TAG Aeronautics, the company that helped launch Bombardier into the business aviation market by making a bold and early commitment to purchase 21 Challenger 600s, and Bombardier have agreed to end a nearly 40-year relationship under which TAG Aeronautics served as Bombardier’s exclusive sales representative and distributor for new Challengers and Globals in 22 countries in the Middle East and North Africa. The relationship began in 1977, and since then TAG Aeronautics has sold more than 100 Bombardier jets to customers in the 22 countries.

TAG Aeronautics is part of the wider TAG Group S.A., which in turn operates business aviation services company TAG Aviation Holding. Among TAG’s many activities, which include aircraft charter and management, it operates the London-area Farnborough Airport. These businesses are unaffected by the ending of TAG’s role as a Bombardier distributor.

“TAG Aeronautics has done an unbelievable job,” TAG Group CEO Mansour Ojjeh told AIN. “I don’t think there has been a contract as one representative for 40 years for any kind of airplane. What has happened with this relationship is unique in the annals of this industry.”

For its part, Bombardier Business Aircraft has assumed all sales activities previously held by TAG Aeronautics, as part of a move that included increasing its number of direct-to-market sales channels and terminating third-party sales-representative and distribution agreements. Both parties say the termination of the agreement with TAG Aeronautics was amicable.

In announcing the change, Bombardier revealed that it is also restructuring customer commercial agreements. As a result, Bombardier will record pre-tax special charges of $278 million in the fourth quarter of 2015, with $145 million of that being non-cash. Approximately $50 million of the $133 million cash charges was disbursed in the fourth quarter, with the balance to be paid this year. Bombardier Business Aircraft’s restructuring of “certain customer commercial agreements” resulted in the cancellation of firm orders for 24 aircraft worth $1.75 billion at 2015 list prices and options on 30. The company expects to re-sell these positions at improved margins.

TAG’s relationship with Bombardier began when Mansour Ojjeh and his brother Aziz learned about the Challenger 600 in 1976. Aziz had learned to fly in 1975, starting in a Piper Cub and quickly progressing, earning his type rating in the family’s first business jet, a Falcon 20, in 1977. Aziz first spotted the Challenger 600 in a Canadair advertisement in The New York Times, but he also worked closely with Roger McMullin, who ran Aviation Methods and managed the Falcon 20.

McMullin was friends with famed Cessna Citation salesman Jim Taylor, who moved to Canadair, then owned by the Canadian government, to develop the Bill Lear-designed LearStar 600. This would be Canadair’s first business jet program. “Roger also mentioned [the 600] to my brother,” Mansour recalled. In fact, Taylor and Canadair hired Aviation Methods to consult on the program, and as McMullin recalled, “I said to Aziz I’ve been going to Montreal and there’s some interesting stuff, let’s take the Falcon 20 and go look.” They were given a tour of the Canadair factory and shown a wooden mockup of what would later become the Challenger.

“Aziz saw what it was going to do and thought it might be an option for us,” said Mansour. “We were convinced there could be nothing like it.” And this led to the 21-jet order that launched the Challenger series, eventually turning into orders for 66 Challengers of various types, thanks in part to TAG Aeronautics taking over a canceled order for 33 jets from Federal Express.

As it turned out, the Challenger 600 fell short of promised performance, a problem for the Middle East market, but the Ojjeh brothers stuck with the company as it transitioned to ownership by the Beaudoin family and as better-performing GE CF-34-powered Challenger models were developed. Early sales by TAG Aeronautics numbered in the dozens, but in 1996 the Challenger 604 and its 4,077-nm range jump-started sales activity and the relationship between TAG Aeronautics and what had become Bombardier Aerospace deepened. By 1997 TAG Aeronautics had ordered more than 70 Bombardier jets.

TAG Aeronautics did more than sell airplanes in the Middle East and North Africa; it had a significant influence on some key Bombardier products. “Did we have a positive impact?” Mansour asked. “Absolutely. We’re the one who launched the Global Express” with an early commitment to purchase. The first CEO and president of TAG Aeronautics was Benoit Kerub, who had been head of marketing for Canadair.

According to Eric Kerub, Benoit's son and president of TAG Aeronautics through the end of the contract with Bombardier and a 20-year employee, “The Global Express was the key. It was launched in 1993, and that was really the aircraft that was going to win everybody’s heart in the Middle East.” Bombardier leadership at the time was hoping for 50 orders to launch the program and ended up with 30, 16 of which were from TAG Aeronautics. “Without our orders there was no launch,” Kerub said. In the meantime, the company sold a lot of Challenger 604s to future Global Express buyers who needed an interim airplane with reasonable range to fly from the Middle East to London.”

Before joining TAG Aeronautics, Kerub worked for Bombardier in the Challenger program office, specifically dealing with auxiliary fuel tank manufacturer Pats. Canadair designers had earlier came up with the idea for a stretched model called the Challenger 610, and Kerub spent some time developing that program and marketing the airplane. That 610 model was shelved eventually, but once the Challenger was stretched to make the Canadair Regional Jet (CRJ), the idea was revived. “We said this was a Global cabin without the range,” he recalled, but adding Pats tanks unlocked additional range. This became the Challenger SE and later the Challenger 850.

Mansour was also instrumental in the CRJ program. “We paid for the STC to put the fuel tank in the back [of the fuselage],” he said. “We wanted that before we got the Global Express. The 850 is a product of the pure way of marketing things.” The result was a jet with a wide and large cabin that could fly for 12 hours. “Plus, the cabin was really quiet,” he added.

“It was great bang for the buck,” said Kerub. “It had three cabins, and we sold a few.”

Over the nearly 40-year relationship, Mansour said, “We had a positive impact, because of our connections; we know the people, how to deal with them. The Middle East is always going to be an important market. Everything has its ups and downs, but it’s a strong market, an important market for sure.”

Mansour said the end of the Bombardier agreement is “in a sense bittersweet. You do get somehow attached. It is an umbilical tie to something you put your attention to.” While the TAG Aeronautics chapter is closing, he added, “There are other challenges. We are in different segments of the business. In any relationship, it’s time to move on because there are different challenges, different people, a different generation. Also the industry has changed, and it is obvious that all manufacturers want a vertically integrated system. I can’t blame them, especially Bombardier with the troubles it’s having.

“There’s no acrimony at all between us. Zero,” he said. “I have lots of respect for the Beaudoin family [Pierre is executive chairman of the board of directors and Laurent chairman emeritus], and I think [Bombardier president and CEO] Alain Bellemare is a great guy; he’s the right guy to sort out the problems. When the Global 7000 comes out, it’s going to be a great airplane. We went through all the waves, all the hoops, all the products, all the problems. It was a great relationship. Everything good comes to an end.”

Kerub agrees that the Global 7000 is key to Bombardier’s future. “This makes the whole world come together. It’s a game-changer, almost as much as the original Global was. I think the future is bright for Bombardier. They have the right ingredients, and the current administration is not wasting time. They’re making the right decisions. They have a clear vision, and that’s the key.”

“I think Bombardier is happy and TAG is happy,” said McMullin. “They were able to reach a mutually satisfactory deal, and I give credit to Alain Bellemare.”