Managing Growth

Is managing aircraft the most difficult job in the aviation industry? Perhaps the question was rhetorical, but it did not stop CJI editor Alasdair Whyte asking as he introduced the panellists.

Luxaviation’s Patrick Margetson-Rushmore believed that while size might have its challenges, it can be managed. In the UK, he said, we have just under 30 aircraft.

Puja Mahajan, CEO of Elit’Avia, said that yes, you can benefit from economies of scale, but aircraft owners can be demanding and the level of service perhaps delivered best by a smaller firm still needs to be there.

Gama Aviation’s Marwan Khalek took the view that if one can channel the size benefits back to clients but maintain a close relationship with a client it provides the best of both worlds.

Florent Sériès of TAG Aviation was clear — most of the benefits of economies of scale are passed directly to the client. We work hard to get better deals, but still have to provide excellent levels of service.

When one grows multiple AOCs are needed, but this is more of a benefit for attracting clients, as you give them more options. From an operator’s perspective, it is difficult to balance regulatory requirements for each AOC.

Are more regulations coming into place every year? – The panellists were unanimous in their answer: “Yes”.

But this is leading to owners trying to disassociate themselves from their aircraft as their management has become increasingly complicated with increased regulation – they just don’t want to hear about it. Luxaviation argues this is especially true for larger jets.

Puja Mahajan, CEO of Elit’Avia, also praised regulators that are keen to work with business aviation operators.

Price over safety?

Margetson-Rushmore was adamant, they are not comparable. Safety obviously comes first, it cannot be sacrificed on the altar of money. Sériès agreed, but pointed out that most owners now consider safety to be a given, they do not see the value of what we are all trying to do together to enhance safety.

Khalek believed that safety is not a subject owners want to get into the weeds about and would, instead, rather focus on the business and service aspects.

What is the differentiator if safety is a given?

Khalek: Service to a degree and the value proposition – not just price on its own
Margetson-Rushmore: You need a large number of characters to meet demand with wide variety of different owners.
Mahajan: Personal relationships are the differentiator.

Economies of scale can save as much as 15% of operating costs for larger operators according to Khalek. This is especially seen with services such as insurance, but these savings get passed directly to the customer.

Do complicated regulations translate directly to safer operations? Margetson-Rushmore thinks so. Material growth will primarily come from consolidation. Obviously, we always try to grow organically, but the primary level of growth will come from consolidation and acquisition.

So there we have it: 70% of delegates expect to see more operator consolidation in 2018. But as Sériès put it with particular Gallic logic – a good wine helps.