Rise In Asian HNWIs Could Lead To Aviation Boom

Vanessa Doctor

18 November 2010

The rising number of high net worth individuals in Asia is creating new growth opportunities for the aviation industry.

According to research by Frost & Sullivan on the outlook for fixed base operators in Asia, ground handling market revenues are expected to double by 2018. With the region recording 291 business jets as of 2009 and with a compounded annual growth rate of 5 per cent until 2018, Asia is likely to have a fleet of 454 jets by the said year. The major airports in the region are in Singapore, Hong Kong, and Malaysia.

"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," Gautam Kanal, research associate for aerospace and defence at Frost & Sullivan, said in a statement.

The increase in the number of HNWIs and improving government regulations are also leading to a greater adoption rate of private business jets, particularly in China, Japan and Korea. Hong Kong employs a rather monopolistic ground handling system, but with the demand increasing, this is likely to change soon, the research noted.

"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 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," added Kanal.

The region currently accounts for 21 per cent of the global air traffic in terms of revenue per kilometre, the study said, and with Asia Pacific housing over 3 million HNWIs, it is expected to grow by 6 per cent each year over the next decade.