NBAA Convention News

CAE-DAC JV Has 15-Year Growth Plan for Simcom Holdings

 - October 7, 2019, 3:32 PM
CAE serves the training needs of not only Directional Aviation, but also third-party clients.

Directional Aviation Capital (DAC) affiliate Volo Sicurro has entered an equal joint venture with training provider CAE, which will soon own 50 percent of Simcom Holdings. The CAE-DAC JV is built around an investment in five additional simulators for Simcom and is seen as its first step in growing the company over the next 15 years.

Nick Leontidis, group president of CAE’s Civil Aviation Training Solutions business, told AIN that the new joint venture intends “to invest in more simulators” and potentially, also, new training centers for Simcom Holdings over the next 15 years. These investments would be in addition to the five new CAE full-flight simulators the new partners agreed to provide when they announced the Simcom Holdings-ownership JV on August 29.

Strengthening the JV’s investment confidence in growing Simcom Holdings are agreements that DAC’s subsidiary bizav operators Flexjet, Flight Options, Flairjet, Sirio, Nextant Aerospace and Corporate Wings signed for Simcom Holdings to be their exclusive training provider for the next 15 years. The JV’s growth plans for Simcom Holdings over 15 years “dovetail nicely” with DAC’s growth plans for its operating subsidiaries over the same period, said Leontidis. Together, those six DAC operating subsidiaries already operate about 175 business aircraft and the CAE-DAC joint venture expects that combined fleet to grow over the course of the next 15 years.

Given the size of the DAC operators’ combined fleet, for CAE the JV arrangement to own and operate Simcom Holdings is “not very different to how we approach an airline requirement,” said Leontidis. A good example of CAE’s collaborative approach to growing its training-services network globally is the Emirates-CAE Flight Training (ECFT) JV, according to Leontidis. ECFT operates a training center in Dubai that not only handles Emirates’ own pilot and maintenance training needs but also “serves the broad market,” including bizav operators, he said.

Today, Simcom Holdings serves the DAC operators’ training needs—and also those of various third-party bizav customers—through two training centers in Florida and one in Arizona. However, the JV expects Simcom’s network of training centers to grow as the DAC operators themselves grow. At the same time, Simcom will continue to seek to add further third-party training business.

Asked if CAE’s other big bizav customers might regard its newly close relationship with DAC’s operators as a conflict of interest for the training company, Leontidis replied, “I don’t think so. None of the others has expressed an interest in getting invested in this” type of arrangement with CAE, he said. In any case, other big bizav operators are used to CAE’s other joint-venture arrangements and know it continues to want to earn their trust by providing excellent service.

“Customers, at the end of the day, judge you on the product and service you provide,” said Leontidis. “From the DAC and the shareholder perspective, we want to open up our doors to other operators. There is no apprehension that there will be a two-class structure—quite the opposite, in fact.”

Additionally, said Leontidis, two months after CAE and DAC announced they were becoming partners in Simcom Holdings, “we haven’t had any reaction” from DAC’s competitors to the news. “When we announced it, our customers understood which area of the market we will be in.” They also understood that “every big [bizav] operator could be a good opportunity for an equivalent [business] model."