Six years after the business aviation sector suffered from the ripple effects of the sub-prime mortgage crisis, the industry in Europe has still not fully recovered. Following a strong bounce back to near-pre-crisis levels, the number of departures has been in a steady decline. Since 2011, top business aviation airports in Geneva, Zurich and at Paris-Le Bourget have lost 5-10% of their executive jet traffic.

After a promising start in 2014, charter operators have been severely affected by the conflict between Russia and Ukraine. According to Eurocontrol figures reported by the European Business Aviation Association (EBAA), the number of daily flights in Ukraine is 71.6% lower than a year ago.

Economic sanctions imposed on Russia have taken a toll on the elite in that country, who had been a key customer group for Western European providers. Because of the weak ruble, flights are now 50% more expensive. So jaunts to Paris, Munich or Berlin and luxury trips to the Cote d’Azur have become less affordable and therefore less frequent. Traffic between Russia and Germany is down by one-third, and the number of business jet flights between Russia and France is 26% lower on a year-to-year basis. “The effect can be noticed across Europe, because Russian-owned business jets are often registered in Europe and operated under a European air opererator certificate (AOC),” notes Tobias Lagergren, data analyst at Avinode.

Mid-size and super-midsize jets like the Citation XLS, Challenger 300 and Legacy 600, popular in these markets, have been hardest hit. While EBAA reported 0.7% more flights in 2014—the first signs of growth since 2011—it is safe to assume that revenues have shrunk again; there are no official statistics.

One reason many operators are struggling is that the fleet has been growing at an annual rate of 4-7%. Assets are heavily underutilized. EBAA/Eurocontol data indicate the number of flights per aircraft has declined from 42 to just 26 per year since 2008. This, however, includes corporate aircraft.

Another pressing problem is the high number of gray-market charter flights, which are run by aircraft owners/operators who offer illicit flights without any authorization. According to the EBAA, 14% of all movements in Europe are illegal. The practice is rife in Russia, Ukraine and Eastern European growth markets as well as in soft regime countries like Belarus. But it is a significant problem in Germany, France and the U.K. as well.

The overall situation is still pretty dire, says Bernhard Fragner, CEO of Linz, Austria-based Globe Air, which operates a fleet of 12 Citation Mustang very light jets. “However, March and April have been surprisingly good.” EBAA figures and other sources confirm the positive trend. In key markets like France, Spain and the U.K., demand is clearly up. “We see Italy coming back as well,” says Fragner. On the other hand, traffic in Germany is still down, despite the strong economy.

One harbinger of hope is that new customers are finally discovering business aviation. “We are seeing more and more requests from former airline customers,” says Fragner. As European mainline airlines fight for profitability, there is a clear trend toward bigger aircraft and fewer frequencies on regional routes. So companies without easy access to a major airport are realizing that an increasingly high portion of their business travel can’t be done as a day trip. Fragner notes, “We are able to convince more of those customers that the higher price of a charter jet makes good business sense.”

The upside of this difficult economic environment is that it has sparked consolidation in the highly fragmented industry. In 2013 just 2.1% of all 427 operators in Europe had a fleet of more than 20 aircraft; 80.2% had 2-5 aircraft. Luxaviation is one of the companies actively driving consolidation. After having received its own AOC in 2009, the company has since acquired operators in France, Germany, Portugal and the U.K., bringing together a fleet of close to 100 jets, which creates a significant potential for lowering costs through economies of scale.

While charter operators in Europe are struggling, manufacturers are doing exceptionally well. On Feb. 6, Dassault celebrated the first flight of its new long-range Falcon 8X. The tri-jet—an offshoot of the successful 7X—is planned to enter service in the second half of 2016. Dassault initially plans to build the aircraft, which is priced at about $60 million, at a rate of three per month. The smaller Falcon 5X is expected to take to the air soon. 

Swiss Pilatus, too, is enjoying an upswing. Last year it delivered 66 of its single-engine PC-12. When the niche specialist introduced its versatile PC-24 jet at Ebace 2014, the company was able to announce 84 orders within just two days. Production is sold out until 2019.