Brazil Business Aviation Conference Overshadowed by Crash: Tragedy Occurred in Year When Brazil Is Expected to Become Largest Latin American Executive Jet Market

The Wall Street Journal
By  Luciana Magalhaes
August  14, 2014 7:15 p.m. ET


SÃO PAULO—As some of the world's leading aircraft makers gathered in São Paulo this week for the region's biggest aviation showcase, they had to cope with some tragic news.

The three-day Latin American Business Aviation Conference and Exhibition was overshadowed by Wednesday's plane crash that killed Brazilian presidential candidate Eduardo Campos. He and six others aboard died after the Cessna 560XLS+ Citation Excel in which they were traveling plowed into a residential area in the coastal city of Santos, about 35 miles south of São Paulo.

"Everyone was talking about it, especially because the people coming here are pilots and airplane owners," said Eduardo Marson, president of Brazil's Association of General Aviation, which organized the event. He estimates the show, which ended Thursday, attracted 14,000 to 15,000 people.

The tragedy occurred in year when analysts expect Brazil to surpass Mexico as the largest executive jet market in Latin America.

The region's two largest economies—Brazil and Mexico—are currently neck-and-neck when it comes to executive aircraft, with just over 800 each, analysts said.

But over the next decade, Brazil is expected to add up to 560 new executive aircraft, compared with between 110 and 140 for Mexico by 2024, according to industry numbers compiled by Brazil's aircraft manufacturer Embraer.

Already the world's largest market for corporate helicopters, Brazil is alluring to private jet makers as well. Manufacturers say demand is being driven by a number of factors, including its growing wealth and variety of industries.

Geography is also key. About the size of the continental U.S., Brazil has poorly developed highways, railroads and commercial airports. About the only way that business executives can travel quickly to many far-flung places is by using the nation's robust network of private airstrips—close to 3,500 in all, according to Francisco Lyra, president of São Paulo-based CFLY Aviation, a Brazilian firm which provides management and services for the aviation sector

"Only 130 of Brazil's 5,600 towns have regular commercial flights," Mr. Lyra said.

Mexico is seen as a more mature market whose buyers have easy access to secondhand executive jets from the U.S., according to industry executives.

"Brazil will surpass Mexico because of its needs, because of the size and number of its industries," said Stephane Leroy, regional vice president for international Latin American sales at the business aircraft division at Canada-based Bombardier,  who came to São Paulo this week.

Mr. Leroy declined to comment on sales so far this year. But he said he was encouraged by the number of inquiries at the show.

Industry executives said Brazil's sluggish economy, the monthlong World Cup and uncertainties regarding October's presidential elections crimped sales in the first half of 2014.

"Brazil would've been ahead of Mexico at the beginning of this year … but the market was kind of slow," said Marco Tulio Pellegrini, Chief Executive Officer and president of Embraer Executive Jets. "We continue to have clients see the jets, but they are taking longer to make a decision."

Still, Embraer is predicting a stronger second half. The company said it expects to deliver between 105 and 120 executive jets to customers world-wide this year, compared with 119 last year. It didn't provide a regional breakdown.

Latin America as a whole is seen adding some 850 jets valued at $16.3 billion in the next 10 years, Embraer said.

While the U.S. remains the world's top market with close to 12,000 executive jets, and China is up-and-coming, Latin America is still one of the most promising markets for private jets, experts said.

The Labace show in São Paulo was teeming with top-of-the-line aircraft aimed at corporate buyers and wealthy individuals. Among the fanciest was Embraer's Lineage 1000E, a modified version of the company's E-190 regional jet. Priced at $55 million, it aims to be a flying home for rich travelers. Its 70-square-meters of interior space boast a full kitchen, dining and living rooms, a master suite and private lavatory with shower.

Capable of transporting up to 19 passengers, the Lineage 1000E is the Embraer's largest executive jet. The company said 20 of the planes are in operation, some purchased by buyers in China, India, Indonesia and some nations in the Middle East.

Executives say the industry is still recovering from the global downturn that followed the U.S. financial crisis; global business jet deliveries of 678 aircraft in 2013 were about half what they were at the peak in 2008, according to data from the General Aviation Manufacturers Assoc.

"We are at turning point, with the U.S. showing signs of recovery while Europe is still hurting," said Mr. Lyra, of CFLY Aviation.

In spite of setbacks, Latin America received around 12% of the world's business jets deliveries in 2013, and almost 45% of those went to Brazil and 12% to Mexico, according to numbers provided by Bombardier.

Source:   http://online.wsj.com

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