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SaxonAir & BBGA Press Conference at London Biggin Hill Airport Addressed State of the Industry Post-Brexit, Pandemic

February 18, 2022

On Tuesday, 1st February Alex Durand, CEO of Norwich Airport-based SaxonAir and vice-chair of the British Business and General Aviation Association (BBGA); Lindsey Oliver, managing director of the association; Aoife O Sullivan, founder and partner at The Air Law Firm and chair of BBGA, and Andrew Douglas, CEO of Make Tech Fly, spoke with reporters about the state of the industry.

BBGA members have fared well relative to the airline sector in the Covid-induced downturn, but it’s still been a choppy ride. In the early days, according to Lindsey Oliver, “it was our members’ aircraft that were being adapted.” But now the focus is turning to sustainable growth and correcting widespread misconceptions of an industry that is an important economic driver, enabling international business to interact.

“A year ago [the pandemic] was still an existential threat to our business,” said Alex Durand.

His company has three hangars and an FBO at Norwich Airport – and is the nominated handling agent, including handling two offshore operators handling 40,000 passenger movements a year. “But we’re probably more widely known for our charter operations,” he admitted.

“Our aim was to plan for recovery when it came, so we looked at every part of the operation — we had a worldwide AOC on the fixed-wing side, for example. Sovereign Jets here at Biggin Hill decided they wanted to stop doing AOC charters (to focus on their buying and selling aircraft activity) so in a new partnership they are now bringing business jets to us to manage and we are co-locating with them at a new Biggin Hill home. We’ve added five aircraft types since then (nine aircraft, one sold) – and three Leonardo AW119 Koalas which were the first on a UK AOC. That’s quite a step up from being down to two Embraer Phenom 300s just six months ago, he said.

“We used to have a [Gulfstream] G550 – but that was a very different client base to now. Now we have four to eight seat aircraft and quite a few options around the UK and Europe, and we have an Airbus Helicopters’ Squirrel [helicopter] too. We have four single-engine turbine helicopters, which are less expensive to operate than twins.”

The company also reviewed its owned assets, selling its two owned fixed-wing aircraft. “So we just manage [and charter] aircraft now,” but we committed in December [2021] to brand new AW109s.”

Durand said SaxonAir also delivered 15 apprenticeships and is proud to be developing an aviation apprenticeship standard for the business aviation environment. “Most people that go to school don’t know what a career in aviation looks like other than being a pilot, cabin crew…”

He also highlighted what SaxonAir has been doing around sustainability, “looking at our green credentials – which we embraced a couple of years ago.”

Sustainable aviation fuel is currently expensive, but it seems that with kerosene at Norwich Airport being very expensive anyway, the cost of SAF could be the same there (about £1 a litre – kerosene is similar but somewhere like Stansted it’s only £0.40). “We signed up to the SME Hub with the aim of becoming Carbon-neutral by 2030. We organised an event in September in our hangar to get our partners with us on sustainability too. Also, we found that there are four companies developing electric aircraft within 25 miles of our hangar! Including NEBO Air, UK distributors of the Pipistrel – the first UK CAA registered electric aircraft) But

Durand pointed out that “the operational infrastructure is not ready for it in any way — and neither are the regulations. Now we are in 2022 what can we do? Hopefully we can be an electric aircraft hub at a regional airport.”

BBGA: Tackling Common Issues

Aoife O’Sullivan, chair of BBGA and partner at the Air Law Firm, reflected that “the past two years have been a difficult ride…we’d started to think that we’d had a hard time with Brexit but the impact [of Covid] on the industry has been enormous and incredibly challenging.”

BBGA continued to play a central role in addressing common issues, said O’Sullivan. “When I see it from a lawyer’s point of view, we see problems repeated again and again. From a BBGA perspective we can focus on those problems and get solutions, and we’ve been successful.”

While there was initially “an assumption that Brexit was a UK problem,” it turned out that “a lot of collaboration was needed between the UK and EU. Europe has a lot of respect for what BBGA does.” An example was overcoming issues with permits after operators in the UK lost their cabotage freedoms in Europe “and the Europeans lost cabotage in the UK.”

“There was huge confusion as to whether governments knew what they were doing when they drafted the withdrawal agreement,” recalled O’Sullivan.

BBGA “worked hard on the issue,” and worked with the UK CAA – “having weekly calls with national aviation associations across Europe, seeing how we could collaborate, and make it easier for end-users.” BBGA also produced weekly update reports.

“We wanted to move beyond the politics – DfT, Treasury, the CAA, etc, all got involved. We’re very stable now and in a much, much better position than we were a year ago. And we’re seeing it with the operators – what Alex and his team have done with SaxonAir is a stellar example,” she said.

VAT Success

O’Sullivan said BBGA has also done a lot of work with HMRC and the Treasury on how aircraft are dealt with from a tax perspective – “as we don’t have free circulation now [the UK has left the EU]. We must deal with the UK and Europe as separate jurisdictions for VAT on aircraft – it’s 20% here and potentially 24% in France, for example.”

She described this as “an absolute pain for lawyers – it was already challenging…there’s an awful lot going on [surrounding] the operation of an aircraft, and the regulators and tax authorities rarely talk! But even that has settled down now – [after] HMRC showed a willingness to listen. BBGA spent a huge amount of time putting in submissions – having teamed up with leading tax advisers in UK. Without BBGA it wouldn’t have happened! Advisers were all saying the same thing, but nobody was feeding back into government and the Treasury.”

High Demand

“Demand for business aviation now is enormous,” reported O’Sullivan, “particularly in the past six months. During the peak of Covid aircraft owners took them back from the charter market (for their own use) – which created a supply and demand problem. But now charter is booming. The [aircraft trading] market are seeing the most incredible results – there’s just no inventory!”

Older aircraft have become “more and more popular…and some buyers are even buying aircraft without doing any inspections, she noted. This is something [as lawyers] we’ll likely to be be dealing with in six months’ time!”

Many observers thought this trend would taper off at the end of 2021 – as US demand tends to lead overall demand. “But it just hasn’t tailed off — January has probably been the busiest month I’ve ever experienced.” O’Sullivan noted that one buyer even agreed to hold their offer price until end of June “until the seller is ready to let the aircraft go.” But she believes I “demand will start to level out come the summer.”

UK Aviation Opportunities

One of O’Sullivan’s key messages was that this represents “a lot of opportunities for the UK.”

“At BBGA we’re trying to remind people that we, as an aviation industry, didn’t go away [during Covid]. In addition, she asserts that “The UK G-register [for aircraft] has become more popular” – having initially lost a bit of appeal during the “panic” over Brexit. “Our advice was calm down” – in fact changing registration, operator, etc, “results in costs of hundreds of thousands of pounds…”

So, says O’Sullivan, “We are seeing a renewed interest in the G-register and much less concern about ‘we must have EASA participation’.” And, she adds, “The CAA should be commended for remaining very stable; I admire their professionalism.”

O’Sullivan expresses herself to be: “Very positive about the future. People are seeing business aviation as saving them time and money.” Buyers are embracing it having seen what it has done for their businesses.

“We can control the narrative,” added Alex Durand, because the value of business aviation has changed – for example there is no longer criticism when reaction when a company, for

example, considers getting a jet.” Andrew Douglas pointed out that “It’s [often] very different in America – shareholders realise the value and say, ‘Why haven’t we got one yet?’.”

The Public Opinion Minefield

Aoife O’Sullivan says this is something BBGA is “trying to address.” “The public doesn’t understand the industry – [and being faced with] imagery of champagne etc [in their marketing] doesn’t help! We’re seeing people change that now,” she asserts. “The industry needs to change and it’s a subtle message. We need to do less talking to ourselves…and the defensiveness has to go.”

Durand agreed that negative coverage is a challenge — Lewis Hamilton’s jet being a case in point – and lamented that “the coverage was all about negativity with no mention of jobs, supply chain, wealth creation…etc.” In fact, Hamilton’s ownership and use of the jet was all “above board.”

“The narrative of the UK economy is job creation so let’s talk about job creation”

What is GA?

General aviation is also about light aviation and smaller piston or turboprop-powered aircraft and helicopters. “We noticed GA aircraft use went up [in Covid],” said Durand, “Medevac, training, survey etc etc…it’s very fragmented so it’s hard to bring it together. Our difficulty is finding a narrative to move it into the mainstream.” Yet aviation is “a hugely aspirational industry” in terms of careers, with so many diverse opportunities.

O’Sullivan called on the media to help explain what business aviation is about, and counter negative, inaccurate hype.

Sustainable Aviation

O’Sullivan said it is “becoming endemic across investment community to have a sustainability element.” “We need to be doing it and seen to be doing it, but interestingly the next generation demand it – they’re not interested in working with companies that are not taking account of sustainability.”

She pointed out however that business aviation has long been a testing ground for new technologies and approaches to operations that improve efficiency and reduce fuel consumption. But she also said that ‘experts’ on sustainability seem to know very little about aviation. “People were repeating verbatim what they thought they knew…so I told them what the industry had done – even the introduction of winglets – not many people know…” And she confessed to not knowing that Durand’s company SaxonAir had such a broad, comprehensive programme to address sustainability in its business, “and we’ve been on the Board of BBGA for years together!”

Durand stressed that it’s “highly complex and there’s no exact science” but SaxonAir has seen

the importance of engaging with the challenge. “We contacted one of the world’s leading climate research institutes — they were surprised and acted as if ‘you guys just hide!’” —believing the aviation industry does nothing and just tried to keep its head below the parapet. “They had no clear answer on business aviation’s impact and what we were doing about it. And a private jet operator on a sustainability panel still gets the reaction, ‘What are you doing here?’”

BBGA’s Lindsey Oliver observed that the pandemic had “introduced an extraordinarily large number of new users to our industry – and they are younger!” This is an important point, said O’Sullivan, “as there seemed to be an expectation we’d just carry on with the Zoom calls, London would collapse etc – no, it’s not happening like that!” And that includes the younger generation. “We saw movement into business aviation as users were saying we can’t do without face-to-face meetings, it’s impossible to pull off a big transaction or deal with cultural nuances, the ability to show respect to one another, and so on.”

Oliver noted that people who owned or chartered private aircraft felt they had more control over the aircraft and were happy to say they were flying with Sustainable Aviation Fuel (SAF). She also said BBGA held a sustainability Working Group meeting at the end of January and the Association fully engaged with its members on the subject.

Durand said some airports had chosen to supply SAF – even though it’s not required or mandated. Initial uptake was low as naturally SaxonAir as an operator asked why it should “buy it from ourselves,” as ground handler. “It’s expensive fuel…and it would be nice if SAF was subsidised! But we need to solve this ourselves as an industry for now.”

He added that BBGA “is encouraging the industry to take it up — the government is looking at it and have task forces on it….at least they’re looking at it. BBGA’s role is to keep pushing it, to get it used, get it into airports…” and working towards ‘Jet Zero 2030’. “I do think we will get there,” he concluded.

Oliver said: “Our role as an association is to encourage government to incentivise SAF – perhaps through APD [Air Passenger Duty revenue]. But also, we need more focus on electric and hydrogen too, and to ask how we can get over the infrastructure challenges. We need to understand the costs.”

Business Aviation Embracing Tech

Also addressing the media briefing at Biggin Hill was Andrew Douglas from Make Tech Fly; a company he started with the goal to develop a new software platform for the business aircraft sector.

Andrew was in the British Army before leaving, becoming a pilot and then a charter broker — “and now I’m also in the tech world,” he said. “We’ve come from the industry — all the problems our new AvioNexus platform solves were ones I came across in my charter broker career – e.g., we don’t want client data going to unscrupulous operators.

There was a lot of mistrust in the Industry, but we’ve developed a solution that aids collaboration between Brokers, Operators and FBOs. This is a product for all parts of business aviation, not just charter, but helicopters and corporate flight Departments too. We’ve taken the banking industry as our lead as they are the leaders in data security and applied that to passenger data sharing in business aviation.”

He said the productivity benefits include eliminating long e-mail chains, which could amount to 100-150 per flight, between the various parties involved. “And e-mails are not a secure way to handle data.” Plus, with ICO rules and GDPR the industry “needs to realise some of its practices in private aviation need to change.”

Essentially the passenger enters their data – which is then available immediately only to the parties that need it — “the operator, broker, FBO and the regulator. And the broker doesn’t have to keep asking for passport information.”

He concluded: “The old ways of working kind of work, we make them work – but we can now book everyone on a flight within 15 minutes. It links everyone and makes the booking process simple — and saves an estimated half a kilo of CO2 per flight from less server use!”

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