faded, the CEO said, with the aircraft once again regarded as useful “productivity tools” by companies.
“Ultimately economics trump politics,” Pryce said. “It made no sense what was going on in America, the continued targeting of business and general aviation. It made no economic sense at all. It was a soft political target.”
BBA said today its pretax profit rose 24 percent last year to almost $164 million after $129 million was spent on seven acquisitions. The stock close 1.2 percent higher at 204.2 pence.
To contact the reporter on this story: Steve Rothwell in London at email@example.com