Ironically for a sector that has a reputation for catering only for those with bucket loads of excess cash to spare, Thomas Flohr, president of luxury aviation firm VistaJet, says the financial crisis has helped his company to become one of the world leaders in the sector.
According to the businessman, this is primarily because the company offers businessmen a middle ground between the expense of buying a private jet and the inconvenience of flying on chartered flights.
Thomas Flohr, founder and chairman of VistaJet said, “I think a big lesson people learned from the financial crisis is that investing in something that is not your core business is a very risky thing to do. It only makes sense to buy your own jet if you are flying more than 400 hours per year.”
The firm has a fleet of 30 aircraft, which businesses can use on a flight-by-flight or a contracted basis. Although not exactly cheap, the 7,000 euro ($9,400) per hour rate VistaJet charges is better value for businesses than buying and maintaining their own jets.
And, perhaps not unsurprisingly due to its hoards of billionaires and mammoth size, it is Russia which generates the biggest share of VistaJet’s business. Flohr says some 30 percent of the company’s trade worldwide is with Russians and there is still room for growth.
VistaJet was founded in 2005 and although it suffered a rocky year or two during the crisis, most of its growth has come in the past few years. In August, as the world economy was beginning to wobble, the firm announced it was taking delivery of three 12-passenger Bombardier Challenger 605 business aircraft as a result of increased demand from emerging markets. The company plans to double the size of its fleet in the next four years.
Flohr says VistaJet’s success in Russia stems largely from the remoteness of the places where businessmen need to travel to in the country. For businessmen on a tight schedule, flying regularly between Norilsk and London, the business jet is a practical solution.
Other players in the luxury aviation market have also been recording high demand for their services. President of U.S. jet trading company Jetcraft told the Financial Times earlier this month that the industry was seeing strong jet sales to both public companies and individuals due to high demand from emerging markets. British firm JetBrokers Europe recorded July as its best ever month for sales.
Thomas Flohr added, “Ten years ago trade went through the West. Today most natural resources are being explored by local companies and they’re doing trade internationally with other emerging markets, which has really has a massive effect on business jets. Global trade today is between Nigerians and Siberians, between Chinese and Saudi Arabians.”
He says the company’s branding – characterized by the silver and red façade of the jets – has also helped it build up a big client base in the country.
Thomas Flohr further added, “I think Russians are very brand loyal – they love strong brands and they have a great expectation from them. You see that in other industries as well. They are very demanding but if you fulfil that demand, they become very loyal. Newcomers have it difficult with Russians. They [Russsians] love to know what they are getting.”
Unusually for a Westerner conducting business in Russia, Flohr says he finds the country relatively easy to work in. He explains that the main hurdle several years ago was the difficulty of obtaining airport permits, but the system has since been liberalized and is now similar to most Western markets.
Thomas Flohr concluded, “I’m now looking at expanding into other markets such as China and it very much reminds me of how Russia was in 2004 and 2005. A year ago it might have taken two days to get a permit, now it’s eight hours. It actually makes me appreciate how easy it is to do business here in Russia.”
Author: Natasha Doff, for The Moscow News