VistaJet – a journey along the old Silk Road
Posted Date: 15/05/2009
Issue: Executive & VIP Aviation International June 2009
Publication: Executive & VIP Aviation International
VistaJet is one of those businesses that appears to come from nowhere, grows rapidly and leaves everyone wondering what will happen next. With Thomas Flohr, Chairman, holding onto the reins, there can be no doubt that he has tight control of what is turning out to be a very powerful business – even in these troubled times. Jo Murray speaks to him
VistaJet resources are being placed firmly in the only region whose economic light has refused to go out – the Middle East, confirms Flohr. And these are not resources that are being sucked out from other regions; these are additional resources. “We are hoping to make a third of the company’s revenue from the Middle East within the next three years,” he remarks.
“If you look at the service areas that VistaJet provides, our focus is everything outside the Americas; that is in Europe, the Middle East and Asia. I call it the old Silk Road which extends from Europe, through the Middle East to South East Asia. As part of our expansion strategy, the Middle East was always the centre point it is just that we have only recently launched our focus on the Middle East because we can’t be everywhere at once. We felt that we should undertake the European and the CIS countries expansion first, and then South East Asia and the last leg is the Middle East.”
Flohr is adamant that the Americas will not enter Flohr’s future business strategy even though bad economic conditions could provide some chinks of opportunity in what has proved to be a very mature market. “I believe business is all about focus,” he says. “This does not mean that we do not fly into the US. We have many flights today into the US and South America and we have flights back into Europe, Russia and the Middle East, however, we do not intend to have a North American base.” He explains further that any lift VistaJet’s clients need within the US is seamlessly provided by FlexJet.
When asked whether VistaJet is replicating a European strategy in the two other regions, Flohr responds: “In terms of the corporate strategy, it is absolutely identical. We will service to the highest level possible which hasn’t really been done in this industry prior to today.” In terms of tweaking the business model for the three different regions, Flohr is fully cognisant that local customs and culture will lead the variations in service delivery.
But, at present, he is really excited about the prospects for doing business in the Middle East “We find an excellent infrastructure in the Middle East,” he enthuses but he concedes that building the business in India is proving more difficult because provision for private jet operations in India simply does not yet allow VistaJet to deliver the level of service required of its brand. “By contrast, in the Middle East I find excellent infrastructure for the services we provide and we have chosen the right local handling partners and catering companies to make sure that our services are delivered at the same standards we deliver today in Hong Kong, Singapore or Moscow.”
Speaking of Moscow, VistaJet has been vocal over the last couple of years about how Russia and the CIS countries have contributed significantly to VistaJet’s growth, but perhaps times have changed; or have they? “We are on track with our growth plans,” states Flohr categorically. “Our growth, year on year, for the early months of 2009 is approximately 25-30% which meets our plan. However, at the lower end of the market – that is Learjets and below – do we see a significant downturn? Yes – in the general aviation market. But VistaJet really focuses on Learjets and above and we’re still flying four or five times a day into Moscow.”
He adds tellingly: “If we have an overall market that is shrinking by 15% and my revenue and passenger numbers are up by 25%, the simple conclusion to draw is that VistaJet is taking market share from other operators. Where is the market share coming from? It is coming from those who have two or three jet operations who are niche players and find it very difficult to achieve scalability of a consistent product.”
Flohr points out that when a customer comes to VistaJet he can be sure that a silver jet with a red stripe will always show up and there will be no subcontracting. “The customer always gets exactly what he expects,” he says. “That is the centre point of our strategy and that is the reason behind us winning market share.” He is very much of the opinion that there are good opportunities to be had in these bad times. “What we are seeing is a market cleansing. You need to have a strong brand,” he insists.
But there is no place to hide when the financial markets crash. Even the buoyant VistaJet is feeling some pain. “Every company is impacted by the current circumstances. We had originally planned to grow this year by 14 planes and we have taken that back to seven planes. Given our excellent relationship with Bombardier, we have pushed out some of our deliveries,” says Flohr.
This brings us on to the Airbus aircraft VistaJet has on order. How does this fit into the VistaJet strategy for these difficult times? “We have had conversations with Airbus and we have disposed of some of the delivery positions and some we have pushed out into the far future because this is such a niche market – and it is an interesting market – but you cannot be in every market. We believe that a Global Express is a natural extension of a Challenger,” he responds.
This means VistaJet will be an operator of four to five different aircraft types – all of which are from the Bombardier stable. “This has a tremendous impact on the cost infrastructure and therefore part of that benefit we can pass on to our clients.”
Commenting on the acquisition of Bombardier’s SkyJet, Flohr says that the buy-out delivered to VistaJet not only a number of bases but also a high quality customer base. So what has Flohr added to the equation since the acquisition? “A consistent product on a silver metallic aircraft with a red stripe,” responds Flohr, adding that he has retained 95% loyalty of this customer base.
In terms of products, Flohr comments that while the overall name for VistaJet’s products is “Flight Solutions”, what Flohr offers the market what the market wants. Essentially, there are two products: the Programs and On Demand charter. “We will structure a contract around the customers’ needs. That is why we call it a Program,” he states. This might entail 60 hours per annum on a Learjet, 25 hours on a Challenger and 15 hours on a Global Express because that is what the customer needs – there is no point in insisting that the product and therefore the contract is for 100 hours on a Learjet if that is not going to get the customer where he wants to be during the year.
“A Program delivers guaranteed availability. You will always be on a VistaJet plane, you have transparent pricing, you have no hidden costs and you will travel on a brand new aircraft with a maximum age of three years.”
Transparency, says Flohr, is at the centre of the VistaJet way. On Demand pricing is absolute and total – there are no add-ons or reductions. The bottom line is that VistaJet is what it is – it focuses only on its two products and it concentrates on its three geographic regions. “We focus on what we feel we are best at and this is flying people in our planes along the old Silk Road with transparent prices under the motto ‘more for less’,” he concludes emphatically.
