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With all the seeming variety of business models implemented by business aviation operators, their customers are fundamentally divided into two categories: aircraft owners and those who order charters. Fractional ownership, clock blocks and other variations of the first or second basic scheme in Russia take root with difficulty – having your own aircraft is still a status indicator, which is inconvenient to save on. Nevertheless, the growing activity of European operators in the Russian market indicates that the potential of the latter is far from being exhausted. The estimated reserve is made up of “second echelon” businessmen, for whom a charter is no longer profitable, and a private plane is not yet profitable. The European operator VistaJet is targeting this category of customers. In September, the company announced plans to expand into the Russian business transportation market, for which local sales representatives have already been appointed. At the same time, according to company representatives, their business model has nothing to do with the well-known fractional ownership of the aircraft.
The thesis that the richer a person is, the better he or she can calculate prompts business aviation operators to invent ever more sophisticated customer interactions. On the one hand, offering at least a small but reasonably justified reduction in service costs is an opportunity to take customers away from competitors or expand the client base by involving a new social stratum. The efforts are justified, because with any market growth, the number of potential users of business aviation services is still finite. On the other hand, operators are interested in improving the efficiency of their activities, since their income directly depends on this. And there is room for improvement: due to ineffective schemes, about 30% of business aviation flights are empty, that is, ferry flights performed to deliver the aircraft to the customer.
This situation is especially typical for the Russian market. This is partly due to the imperfect system of charter sales, but the main reason, of course, is that most of the fleet of operators belongs to private owners and is located outside of Russia, so flights to Moscow from an airport based in Europe are inevitable. Of course, there are fewer of them if the owner of the plane uses it only for his own movement, not allowing the management company to operate the car on charter flights. However, it is completely unprofitable for the operator – it is not possible to earn more than 15-16 thousand euros per month on management. And an idle plane brings only losses to the owner. So it is better to be able to sell the free time from the main passenger, while shifting ferry costs to charter customers, which doubles the cost of the charter on average. As a rule, operators are hesitant to purchase their own fleet, since huge investments are associated with high risks in the event of a decline in demand.
Companies are trying to solve this optimization problem through a variety of customer interaction programs. The word “solution” often appears in the name of these programs. But it is difficult to surprise today's sophisticated customer with another decision: in most cases he is not interested in beautiful packaging, but in economic efficiency and transparency of relations with the operator.
Founded in 2004, VistaJet did not initially differ much from dozens of others. The Flight Solutions product it offers today is hardly unique. “NetJets and TAG have offered such a product, but VistaJet says it will be more transparent and on more acceptable terms,” says Vladimir Kodintsev, VistaJet Senior Vice President representing the company in Russia. on two key points: sophisticated logistics and a huge fleet of aircraft. “
More than Aeroflot
VistaJet customers have a complete sense of their own aircraft, and do not have to put it on the balance sheet of their company.
These key points, in fact, are the solution to reduce the share of ferry flights to 5% – in other words, to bring the fleet operation efficiency to 95%. According to Kodintsev, in charter mode, the average annual flight time per aircraft is about 1,200 hours. Over the past 12 months, VistaJet aircraft have flown about 8,000 hours in the interests of Russian customers, taking off or landing in Moscow on average three times a day. “It takes scale,” says VistaJet Chairman Thomas Flohr. “You can't do it with five planes because with 50 you're closer to the customer.” The number of VistaJet fleet changes every month and from the original 30 aircraft by 2012 should grow to 94 aircraft with an average age of no more than three years. Moreover, unlike most operators, this fleet is originally owned by the company. In July VistaJet signed an agreement with Bombardier to acquire Skyjet International, the European charter arm of the Canadian aircraft manufacturer, and a concurrent $ 1.2 billion firm order for 11 Challenger 605, 13 Learjet 60XR and 11 Learjet 85, as well as an option for another 25 aircraft. …
“The number for which the program is designed (90 aircraft) is a lot, more than Aeroflot has today,” says Kodintsev. “But the scheme will work. VistaJet's top management are economists, and the calculation was made correctly. “.
The large fleet allows aircraft to be based throughout Europe, including in Moscow; thus, the percentage of empty runs is minimized. Therefore, the client pays only for the time he spends on board the aircraft. “The cost of a VistaJet flight hour is higher than the notional cost of a flight hour on a regular charter. But the difference is that when buying a charter, the client pays for the return flight anyway, here only the time on board is paid. For example, empty leg (empty a flight sold at cost price. – ATO note) from Nice to Moscow a developed company sells for 22 thousand euros. A VistaJet flight on the same route costs about 32 thousand euros. But an empty leg is a matter of chance, and an ordinary charter for the market costs 44-45 thousand euros. That is, it turns out that the price of 32 thousand euros falls in the middle between an empty leg and a regular charter, and if the client needs to fly in one direction, then this is certainly profitable, “explains Kodintsev.
Which one is yours?
Challenger 605 is one of the main aircraft types in the VistaJet fleet; the company has ordered 11 more of these aircraft.
Increasing the efficiency of charter programs by increasing the fleet is a small trick. This does not make it easier to work with the category of owners, and it is this category that forms the basis of the VistaJet offer. Three programs are designed for clients with different needs and capabilities: Membership, Ownership and Partnership. In the first program, the customer buys a fixed number of flight hours per year at a fixed price. In the Ownership program, a customer purchases an aircraft that remains in the fleet and is operated by VistaJet. Moreover, if the owner of the aircraft flies 200 hours a year, and the rest of the time the aircraft is operated on charters, then the cost of a flight hour on his Learjet 60XR will be an incomparable amount of 360 euros.
The Partnership program is designed for frequent flyers (100 to 400 hours per year), and the aircraft remains the company's own because some customers find it more beneficial to keep the aircraft on VistaJet rather than their own. “Our system is simple and transparent, – Thomas Flohr comments. – We invite the client to decide who will own the plane: he or we. Then, after choosing the type of aircraft, the client's annual need for flight hours is calculated. in which the previously agreed cost of a flight hour is multiplied by the number of hours flown – no monthly management fees, flat rates, maintenance costs, parking, hangar storage, etc. Clients, especially in Russia, are educated and sophisticated, and they are tired of long Lists of additional costs. For example, with a minimum annual flight of 100 hours on a Learjet 60XR under the Partnership program, the cost of a flight hour will be 5,900 euros, which is 20-25% cheaper than the market average. “
This result is achieved thanks to the main invention of the VistaJet founders: all aircraft are the same (of course, within the limits of the type), in the same paintwork, with unified cabins and equipment. When purchasing an aircraft, a client can be sure that a silver car with a red ribbon on the side, with a familiar interior will always be waiting for him at the airport, but memorizing the aircraft registration number is useless – this is one of a dozen aircraft of this type in the operator's fleet.
Affordable luxury
“Charters are used by people who need to move from point A to point B, – explains Flor. – If we draw an analogy with regular flights, I would compare them with passengers of EasyJet or Ryanair. But then there are those who fly exclusively Singapore Airlines or Lufthansa, because these companies offer their own special product, predictable high-quality service. In business aviation, no one has created a product similar to Lufthansa. Our client is not someone who can afford a charter, but someone who, in principle, could buy aircraft, but for economic reasons or because of high labor costs does not want to do this. We offer the full experience of owning an aircraft with pay per flight hour at a transparent and fair price. “
This option (as opposed to fractional ownership) saves flight time for charter operations, thereby offsetting operating costs, Flora said. The fact is that in the fractional ownership scheme of the largest operators, up to 8-10 clients act as co-owners of one aircraft, all of them expect a guaranteed aircraft delivery at the time when they need it, which determines a large number of ferry flights. VistaJet provides guaranteed aircraft delivery for no more than four customers per plane. However, as observations of Russian reality show, aircraft are most often bought for fractional ownership “for two” – otherwise it is more difficult to achieve the necessary trust between partners.
Russian reserve
Nevertheless, the carriers of the Russian mentality, with all the price advantages, will be confused by some abstraction of the aircraft as property, since, strictly speaking, a VistaJet customer who has bought an aircraft cannot point a finger at the board that has flown in after him and say: “This is mine.” Most likely, this aircraft is not his, although, of course, it is exactly the same.
“The Russian market is not very accepting of complex schemes,” admits Kodintsev. “If in Europe and America fractional ownership is the order of things, then in Russia people are accustomed to the fact that a rich person can afford a charter or an airplane, he does not need to look for a more economical option. The contract with VistaJet stipulates that there will be no private jet with its own tail number. If you want a personal one, buy a personal one. But the more a person compromises the principle of ownership, the more he has the opportunity to earn. Flight Solutions is being launched simultaneously in Europe, Russia and the Middle East. It is divided into the European part (Europe, the Baltic States, Ukraine, Moscow and St. Petersburg) and into the South-East Asia zone, where part of the park will soon be relocated from Europe.
The heads of the European operator are also thinking about importing several aircraft to Russia for domestic flights. According to Vladimir Kodintsev, about 40% of all traffic on the market in the interests of Russian clients is carried out in Russia, but a number of obstacles prevent the owners from putting their aircraft on the Russian register. “The owners themselves do not want to do this, firstly, because they will have to show their name everywhere, and secondly, because by placing an airplane in Russia, you are deprived of the opportunity to finance the purchase in Western banks, and this radically changes the situation. : So far, for today the duties are the same as they were. There are no instructions, from the law to the implementation did not come “, – explains Kodintsev. He sees his task in overcoming the mistrust of Russian customers in such schemes. However, it is expected that Flight Solutions will be more understandable to Russians than fractional ownership programs, since the project was created by a European company focused on the Russian market. In addition, one can hope that the Russian “oligarch-aviation” is gradually acquiring business features.
Source: ATO
