Buoyant at Blink
Posted Date: 11/05/2009
Issue: Executive & VIP Aviation International June 2009
Publication: Executive & VIP Aviation International
It is not easy to stay positive during this downturn. While the airlines with their herd-like strategies and dependence on huge credit lines falter, the private jet operators can, at least, take comfort in the fact that their business models are more fleet of foot and many are still young and flexible so they are better able to react to this very changeable market. Peter Leiman, Managing Director and co-founder of Blink, continues to exude confidence a year after the air taxi operator’s London launch
Peter Leiman and Cameron Ogden are the brains behind what they called a revolutionary move a year ago: the launch of a Mustang-oriented air taxi operation from their London base. The question now is whether revolutionary business models work in all climates, including this very dank and dark phase in the world economy. Leiman is unfazed and continues to exude the optimism that put Blink on the map.
Given the failures in this part of the industry – both in terms of operators and manufacturers – has the negativity made Leiman more convinced that Blink’s model is the right one or has he and Ogden made adjustments? “These failures have reinforced our business model and our choice of Blink jet – Cessna Citation Mustang,” responds Leiman. “No other operator is like Blink and we are confident that we have the right business at the right time.”
These two have borrowed significantly from the low cost airline model. Essentially, they took everything about the low cost carrier market that they perceived to be effective and applied this to their blank sheet of paper they worked on when they developed their air taxi operation. Leiman says that the essence of low cost airlines is critical to Blink. “This will hold true no matter what market conditions exist,” he adds.
Leiman and Ogden are Harvard Business School graduates with investment banker backgrounds who undertook a private travel proof of concept study for a Fortune 500 company and, so convinced were they by this research, that they decided to plug the gaps in the European executive air travel market themselves. For 18 months, they operated under the radar, during which time they successfully completed a $30 million round of equity funding with European investors. Leiman comments: “We are very fortunate to have a solid financial footing to build growth and scale that is essential to our air taxi model.”
The $30 million is to accommodate the firm orders for 30 Mustangs that are coming on stream steadily over the course of the coming months and years. “Blink aircraft delivery schedule remains unchanged,” insists Leiman. “There are four aircraft in operation today, a fifth aircraft to be delivered in April and nine to be in operation by the end of the year.”
The operating economics of the Mustangs firmly met with Leiman and Ogden’s approval and the short landing distance of the aircraft means it has access to a large number of airports. This is important as Blink has previously stated its plan to develop a primary and secondary hub system within identified regions.
When asked whether the downturn has made Leiman question Blink’s business model in terms of fleet and whether he has had cause to reconsider being a provider of purely short haul missions, Leiman responds: “No and no. We are a European operator – there maybe opportunities to deliver Blink in the Middle East or India. However, we want to prove the validity of our model in Europe.”
Blink has always been about corporates saving on their travel budgets, saving corporate time, making travelling time productive and also accommodating a lower level of employee when it comes to private – as opposed to commercial – corporate travel. Pricing was planned to be half what a corporate would expect to pay today for a private flight; in fact the four seat travel opportunity has been priced comparably with four business class fares.
Leiman states: “In addition to the corporate shuttle products Blink offers a variety of services to our customer base – from 21 day advance fares to walk-up fares. The further in advance you book the lower the cost.”
Does the plan to become an outsourced flight department for corporates still hold firm or has Blink’s market become more diverse than this over the last year? “Yes this imperative does still hold true for Blink,” responds Leiman. “We have seen significant demand from corporates looking to move their people around quickly and efficiently – we are in advanced negotiations with a number of FTSE 100 firms and global companies.”
So is Blink targeting specific industry sectors? Is the banking community still an opportunity for operators such as this? “Blink is targeting major corporates with a European footprint. Any firm which needs to move people to multiple sites within Europe will save money by using Blink,” Leiman insists. “In the current economic environment, corporations and individuals alike are looking to increase their productivity without increasing cost. Blink allows them to do both.”
But to what extent do corporates still understand the economics of private air travel? Are there now two very distinct camps on this issue? “Blink offers a differentiated product in the market place that provides significant value to both corporations and the end travellers,” he comments.
Blink is very much about providing a customised solution to corporate customers. The company’s partnership with TAG has been intrinsic to this. TAG has been operating the Mustangs on its own AOC throughout the airport destination network the business plan has supported to date. However, Blink is now developing its own AOC which will be completed by the middle of 2009.
Leiman and Ogden have always been confident that their business plan is unshakeable but has the erosion of confidence in the corporate and air operating markets caused them to falter at all? “We are very confident that Blink will be highly successful,” responds Leiman. “There has been enough evidence that our business model is the right one and the demand is growing from corporates looking for a service that hitherto has not been available.”
