10 MARCH 2014

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Article from BTNews 10 MARCH 2014

ON TOUR: Future of Business Aviation conference

It was a tale of two cities at EVIP’s first Future of Business Aviation conference held at the new Hilton Terminal 5 last week writes Alison Chambers.

On the one hand we had the ebullient New Yorker Kenny Dichter, Chairman of a brand new US fractional company, talking up the benefits of his venture Wheels Up, a business model centred around the venerable King Air – for which he has ordered 105 latest model 350is for his members.  His aim is to more than double the broad base of business aviation industry and refreshingly, he brought his whole family, including mum-in-law along to his presentation.

Martin Lener, Managing Director, Tyrolean Air ServicesOn the other was Martin Lener, Managing Director of Tyrolean Jet Services who, to the audience’s dismay, showed up a slide of a business jet with cobwebs around it to highlight the fact that utilisation was significantly down in Europe.  Yet his company is one of the lucky ones, not least because they have a contract to fly the British Royal family aboard their Airbus ACJ.

In Europe, as we heard at the Corporate Jet and Helicopter Finance conference this month, there are 300 business aviation operators and over 85% of them have just three or less aircraft in their fleets.  No wonder the whole industry is consolidating.  Lux Aviation has acquired UniJet of France to become Europe’s third largest business aviation group with 60 aircraft.  This is hard on the heels of its purchase of Abelag 18 months ago and more recently, Fairjet of Germany.  Eurojet in Birmingham is looking for a new owner.

Expanding Oxford Airport based charter company Hangar8, which acquired International Jet Club of Farnborough 18 months ago has confirmed its intention to join forces with one of the industry’s biggest air charter brokers, Air Charter Services (ACS).  David Savile, Non-Executive Director on the Hangar8 executive board will be able to lend good advice observers noted, calling on his experience with the former Air Partner Private Jets.

There are bright spots in the UK.  Fly Victor, set up by entrepreneur Clive Jackson bemoaning the lack of scheduled services out of Mallorca, claims to be doing rather well.  It now boasts 5,500 high net worth individual members who have just helped the company raise £5.5m to take the business into new territories including Russia and Central Europe.  Next year they take on the USA.  Mike Ryan, Head of Commercial Operations, describes it as the Remington effort.  The model is successful he says because it is fully transparent.  Members see online which operators they are going to fly with, aircraft type and cabin layout.  All are bona fide AOC operators.  Fly Victor works with 110 established operators, including Marshall-owned FlairJet and London-based LEA, and has call on 600 aircraft types from a Cessna Mustang to an Airbus ACJ. “You wouldn’t book a hotel if you didn’t know the name of it would you?,” he said, highlighting that transparency has to be crucial for the future of the charter industry.

Alex Berry, Global Sales and Marketing Director, Chapman Freeborn“We are competing for the same business,” stressed Alex Berry, Group Sales and Marketing Director of Chapman Freeborn.  “We are talking here about the future of air charter, but it is not so complex today.  What the industry really needs to do is to refresh the customer pool.  What are we actually selling?

It’s not champagne, it’s not fancy catering it’s not luxury.  Some of the aircraft we charter aren’t fancy at all.  The Mustang doesn’t have a toilet.  It is the one finite commodity – time.  Buying your life back.  it is time for all of us in the industry to get more people educated on the merits of business – whether they fly NetJets,  PrivateFly, Fly Victor, the numerous charter operators.  We need to be challenging that anyone with significant wealth should have their head examined if they fly Ryanair or easyJet again.”

Transparency is what marketing supremo American Kenny Dichter is about clearly.  Having successfully made his name with Marquis Jet, where he made US$1.4bn of sales in confirmed flight hours, he is positioning Wheels Up as a private member’s club.   The initial membership fee is US$15,750, followed a year later by the first annual membership fee of US$7,250. Kenny Dichter, CEO of Wheels Up, plans to bring his fractional business to Europe within 18 months Then the per occupied flight hour cost is US$3,950 for the first hour and a pro rata percentage charge on any portion of the next hour.  This includes everything, except for certain designated higher charging airports like New York’s JFK, where the additional cost is passed on to the member.  His goal is to obtain 1,200 and 1,400 members in the first year.  Included in the membership is Wheels Down where members enjoy access to events like the Masters (we have Sir Nick Faldo joining us there he proudly told delegates), the Oscars, the Super Bowl where they are entertained in VIP Wheels Down lounges.  “We are attacking the corporate market with this message – CEOs like us, but CFOs love us,” he said.

Squarely on the future theme Richard Lugg, CEO of Hypermach, captured the delegates' imagination as he presented his Sonic Star concept.  Lugg is passionate about aviation and is Richard Lugg, Chairman and CEO, Hypermach, exclaiming the virtues of supersonic business aviationfulfilling a long held wish to design and develop a supersonic craft.  Seven years in development a small but focused team are redefining the jet engine to create an aircraft that can fly Dubai to New York in the time it takes to watch an inflight movie.   Lugg has a heritage of speed having worked in military jet development and for NASA on the space shuttle.  He sees things differently, a vision that enables him to create a propulsion system that will drive a supersonic aircraft.   The first three aircraft he plans for Hypermach to build so removing risk for the eventual airframer – and he is already in discussions with an interested party.  Farnborough 2016 should see the first prototype in the form of an unmanned drone demonstrating the future of flight.

 
Two friendly business aircraft rivals Sean McGeough, President, Nextant and Scott Plumb, VP Sales for EMEA, Beechcraft, shared a platform to talk about light jet and turboprop markets.  Nextant is applying its “reimagined, rebuilt, reborn” philosophy to the Beechcraft C90, although Beechcraft is not so enamoured by the fact that its aircraft require “reimagining”.
 
Richard Coe, Managing Director,- WingX, says that emerging markets are driving business jet salesRichard Koe, CEO of WingX, highlighted the relative opportunity for light jets in emerging markets but acknowledged the continuing predominant preference for large aircraft in RoW.  Lead markets for business jets are Turkey, Nigeria, China and South East Asia.  He also concluded with analysis of the US market, suggesting it to be the most interesting re-emerging market, with the influential come-back of very light jets set to provide the benchmark for future light aircraft business models worldwide.
 
A long and fascinating day.  Will supersonic executive travel come in our lifetime?  Probably.  http://evaint.com
 
Alison Chambers – Emerald Media  www.emeraldmedia.co.uk

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