Royal Jet Expansion Set For Early 2013

 - December 10, 2012, 8:30 AM
Royal Jet, owner of the world's largest BBJ fleet, plans to expand its holdings next year, but says it may shop the competition.

Royal Jet, the commercial private jet concern owned by the UAE’s Presidential Flight Authority and Abu Dhabi Aviation, is planning a major fleet expansion in 2013, the year of its 10th anniversary. A defection by the nine-jet company away from Boeing, given that Royal Jet owns the world’s largest Boeing Business Jets (BBJ) fleet–six aircraft–would be a major blow for the U.S. manufacturer.

“One of the major activities [for 2013] will be the forward fleet plan,” said Shane O’Hare, Royal Jet’s CEO. “It will depend on who we choose. There will be a competitive tender. It won’t automatically be BBJ. There is quite a lot of competition…[among] Bombardier, Embraer, Boeing, Airbus, and the wider market. We anticipate an announcement in the first quarter of 2013.”

A major refurbishment program is under way for two of the existing BBJs in its fleet. One is undergoing a $12 million refit at Sabena Technik in Bordeaux, France, and will be ready in January. Royal Jet now has two BBJ bays and one Gulfstream hangar at Abu Dhabi International Airport (ADIA), and a wide-ranging commercial agreement for utility services is in place. A commercial agreement with ADIA for additional hangar space and other new infrastructure tops the company’s agenda, O’Hare told AIN.

Although it is shareholder policy not to discuss numbers, Royal Jet has enjoyed bumper profitability of late, thought to be in excess of $100 million for FY2011. Full-year profits were up 234 percent on the previous year. “We have nine airplanes, and a profitable business we run efficiently,” said O’Hare. “Yields are good, despite the global financial crisis, [but] this year there is more pressure on them. Last year was a clear record, but this year our performance was similar,” he added.

Royal Jet is now running around one medevac mission a day. Two Gulfstream G300s and a Learjet 60 are well suited to short-haul trips, said O’Hare. “I am very satisfied at the level of business in medevac and corporate travel. The Learjet 60 is perfect, offering low charter rates, at around $6,500 per day.”

In terms of the UAE and GCC operating environment, O’Hare welcomes the shakeout wrought by the global slowdown. His wish is for a smaller, better organized group of professional operators, whether FBO, charter or medevac, serving the market professionally, safely and at fair prices.

Prior to the global financial crash in 2008, he said, the region had an “anything goes” mentality. Many people ordered aircraft, speculated on buying aircraft and slots, and many global companies entered the market. “It was a time when anything was possible,” said O’Hare. “Today, the market is starting to significantly mature, compared to two years ago. But I still believe large part of the industry is facing difficulty due to market conditions, and the level of competitiveness. Struggling operators are driving down yields. Unfortunately, weaker players will leave the market.

“The customer base is much better informed, and that has created a far more competitive environment,” he said. “What we’d like to see is a playing field of well-funded, strong, professional operators in the region, able to deliver safe and reliable service. What we don’t want are operators that are sailing close to the wind, and cutting corners, not just blatantly operating illegally, but who cannot afford to pay their bills. They give the industry a bad name.”

O’Hare is excited about the transfer of the MEBA event to the new venue at Jebel Ali. “[The site] is going through a growth phase, and this will be one of the first opportunities for Dubai Airports to showcase Jebel Ali and [its] future. It is going to be around for a long time. It’s the future of Dubai. It’s a good idea for MEBA also to move around to different locations. Abu Dhabi has its own executive airport. There are also opportunities for hosting MEBA [there].

“Dubai and Jebel Ali will develop their own specific markets for private jets,” he says. “We are not entirely sure of the policy of Dubai International on future aviation for private jets, or the requirement to go to Jebel Ali. I think Abu Dhabi is the same thing. We enjoy good business at ADIA, while Al Bateen [Executive Airport] is a growing business for different reasons. If you have transiting aircraft, you want as much market share as you can get. [Even] Al Ain Airport is a consideration for transiting.”

Despite the embarrassment of riches, O’Hare sees room for all these airports. “The more infrastructure available for the specific operations of private jets, such as unlimited slots, 24/7 access, close accommodation, fuel and maintenance, the more competitive they will become,” he said.

Royal Jet is a founding member of MEBA, and it is very important to the company as an organization, O’Hare said. “As a private jet show, it is certainly one of best in the world, up with the NBAA and EBACE. It’s a very, very strong show. We see the new location as positive thing.”