International Operations

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In 2012, Significant Developments for Business Aviation Outside the U.S.

December 24, 2012

Listen to the NBAA Flight Plan podcast about the business aviation industry in the international arena in 2012

Business aviation has always been a global industry, so it’s no surprise that 2012 was a busy year for the industry in the international arena. Throughout the year, NBAA worked with international partners, and with the people and companies in business aviation, to confront challenges outside the U.S. and pursue opportunities to foster the industry’s growth and prosperity.

China’s Increasingly Friendly Skies

As NBAA and its counterpart in Asia, AsBAA, worked diligently to put together the 2012 Asian Business Aviation Conference & Exhibition (ABACE) in Shanghai, excitement was brewing over an expected boon in business aviation that would result from the combination of a burgeoning economy, a thirst for general aviation and a fast-developing aviation infrastructure. The conference was a remarkable success.

“ABACE2012 met all of our estimates and expectations, as well as those for the Exhibitors and Attendees,” said NBAA President and CEO Ed Bolen. Together with AsBAA, NBAA partnered with the Shanghai Airport Authority, the Shanghai Exhibition Centre and the Shanghai Hawker Pacific Business Aviation Centre to stage the event. A total of 156 Exhibitors filled a 12,000 square-foot hangar, and an adjacent Exhibit Pavilion that was built to accommodate the overflow demand of vendors. All Exhibit space was sold out two months prior to the event, Bolen said a key indicator that business aviation is bullish on Asia in general and China in particular.

The clamoring for all things aviation in China was evidenced in 2012 by the stepped-up growth of what was supposed to be an experiment in the use of airspace below 13,000 feet. While the central government in Beijing has made it a priority to open that airspace to general aviation between 2015 and 2020, the experiment has drawn the attention of government and business leaders nationwide.

“They were trying to go slow and try it out with what they called a ‘test area,’” said Jason Liao, chairman and CEO of the China Business Aviation Group, and NBAA’s representative in the Asian region. But as the experiment began, Liao explained, interest peaked. “People in provincial government, municipal government showed so much interest in this, there were more and more people interested in being in the test area. I believe right now one-third of the country is supposedly a test area.”

Liao predicted the tremendous and growing interest in general aviation would spur the Chinese government to move ahead of schedule in opening lower altitudes up to general aviation.

To that end, ABACE2012 was more than merely a trade show, Bolen said. It was a platform for advocacy as well.

Among the speakers at the show's two opening sessions were Xia Xinghua, Deputy Administrator of the Civil Aviation Administration of China, Yin Hong, Deputy Secretary of Shanghai Municipal Government, Nianzu Wu, Chairman of the Shanghai Airport Authority, Yukiyoshi Noguchi, principal Deputy Director of the Japanese Civil Aviation Bureau, Tay Tiang Guan, Deputy Director-General of the Civil Aviation Authority of Singapore, Jing Yiming, Vice president of the Shanghai Airport Authority (SAA) and Chairman of Shanghai Hawker Pacific Aviation Ground Services, Ltd., and John Porcari, Deputy Administrator for the U.S. Department of Transportation.

“The support ABACE received from these important officials demonstrates their understanding of the value business aviation can provide to China and the broader Asian region. We look forward to working with these and other officials on efforts to promote a safe and efficient aviation system in Asia, and building on our partnership in the years ahead,” said Bolen.

Learn more about ABACE on NBAA’s web site.

Challenges in Europe

A Tax Battle in Italy

The Euro crisis that has impacted several EU countries also threatened aviation in at least one country Italy. Earlier this year, lawmakers in Rome decided to tax all aircraft parked on Italian soil for more than 48 hours, regardless of registry.

The European Business Aviation Association (EBAA), NBAA and the Italian Business Aviation Association (IBAA) immediately went to work educating Italian lawmakers about the negative impact the tax would have, not only on business aviation, but on business itself.

Thanks to these and other efforts, parliamentarians extended to 45 consecutive days the length of time operators from other countries could park their aircraft at Italian airports without having to fear being subject to the tax.

“During debate on the original tax plan, someone came up wrongly with the idea that you could catch Italian owners trying to register their aircraft outside Italy with the 48-hour rule,” said IBAA board member and aviation attorney Franco Campomori. “They didn’t appreciate that, by doing that, they would catch foreign aircraft coming into Italy. It was a technical mistake.”

In amending the tax, Italian lawmakers also reduced the rate on lighter aircraft, with maximum takeoff weights that do not exceed six metric tons (13,228 pounds).

The Italian government also exempted foreign aircraft undergoing maintenance in Italy, regardless of the length of time they remain in country, Campomori said.

Still, the impact on business aviation was measurable, according to the EBAA. While business aviation activity in Europe suffered a four-percent downturn during 2012, EBAA President Brian Humphries said, “If you look in Italy, it’s 18-percent.”

Humphries called that “disasterous.”

Concerned that the Italian parking tax may be the vanguard of a new effort by EU Member states to raise revenue on the back of business aviation, EBAA CEO Fabio Gamba said the organization was contemplating commissioning a study that would examine the effects of the Italian tax in detail. The results would “tell them, ‘don’t even think about a new tax. These are the results you are probably going to get if you do so,’” he said.

More information about Italy’s business aviation tax is available on NBAA’s web site.

Grappling With the EU’s Emissions Plan for Aviation

Of course, the challenges for business aviation in the European theater weren’t limited to those coming from individual states in the region. Throughout 2012, industry and government officials in the U.S. grappled with a proposed European Union Emissions Trading Scheme (EU-ETS), a market-based solution introduced by European officials to curb greenhouse gas emissions.

While business operators outside Europe hailed a late-year proposal by EU Climate Commissioner Connie Hedegaard to “stop the clock” on imposing the EU-ETS upon operators based in third countries, those based in Europe were not so pleased.

Hedegaard based her recommendation, which could be approved early next year, on what she perceived as progress by the International Civil Aviation Organization (ICAO) toward a globally-implemented Market Based Measures (MBM) program to curb greenhouse gas emissions. Hedegaard’s proposed moratorium on involving non-EU operators is good for one year. If, in her opinion, ICAO has not made sufficient progress toward an MBM program in that time, she warned she could start the clock ticking once again.

In the meantime, EU aviation operators were left wondering how they would compete in an environment where they would seem to be at a distinct financial disadvantage.

“Why stop the clock only for international operations?” asked Gamba. “Suddenly, [EU operators] are forced to implement a burdensome scheme, but your competitor isn’t, even though he flies to Europe. This creates further distortion of competition.”

In the meantime, ICAO formed a High Level Group comprised of representatives from 17 nations, which held its first meeting in Montreal earlier this month. The group is trying to tackle political issues that have stymied a global agreement on creation of an MBM program for more than a decade.

Simultaneously, the International Business Aviation Council met in Montreal, determined that the voice of business aviation would be heard during the formulation of a global MBM plan. Both groups will meet again in January. The clock on EU-ETS may stop early in 2013, depending on a vote by the European Council. But as 2012 wound down, it was still ticking.

More about the EU-ETS is available on NBAA’s web site.