Now one of the global leading operators in the business aviation industry, Avjet has come a long way from the single aircraft, fledgling charter company Marc Foulkrod joined as a consultant in 1981. By the time Foulkrod acquired the majority ownership of the company in the mid-1990s, buying out his partner, the former chief pilot, Avjet was already well on its way to being a global player. Today, the company has offices, agents and representatives in Asia, Europe, Africa and the Americas – and as Foulkrod told EVA, it is continuing to expand.
“We just added three Gulfstream G550s to the fleet and we have three Gulfstream 650s that we manage, which maintains our focus on large-cabin aircraft for our charter business,” Foulkrod explains. The rationale for the current expansion of the fleet is to provide the company with sufficient capacity to increase its presence in Europe, the Middle East, Asia and Africa. As Foulkrod notes, US companies are very keen to develop and extend their relationships into these regions and that, in itself, is generating demand for long-haul, large-cabin charter capacity.
However, while some markets definitely provide expansion opportunities, at present, some are shrinking. Russia and China are both cases in point here. “The market in Russia changed dramatically once Putin annexed the Crimea and the US and Europe imposed sanctions. However, a lot of Russian owners did not keep their planes in Russia anyway and those that did lost no time getting their aircraft out of Russia. We have to wait to see how things turn out there, but business doesn’t stop and many wealthy Russian business people have simply shifted their focus. Money goes where it is treated best,” he comments.
Avjet has been in Africa for some three years now and has co-operative arrangements with several Gulfstream owners. “There are challenges to operating in Africa. In some ways it is like the Wild West, but we are persevering there and we believe there is definitely growth to come,” Foulkrod says. GDP growth for Africa as whole is currently running in excess of 5% year on year, according to The World Bank and the International Monetary Fund, which makes it a very exciting place to be – despite the challenges around the lack of infrastructure and endemic corruption. “You have to be careful about who you engage with and partner with. You need to make sure you are working with the right people and doing things correctly, but if you do that, it is definitely worth being in Africa,” he comments.
He points out that there is a real opportunity to differentiate yourself as a player in Africa. “What separates us is that we do not engage in questionable practices or whatever oddities some might engage in there. We deal with the best people and the best companies and they respect us as a professional organisation. It is very important not to try to gain short-term advantages by engaging in practices that would not stand up to scrutiny. By being determinedly professional, other businesses that have the same requirement for transparency and high standards of corporate conduct seek to do business with you and that is a great way to grow,” he notes.
According to Foulkrod, Avjet has expanded its aircraft management business, and that part of the operation continues to grow at a healthy pace. “With the charter market in the US now back to relative health we are able to get more charter hours than our owners need, so charter continues to grow. We also see a general broadening of the base when it comes to the numbers and types of people that use charter,” he notes. The aviation industry has come a long way from the Pan Am days where passengers wore suits and fine gowns and only the wealthy flew. It has now definitely become more available to a broad market, he says. In part this has come from the other end of the scale to that which Avjet specialises in. The light jet charter market, with Embraer Phenoms and aircraft like the Eclipse and in the year ahead, the HondaJet, has opened up charter to a much wider spectrum of people for short-haul flights. Potential charter travellers have become very sophisticated about the opportunities for flying ‘empty leg’ charter flights at a heavily discounted price, and this is true at all levels, he notes. “Clients know that there is an opportunity out there, that they can get on an airplane for a one-way trip without paying the normal, vastly higher price for a round trip. The fractional market has also extended private jet flying to a wider audience, a number of whom go on to buy their own aircraft,” he comments.
“We are seeing quite a lot of innovation in the industry, especially in the US, around empty legs. In the past the industry of necessity generated a wide variety of empty legs across the whole spectrum of charter. Now people are making a business out of marketing empty legs and we are seeing increased utilisation of business aircraft as a result. For some operators and owners it is a much-needed revenue source, for others it is a new way of addressing the charter market,” he notes. For Foulkrod, however, this increased focus on one-way trips also has the potential for creating difficulties and challenges. Because it reaches down into the opportunistic end of the market it encourages the entry of charter sales brokers of variable quality. There are problems with the non-payment by some brokers of the relevant taxes, which leads to investigations by the IRS and the FAA, which does not do the reputation of the sector any good.
Avjet now has some 41 aircraft under management and continues to be highly focused on long-range, international travel and coast-to-coast flying in the US. “Being based in Los Angeles means that we do a lot of LA to New York five-hour trips, while London is a nine-hour flight,” he says. Avjet owns two jets in its own right, a Hawker 800XP and a Gulfstream150. “With the pick-up in the charter market in the US it is now relatively straightforward to provide an owner with 200 to 300 hours of charter, if that is what they want. We have aircraft in our managed fleet that do 400 hours a year of charter. It is up to each owner to decide on the level of activity that they are comfortable with,” he says.
Interestingly, Foulkrod says that Avjet is now seeing an uptick in aircraft sales. The company is a major aircraft broker in addition to its aircraft management and operator activities. “We are seeing more interest from owners in acquiring new jets or upgrading their existing jets, than we have really seen since the global financial meltdown of 2008. But people are not fully engaged yet because of the very dysfunctional nature of the US government. The continued intervention in the markets and the currency wars we are seeing make people nervous. Plus the regulatory stream that seems to spew out of Washington at an accelerated rate is a chilling factor for business. We need a stable regulatory regime that enables you to plan ahead five and 10 years, which is definitely not what we have enjoyed for some time now.” Foulkrod, like many of the business leaders in the sector, is no fan of the current Administration. “Corporate aviation is a business tool, but it is always under attack by politicians. They want to tax it more and regulate it more and there is a constant threat of overreach by government that is not good for any business,” he notes.