LABACE, the Latin American Business Aviation Conference & Exhibition, is a success, at least in terms of scale, but the show is not without its growing pains.

Cosponsored by NBAA and the Associação Brasileira de Aviação Geral (ABAG, the Brazilian association of general aviation), it is a modest exhibition, especially when compared with the much larger EBACE and the NBAA Convention.

This year, 4,971 visitors passed through the gates, an increase of 1,236 over last year’s attendance, and aircraft at the static display rose slightly from 19 to 21. However, the number of exhibitors dropped from 92 last year to 87 this year, and the number of booth spaces decreased from 211 to 181.

Event organizers moved the aircraft static display to a more spacious ramp at Congonhas Airport, making the display more easily accessible to visitors. “A definite improvement,” said a Bombardier spokesman, who noted that at the first two shows “there was a lot more activity in terms of customers at the airport than at the exhibit hall.”

The number of serious customers visiting the static display was not lost on Bombardier and the number of other aircraft manufacturers that reduced the size of their displays in the exhibit hall this year in favor of a greater presence at the airport. Bombardier, Gulfstream and others went as far as to erect chalet tents adjacent to their aircraft.

Aviation Continues To Grow in Brazil

Using Brazil as an example of improved economic growth throughout Latin America and the need for business aviation, ABAG president Anderson Markiewicz noted at the opening general session that Brazil’s exports increased 32 percent to $96.5 billion from 2003 to 2004, and its trade surplus widened to $33.7 billion from $24.8 billion.

“Brazilian companies are expanding abroad and the need to be able to reach a larger number of destinations [is greater] than ever before,” he told the audience at the opening general session.

But he also pointed out that despite the climate of optimism, there remain a number of factors that inhibit the growth of business aviation in many, if not all, Latin
American countries. Those factors include:

• currency devaluations (business aircraft are sold in U.S. dollars).

• the rising cost of fuel, which has increased five-fold since 2000.

• economic and political instability.

• bureaucratic inadequacies at customs stations that result in problems with parts shipments.

• high import taxes.

• lack of government support of tax incentives such as the bonus depreciation allowance recently extended in the U.S.

• saturation of available aircraft storage at airports.

He also noted the increase in international travel and a growing trend toward larger business jets in Latin America. The super-midsize fleet, he said, has increased 18 percent since 1999.

Business aircraft travel in Brazil, he said, is a necessity, not a convenience. He pointed out that in the past 10 years Brazil has lost 584 airline routes, leaving only 335 routes active. “Only 2 percent of Brazil’s 5,550 municipalities have commercial aviation, and there are 2,600 municipalities that can be reached only by charter companies or private aircraft,” he explained. “In parts of Brazil, you fly or you don’t go.”

Skeptics, said Markiewicz, forecast an age when the instant contact via the Internet would reduce demand for aircraft. This has not proved true, he concluded, because, “there is still a need for eye-to-eye contact and a handshake when the deal is made.”

Catching the Momentum

At the general session, NBAA president Ed Bolen spoke to the theme of LABACE 2005–“Catch the Momentum.” The momentum of which he spoke was the growth in business aviation worldwide in the recent past. Last year, he noted, business aircraft billings increased 19 percent and aircraft shipments were up 10 percent.

And he quoted the most recent industry forecasts by Honeywell and Rolls-Royce. Honeywell, he said, predicted the purchase of more than 8,000 new aircraft between 2004 and 2014. Rolls-Royce is only slightly less optimistic, forecasting more than 15,000 deliveries through 2023.

Equally encouraging, he said, is the increase in international travel by the business aviation community. He said Universal Weather & Aviation figures showed a 30-percent jump in international activity in the past year and that Latin America was one of the top destinations.

With an eye to increasing government support, LABACE featured as one of its speakers Deputy FAA Administrator Robert Sturgell, who asked listeners to remember Brazilian aviation pioneer Alberto Santos-Dumont, who in 1901 flew his hydrogen-filled, gasoline-powered airship from St. Cloud around the Eiffel Tower and back to St. Cloud. It was Santos-Dumont, said Sturgell, who urged mankind to master what the Brazilian pilot called “the aerial ocean.”

The tradition of Santos-Dumont was present at LABACE, said Sturgell, pointing out that the show is more proof that “business aviation is alive and well in every corner of the world.”

He also took the opportunity to promote more international cooperation with regard to fractional ownership operations, noting ongoing talks on the subject by Canada, Mexico and the U.S.

Growing Pains and Solutions

While the official public face of LABACE was one of optimism, the mood among exhibitors was somewhat less enthusiastic. Some found the show, in its third year, failing to fulfill their expectations.

One major business aircraft manufacturer noted that the third year for a trade show was the “make or break” year, and this year was looking like a “break” as far as his company was concerned.

Asked if he expected to attend LABACE 2006, a U.S. interiors shop representative groaned. “It’s a matter of return, and the return isn’t here,” he said.

The organizers are aware that something is wrong, but NBAA president Bolen stopped short of saying next year’s show might be cancelled. Asked if LABACE 2006 is a lock, he replied “It certainly appears to be.” But on the other hand, he pointed out that in terms of its agreement with ABAG, NBAA is not locked in as a sponsor of LABACE.

Certainly ABAG and NBAA are looking for ways to improve the show, among them an extensive, post-show one-on-one survey of exhibitors, consideration of solutions that include other cities to host the show, or even partnership with the FIDAE Chile show.

Investing in Latin American Market

While exhibitors, including some OEMs, may be expressing dissatisfaction with LABACE, there seems to be little doubt that they see Latin America as a viable market.

Hometown player Embraer brought the biggest news, announcing plans for two new airplanes–one a very light jet and the other a medium-size business jet. According to company president Mauricio Botelho, both airplanes will be of a new design.

Jet Aviation announced at the show that it will invest $8 million to $10 million to install an FBO at Viracopos Airport in Campinas, about 65 miles from São Paulo.

Pilatus, despite weak sales in Brazil, revealed at the show that OceanAir Táxi Aéreo will be its new sales rep in Brazil. For its part, OceanAir has purchased a new PC-12 to be used in air-taxi service and as a demo aircraft for potential customers. Other aircraft manufacturers have seen a growing market in Latin America, and Brazil in particular, where the economy appears to be improving steadily.

Bombardier announced that OceanAir is now an authorized service center for its Learjet line, with operations to begin this spring. The Canadian company also brought its new Global 5000 to the static display, along with the super-long-range Global Express. The company also revealed it had recently sold two Global 5000s in Latin America–one to a multinational company in Honduras and another to a Brazilian corporation.

While declining to reveal exactly how many, Cessna said it already has customers in Latin America for its new Citation Sovereign. Deliveries this year in Brazil include two Citation Xs and a Citation XLS. Of the 280 business jets in service in Brazil, approximately half are Citations.

Dassault, which has 15 Falcons operating in Brazil, was in attendance at Congonhas Airport with its new Falcon 2000EX EASy, and John Rosanvallon, president and CEO of Dassault Falcon Jet, added that the company has orders from Latin American customers for three Falcon 7Xs. Dassault also named Sergio Ribeiro the first field service representative based in Brazil.

Raytheon Aircraft was present with a balanced static display that included a King Air 350, Premier I, Hawker 400XP and Hawker 800XP. According to Marcos Nogueira, regional sales manager for Latin America, Raytheon has a 38-percent market share in the region. The Brazilian civil aviation authorities have also approved Raytheon Aircraft Services Tampa as a Brazilian Repair Station for the entire Raytheon Aircraft line.

After delivering its first TBM 700 in Latin America, to Brazilian sugar giant Usina Coruripe, EADS Socata showed the airplane at the static display.