Business Aviation: Power & Energy Drive Growth in Utilization
The energy sector is a large, global industry, and in many countries, second only to healthcare. According to energy data resources Enerdata and the International Energy Agency, the sector accounts for roughly 10 percent of the world’s GDP and will require an additional $37 trillion in cumulative investment in the world’s supply system over the next two decades.
In order for businesses to compete in a global industry of this scale, they require efficient tools and resources to meet their business demands. Those with the use of a business jet, turboprop or helicopter can visit more customers in less time and reach destinations and markets that simply aren’t accessible via commercial aviation. Business aviation allows companies to reach their destinations with greater efficiency and leverage it as an asset in support of the company’s operational objectives and goals.
Historically, when flight hours increase, there is corresponding economic and performance growth. Within the general aviation industry, utilization is tracked by two metrics: time and cycles. Time is the duration that a business aircraft is flying or the number of hours that the aircraft is in flight. The cycle metric measures how often aircrafts land. From these two metrics, a number of evaluations can be made, but for the purposes of this article, we will evaluate business aviation utilization by time as an economic indicator for the energy sector.
JSSI Business Aviation Index
When businesses are flying, businesses are thriving. Flight hours are a powerful economic indicator from both a regional and business sector perspective. The JSSI Business Aviation Index is used as a resource to understand the utilization patterns of business aviation for many industry sectors. JSSI tracks and analyzes the utilization of thousands of companies worldwide and freely provides its report for use by various outlets.
In its most recent Q3 report, JSSI shows modest year over year growth. However, there are sectors who have performed exceedingly well during this same time frame. Business services, real estate and healthcare have all shown strong growth in Q3 with double digit increases year over year in the low teens. The one shining star, however, is the power and energy sector, with growth in excess of 20 percent.
Power and Energy Drive Growth in Utilization
In 2011 and 2012, the power and energy sector saw roughly an 8 percent and 1 percent decline in overall utilization. 2013, however, shows a sharp recovery in the first three quarters with a 29 percent spike in Q3 utilization year over year, which builds upon consecutive growth over the last five quarters. The power and energy sector has been leading the way throughout 2013, helping to keep the overall utilization for business aviation at or slightly above breakeven.
A further look into the power and energy sector shows that business aircraft utilization is up most sharply for those businesses that are servicing emerging markets. This is no surprise as the economic growth in emerging markets can be tied to those countries’ energy consumption. Oil and gas consumption in Brazil, Russia, India and China alone is estimated to exhaust nearly 30 percent of the global fossil fuel resources. As the need for further supply and supply side development increases, the demand for the utilization of business aviation will, as well.
Finally, the fleet disposition for the power and energy sector is quite diverse with almost every class of business aircraft represented in the index. The sector represents utilization needs in a broad range of aircraft types—from commuter airlines to turboprops to helicopters—illustrating the broad, yet specific, need for business aviation as a tool. When the tools of an industry are used to their fullest potential and the assets of a company are utilized toward its operational objectives and goals, growth should be expected. The use of business aviation within a given sector like power and energy is generally a strong indication on the health of that sector.
Future Predictions for the Industry
Barring any unexpected economic downturns, the energy sector should continue to see growth in two areas of business aviation. While the average utilization for an industry will stabilize, the expected growth for aviation in general will translate into new orders and more aircraft being leveraged as a business resource throughout the industry. The need to expand into emerging energy markets, the growth in offshore drilling and the need for continued exploration all lend to greater use and development of business aviation in the energy sector. Business aviation will continue to be a vital tool in the development of the world supply system and will play a direct impact in support for demand, investment and growth over the next two decades.
Neil Book is president and CEO of JSSI. As President and Chief Executive Officer, Neil provides leadership and direction to the entire organization. Prior to joining JSSI, he served as Vice President of Mobility for Juniper Networks, directing its mobile security business unit. His role at Juniper began in 2010 in connection with their acquisition of SMobile Systems where he had served as President and Chief Executive Officer. Neil began his career at AT&T where he held various management positions and is a graduate of the University of Delaware.
- 2014 Insider Knowledge Report
- Energy Efficiency Ratings: Benchmarks that Drive Excellence in Building Design & Operations
- Guide to Energy, Carbon and Environmental Software
- Integrated Building Optimization
- Trends in Energy Management: Where Should Your Next Investment Be?
- 6 Steps from Getting the Most From Every Lighting Retrofit
- The CFO and the Sustainability Reporting Chain
- How "Fixed" is the Fixed Price Product?
- 2014 Environmental Leader Product and Project Awards
- Essential Guide to Lighting Retrofits and Upgrades
- Energy Efficiency Requires Engineering Efficiency
- Integrated Building Optimization: A Crucial Convergence of Demand-side and Supply-Side Energy Management Strategies
- Driving Productivity and Profit with Industrial Energy Management
- Energy Procurement in 2014: Products & Programs to Optimize Savings
- BUYING STRATEGIES IN A VOLATILE MARKET: What Businesses Need to Know about Retail Electricity Procurement