Marked upswing in Asian-Pacific Bizjets
Dr. Praveen Srivastava (Mumbai) weighs in on the burgeoning Post-Covid Business Jet markets of Asia and the Middle-East.
Interview conducted by: Richard Roseman – Managing Director, Jet Cabin Freshbook
This Doctor won’t be able to help you with hypertension or your thyroid levels, but he's certainly wired into the region’s business aviation global market trends. Dr. Praveen Srivastava is the CEO of Aerochamp, a Mumbai based product and service provider to the global business jet market. In addition to heading AeroChamp, Dr. Praveen also sits on the board of several other aviation companies in the region. With 25+ years experience in positioning companies to take advantage of global and regional market trends, Dr. Srivastava has earned the reputation as an influencer in the region and something of an expert in forecasting emerging aviation hotspots.
Today I had an opportunity to sit down with Dr Srivastava (Q&A style) while he elaborated on his latest and rather confident bull-market predictions for Asia and the Middle East over the coming years.
Below is our transcripted interview:
Q: Dr Srivastava, in looking at a recent article in AVIATION WEEK Network, the story lead read:
“Asia-Pacific is a high-growth and increasingly important market in the global air transport industry, both for passenger and cargo carriage. That remains true through the pandemic crisis: China became the world’s largest domestic air traffic market in 2020.”
Obviously you agree with this statement, so with your vast experience in the region, we’re hoping you can help us put a finer point on it. In broad terms, can you tell us why this is - and just what your predictions are in terms its scope - and what its duration might be.
A: The growth of air transport industry in the Middle East and Asian region started late in the 1990s, hence it is still the emerging market compared to the stable and saturated air transport industry in the western part of the globe. This region has seen double-digit growth in both commercial and private flying over last two decades and just when it was at full thrust, Covid-19 applied the brakes. But while the growth was put on hold, the dynamics haven’t changed and I see that growth returning, more or less proportionate to the easing of COVID concerns. Based on my study of the markets in this region and given the fact that people getting vaccinated, I am quite optimistic of the air transport industry bouncing back to its near normal within next 12 months and resume its growth journey in the years to follow. I have also closely analysed figures available from various regulatory authorities which show that the domestic flying of business jets is gradually picking up since January 2021. Businessmen and corporates are opting to fly private vs. commercial – a powerful trend driven by the pandemic, and one that won’t fade for quite some time.
Q: What are the factors that business jet completion and refurbishment centres in middle east & Asia region, consider while sourcing their products from US suppliers?
A: I am privileged to have setup 4 business jet interior refurbishment facilities and connect with most of the refurbishment centre owners in the region. There are 3 main points that interior refurbishment centres in this region have to consider while sourcing products from US suppliers 1) Availability and lead time of the samples selected by their customers, 2) uncertainty of high freight cost, which in most cases is not known till the consignment is packed for shipment, and 3) coordination between the supplier and purchase manager due to different time zones.
I have seen purchase managers struggling at midnight trying to reach out to the US suppliers as they strive to meet the time line; worst on Fridays when the US suppliers slow down for the weekend but the refurbishment centres have to work on Saturday and Sundays to complete the project. Some suppliers with local representative in this region are better to deal with, as the representative develops a rapport with the purchase manager and the point of contact with the US supplier and is therefore able to co-ordinate more smoothly.
Q: Can you give us an overview of the current business jet interior market in the Middle-East & Asia?
A: The current business jet interior market in this region is surely hit by the Pandemic but it looks promising, as we see many refurbishment, modification and retrofit opportunities in next 24 months. Business jets which were grounded have begun to operate again now, only to realise their cabin appearance has deteriorated due to poor upkeep during lockdown and the hot-humid weather adversely affecting the upholstery and lining material. Many business jet owners and charter operators have expressed their intent to refurbish the cabin interior during the next grounding for scheduled checks. Due to the change in hygiene and personal safety protocols post Covid-19, business jet flyers want the cabins not only refreshed – but the surfaces protected by new antimicrobial finishes and set onto a more frequent interior maintenance schedule. Thusly, these two enhanced requirements will, unquestionably lead to more refurbishment opportunities.
Q: Most well-known business jet completion/ refurbishment centres seem to be in the US and Europe. In your opinion, what challenges do centres in the Middle-East & Asia face.
A: Yes, it is true that most well-known centres are in the US and Europe, but that landscape is changing fast. Over the last decade, many leading MROs have extended their operations in the Middle-East and Asia due the increasing number of business jets in the region and the accompanying demand for local maintenance. Jet aviation, Execujet, Gama Aviation and DC Aviation are some of the leading MROs in the UAE. Bombardier has also setup a full service MRO in Singapore. There aren’t many established business jet refurbishment centres in this region except for Flying Colours of Canada – having set up a facility at Singapore in collaboration with Bombardier. But the smaller refurbishment centres face the challenge of sourcing material and delivering matching quality in comparison to the established players in Europe and US, however this scenario is also changing fast and completion/refurbishment centres from Europe and US have started expanding their operations in Asia and Middle - in collaboration with local partners.
Q: How do you see the market uplift for business jet completion / refurbishment centres in the Middle east & Asia region, post COVID-19?
A: As stated above, I am quite optimistic about the market uplift due to the deterioration of aircraft interiors during the lockdown and the more frequent disinfectant treatments for exposed surfaces. I have observed a reduction in aircraft interior refurbishment cycle in the Middle East and Asia, which is 6 years now as compared to 8 years earlier. Based on my study of the industry in this region, Covid-19 impact has further shortened the cycle to 5 years temporarily. Thus I see good demand for aircraft interior refurbishment centres by the end of 2021 and beginning of 2022.
Q: Again, in your opinion, do the business jet refurbishment centres in the Middle east & Asia region have sufficient technological backup to carry out major cabin modifications at the VVIP or top-tier FC commercial levels?
A: Until 2010 there were no major cabin modifications being carried out in this region and refurbishment was largely limited to carpet replacement and re-upholstery. But the refurbishment centres here have evolved - enhancing their capabilities to offer hydrographic printing, wood veneer replacement and lacquering, cabinetry modification and all other works related to cabin. In fact, my team carried out complete IFE replacement with latest mobile operated cabin management system, mood lighting, inmarsat based cabin wi-fi installation and major cabin modification on a mid-size business jet here in India in 2018. This was the first ever major cabin modification project in the region with an EASA STC. Collaboration is certainly the way to move forward and refurbishment centres in the Middle East and Asia will have to form new JV and strategic alliances with their counter parts in Europe and US to offer complete modification solution to their customers.
Q: What factors do you consider important for business jet interior product manufacturers in western countries to expand their business in the Middle east & Asia region?
A: One of the challenge I’ve always observed in western manufacturers targeting this region, is the understanding of local culture and liking. I would recommend the product manufacturers and suppliers to join hands with local distributors and representatives to offer their products to the completion and refurbishment centres in the Middle- East and Asia. These distributors and representatives can bridge the gap between the west and east as they know the local culture, connect well within the region and can coordinate in local time. Manufacturers must also understand the colour, pattern and design requirements of this region which are almost always, very different than the west. Manufacturers of volumetric products like seat cushions should try to keep some inventory of fast moving items in this region, in order to reduce lead time and freight cost.
Q: As interiors supply chain partners continue to tackle unprecedented challenges as governments around the world impose and adjust restrictions on travel and social interactions to combat Coronavirus, what is your insight in the interior market-segment that will set the scene for business into 2021?
A: If I understood your question right…. you want to know how the travel restrictions will impact the aircraft interior business and how do the companies overcome it. In my opinion these travel restrictions are temporary and may not last beyond mid to late 2021, when manufacturers and suppliers will have to accept the temporarily decline in demand and prepare for higher demand beginning around Christmas 2021. Do we have an option, than to simply accept the situation? Not necessarily. It’s a natural phenomenon – what goes down has to bounce back and this will apply to the business jet interiors industry too. We have already started seeing an upswing in demand for interior goods in the Middle-East and Asia. My recent interactions with leading supply chain partners gives an indication of slow increase in number of enquiries received by them from Jan 2021, which is a clear sign of recovery of the industry.
Q: How would you analyse the demand for aircraft interior industry collaborations in Middle-East & Asia region and how might it differ from western markets?
A: In the US and Europe the aircraft interior industry is aligned with the completion centres and MROs due to the volume of business. However in the Middle-East and Asia which are markets, the aircraft interior industry is not well organised, hence the need for collaboration. It is important to note that the whole of Europe has one regulatory authority, EASA - and similarly, the US is governed by FAA. However, many small countries have their independent regulatory authorities which do not recognise the approvals and released certificates of the other countries. Example : UAE GCAA doesn’t recognise Indian DGCA, though both normally follow EASA. So if an Indian refurbishment centre has to do business in the UAE, it has to take GCAA approvals. Here if the aircraft interior industry creates a forum to which all the supply chain partners and refurbishment centres before a member, this can lead to collaborations between such members to utilise each other’s capabilities through outsourcing of tasks.
Q: Based on your expertise, please advise what you see as necessary measures for business jet operators in better caring for their aircraft interiors in the current situation where interior surfaces are being cleaned with vastly increased frequency?
A: This is an unprecedented situation which has changed everyone’s life. Frequent use of surface cleaners and spray disinfectants, would obviously erode the material surfaces faster; be it leather, synthetic leather, fabric, carpet or the clear coat on wood veneer panels. Professional detailing of aircraft interiors at regular intervals can prevent deterioration and help evaluate the effects of such cleaners. Business jet operators should suggest their cleaning agencies not to use IPA or any other solvent based cleaners or disinfectants, instead opting for water based cleaners and disinfectants with far less corrosive effects. Use of custom maintenance covers for carpet and seats up until the passengers arrive for flights, can also be a good way to protect the surface and reduce repeated use of cleaners.
Q: In your estimation Dr. Shrivastava, how do you think the business jet interior refurbishment centres are keeping up in your region ? Are they prepared for the projected uplift in business?
A: Based on our interaction with the majority of the interior refurbishment centres in the Middle-East and Asia over the last 4 months - and a survey carried out to evaluate the impact of pandemic on their businesses, our findings reveal that revenues were down between 50 – 70 % for most centres. However the good news is, these refurbishment centres have started receiving fresh enquiries since Jan 2021, so they are getting busy now. During my personal interaction with the owners of major refurbishment centres in this region, I advised them to enhance their capability to offer additional services to the business jet operators to increase their engagement. The refurbishment centres are indeed getting prepared for the uplift as their skilled employees report back to work at the shop floor – proportionate to the increase in business inquiries.
Q: What products & services of cabin interiors are having the highest penetration in your region among different aircraft applications?
A: Carpet replacement, leather upholstery, wood veneer lacquering and decorative plating have the highest demand in this region. There is a big gap in the decorative plating and wood veneer lacquer supply chain partners from Europe and the US. Such suppliers should look for local dealers and representatives to improve their market presence and reach to the customers here. Foam and Cushion suppliers should try to place inventory of fast moving items at a central location in order to cater to the Middle-East and Asian refurbishment centres – again because the freight charges for these items are often more than the cost of the product. DER, DOA and Engineering services through local partnership can have good demand in the near future as the refurbishment centres slowly mature into proper full-range modification centres.
JCF would like to thank Dr. Srivastava for his time in conducting our interview. His name is increasingly becoming recognized not only as an authority within the region, but an influencer and "go to" for new companies seeking to do business in the region - as well as customers there, looking for a sense of comfort in utilizing local resources - as opposed to US and European assets.
We will continue to keep up with Dr. Srivastava and provide timely updates and insights as they occur.