VistaJet Enters U.S. Market To Go Head to Head with Frax

 - September 6, 2013, 2:05 PM
VistaJet chairman Thomas Flohr (left) has turned to Wheels Up led by Kenny Dichter (center) to market its Flight Solutions Program services in the U.S. An initial batch of 12 Bombardier Globals will be operated in the U.S. for VistaJet by Jet Aviation’s Flight Services division under the direction of vice president and general manager Don Haloburdo.

VistaJet is moving into the U.S. private-lift market with a new alliance with Jet Aviation Flight Services, which is to operate a fleet of 12 Bombardier Globals on its behalf. The Europe-based group made clear its intention to target former and current fractional ownership clients in building its North American client base. Under the terms of an agreement announced today in New York City, the private flight provider is also teaming with start-up membership-based program Wheels Up to market VistaJet’s Flight Solutions Program (FSP) to customers in the U.S.

The first three Globals will enter service in March next year based at Jet Aviation’s New York-area Teterboro Airport facility. As a U.S. licensed direct air carrier, Jet Aviation’s Flight Services division will maintain full operational control of all flights arranged by VistaJet on behalf of its customers in the U.S.

The Globals are part of a large order for up to 142 Bombardier aircraft placed by VistaJet in November last year (firm orders for 56 and options on 86 more). The aircraft exteriors will feature the company’s standard livery of silver with red stripe, and cabin interiors are expected to be similar to those of its existing fleet of more than 35 jets (which have an average age of less than two years).

“The U.S. services operated by Jet Aviation will mirror the worldwide VistaJet model,” explained VistaJet founder and chairman Thomas Flohr. “The aircraft will fly from one destination to the next, keeping empty-leg flights to a minimum.”

Jet Aviation is recruiting flight crew specifically for the VistaJet operation. “When we started working on this [cooperation] with VistaJet we quickly found that there are not too many gaps in service [levels] and operations so it will be easy to put a training program in place to ensure consistency,” Don Haloburdo, vice president and general manager of Jet Aviation Flight Services, told AIN.

VistaJet’s new U.S. customers will have the same FSP terms and conditions as clients in other regions. Differences in cost structure in the U.S. market mean that the pricing structure will be somewhat different. Occupied flight hours in the Globals will be charged at $15,900.

For now, the U.S.-based fleet will not be available for flights within Canada or Mexico. “We’ll operate wherever and however we can with N-registered aircraft so we can drop off passengers anywhere in North America,” said Haloburdo, indicating that operations based in the U.S.’s two neighbors might be considered in the future.

Jet Aviation, which manages more than 200 aircraft based in 26 locations around the world, already has more than 50 Globals in its fleet. Haloburdo pointed out that this will allow it to provide equivalent capacity in the event one of VistaJet’s aircraft is not available. In markets outside North America, Jet Aviation remains a competitor to VistaJet.

Wheels Up, which is preparing to launch service with a fleet of Beechcraft King Air 350i twin turboprops later this year, will be VistaJet’s exclusive general sales agent in the U.S. for FSP clients. Its own members will be able to book flights on VistaJet’s U.S.-based fleet subject to availability, and VistaJet clients will be able to book Wheels Up flights and take advantage of its Wheels Down programs offering participation in a variety of special events.

Under FSP contracts, VistaJet clients enjoy guaranteed aircraft availability at a fixed price per occupied hour (with no charges for ferry flights). Wheels Up founder and CEO Kenny Dichter said that selling these VistaJet packages is the priority of his newly appointed management team. He anticipates selling initial commitments for 5,000 flight hours through next year, with an additional 5,000 hours forecast for 2015.

“We successfully expanded our business by carefully identifying which marketplace to enter and develop,” said Flohr. “Several criteria came into play when making this analysis. However, two things are key: time; and having the right partners and team. Leading key indicators such as the overall U.S. economy, business jet usage and demand for a truly global solution were integral in my decision [to enter the U.S. market].”

At a press conference on Friday, Flohr acknowledged that he previously doubted the business case for VistaJet to enter the U.S. market because, with shorter average flight sectors and a more pragmatic approach to business travel, he had believed American travelers would be less willing to pay for his company’s premium level of service. “But from late 2011 and early 2012 we had a growing number of calls from U.S. companies wanting lift for flights such as Siberia to Mozambique and Riyadh to Hong Kong,” he explained. “Some of these customers owned aircraft in the U.S. but felt comfortable asking VistaJet for 200 or more additional hours, and this was a wake-up call for me.”

VistaJet has established a reputation for being able to operate into parts of the world with limited infrastructure to support business aircraft. Flohr gave an example of a response to a recent request for a flight from Beijing to Moscow in which an aircraft was dispatched from Kazakhstan after the company secured a notoriously elusive Chinese flight permit in just five hours.

According to Flohr, the recent economic downturn inspired U.S. companies to pursue new business opportunities overseas and this can only be done effectively using business aircraft. “My analysis tells me that U.S. corporations have learned a big lesson in terms of not necessarily owning [aircraft] assets,” he said. “A lot of people here learned a lesson with fractional ownership when they faced a 40- to 50-percent depreciation hole [on the declining value of their aircraft shares]. If you factor that back into the occupied hourly flight cost, our business model beats anybody’s.”

Dichter, who founded his former company Marquis Jet to re-market time in NetJets’s fractional fleet, said that VistaJet’s offer of guaranteed availability at fixed prices will have strong appeal in the U.S., and especially to clients drawn from New York’s financial community. “They will really understand the value of a straight flight hour contract that does not involve an aircraft on the balance sheet,” he commented. He believes that the market for large-cabin business aircraft in the U.S. will double in the next seven years.

Wheels Up has recruited senior executives from the NetJets group for its leadership team, including Robert Garrymore, who was formerly president of its Executive Jet Management aircraft charter and management arm, and Ronald Silverman, who was EJM’s senior v-p of aircraft management, sales and owner services.

Dichter said that the first goal of the Wheels Up sales team is to sell commitments covering 5,000 occupied hours in the VistaJet aircraft, with up to 40 or so clients expected to average about 150 flight hour per year. He estimates that the initial 12 Globals can operate up to approximately 10,000 hours per year on a guaranteed-availability basis. Flohr made it clear that VistaJet is willing to assign more of its future deliveries from Bombardier to the U.S. fleet as needed, predicting that this could happen within two years.

VistaJet unveiled its new alliances with Jet Aviation and Wheels Up less than 24 hours after Kenn Ricci’s Flight Directional Aviation Capital announced that it is to buy fractional ownership provider Flexjet from Bombardier. U.S.-based Flexjet and VistaJet, which already operates flights across Europe, Russia, the Middle East, Asia and Africa, have had a reciprocal arrangement through which their clients have access to their respective fleets.

Flohr indicated that VistaJet’s alliance with Jet Aviation and Wheels Up does not necessarily mean it cannot continue to cooperate with Flexjet since it serves a different market segment with a fleet of Bombardier Learjets and Challengers. In his view, VistaJet’s move into the U.S. market means that it is now the only private jet service offering guaranteed availability globally.



Watch out for US Foreign Corrupt Practices Act violations on those last minute flight permits!

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