VistaJet Says Its Rapid Growth Has Firm Foundations
VistaJet’s bullish expansion plans have long turned the heads of more conventional charter sector rivals suspicious of how well-founded its business plan would prove to be in a sector that has struggled to regain profitability since the ravages of the financial crisis. But the high-octane announcement in November that VistaJet will buy up to 142 new Bombardier jets (56 firm orders and 86 options) really got the sector’s attention and left some pondering whether the company might be over-reaching at a time when demand still seems patchy and the entry barriers to new markets like China are quite severe.
VistaJet says it is simply executing a carefully considered expansion plan bolstered by growth in revenue flight hours of 20 to 25 percent. “The business model always has been based on having new aircraft, so many of the new ones will be used for replenishing the fleet,” explained Ian Moore. “We’re looking at take around one [jet] per month from next year. We’re the only company that has consistently replaced aircraft as planned.”
Another factor driving the fleet expansion is the need to honor the aircraft availability guarantees it gives customers in about three quarters of the world. Plus, some regions in which VistaJet is introducing service, notably Africa, have not previously had access to new business aircraft, and the company is determined to offer clients there the most modern equipment available.
VistaJet’s service area now spans Europe, Asia, the Middle East, Russia and the CIS, West Africa and the U.S. east coast (with domestic U.S. flights available through its alliance with Bombardier’s fractional ownership provider Flexjet). “No one else has done this and it is very unique, especially in the frontier locations [like Africa],” said Moore, explaining that by maintaining full ownership of its aircraft VistaJet is able to switch them between its various air operator certificates according to where they are needed.
VistaJet is now finalizing its new AOC in Nigeria. At the same time, it is hoping to establish its AOC in China within the next 12 months with an as-yet-undisclosed local partner. In March 2012, the company signed a memorandum of understanding with Beijing Airlines, but the Chinese carrier has now decided that its Deer Jet subsidiary will set up a fractional ownership program–a business model that Moore said holds no attraction for VistaJet.
Today VistaJet’s all-Bombardier fleet consists of 32 aircraft and this will have risen to 35 by year-end. The fleet mix today is eight Global Expresses, six Learjet 60s, 12 Challenger 605s and six Challenger 850s.
According to Moore, VistaJet (Booth 2225) is looking to build a manageable customer base consisting of clients committing to 100 or more flight hours, rather than having to accommodate large numbers of people who have bought blocks of 25 hours. “We want them to feel that they are like a part-owner of the aircraft and we work hard to pre-qualify clients [in terms of understanding their travel needs],” he told AIN.
With an initial commitment of 100 hours, customers can then increase their time flexibly rather than having to do this in batches of 50 hours. VistaJet rewards higher-usage clients with added-value perks. For instance, at 200 hours they might get their own dedicated flight attendant and at 300 hours they would be assured of having access to two different aircraft on one day.
VistaJet’s basic aircraft availability guarantee starts at 24 hours’ notice. Of course, this is dependent on the necessary flight and landing permits being attainable, and with long-range aircraft this may not be achievable. In practice, Moore said that most customers give more notice.
Customers committing to a package of hours make quarterly payments in advance for the hourly flight costs and capital fees, which Moore explained cover the capital costs that VistaJet incurs for providing the aircraft and are somewhat comparable to lease payments. Clients can carry forward up to 20 percent of any unused hours into the next year, or can add hours as needed. The company also offers on-demand charter.
With the anticipated influx of new aircraft, VistaJet also is boosting its human resources. It will soon employ around 150 to 160 pilots and 60 to 70 cabin crew. “We’re looking for people who are very entrepreneurial and customer-focused,” said Moore.
The company recently opened a new operations office in Malta and will be rolling out a new IT system in the next few weeks. “We’ve continued to grow at between 20 and 25 percent and have done this by making bold decisions,” concluded Moore. “It’s been a lot of hard work with plenty of challenges along the way.”