Time and again, when looking at the history of successful business aviation companies, one’s attention is drawn to the managerial flair and skill of the founding director or directors. FAI rent-a-jet, Germany’s largest GA operator by fleet utilization, with 21 aircraft, is a clear example.
Siegfried Axtmann, FAI’s founder and chairman, is a real estate specialist who came into business aviation almost by accident. As he explains, in the mid-1980s his group of companies had a helicopter, kitted out with an executive interior, that was something of a source of irritation since it was not being satisfactorily managed or utilized.
However, the fact that the Axtmann Family holdings was familiar with helicopter operations was to prove significant. In 1989 a private club with two rescue helicopters, spun off that part of its activities as a separate, wholly owned subsidiary called IFA Flugbetriebs GmbH. That operation quickly became too much for the private club to manage and it was put up for sale. The idea of acquiring a modest sized operation with an experienced flight department and helicopter operations team was attractive and Axtmann Holdings bought the company from the private club, renaming it FAI.
“I am a construction engineer by profession and you can say that I came via the side entrance into business aviation. It is a sector that I have become very fond of,” Axtmann says. Two years later that basis in flight operations provided by the acquisition enabled Axtmann to take over the flight department of GRUNDIG, as an outsourcing operation.
That acquisition gave him an entrance into general aviation. However, to his professional eye that general space looked to have too many players, all competing on price and quality of service. Those two factors, price and quality do not sit comfortably with each other. It is extremely difficult to open up a lead on your opposition on sheer quality of service when you are getting undercut on price.
Instead, Axtmann decided to expand the notion of a “rescue” service into a full blown air ambulance and medical evacuation service. He also focused FAI on providing NGOs such as the Red Cross and other emergency and crisis relief organizations with air transport and close air support services. This gave the company two niche areas to expand into.
“The beauty of having a niche business is that you immediately have a better protected and more profitable revenue stream. Everyone can do general aviation, but the barriers to entry are a lot higher with an air ambulance service”, Axtmann comments.
He points out that the key ingredient to running a successful air ambulance operation is confidence in an operator´s experience. “You need to build up a long term relationship with the insurance industry, since insurance underpins virtually all medical flights. Winning that trust is a core problem for any new entrant in this field,” he says. FAI built its reputation slowly over time, doing a mix of general aviation and medical services to start with and gradually ramping up the air ambulance service as the business developed. As the level of enquiries rose, the brand gained momentum across the sector.
“The key to profitability in air ambulance is the level of enquiries that you get. A sustained level of enquiries allows you to get a good utilisation rate. One case a day will not fill up your network. Within a year we will get as many as 10,000 enquiries. Not all of them will be actioned and some of the cases that are serious will be in areas that your aircraft are not positioned for and so you cannot make a profitable flight out of that particular call. If you want to be profitable in this business you need at least one in five of the calls to generate business,” he comments.
In this sense the air ambulance service has a very similar model to a freight forwarder. Both businesses want the unoccupied mileage to be as small as possible and you want to keep the non-patient carrying hours down to a minimum.
Inevitably, running an air ambulance service is a lot more complex than running business charter services. This is a bedside-to-bedside service, so the logistical challenges are always a lot tougher.
The European standard for air ambulance work is that every flight carries both a doctor and a paramedic. As Axtmann explains, it is an industry standard in Europe that the doctor is a full time practitioner, so air ambulance services create a roster of doctors and paramedics from local hospital and clinical practices who are willing to sign up to a certain number of days per month and to be diligent in meeting their roster duties. FAI currently has some 50 part-time physicians and paramedics on its roster. In addition to its main base, where it has a 9,000 square metre FBO, FAI operates satellite offices in Dubai and Miami, as well as line stations in Baghdad, Kabul, Entebbe, Abidjan, Bamako and Dakar.
2015 will be a great year for Axtmann and FAI. Not only is the company expecting another record year, with revenues anticipated to be in the region of 80 million euros, in July of this year Axtmann finally bought out its Greek shareholder, MIG Aviation Holdings, a 100% owned subsiary of Marfin Investment Group. MIG had originally taken a 49.9% stake in FAI back in 2008.
The original idea, as Axtmann notes, was that MIG would bring both money and potential clients to the table, but then L. B. Day followed by the Greek crisis hit and MIG was too busy to be more than a passive shareholder. “Basically, they wanted to exit and I was able to buy them out. That gave me back 100% of FAI, “ Axtmann says.
It also frees him up to look at potential acquisition and to focus on driving further efficiencies in FAI’s fleet of 21 aircraft by consolidating the entire fleet around a single OEM, namely Bombardier. “We are now in the final stages of having just two aircraft types for our air ambulance service, Challenger 604s and Learjet 60s. We have three Global Express and we keep that either for VVIP-charters on a case-by-case basis . We shall have a conversion kit certified by end of this year which means we can install up to 3 ICU in the cabin of the Global Express,” he explains. There is a solid niche market for long haul VVIP “ intensive care” transport.
“This is the first generally available Global Express that is air ambulance capable. So far previous air ambulance Globals have been the preserve of governments and the military,” Axtmann says. At EBACE 2015 FAI announced the induction of its eighth Learjet 60 into its air ambulance fleet. Four more Learjet 60s are scheduled to be delivered before EBACE 2016, replacing Learjet 55s. This will bring the total Learjet 60 complement up to 14, along with four Challenger 604s and the company’s three Global Expresses.
FAI recently acquired a small charter operator, Fly Alpha, that also happens to be based at FAI’s home base of Albrecht Dürer International Airport in Nuremberg, Germany. While charter is not its main business, Axtmann says that the charter side of the business is doing reasonably well, with the three Global Express aircraft easily notching in average per aircraft 600 charter hours a year.
He is particularly pleased with the fact that FAI has again made the shortlist for the 2015 best air ambulance service provider award. The presentation of the International Travel & Health Insurance Journal’s ITIJ Industry Awards is scheduled to take place on 5 November at the Megaron Athens Concert Hall. “We won the award in 2012 and it is very gratifying be amongst the four finalists again this year. I shall, of course, be delighted if we win, but making the short list is a huge boost to all our team and highlights the tremendous effort that everyone puts in every day,” he notes.