Setting the pace
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Posted Date: 01/03/2008
Issue: Executive & VIP Aviation International March 2008
Publication: Executive & VIP Aviation International
Bing Chen, Chief Executive Officer and President of VistaJet, the ultra luxury charter operator headquartered in Switzerland, anticipates a frenetic year ahead. With the company having already grown exponentially since its launch three years ago, Chen now points to a flurry of orders, efforts to strengthen existing market positions and plans to expand into new arenas. “It is going to be full throttle for us in 2008,” he admits.
The scope of the company’s ambition was illustrated, in part, by an order in September 2007 for three Airbus Corporate Jetliners (ACJ) – an aircraft destined to become the flagship of the company’s fleet when delivered in 2010. Already the biggest customer of Bombardier, this is VistaJet’s first piece of business with Airbus. “We already have a good mix of aircraft covering medium- to ultra-long range, but the ACJ is in many ways a missing link,” explains Chen.
“Our goal is to define the standards in business aviation and so by taking the ACJ, which is at the very top end of the wide body offering, we are reinforcing that philosophy. We are now the only company in the [ultra-luxury] sector with a full range of aircraft.” In truth, the ACJs are only half the story: with a $1 billion commitment for new aircraft, the VistaJet fleet is undergoing a dramatic transformation. With eight aircraft in service at the turn of the year – ranging from a Learjet 40XR to a Challenger 605 – the company will take delivery of a further 17 aircraft during 2008: one Global Express; five Learjets (two 40XRs and three 60XRs); and 11 Challengers (two 300s, five 605s and four 850s).
This will be followed by a further Learjet 60XR, two Challenger 300s, one Challenger 605 and two Global Expresses in 2009, plus the three ACJs in 2010. Chen also hints at a major bulk order currently being worked on, but is unable to say any more at this point.
However, it is the ACJ order that Chen feels will really push the company forward; delivery of the first aircraft is scheduled for January 2010, with the remaining two arriving in the following May and August respectively. Like the rest of the fleet, the ACJs will feature VistaJet’s trademark silver metallic body and red stripe.
Having evaluated all other equivalent aircraft types, VistaJet was convinced by the ACJ’s function and quality, says Chen. “Product-wise, Airbus made an extra effort to accommodate us,” he adds. “Airbus has chosen VistaJet as the flagship operator to represent the product.”
Chen feels that the ACJ order sends out an important message to customers, competitors and the wider industry. “It shows that we have been successful in executing our business model and highlights how we have grown over the past three years,” he says.
It is a business model based around on demand charter services with an unrestricted, client-dedicated fleet. VistaJet also offers a programme that Chen says provides the ultimate operational and economical benefit to customers and competes head on with fractional card programme charter and sole ownership.
Customers can choose from a full range of aircraft that are typically between two-and-a-half and three years old and each operate an average annual flying time of 1,300 hours. The company also offers aircraft operations and management, plus aircraft financing and remarketing services. Meanwhile, the VistaJet clientele typically consists of elite entrepreneurs, plus a fair share of politicians and entertainers – in other words, those at the very highest end of the charter market, says Chen. “Many have their own aircraft, but also need to use additional business jet services from time to time.”
Market opportunities
Much of the company’s growth has come from tapping the economic development of Russia and the CIS, a market known for demanding customers with a taste for the ultra-luxury side of business jet travel. In 2007, VistaJet operated more than 1,600 movements at Moscow and carried nearly 3,800 passengers. Interestingly, Chen adds, this has been achieved through just networking and referencing rather than any advertising or operating a Moscow office. “We currently enjoy the highest number of take-offs and landings in Moscow. We have been very well received.” According to Chen, the company’s visibility in a market that he sees as becoming “more and more sophisticated” has increased greatly – thanks in large part to the consistency of its branding and service. “Customers are often heard to say that they need to take the ‘silver plane’,” he says.
Using the Russian and CIS market as a stepping stone towards further growth is a canny move; by entering an emerging market on the ground floor, VistaJet has been able to mould the business to some extent. Chen admits that it would have been very different if VistaJet ever entered the US market, for instance. “We could enter that market, but it is very different and customers have already formed their own market perceptions,” he believes.
However, in Russia and the CIS, Chen sees a real opportunity to define the business aviation standard. But in terms of wider ambition, the company has only just begun, contends Chen. “It is not arrogant, but is not fantasy either. Each step we have taken has been thought through and done well. We are very serious about being the player in each market that we serve.”
And it is a goal that applies equally to the next region on Chen’s radar: Asia. It is a business aviation market that others have struggled to get to grips with in the past and one that the Chinese-born Chen believes is “probably several years behind that of Russia and the CIS”.
However, he is confident that VistaJet can make its mark, with its initial assault centred on the Malaysian government’s plans to turn one of the terminals at Kuala Lumpur’s old Subang Airport into a regional executive aviation hub to compete with the likes of neighbouring Singapore and Hong Kong. A private operator, Subang SkyPark, is investing some RM300 million ($92 million) in the upgrade of existing infrastructure, including the development of an FBO and MRO facilities for executive aircraft. The ambitious plan includes the development of a host of leisure facilities around the site before its completion in 2010.
VistaJet has been selected as the sole operator to offer charter services from the SkyPark and will base a minimum of two aircraft there by the end of the year. “These will most likely be Challenger 604 and 605s,” says Chen.
“The Malaysian government was impressed by our track record and has chosen us to represent it. Malaysia is one of several countries in the region interested in inviting us to build a business aviation hub.” But how does VistaJet plan to succeed where others have failed? “First, it is important to have a sustainable business model in place to succeed in Asia,” says Chen. “Others have failed because they were too opportunistic, lacked sufficient assets or were not flexible enough, with aircraft often subject to owner availability. There is a whole host of reasons for failure.”
Chen sees the Subang operation as offering customers a more logical – and economical – choice, as they will not have to incur extra fuel costs and service charges from repositioning aircraft and returning them to bases elsewhere in the world.
Crucially, says Chen, the demand is there, although as in Russia and the CIS, he sees an opportunity to shape the market to some extent. “We are committed and have an early start [in the region]. But when it comes down to it, all customers want consistency, quality, reliability and flexibility, otherwise they may as well just fly commercial.”
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