United’s Avolar project to begin ops this month

 - October 3, 2007, 4:39 AM

Avolar, a stand-alone subsidiary of UAL Corp. created in March to launch a new business aviation venture, has already acquired three business jets as part of the fractional- ownership core fleet and expects to begin flying this month.
Avolar president Stuart Oran told AIN on October 15 that the Chicago-based company expected to receive its Part 135 certificate “in the next couple of days” and will begin operations this month with two pre-owned Falcon 50EXs. In terms of shares, added Oran, Avolar is already actively marketing its fractional program and has the equivalent of three or four aircraft “spoken for.”

Oran told AIN that an order for “smaller aircraft” will be announced in the near future and the first will be delivered in time for Avolar’s official grand opening on April 2.

The company has already placed a firm order for a mix of 12 Gulfstream IV-SPs and Gulfstream Vs, and holds options for an additional 23 Gulfstream Falcons. Delivery of the first Gulfstream is expected in May. Avolar has a separate tentative agreement to acquire a total of 100 Dassault Falcons valued at about $2.5 billion.
Aircraft deliveries are expected to continue throughout next year, at which time the fleet will total 22 business jets.

But the launch of Avolar has not been smooth. UAL Corp.’s United Airlines subsidiary may receive some $802 million from the $5 billion in federal funds earmarked for airline relief following the September 11 terrorist atrocities, prompting an angry attack by Rep. Peter DeFazio (D-Ore.). Citing the need for federal relief funding and the decision by United Airlines to lay off some 20,000 workers, DeFazio described the decision to continue with Avolar’s launch as “outrageous.”

Oran, however, noted that not only had UAL already allocated more than $250 million to the company in May, but “only a small portion” of that money has been spent. And he further noted that Avolar is currently seeking equity position financial investors in an effort to “relieve some of the UAL cash burden.” He also pointed out that with the airlines losing passengers to business aviation, that it only made sense to create a fractional-ownership program to fill the needs of those travelers.

Aware of the effect of staff cutbacks on long-time United employees, Oran said Avolar is giving hiring preference to those laid off. “We are very fortunate to be able to offer these experienced and skilled individuals places at Avolar,” he said. The company is seeking pilots, middle managers, and flight attendants with previous business aviation experience. The fractional program will eventually total 200 aircraft, more than 1,000 pilots and some 250 support personnel.

Oran said Avolar will be a Part 91 operation, but that its fleet aircraft would be on the company’s Part 135 certificate to maximize income potential through an on-demand charter program. The company is also seeking a Part 121 certificate that will allow establishment of a business jet shuttle, and it expects to establish “links” between United Airlines mainline commercial service and business aviation products outside the U.S.

Avolar’s upper-management ranks are now complete and its most recent employee is indicative of the company’s emphasis on “a high-quality, premium product,” said Oran. As senior v-p of owner experience, Myra deGersdorff will be responsible for hiring, training and monitoring, with regard to customer-service activities. DeGersdorff previously managed the Pentagon City Ritz Carlton in Arlington, Va.

While Avolar is a stand-alone company, Oran has emphasized that one of the keys to success is its association with United Airlines. Early studies, he said, showed the value of the public perception of a fractional-ownership program with links to a major commercial airline. When asked to choose between an existing fractional program and a new fractional program that delivered the same level of service but with links to a major airline, Oran said 74 percent said they would sign with the latter program.

Avolar had planned to introduce itself at the September National Business Aviation Association (NBAA) Convention in New Orleans. With the convention postponed until mid-December, Avolar now plans a more subdued presence “with the new display stand but with reduced floor space.”