Executive Airlines plans to expand at the double Executive Airlines ...

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8 APRIL 2008 EUROPEAN BUSINESS AIR NEWS GERMANY REGIONAL REVIEW Still regarded as an economic heavyweight, Germany’s reputation for quality and its geographical position in the centre of Europe have both contributed to its success within the business aviation industry. It is not without its problems. Fuel price hikes, pilot shortages and the disproportionate allocation of airport slots continue to dog the charter market, perhaps worsened by a high concentration of operators located in and around Frankfurt and not enough reliever airports to help take the strain: A problem that is surely set to intensify this October when one of Berlin’s main airports, Berlin-Tempelhof, closes. A recent upturn in the economy has had a positive effect on the charter market. “Unemployment rates have fallen, GDP is positive and we are receiving more and more requests for charter flights,” says Ulrich Sigmann, sales director of Vibroair Flugservice. Vibroair is located in Düsseldorf. Alongside Frankfurt and Munich it is one of the busiest regions in Germany for business aviation. The company operates passenger and freight charter services using two Beechcraft Premier 1 aircraft and a Gulfstream G100. It also hopes to add a new Falcon 900EX to its fleet. Sigmann points out that this latest aircraft would give Vibroair access to the long haul market. “With the Premier 1, G100 and the 900EX we can offer all segments over middle to long haul distances,” he says. Eastern Europe and Russia continue to dominate the demand for charter aircraft, while the company also works closely with brokers to bring in more business. Shortage of manpower Nevertheless, charter operators all over Europe are having difficulties holding on to their pilots. Germany is no exception. Many pilots join small firms in the beginning to accrue flight hours before leaving to fly larger aircraft. In a bid to reduce staff turnover Vibroair is targeting crew who particularly enjoy flying smaller aeroplanes. For them, as for many firms, it remains an ongoing problem. “The shortage of pilots is the result of years of neglect within the industry,” says Andreas Wald, managing director of ProAir Aviation. He seems resigned to the fact that smaller companies can expect high staff turnover. Wald explains: “A few years ago, people were saying ‘don’t become a pilot because it’s hard to get a job once Expanding Horizons Charter operators compete for airport slots and oppose closure of Berlin’s oldest airport DCA is looking to develop business in the Middle East. you’re qualified’. Now more people are training to become pilots again. There are some who enjoy flying smaller aircraft, whereas new pilots fresh from ATPL dream of flying big jets. They might stay with us for the short-term while they build up their hours but we don’t expect them to stay with us for very long.” Most of ProAir’s pilots currently operate as freelancers. For ProAir, the next couple of years will be spent developing its flying hours and establishing a good team. The company is currently looking to recruit two more members of staff and when its plans to acquire a Falcon 900B come to fruition, it will require even more people. ProAir is located in Stuttgart and during the summer months it has a floating base in Cannes in the south of France. ProAir Aviation was launched last year. Borne out of parent company ProAir Charter Transport which has been operating for the past 12 years. This new venture acquired its AOC in April 2007. Last October, Wald took up the position of managing director. Wald is keen to point out that the business aviation arm operates independently from the parent company. Know More. 800.553.8638 +1.315.797.4420 JETNET.COM Worldwide leader in aviation market intelligence. Euroheli: Charter flights and pilot training. “We’ve had to convince people that we are 100 per cent neutral. As we're a new company we're acquiring more and more new customers.” ProAir currently owns and operates a Learjet 31A, its first acquisition, and manages an investor-owned Learjet 45. Says Wald: “Years ago when you thought of a business aircraft it would usually have been a Learjet. The bulk of the charter market in Germany still focuses on 6-8 seater aircraft, and is usually either a Cessna or a Learjet. As a new company we needed to find our niche and as many clients, particularly those in the UK and Germany, still often seek out charter companies who operate a Learjet we went for that.” The company flies throughout mainland Europe, with the Learjet 45 regularly heading to Moscow or Scandinavia. Southern France is also a key market, Wald says, which is why the company decided to operate a floating base there to meet the increased demand over the course of the summer. At one point, ProAir had considered doing a similar thing in Moscow but after investigating the options it decided not to go ahead. “We ran some tests but for now it's not where we want to be. It would not be successful. There are some operators who cover Moscow who can offer flights at unbelievable rates so it wouldn’t make sense for us to compete.” With so many charter firms operating out of Germany how does ProAir stand out from the rest? “Being situated in the centre of Germany obviously helps reduce ferry costs and as we’re small we have lower overheads. We don’t have anybody working for us who isn’t absolutely vital to our operations. These both allow us to keep our rates down and because we’re small we’re flexible enough to see what we have to do to win new business.” Top on the list of priorities for the coming months is acquiring a new aeroplane. “Bigger aircraft normally reflect a bigger turnover and would cover a lot of our overheads. It would also allow us to increase the number of flights east, which is a massive market. The 31A isn’t really equipped for that service. It will depend how the fleet develops. We’ll be acquiring an aircraft through an investor so it will depend on what they want from an aircraft. We’ve got broad experience of operating larger aircraft; our transport division has operated a Falcon 900B for many years. We’ll just have to see what happens.” Aero-Dienst is modernising its fleet and has recently added two new aircraft to its AOC. The first is a Falcon 900EX trijet. This 15-seater aircraft has a range of up to 8,300 kms and will be used for medium to long-haul charter flights. The other is an eight-seater Learjet 45XR which joined the fleet last December. Aero- Dienst, which is based in Nuremberg, chose these two aircraft for the so-called ‘steep approach’ so they can fly, for example, to the centrally-located London City airport. It has eight aircraft in its fleet used mostly by corporate business travellers. Part of the Aero- Dienst fleet is also used for air ambulance flights. This year, Aero-Dienst will celebrate its 50th anniversary, making it one of the oldest business jet operators in Germany. Additionally, the construction of a new third maintenance hangar is expected to be completed by the summer. It will give sufficient room for Aero-Dienst’s fleet and for client aircraft from around the globe. The company has just become an authorised service centre to cover additional models such as Falcon 900EX and 900EX EASY, so all line and maintenance work on these two aircraft can now be carried out in Nuremberg. Based close to Nuremberg is Euroheli Helicopterdienste. It currently operates one AS350 and two EC120 helicopter, with plans for new acquisitions in the near future. Euroheli typically provides charter and freight services throughout Germany and across the rest of Europe. In addition, it also offers external load missions, sightseeing trips, aerial photography flights and flight training services. Air Hamburg acquired a Citation Bravo last year. It has also made changes within the company. A spokesperson told EBAN: “The flying and operations staff have been integrated into the existing operation. Furthermore, due to raising demand more crew have been engaged. We plan on adding at least two more jets by the end of the year,” the company says. Air Hamburg: Bravo latest addition. Although the company is continuing to grow, it has had to tighten its belt. “The raising fuel price is not good for margins. Charter prices are rising and some clients do not understand why prices go up every month. Flying in Russia in particular is becoming extremely expensive, obtaining overflight permission takes a lot of time.” Despite added costs, business levels remain healthy. “The charter market is very busy and a lot of new customers who did not know this type of flying before enter this business. With direct marketing, the
EUROPEAN BUSINESS AIR NEWS Essen-based VHM. brand “Air Hamburg” is getting well known in the north of Germany. This attracts a lot of new and end-user clients. Internationally, we perform very well and this is the best publicity to obtain more flights from international brokers. “The Citation Bravo that we recently acquired is performing very well which was no surprise as it is the second one we are operating now. We also do a lot of AOG-flights and it is always exciting to meet the deadlines.” VHM Schul und Charterflug currently operates six aircraft including a King Air B200, one CJ3 and an EC120 helicopter. As well as passenger services it also offers cargo, air ambulance, photography and leisure flights. Most recently, the company recruited more pilots and a marketing and sales manager, Marc Sanders. The company is based in Essen in the Ruhr valley and is very pleased with its one year old Cessna CJ3. “It has performed very well from the first day on,” comments Sanders. “The charter market is still growing and we get in personal contact with direct customers and brokers by our sales and marketing manager.” Room to expand Another area of growth in Germany is medical flights. In 2007, the air rescue alliance Deutsche Rettungsflugwacht (Team DRF) was alerted to more missions than ever before; up to 39,111 missions, seven per cent higher than the previous year. On average, DRF crews were on a mission 107 times a day. One main reason for the increase in demand, according to the DRF, could have resulted as a knock-on effect from changes in the German health system where regions of weak infrastructure are confronted with a growing lack of ground-based emergency physicians. As a consequence, the demand for help from air rescue teams is gaining more and more importance for complete medical emergency care for the population. The number of transports between hospitals and specialised clinics has also risen. DC Aviation (DCA) is looking to the Gulf to develop its business interests. Formerly known as DaimlerChrysler Aviation and a member of the Cirrus Group, DCA operates a 30-strong fleet of aircraft including a G550, Challenger 604, Legacy 600 and Learjet 60. The company has always had a strong European focus and hopes this will continue. It has set its sights on developing a new market by establishing a base in the Middle East. Explains DCA’s Jonas Kraft: “DCA was focused on German corporate clients while Cirrus has a strong focus on Russia. We are still in a strong position there but we want to develop other corporate business in Europe and the Middle East.” The Stuttgart-based company has ambitious plans for the next few years. It wants to establish other bases and acquire up to 20 new aircraft between 2008 and 2011. According to Kraft, the company will fund the move by selling some of its older aircraft. “It is our philosophy to operate young aircraft for our customers,” he says. DCA will be investing in its own fleet – it already operates 30 aircraft – as well as acquiring new aircraft on behalf of clients. The first aircraft in this ambitious plan will be a Legacy. It will be looking at longhaul aircraft such as a Global More jets for Air Hamburg. Express or a G550. “The Middle East is a growing area. There are a lot of aircraft around but many of them are quite old. The market is booming there like it is in Russia so we are hoping to find a good partner to develop this area.” Unlike smaller operators, large charter companies like DCA are fortunate to be able to offer their staff room to grow and develop their career within the same company. Does this help with staff retention? “We show people a career and as we have so many different models our pilots can climb to larger jets which makes us more attractive to pilots.” They are also more able to absorb extra costs incurred by factors out of their control such as increases in fuel prices. “There is not much you can do about that [fuel prices]. We have tried to reduce costs elsewhere; we have five Citation XLS aircraft for example so we have tried to reduce the costs for spare parts. Fortunately we are large enough to have other opportunities to reduce costs.” Jet Executive recently boosted its fleet with a Challenger 600 from Premium Aviation. It is planning further development of its fleet. Gunther Krahe from the Munich and Frankfurt-based company Jet Executive says: “We operate with a good range so it's not our focus to concentrate on the German market, it’s more for those who operate aircraft like Citation jets. We don’t see our main business coming up from German market but from European market, North Africa and the Gulf. The UK and Russia are strong markets. More and more Russians are acquiring their own aircraft, they’re not chartering any longer. More often they are offering their own aircraft for charter so it’s becoming the other way around now. Some aircraft are based in Russia but it’s very expensive to be APRIL 2008 9 GERMANY REGIONAL REVIEW based in Moscow or St Petersburg and there are high living costs for crews and landing fees. Getting permission to land remains difficult. If you are not based there and have a good relationship with the CAA perhaps you can get permission quicker.” The direction of the market is becoming more and more complicated. According to Krahe, the problem is not the economy, the problem is airport slots. He says: “Nearly every German airport, or at least the five or six biggest ones, are now fully coordinated. We need the same airport slot operating a Learjet that a 747 needs. The problem is coming up more and more. We have some aviation professionals working on it who are considering going to their lawyers with it. There needs to be a certain capacity for business aviation. Lufthansa is blocking 90 per cent of slots for German airlines in Frankfurt. The airports like to have larger aircraft in the slots because they make much more money for a slot for a 747 than for a Learjet. The German Business Aviation Association (GBAA) is already considering whether or not to take it to the courts. We won’t get them to agree without going to court. It’s a serious problem since nearly two years ago, since the slot co-ordinators were automated. Previously you could arrange an ‘oral’ slot for a flight. Today you have to set your slot into the computer or risk having the flight plan cancelled.” Charter operators in Germany are all finding it increasingly difficult to compete with scheduled airlines for airport slots. Vibroair's sales director Ulrich Sigmann fears that the allocation of airport slots will become more and more of a threat to the industry. He explains: “The EU regulations give more rights to scheduled airlines so we often find there are no slots remaining. Each slot is worth millions for scheduled airlines so this is becoming an increasing problem for us.” For the short-term charter operators are able to liaise with airport slot co-ordinators to resolve the problem but, Sigmann says, it is essential that the industry comes up with a long-term solution. “In the United States it is very common for charter operators to invest in bypass airports rather than competing with the airlines but it takes a great deal of time to implement and is
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