The charter for change

opinion

by Alasdair Whyte

February 21, 2022

“Charter in Europe is great. The market is buoyant,” says Graham Williamson, president of ACASS Ireland. “But experience shows that it will not stay like that, so now is the time to make hay while the sun is shining.”

This is not what Williamson expected when the company formally launched the Irish aircraft management company. ACASS Ireland received its Aircraft Operator’s Certificate in March 2020, the same week the country locked down due to Covid. But since restrictions ended it has seen strong demand. Both from corporates – like mining companies sending 10 executives at a time to Africa – and from individuals. Its small fleet of Bombardier Challenger and Global aircraft are typically each flying more than 100 hours a month.

“If you have a good aircraft available with good crew and can move quickly, there is a lot of demand out there,” he says. This strong demand is also encouraging owners who saw revenue from charter as insignificant to make their aircraft available.

Bernhard Fragner, CEO of GlobeAir – Europe’s second most active business jet operator with a fleet of 25 Citation Mustangs – is also seeing this strong demand. GlobeAir had a strong January and February in 2021 and did not expect to beat this in 2022. But it has. Charter flights are 10% up. “We are seeing a boost as companies open up and both leisure and business travellers return.”

The two may have very different models and are enjoying strong demand. But they also are focusing relentlessly on costs.

“We are entering a price cost spiral which could starts to become very dangerous. This is driven by inflation and the explosion of energy costs. Staff across the industry – from ground handling to operators – are also expecting salary raises,” says Fragner. “We need to educate customers that charter costs are rising and pass these on. The market can absorb these now even if we lose some customers.”

Willamson agrees. “You have to really focus on costs. As operators we should be focused on margin rather than charter rates. We look at each trip and focus on gross profit,” he says. Rather than receiving a portion of the charter fee, ACASS Ireland takes a profit share. “We need to make sure yields are rising in line with fuel costs and handling charges,” says Williamson. “There is no point in being happy about charging more for charter if your costs have risen more.”

Fragner and Williamson are both hoping that the post-Covid bounce will last longer. But also preparing in case is does not. “My genuine worry is that hundreds of operators are only going to learn they were too cheap at the end of the year,” says Fragner. “We have this opportunity to get pricing right and we cannot afford to waste it.”