Private jet sales flying high in CEE

By bne IntelliNews July 24, 2008

Bogdan Turek in Warsaw -

While worries about the US economy has hit sales of private jet sales there hard, Central and Eastern Europe, spearheaded by countries like Russia and Poland, is proving to be a top market for companies that manufacture these small and medium-sized planes.

At the end of 2007, US sales made up just 30% of global private jet sales, data from avionics firm Honeywell showed, well below the traditonal 50%-plus level. Meanwhile, aviation exports say that demand for these planes in CEE is growing by 20% to 30% annually.

Paradoxically, the poor condition of Polish roads and lack of real progress in construction of highways has became an asset for small jet manufacturers. For example, Cirrus Design, founded in 1984 with its main manufacturing facility in Minnesota, could not have chosen better timing for stepping into the Polish market. "Cirrus Polska opened its office in Warsaw on April 22 and we sold the first plane on May 3," says Piotr Orlik, spokesperson for Cirrus Polska. "We were surprised it went so quickly." The plane was a Cirrus SR Turbo GTS, X Package, the most luxurious of the best-selling Cirrus SR 22 series. This version cost about €366,000; the lowest price for a Cirrus 22 is €167,000.

Good prospects are ahead not only for Cirrus, but also for Cessna Aircraft and Piper Aircraft, which are also present in Poland. "Practically all producers of general aviation planes are on the Polish market," says Piotr Dlugiewicz, the director of Cirrus Polska. "Our chief competitor is Cessna." But he adds that for the last six years, the Cirrus SR 22 has been the best selling plane in the world in its class.

According to data published by the International Council of Aircraft Owner and Pilot Associations, a non-governmental federation of 66 national aviaton organizations, Poland has the least saturated market in Central Europe: one private plane per 50,000 Poles, compared with one per 15,000 in the Czech Republic, one per 10,000 in Germany and one per 3,706 in Switzerland.

Looking at Europe as a business opportunity for general aviation planes, Dlugiewicz says the middle class is expanding quickly in CEE, but the road network is still poor. "Private planes have a chance to become an equal alternative in transport and the prospects are very optimistic," he says

For one thing, there are plenty of airports in Poland that make flying convenient. There are 1,089 general aviation planes registered that have access to 53 registered airfields plus 272 landing fields throughout the country. But a high percentage of the registered planes are old and many need to be replaced, which has intensified the competition. One of the advantages Cirrus promotes is its Aircraft Parachute System on the Cirrus, SRV, SRV20, and SR22, which in case of emergency can bring the plane to the ground safely.

Poland's buoyant economy has prompted many expanding businesses to adopt private air transport, which can save not only time but also money both in Poland and further afield. What's more, those who cannot justify buying a plane can still fly privately via an ownership sharing system. Orlik from Cirrus says €65,000 buys co-ownership of a plane under the Sky Share Club - the first and only such operation in CEE. Usually, six to eight people co-own a plane and, interestingly, scheduling conflicts occur rarely. Bartlomiej Barancewicz, commercial director of Air Taxi Company in Warsaw, one of about 10 in Poland, says there is a growing demand for this kind of service among Polish businessmen, too. "It's a danger to drive in Poland so an air taxi is a good alternative," says Barancewicz. "Although it is not a very lucrative business yet, there is a bright future for this kind of operation."

Barancewicz cites an example of a business flight from Krakow to Wroclaw to Szczecin and back to Krakow, which could cost around €3,000. "It would take one day to handle business problems by (private) plane as compared to about three days by car, not to mention higher overall costs due to the absence of top business people from their company," says Barancewicz.

Dlugiewicz, the Cirrus director, shares this view. He says a trip by car from Warsaw to Lodz, some 150 kilometres, takes 2.5 hours, by train 1.5 hours and by plane 25 minutes. "It is a tremendous time-saving system," he said.

Send comments to The Editor

Related Articles

Drum rolls in the great disappearing act of Russia's banks

Jason Corcoran in Moscow - Russian banks are disappearing at the fastest rate ever as the country's deepening recession makes it easier for the central bank to expose money laundering, dodgy lending ... more

Kremlin: No evidence in Olympic doping allegations against Russia

bne IntelliNews - The Kremlin supported by national sports authorities has brushed aside "groundless" allegations of a mass doping scam involving Russian athletes after the World Anti-Doping Agency ... more

PROFILE: Day of reckoning comes for eccentric owner of Russian bank Uralsib

Jason Corcoran in Moscow - Revelations and mysticism may have been the stock-in-trade of Nikolai Tsvetkov’s management style, but ultimately they didn’t help him to hold on to his ... more

Notice: Undefined index: subject_id in /var/www/html/application/controllers/IndexController.php on line 335