After working to put down roots in Europe for the best part of a decade, Signature Flight Support now appears to be gathering some real momentum with its recent acquisition of facilities in the UK, Ireland, Belgium and Greece, as well as the opening of a new base at Toulon-Hyéres Airport in the south of France. The European chain now includes some 15 full-service FBOs and an executive aircraft handling presence at almost 20 more airports.
According to Beth Haskins, president and CEO of the Orlando, Fla.-based group, these moves are part of a concerted effort to build a significant network of FBOs in Europe, and further acquisitions and expansions can be expected at the continent’s busiest business airports. “We are working on several deals at a time now,” she told AIN.
In mid-September Signature completed the purchase of a controlling stake in Greek FBO group Athens Aviation Services for $1.8 million (€1.5 million). Athens Aviation Services runs a handling and flight- planning operation at Athens International Airport, which this summer opened a new general aviation terminal in time for the Olympic Games. It also provides handling and support through a network of agents at 19 other Greek airports, including Heraklion on the island of Crete. The company is active in airline handling.
Haskins explained that the Greek operation will now trade under the name Athens Aviation Services–Signature Flight Support. Signature has adopted the same naming formula with its jointly controlled operations in other parts of the world, such as the Hong Kong Business Aviation Centre and the Lider-Signature bases in Brazil.
In August, Signature spent $20.5 million (€17.1 million) to buy the Execair chain of FBOs from Britain’s John Menzies group. The package includes bases at Aberdeen, Glasgow, Edinburgh, Birmingham, Cardiff, Inverness, East Midlands and Bournemouth in the UK, Dublin in Ireland and Charleroi, near Brussels. The deal did not include Menzies’ Execair bases at Prague in the Czech Republic and Shannon, Ireland, since these operations are involved primarily in airline handling.
Since Signature took over the Execair facilities, Execair staff have been participating in Signature’s training program and have now been issued company uniforms. Signature Flight Support signage was due to be in place at all the facilities by October 11.
Signature is now making further investments to equip its newly acquired FBOs to the standard of the company’s existing European bases at London Luton, Southampton (on the south coast of England), Paris Le Bourget and Toulon.
Signature Flight Support opened its new FBO at Toulon-Hyéres Airport in September, having completed construction and received the necessary permits that same month. The development took much longer than intended due to legal wrangles with local officials. The facility consists of a 2,410-sq-ft building and ample apron space.
In fact, since January, Signature has been providing executive handling from Toulon’s main passenger terminal. The group’s goal is to offer an alternative for business aircraft operators who might otherwise use airports such as Nice-Cote d’Azur, Cannes-Mandelieu, Marseille and Le Castellet.
Extending the Company’s Reach
The Signature chain now seems to be gaining some traction in the European marketplace, having initially struggled to find its feet. In April 1997 it opened an expensive purpose-built FBO at Switzerland’s Zurich International Airport in partnership with Zimex Aviation. Despite being well-equipped, the FBO struggled to turn a profit in the face of competition across the ramp from Jet Aviation. Three-and-a-half years later, in October 2000, Signature pulled out of the location.
Also in 2000, Signature purchased the Lynton group’s London Luton FBO (which had formerly been Magec Aviation). It soon acquired Osprey Aviation, thereby adding Southampton to its European holdings.
Last year, Signature opened a new 73,000-sq-ft hangar at Luton. The company has also invested in 12,000 sq ft of adjoining office accommodation on three floors available for based operators, a 6,000-sq-ft airside storage area and a sizable ramp area between the new structure and its main lounges and operations department. The Southampton base received a new crew rest area around the same time.
In the same year, Signature withdrew from the business aircraft maintenance business in the UK, first selling its Luton engineering shop to Gulfstream to serve as the airframer’s first factory-owned service center in Europe and then disposing of the former Osprey repair shop in Southampton.
Haskins told AIN that Signature’s London and Paris bases have had “two very good years of growth,” with traffic levels having increased to a similar degree at the former Execair facilities at Edinburgh, Glasgow, Birmingham and Dublin. While the other Execair bases have not flourished to quite the same degree, she said that the company is “very optimistic” about future business at Inverness, Aberdeen, Charleroi, Bournemouth, East Midlands and Cardiff. Overall, Signature expects to see greater business aviation growth in Europe over the next few years.
Signature Predicts Growth
That cash will be available for further Signature Flight Support expansion in Europe was evident from the most recent financial results from its UK-based parent group, BBA. In August, the public company reported improved figures for the first half of this year, with group-wide profits-before-tax for the six months to June 30 up by 7 percent to $118 million (€98.3 million). In fact, the profits would have been about $7 million (€5.8 million) higher (representing a 14-percent increase) had it not been for the significant weakening of the U.S. dollar since the first half of last year.
Revenues at BBA’s aviation division (which include Signature Flight Support) were virtually unchanged at $700 million (€583.8 million) for the first half of this year, but, taking exchange-rate fluctuations into account, they effectively grew by 8 percent (representing 6 percent organic growth in this side of the business). Underlying operating profits (using comparable exchange rates for the first half of 2003 and 2004) increased by 11 percent to $71 million (€59.2 million), with operating margins improving from 9.9 percent to 10.1 percent.
Fuel volumes sold through Signature Flight Support bases in the first half of this year were up 12 percent on those in the same period last year. Fractional ownership customers bought 28 percent more fuel and Signature fuel sales in Europe grew by 40 percent–due largely to a recovery in transatlantic business aviation traffic.
Ensuring consistency in service levels is Signature’s overriding goal in Europe, where service and infrastructure standards can vary widely. “We have an opportunity to raise the level of service expectations,” Haskins said. In her view, U.S. customers generally have higher expectations of FBOs and so Signature feels well placed to raise the bar in Europe.
Among the challenges facing the group are varying (and in some cases elevated) cost structures at Europe’s main airports. Fuel arrangements at European airports can also be somewhat complex, with FBOs not necessarily having direct control over jet-A supplies.
Commenting on the European FBO industry’s practice of unbundled service fees, Haskins said that she found this approach “refreshing” and added that it is still unclear whether this or the U.S. bundled pricing model (based on fuel sales) will prevail.
At face value, Europe’s á la carte pricing formula is more transparent. However, some operators complain that muddled billing arrangements leave them confused about what exactly they are paying for. In Haskins’ view, the array of high airport fees can obscure the picture. She said that it is vital for FBOs to clearly communicate to clients the source and scale of these charges.
According to Haskins, regulations for policing national borders–even between the theoretically borderless European Union states–continue to complicate airport access. She said that business aircraft operations would be more straightforward if European authorities would finally adopt common flight and security procedures.
Addressing these challenges for Signature Flight Support is David Best, who earlier this year was appointed the group’s first managing director for European operations. He was formerly a senior executive with Menzies’ Execair chain and so knows these businesses intimately and has a sound understanding of the wider European FBO industry.