August 07, 2013
BBA Aviation is seeing pockets of growth in business and general aviation flight operations in North America, but overall traffic has remained flat, and is even down a little in Europe.
“In terms of North America, interestingly we continue to see signs, positive signs of recovery, both in terms of macroeconomic indicators … and some of the underlying business confidence indicators,” says Simon Pryce, CEO of Signature Flight Support parent BBA Aviation.
That growth was particularly evident in the Northeast, concentrated around business centers and charter operations in the first half. But Pryce cautions, “much of the rest of North America remains very volatile. I think it’s too early to call a return to accelerated growth quite yet.” He adds that the company believes “it’s just a matter of when it comes.”
In Europe though, the economy still remains difficult, and flight operations have slid another 3%. “The macroeconomic conditions will mean that Europe will be a lower growth environment for some time to come,” Pryce said.
Business and general aviation movements drive 65%-70% of the company’s business. With little change in operations, Signature’s revenues slid slightly through the first half of the year to $484.7 million, down from $488.6 million a year ago. But this decline also reflects lower fuel prices. When adjusting for the fuel price change, Signature’s organic revenue growth was 2%, despite the traffic trends, BBA Aviation reports.
BBA was encouraged that Signature’s organic growth outpaced flight movements, and also notes that it continues to pick up participants in its loyalty programs. Participants in the Tailwins programs for pilots, schedulers, dispatchers and flight departments, increased from 11,900 to 13,000, while the Signature Status program for crew and passengers now has more than 200 “platinum” member aircraft.
The company notes the number of steps it has taken to increase Signature’s business reach – from launching operations in Changi to extending and expanding at London Luton, to growing its Signature Select network, most recently with the addition of Sonoma Jet Center. Pryce says these and other projects are “building a good growth pipeline going forward.”
While business confidence improves over a period time, growth will remain slow, he says.“But when it does happen, then we are very well placed to benefit from it.”
Also finding business down slightly was BBA Aviation’s aftermarket services business, where revenues dipped from $425.9 million in the first half of 2012 to $424.6 million this year. Its Engine Repair and Overhaul (ERO) business experienced a 7% reduction in organic revenue. BBA attributed some of this slide to a second-quarter sales restructuring. “We are already seeing the benefits of that reorganization begin to flow through, and we anticipate ERO returning in the second half.”