Luxaviation's Acquisition of Unijet Signals consolidation in European executive charter

 - February 5, 2014, 12:35 AM
With its recent acquisition of Le Bourget-based Unijet, Luxaviation gains access to one of Europe's premier business aviation airports.

Continuing an expansion plan it launched in 2011, Luxembourg-based Luxaviation has acquired Paris Le Bourget-based Unijet. Among the expected benefits for Luxaviation, access to the continent’s premier business aviation airport and fleet growth rank first.

“We chose Unijet because it has a good reputation, has gathered a lot of experience–notably through CEO Dannys Famin–and it is at Le Bourget,” Luxaviation CEO Patrick Hansen told AIN. He added it is difficult to find operators that are financially sound and have a fleet of significant size. Luxaviation expects the acquisition to yield increased revenues, among other favorable outcomes.

Luxaviation took over Unijet through Brussels-based Abelag, which it bought last year. In 2011, it took over Germany’s Fairjets. Through the acquisition process, it now has four AOCs. Hansen hopes that the consolidation will yield more satisfactory negotiations with suppliers. However, each company will retain its identity and the ancillary activities such as FBOs and maintenance shops.

Luxaviation is also betting on the flexibility of an expanded and diversified fleet that will now number approximately 60 aircraft–15 of which are owned by the group. One third are long-haul business jets. Unijet brought in half a dozen aircraft, ranging from a Citation CJ3 to a Falcon 7X.

“We are going to grow to 80 aircraft quickly,” Hansen anticipated. This will be via other company acquisitions, aircraft purchases and the signing of more management contracts. “We are focusing on midsize and large-cabin jets–everything bigger than a Citation Excel,” Hansen said.

Rationalization of Service Offerings

Luxaviation’s purchase of Unijet provides one example of the trend toward consolidation among European executive charter operators. Such consolidation is necessary, as the industry is still too fragmented, according to EBAA CEO Fabio Gamba.

Gamba and Hansen agree on the fact that a small operator faces a competitive disadvantage in today’s environment. One of the critical points is the ability to cope with the ever-heavier burden of regulation. Nonetheless, the industry has remained fragmented. As an example, Gamba said that in 2009 there were 800 operators in Europe, 85 percent of them with three aircraft or fewer. And the situation has hardly improved, according to Luxaviation’s estimate for 2013.

To become resilient, some companies have realized they need to grow, “to have some fat to survive” in weak traffic periods, Gamba said. The 2008 downturn hit hard those companies that were too small and not mature enough to be aware of it, he explained.

The need for resilience has also spurred the creation of operator alliances. For example, AirClub was formed in 2012 and now offers 127 aircraft from nine operators in Europe, a significant strike force. An alliance is more flexible but less integrated than a single company assembled through mergers and acquisitions, Gamba noted.

In the near future, he predicted, operators with only a few aircraft will face extinction, while the proportion of operators with at least 20 aircraft will increase.