The business of succes

Corporate air travel is big business in Europe but we could be entering turbulence as the recession takes hold. To get a better view on the industry and where it is heading, we speak to Dave Jackson, CEO of 328 Support Services GmbH.

BM. Can businesses justify VIP/corporate aircraft in today’s new economic climate?
Dave Jackson. This is not really a new question, but is a question organisations should be asking themselves all of the time. Today’s global recession has raised the profile of the question again, as many companies “lay off” employees in a bid to restore their trading position – any sign of a frivolous or unjustified expense is being examined, amongst those the corporate aircraft.

We believe the case for efficient use of point to point or shuttle travel remains as strong as ever, in fact more so as some regional operators cut back on their routes, forcing certain clients back to a less efficient hub and spoke travel pattern. In the current economic climate rapid communication with employees, clients and other interested parties is best done face to face and this can  be done efficiently and cost effectively with a corporate aircraft especially in a multi site/multi location environment. Having said that there are expensive and less expensive ways to get from A to B to C and back to A.

New corporate aircraft are not a necessity, used aircraft or used and refurbished aircraft offer great value. Travel within regions e.g. Europe, US, Middle East etc. can also be achieved very cost effectively in high specification refurbished aircraft coming from the regional airline sector such as the BAE 146, CRJ and of course the Dornier 328. These aircraft have been built specifically for heavy duty regional use, are well supported and reliable, with a ready stream of qualified pilots and mechanics.

An ex Regional aircraft with full size cabin and a beautifully refurbished “bespoke” interior can be far more cost effective than a glamorous “pocket rocket”. Given crowded airspace and tight airport slot positions, speed is not always an advantage, certainly not for 1-2 hour flight sectors. So in summary there is still very much a place for the Corporate aircraft and it can  fully justify its existence and future use.

BM. What is the future for long haul, such as intercontinental corporate jets?
DJ. This is not an area we at 328 Support Services are heavily involved in, however I can offer a personal view. Beyond the need for head of state or Government delegations with particular security needs – it is hard to see how todays full service Business Class and First Class service offering from the major airlines can be beaten on a cost per kilometre/mile basis.

The major airlines continue to support all of the most important intercontinental destinations and airlines such as Lufthansa and Emirates continue to develop that network. I believe international long haul on a major airline, perhaps complemented by a local Corporate Jet network, such as NetJets etc. is probably a more cost effective solution, certainly in the case of organisations with multiple travel requirements but perhaps only one or two aircraft. Within a region corporate aircraft can be repositoned much more quickly and cheaply, dead legs are less costly and on occasion could be dovetailed with scheduled airlines or a “by the hour” provider.

BM. Will ‘fractional’ ownership replace “by the hour” usage models in the future?
DJ. We believe both have a place and certain advantages dependant on specific circumstances.
As I said earlier all forms of spend, especially if it might be classified as “ostentatious” will be clamped down up, no one wants to own up to being the guy responsible for the $25 M corporate Aircraft sitting on the balance sheet and doing 5 hours a month flying !! However, there are  some great value propositions available now, and again, there is a case for the Corporate aircraft, either shared amongst geographically co-located businesses or individuals. The fractional model works especially if supplemented by ad hoc charter.

The “by the hour” model exemplified by the likes of NetJets, avoids the balance sheet challenge and for low time users is probably still the best way forward. The answer to both points is somewhat based on what you are comparing to. If you have a low cost, well specified or refurbished ex Regional Jet it could be that over a reasonable lifetime it is cheaper to “own” or “part own” than rent.

BM. Do you believe the new “Part M” regulations are fully understood by the Corporate World ?
DJ. Where aircraft are part of major corporate fleets, for example in the aircraft charter business, and where they regularly operate in the EASA world – I would say the regulations are fully understood.

However, where the question becomes more difficult to answer is for the single aircraft fleet or small fleet owners, either private or corporate. This is particularly the case where held in an offshore trust, by banks or others. Here the owners or trustees acting on their behalf are divorced from the day to day operating world and may not realise fully or even be aware in “real time” of the risks to insurance cover or of airworthiness invalidations, by not being fully up to date with Airworthiness Directives for example. We have recently formed a Joint Venture – called Jet CAMO to deal specifically with these issues in offshore jurisdictions. It is important however that operators and owners understand at all times and in “real time” the status of their aircraft.

BM. Is there a place for a VIP turboprop?
DJ. Until recently, turboprops were starting to fall out of favour. I have boarded flights in the US where they have actually apologised beforehand because it is a turboprop. I think that has changed and therefore the concept of a VIP turboprop certainly within Europe, where there are not major speed advantages that can be achieved on journey times of say an hour or so due to distance, air traffic restrictions and so on, it is hard to separate a jet from a turboprop. However, there is a different cabin noise footprint and certainly a different ‘image’. We definitely see a tubroprop perhaps in a business class/corporate shuttle role more than say a full VIP configuration. Having said that, we have an enquiry for a turboprop Dornier 328 VIP right now – so maybe the turboprop really is back.

Dave Jackson has over 25 years experience in the aviation Industry since graduating with BA (Hons) in Marketing (Engineering) in 1984. His background has been sales and marketing and general management with a strong emphasis on business improvement and turnaround within global multi-division/multi site-environments, with companies such as Lucas Aerospace, Aviall Inc., and Hunting PLC.