Dubai Air Show

VistaJet seeks partner to build charter business in ME region

 - November 12, 2009, 6:30 PM

The business aircraft charter market is down by at least 15 percent this year, but VistaJet (Stand E540) expects to achieve 20-percent growth for 2009, and it wants to establish a more permanent presence here in the Middle East through a local partner that would help it to connect with prospective charter clients. It is investigating options to expand into markets such as Saudi Arabia and Egypt.

Ahead of this week’s show, VistaJet chairman Thomas Flohr told AIN that the Europe-based operator is continuing to grow market share. One particular avenue is to attract existing and prospective clients of fractional ownership programs, which he condemned as a “broken” business model because of the inflexibility and a lack of transparency in contractual terms and the difficulty of securing financing to buy aircraft shares.

“By contrast, we have simplified our contracts to just four pages in recent months,” Flohr said. His goal since entering the charter sector just a few years ago has been to introduce a degree of “industrialization” to a business aircraft charter sector that, as a consumer, he found to be riddled with inconsistencies and gaps in service delivery.

VistaJet’s growing fleet consists entirely of identically equipped Bombardier business jets. It offers neatly packaged block charter (typically 100 to 200 flight hours per year) or lease terms for these aircraft, with guaranteed terms and conditions as regards availability and service standards. Under the lease program, customers buy an aircraft and hand it back to VistaJet to operate–in its livery–in the charter market with the owner guaranteed a specified number of hours per year in fleet aircraft.

Flohr argued that VistaJet has demystified business aviation and introduced the consistency of service that has long been available in the five-star hotel sector. “We said: It’s very simple, Mr. Client. Either we own the aircraft and will give you 200 hours [per year] or if you insist on owning the whole asset, we will buy back 600 hours and you have 200,” he explained. “Either way, you are free to do what you like if it isn’t what you want anymore. But the aircraft will be silver with a red stripe and we will operate it. If you want a pink carpet you need to go somewhere else, because this fleet has to be completely interchangeable. If we fly you to Dubai tomorrow and pick you up in four days, the likelihood that you are going to be on the same airplane is close to zero but you won’t notice the difference.”

Back in May 2008–some six months before the financial crisis became a global phenomenon–VistaJet made waves by acquiring Bombardier’s Skyjet block-charter program and simultaneously placing an order for up to 60 new aircraft in a deal that could be worth up to $1.2 billion to the Canadian airframer. The plan then was to have a 100-unit fleet by 2012 operating some 80,000 flight hours per year.

The marked dip in demand since then has prompted VistaJet to adopt a more gradual rate of climb but it will still have taken delivery of seven new jets this year, compared with the 14 that had been planned. Its contract with Bombardier allows it to pace the rate of deliveries, so Flohr said it will plan to take an additional aircraft every time its sales team sells around 600 to 800 flight hours.

The VistaJet fleet is a mix of Learjet 60s, Challenger 605s, Challenger 850s and Global Expresses. It also holds 11 firm orders and eight options on the Learjet 85. Fleet continuity among the Bombardier types is an important plank in VistaJet’s plan to achieve airline-standards of efficiency.

Flohr also maintains that the aircraft offer charter customers significantly greater value than comparable alternatives. For example, he claims the Learjet 60 delivers 10 to 15 percent more value in terms of distance flown per flight hour than the equivalent Cessna Citation or Hawker Beechcraft jets. He said this is because the Learjet climbs faster through commercial airline traffic and bad weather, which results in roughly six to nine additional minutes of en route flying in each flight hour. At the Learjet 60’s 465-knot cruise speed this implies an additional 46 to
70 nm flown each hour–or up to an additional 7,000 nm over the course of a 100-hour annual charter agreement, which equates to just over one round trip between Dubai and London.

Flohr also claimed that the Challenger 605 cabin offers 15 percent more space than its rival Dassault Falcon 2000. [The difference in cabin volume is, in fact, just over 12 percent at 1,150 cu ft on the Challenger versus 1,024 cu ft on the Falcon.–Ed.] Similarly, VistaJet touts the Global Express as having 15 percent more cabin space than the Gulfstream G550. [In fact, there is 17-percent more cabin volume, with 1,960 cu ft versus 1,669 cu ft.–Ed].

According to Flohr, the worst of the uncertainty generated by the financial crisis is now over and people are starting to show more confidence in planning charter flights. However, he predicted that consumers will no longer make imprudent buying decisions and implied that, more than ever, they will be looking for transparency and value from charter operators.