The slowing world economy is having an impact on business aviation in Thailand, with traffic this year expected to be about the same as last year, when growth was far short of the 12% forecast, according to MJets Ltd, the largest private jet service provider in Thailand.
Executive chairman Jaiyavat Navaraj told Asia Focus that the weakness partly reflected a slowdown in activity as foreign investors wait for Thailand to move forward politically.
Business aviation traffic handled by MJets through Don Mueang airport grew nearly five-fold from an average of 25 flights per month to 110 by the end of 2014. The figure dipped to around 100 flights a month last year.
The affiliate of the SET-listed hospitality group Minor International Plc recently received a 10-year concession extension to continue operating at Don Mueang as the only fixed-base operator (FBO) in the country. It is preparing to invest 300 million baht to develop a new private jet terminal and FBO facility roughly twice the size of the existing one. Its services include aircraft management, charters, maintenance and air ambulance service.
MJets in 2014 pioneered business aviation in Myanmar in a 50:50 joint venture with Wah Wah Group, and has won a bid to establish a facility at the New Delhi airport. Other possible locations for expansion, Mr Jaiyavat said, included Salalah airport in Oman, as well as Vietnam, Cambodia and Laos which have been under negotiation for two years.
"Establishing in the CLMV (Cambodia, Laos, Myanmar and Vietnam) countries is challenging, unlike building a hotel," he said. The licensing procedure involves different bodies including the local airport authority, aviation department and transport ministry.
The sluggish process, he said, reflected unsupportive policies and a lack of understanding about the benefits of the business aviation industry.
Congestion at major airports also hinders growth in Southeast Asia as airport operators will give priority to commercial airliners. That causes aircraft to be repositioned to other less congested airports after dropping off passengers, "in contrast with the advantage of a business jet which promotes convenience and agility of travel", Mr Jaiyavat said.
Flexible flight schedules and access to airports where commercial options are unavailable, as well as greater privacy, make business jets an attractive alternative, in his view.
"In business aircraft, we own the time," he said, adding that businesses needing to oversee operations in various locations should consider owning or chartering a corporate jet to increase productivity.
Whether one buys or charters comes down to frequency of fleet utilisation, he said. A business expecting to make a half-dozen or more trips per week should buy its own aircraft.
MJets charges charter customers US$8,500 per operating hour for its 14-seater long-range Gulfstream GV, which costs around $13 million to buy new. Assuming other factors remain unchanged, the per-hour cost translates to about 63 days of nonstop operation to make up the initial fleet price.
However, customers must factor in other fixed costs such as crew, hangar and insurance. There are also variable costs of around $4,381.80 per hour for fuel and maintenance of a Gulfstream GV, according to Aircraftcostcalculator.com.
Costs are mainly concentrated on fuel, maintenance and pilot expense, Mr Jaiyavat said. Considering a plane will be in service for longer than a decade, it is an asset worth having for some corporate buyers.
"Money is not enough to own a business aircraft, you need to have knowledge. ... That's the reason a company like ours exists," he said.
Southeast Asia, with the exception of Singapore, is still in its infancy when it comes to supporting the growth of business aviation, and regulations vary by country. Overfly and landing permits can be particularly troublesome.
In Thailand, he said, it takes 3-5 days to issue such permits and the operator has to renew the permits for every flight flown, while Singapore issues a permit similar to a multiple-entry visa, good for 6-12 months.
Though operating costs for a Thailand-based fleet are considered competitive, Singapore offers a tax advantage on imports of plane parts, and is also home to manufacturer-owned maintenance centers.
"Thailand could actually become a hub of business aviation if the government sets a clear direction and the private sector joins hands," Mr Jaiyavat said. "If we open up, it will be difficult even for Singapore to compete."