Swiss business aviation servicer Jet Aviation is cashing in on the rising demand for private flights with its impending sale to a United States defence contractor.

Matthew Allen

General Dynamics will buy the Zurich-based firm for SFr2.45 billion ($2.23 billion) by the end of the year. The sale of business planes has trebled in the past ten years, boosting Jet Aviation's fortunes.

Jet Aviation specialises in servicing and maintaining business aircraft and provides private charter flights and a range of temporary staff for the airline industry.

The privately owned business has gone from strength to strength since it was founded in 1967 to become one of the world's leading companies in its field. It operates from 25 locations around the world and has a fleet of 200 aircraft.

The market for privately chartered business aircraft has been boosted by security restrictions imposed on commercial flights following the 2001 terrorist attacks in the US, according to aerospace analyst Nick Cunningham of Evolution Securities.

"Post 9/11, scheduled flying has become more onerous and time consuming," he told swissinfo. "Added to that, the general economic upturn has seen the emergence of more wealthy individuals."

The sale of business jets nearly tripled in the last decade, according to the General Aviation Manufacturers Association. It estimates that 1,138 aircraft worth $19.4 billion were sold in 2007 compared to 438 with a value of $6 billion ten years earlier.

"The market is not huge, but it is now significant rather than the niche market it used to be," said Cunningham.

Geographical spread

The market has traditionally been dominated by the US, but demand has risen in Europe, Asia and the Middle East in recent years. The French civil aviation authorities predict there will be around 4,000 business aircraft on the continent in 2011 compared with some 2,500 at present.

Jet Aviation is well placed to take advantage of this increased business. This year it has opened a new hangar in Basel, creating 400 new jobs, and announced that it will expand its operations in the US, Brazil, Latin America and the Middle East.

The company also entered into a joint venture to open new facilities at Beijing airport in time to provide ground services for the Olympic Games. The company has come a long way since former pilot Carl Hirschmann opened Europe's first maintenance facility for business aircraft in Basel 41 years ago.

General Dynamics revealed that it wanted to acquire Jet Aviation three years ago, but was beaten to the prize by the firm's present owners, the London-based private equity firm Permira Funds.

Warning signs

Jet Aviation does not reveal its financial figure, but General Dynamics – which manufactures Gulfstream aircraft – expects its new acquisition to generate sales of $1.5 billion next year and to grow by up to 12 per cent annually.

But Cunningham warned that the expansion of the market might not prove to be so sustainable.

"As the market gets bigger then we would expect growth to slow and become more cyclical like the rest of the aviation industry. It will be interesting to see what happens in the near future," he said.

swissinfo, Matthew Allen

In compliance with the JTI standards

More: SWI swissinfo.ch certified by the Journalism Trust Initiative