Charter market maker
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Posted Date: 01/03/2008
Issue: Executive & VIP Aviation International March 2008
Publication: Executive & VIP Aviation International
“We tend to open offices where we see untapped market potential in either executive aviation or cargo – which is another large part of our business – and also to respond to client need,” comments Julie Black, spokesperson for Chapman Freeborn. “At the moment, for example, a lot of music bands are touring Asia that would never have travelled that far east five years ago. Now we can support them much better.” She continues: “The Asian and Latin American markets are very hot right now for executive aviation and we want to be there to grow with it.” But much of the growth for Chapman Freeborn is not just on the back of executive aviation; it is also supported by the company’s cargo brokering business. “When we opened our Indian office three years ago, that was very much about servicing the cargo business; but we developed the executive aviation market alongside it,” points out Black. “That paid dividends. Three years ago I would not have foreseen the number of executive aircraft that are now available for charter in India and the amount of work we now do in India.”
Additionally, it was China’s reputation for manufacturing export goods that prompted Chapman Freeborn to establish its Chinese office to consolidate cargo charter activity in the region further. “But the personnel there are also working to set up relationships with Chinese operators and the CAAC – which is vital for establishing traffic rights and permissions,” comments Black. “Again, that’s working really well and our Chinese office assists in all kinds of business that we have in the region from business and corporate flights to flights for clients from the entertainment world as well as the very busy cargo charter business.”
The growth of executive charter brokering on the back of cargo charter operations has paid dividends for Chapman Freeborn. But how does the growth in executive charter compare with Chapman Freeborn’s traditional business? “We have been in business since 1973 and, indeed, we did start out by chartering mainly cargo aircraft. But we have always embraced passenger operations – and by that I mean both large passenger airliner charters as well as bizjets – and this has grown steadily over the years”
In 2005, the turnover of Chapman Freeborn’s cargo business was $245 million group-wide and its passenger business was $75 million. In 2006, these figures were $283 million for cargo and $117 million for passenger business. “You can see that the passenger side of the business is really catching up,” remarks Black. “The market is such that clients are generally up-sizing their aircraft aspirations.”
She continues: “Many of the operators make it perfectly clear that they are deriving 60-90% of their business through brokers. The role of the broker is absolutely vital and it is very important that brokers and operators maintain good relationships.”
Safety first
So how does Chapman Freeborn know – when it is brokering passenger charter services – that the operators with whom it does business operate equipment to the standards that its clients expect? “The very least that we do for each and every charter as a starting point is request from the operator a copy of all of their paperwork – for example their AOC, certificate of insurance, certificate of airworthiness, registration documents – as the bare minimum. But that’s just the starting point in a continual audit process,” responds Black.
She continues: “Obviously, when you have been in the business as long as we have, you get to know who is good and who is bad. And by this, I don’t mean only in terms of the standard of equipment used, but also other vital aspects such as adherence to the high standards of service that we and our clients continually expect, such as: being commercially competitive and operationally experienced, being reliable, and having a suitable fleet that can provide backup in the case of a problem. Not everything has a price.”
Chapman Freeborn’s global office network shares intelligence and information group-wide on a daily basis about who is reliable and who is not; who is looking financially unstable; personnel changes; and new carriers on the market. Black is adamant that, while knowing which operators are reliable, and therefore desirable charter partners, this does not preclude Chapman Freebron forging a relationship with new players in the market or those operators that are changing the shape of their operations. “You have to support the whole industry,” she insists. “It is very important to spread the business around.” Chapman Freeborn is also aware that the end users of these services really do want to know that suppliers, such as brokers, have investigated the whole market. “It is not unusual to find that three other brokers are chasing the same operators for the same business,” she reminds us. “Everyone is looking rather carefully at their margins but it is up to the broker to demonstrate its value to the client in terms of what else it can bring to the deal.”
Market awareness
No broker can operate in any business without access to up to date data and appropriate IT tools. “Operators are always sending out availability information and we put that in our database straight away,” says Black. Other suppliers’ information tools are also harnessed but Chapman Freeborn’s own systems are the nerve centre of its operation. “Our systems are wonderfully simple – a comprehensive operator list, updated daily with detailed aircraft and operator information as well as position and empty leg data which is regularly refreshed,” she says. There is a team of dedicated specialists globally working for clients in the entertainment, banking, finance, corporate and technology sectors as well as high net worth individuals and the company is similarly represented by teams in the US, Europe, the Middle East and Asia.
Apart from Chapman Freeborn needing to know where to find air lift, how do clients know to come to Chapman Freeborn for air travel solutions? “Our business has grown organically,” responds Black. “Much of it comes by word of mouth. Clients come to trust us and recommend us to their associates; this is especially true in the entertainment world.
The sale of an empty leg would remain a conundrum to most commentators but Black ventures: “We can sell an empty leg by maintaining up to date databases of both aircraft positions and client requirements so that we can often make a lucky match. It’s very satisfying when you do because you know your client is getting a great deal.” Black expects the market to expand further with the advent of very light jets on the market. She expects brokers will also see a slice of the air taxi action. “Most operators will tell you that they get upwards from 70% of their business from brokers, so I would guess that air taxi operators can’t afford to cut brokers out of the loop,” she comments.
So the need for this service and the fulfilment of it appear to dovetail conveniently at Chapman Freeborn, but no business is without its challenges and this is equally true in this sector. “The executive aviation market continues to grow in strength and depth globally. Black comments: “The main challenge is increasingly airport slot restrictions and congestion. With security issues affecting commercial airline operations, and users realising that fractional ownership is not as cheap or as flexible as it seems, our market has never been stronger.”
So where does Black see the market headed and what will Chapman Freeborn’s role in the future market be? “This last year has seen great strides in Asia and I hope we can continue on the same vein in Latin America now we have an office presence there.” She concludes: “Whilst we are stronger in the entertainment sector than anywhere else, we are seeing steady growth also with our clients in the financial and commercial sectors. I hope we will improve still further in that regard.”
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