The fractional ownership market is growing, and having gained a foothold in North America and Europe, it is now truly developing as an emerging market in Asia. In keeping with this trend, aircraft fractional ownership has risen from just 548 shares in 1996 to more than 7,000 by 2004.
The absence of a single dominant participant and low market penetration rates, make the fractional ownership market highly promising.
China in particular holds enormous potential as its booming economy brings in many potential business executives from all over the world.
Unlike the commercial aviation industry, the Chinese Government is more lenient in its policies for joint ventures and partnerships in the fractional ownership sector.
“Led by easing regulations and growing interest in the Chinese market, some of the major fractional ownership and charter companies are expected to enter Asia through joint-ventures or mergers and acquisitions in the next ten years,” says Frost & Sullivan Industry Analyst Kirti Timmanagoudar.
“However, tighter regulations, the lack of good infrastructure, the lack of aircraft financing companies, and the absence of fixed base operators (FBO) remain as challenges for potential entrants in the Asian market.”
In Europe, the formation of the Common European Market and the opening of Eastern Europe have fueled the growth of the fractional ownership market.
Europeans prefer leasing to owning business aircraft and, block charter programs, which do not bind the customers to buy an aircraft or involve them in a long-term obligation.
Nevertheless, though the North American market is well established, it still holds good growth prospects.
Considering the 15,000 flight departments maintained by U.S. corporations and the thousands of potential customers who fly first-class without prior booking, there remains a large, yet untapped, customer pool.
“Overall, the global fractional ownership market seems to be witnessing growth, however lack of profitability is the biggest concern for the future of the market,” explains Timmanagoudour.
“Although Frost & Sullivan estimates that none of the major fractional ownership companies made profits in the first nine months of 2004, the encouraging factor for the industry is that most of the losses were a result of heavy initial investments in newer markets such as Europe and Asia.”
World Fractional Ownership Market: Investment Analysis and Growth Opportunities, a part of the Financial Benchmarking & Analysis in the Aerospace Industry, details current trends, competition, market drivers and market restraints in the world fractional ownership market.
It also provides a near term outlook for various regional markets and highlights emerging growth opportunities in the world fractional ownership market. Interviews are available to the press.