VistaJet expects fractional customers to switch
“The fractional model is fine when the market is buoyant, but in recessionary times people don’t like seeing their shares losing 60% of their value. They are then tied to an asset at a time when everyone is trying to address their balance sheets,” says Ian Moore, chief commercial officer of Vistajet and former NetJets employee.
“The fractional model is fine when the market is buoyant, but in recessionary times people don’t like seeing their shares losing 60% of their value. They are then tied to an asset at a time when everyone is trying to address their balance sheets,” says Ian Moore, chief commercial officer of VistaJet and former NetJets employee.
Moore says Vistajet is an ‘unscheduled airline’. The Swiss company does not sell shares (although it has tried selling whole aircraft) and unlike most European business jet operators it owns its Bombardier fleet. Customers pay for blocks of time from 50 hours to over 500 hours and are promised a jet to anywhere in the world within 24 hours.
Vistajet claims to be the fastest growing business aviation company and says it has remained profitable throughout the recession. It has a $2 billion order backlog for Bombardier aircraft.
It also has big plans. Since entering the market in 2004 the goal has been to expand into growth markets, or the ‘BRINCs’ as Thomas Flohr, VistaJet’s founder and CEO, likes to call them – adding Nigeria to Brazil, Russia, India and China.
Moore says the challenge in Asia is the risk of a high number of dead legs without a large customer base present in the region. “We can’t control where customers want to fly, but we do want to connect them by expanding into other areas so that the jets can be used efficiently,” he says. “But customers are leading us to new areas, and to new customers. We already have two jets in the Asia-Pacific region. China is a very challenging environment, but we’re still excited about the opportunity there and still focused on China in 2012.”
It is not just about finding untapped markets, however. Moore expects Vistajet to pick up customers from fractional operators as well.
“We still expect to get more business coming from fractional as their customers take advantage of any bounce in the value of their shares to get out of the market,” he says.
“Over the last 12 to 15 months we have seen a significant increase in the number of corporate customers coming to us. We have a very simple four-page contract and they can see all the costs upfront, which is good from a corporate budgeting point of view.”
Moore is pleased with the increase in corporate customers because it means the fleet can be used more efficiently. “Corporates tend to fly Monday to Friday, while leisure travellers are mostly on the weekends, so being able to fill the jets all week is important to us.”
Vistajet’s major source of financing for its fleet of Bombardier aircraft is export credit, something Moore expects to continue.
“There’s no-one tripping over themselves to finance jets at the moment, but because of our financial performance and sound business model it’s not been a major problem for us,” he says.
The Vistajet team has recently been meeting financial analysts, prompting rumours that they are contemplating a float or at least a significant investment, but Moore insists the company currently has no need or desire for raising funds.
“We’re building relationships so that if in three or four years’ time we decide that’s a route we want to take we are in a good position,” he says. “Thomas likes having 100% of the company, and he is very committed to the day-to-day running of the business. It’s just handshakes and coffee.”