London Executive Aviation has been one of the stalwarts of Europe’s private charter sector for almost two decades. Trading conditions have never been tougher than in the last few years, but the UK firm is surviving by sticking to its core values, as founders Patrick Margetson-Rushmore and George Galanopoulos told AIN in an interview prior to this week’s show.
Since starting in 1996 with a single piston-engine aircraft, London Executive Aviation (LEA) has gradually grown its presence at airports around the UK capital, with a fleet of 28 aircraft. It now has managed aircraft available for charter at London City, Farnborough, Luton, Stansted, Biggin Hill, Stapleford and Oxford.
The fleet–consisting of a dozen Cessna Citations (four Mustangs, two Bravo/IIs and six Excels), two Bombardier Challenger 300s, nine Embraer Legacys and a Dassault Falcon 2000LX–is used to operate some 500 flights a month to a vast range of 5,000 or more destinations across Europe and the Middle East, assisted by a 24/7/365 operations support center. For shorter hops, it has two King Airs based at Stapleford, in the northeast London suburbs, where the company was founded and still maintains its corporate headquarters.
“There’s an oversupply of aircraft available for charter,” said Margetson-Rushmore. In Russia, the company has found some operators are quoting 20 to 30 percent below cost to secure business. “And our gross margin is 10 percent, the same as most operators’,” he added. “We have three aircraft that are Russia market related: two Legacy 600s and a Legacy 650.
“What is surprising is in Russia there is virtually no regulation…even a bank will own an aircraft and charter it out quite openly, without an AOC. It’s like the Wild West,” said Margetson-Rushmore. But he said most charter customers still use reputable operators, especially so their insurance remains valid and because of the various tangible and intangible repercussions that can result if something goes awry.
Over the last three months the company has taken on an Embraer Phenom 300, a Dassault Falcon 2000LX and a Legacy 650. It now has three 650s and six 600s. The Phenom 300 is the first example available for charter in the UK, he added.
“Historically, when we started we were predominantly charter–and it’s fair to say that we are still one of the largest charter operators in Europe, and one of the largest [aircraft] managers,” said Margetson-Rushmore. “In the last five years we’ve seen more of an emphasis on management, but that’s not because we want to do less charter.”
In LEA’s customer base, the majority of owners are happy to allow their aircraft to be chartered, therefore earning income to help offset costs. The ratio of charter time to owner’s use is 80:20, said Galanopoulos. “It’s really good at times. This is quite a high split,” added Margetson-Rushmore.
Over the past eight or nine months business appears to be picking up, with more interest especially on the management side. “I suspect people have become more settled in terms of the economic situation,” said Margetson-Rushmore. So far this year, for January to March, the number of quotes given compared with the same period in 2012 is up 32 percent.
In the company’s view, its reputation means that it can be strict about standards, and is not desperate for aircraft to manage. “We don’t promise unrealistic expectations, and as a result people often go elsewhere,” said Margetson-Rushmore. “Also, we try to be as transparent as we can be in terms of costs of running the aircraft.” Ultimately, LEA is looking for long-term relationships, with most of the company’s clients staying with it from the beginning.
“We quite often turn down management opportunities,” said Galanopoulos. “For example, managing the Hawker 800 because we don’t see it as a good charter aircraft. You need to choose a charter aircraft that will make money…and one-of-a-kind won’t make you money either.”
LEA doesn’t create a base everywhere it manages an aircraft. However it does take a very hands-on approach. “That’s one of the unique things about our firm–we’re the owners and directors and actually get involved with the clients,” said Galanopoulos.
All planning and coordination is carried out at the Stapleford headquarters, while local arrangements are made to crew and maintain the aircraft through partnerships with companies where the aircraft are based. This is how the Legacy based at Tallinn, Estonia, is managed, and the Russian aircraft, too–by using local people who can assist the LEA team.
LEA made a brave move when it decided to offer lower cost charters–as much as 40 percent lower than average European charter prices–by acquiring a fleet of Cessna Citation Mustangs five years ago. It couldn’t have foreseen the financial crisis that started to bite in 2009, but that certainly put the squeeze on the light jet end of the charter market.
So what next for LEA? “We have looked at increasing the number of aircraft and where the physical geography would take us. We won’t go somewhere just for the sake of going there, for example, to China,” said Margetson-Rushmore. He said other companies are placing people in different parts of the world first, “just to talk with local people.” LEA is being more cautious, however, wary that overseas firms could use a company like theirs to learn the business and then go it alone.
So would LEA add long-range jets, such as Gulfstreams or Bombardier Globals? “We’re not actively seeking that but if a client wants to buy a Gulfstream or Global, we’d manage it,” said Galanopoulos.
For now, Margetson-Rushmore identifies the Legacy or Challenger 300 as “ideal for tours, families moving around Europe and so on,” thanks to its 3,236-nm range. He believes that the Phenom 300 will become “very popular,” especially once fractional ownership rival NetJets Europe starts to take delivery of the 50 Phenom 300s it ordered in 2010, there may be too many of the type in the market, he said.
In terms of aircraft in the pipeline from manufacturers, Margetson-Rushmore said, “We’ve got our eyes on the Embraer 450/500, which are going to be extremely nice aircraft, and the [Cessna Citation] Latitude and Longitude should be good.”
Is there a threat from new start-up operators in the market? LEA’s CEO believes not. “People underestimate the amount of manpower you need to deal with the administration. They still think they can make money with air taxis and by building a large fleet of small aircraft,” he said.
LEA at one time envisioned having 20 to 30 Mustangs. “Thank God [the first few] didn’t make money [at the time],” concluded Margetson-Rushmore.
Like many of its peers, LEA still feels burdened the high administrative cost of regulation. Despite this, Galanopoulos reflected that the European Aviation Safety Agency is better than the old UK Civil Aviation Authority, which had at one time become “archaic…run by ex-British Airways and RAF dinosaurs…You couldn’t even import an aircraft into the UK without spending millions on it. All that has gone thanks to EASA.”
Another area where Galanopoulos believes EASA has moved things on for the better is in pilot certification, which recently went pan-European. “Having a common license is massively better,” he said, “so if you need a guy for a contract in Moscow, the pilot doesn’t have to be from the UK.” LEA has pilots from all over the world, especially from Europe.