Ian King: Air travel is one of the hardest hit areas in the pandemic, commercial passenger flight numbers have collapsed due to travel restrictions, but cargo has held up well and private or business aviation has flourished.
VistaJet is a global private aviation company and it saw its bookings rise by 15% last year. Well the Founder and Chairman of Vista Global, Thomas Flohr, joins me now.
Thomas very good morning to you. You’ve obviously had a record year, how difficult has it been to keep up with demand?
Thomas Flohr: Thank you, good morning. It’s been an interesting year and we’ve seen a very strong recovery as the commercial infrastructure as collapsed, but the world economy keeps on going and we’re connecting every corner of the world with our airplanes and our global infrastructure.
IK: Now you saw demand rising most strongly in Europe, is that because that’s where commercial aviation has suffered the biggest hit?
TF: That’s what I believe. We see that today, in many cities you can’t get to anymore on a non-stop basis, so you’re not only exposed to one airplane and two airports, you’re exposed to two airplanes and three airports if you need to catch a connection flight. People just don’t want to take this risk and business aviation is certainly the safest way to travel today. At VistaJet we have created travel bubbles to make sure that you are absolutely secure and have the least touch points, hence it is the safest way to travel today.
IK: Do you think that this is a permanent shift in demand away from commercial aviation and towards private jets? Do you think this will continue even after the pandemic is over?
TF: We believe so, there is a study from McKinsey which shows that approximately 90% of corporations that can afford to fly private, will continue to fly private. I think what you see really is that these aircraft, these time machines, are creating the safest and most efficient way to get from A to B. Whilst overall travel, due to Zoom and many other technology aspects, will be down in our prediction, maybe some 20-30%. I think the direct connection and the safety of a trip on a private jet has advantages and what we are seeing is that once somebody is on a business jet and has experienced this level of efficiency, it is very difficult to go back to the commercial infrastructure.
IK: Where is most of the interest coming from? Is it from wealthy individuals or is it from, as you were hinting just now, from corporates?
TF: It’s really driven by the corporation and the need to travel. Business is still being done between individuals. It’s really difficult if you think about it, that a corporation will go to a board today and say that we do need a private jet, hence please approve 20-30-million-dollar CAPEX. If you buy hours on the Vista Global fleet around the world and now we have 130 aircraft which we own, it’s simply an operational expense. Just buy the hours you need and you can get going tomorrow. I think it is that attractiveness of the business model, with no CAPEX, which allows our passengers to have access to any place in the world, at any time.
IK: Have you been tempted to put up your prices in response to this high demand?
TF: No, I think it’s really the efficiency through our technology which is bringing pricing down, which makes it more attractive for corporations. We’re happy to share some of these efficiency gains with our client base, so there is no price increase.
IK: The rating agency Moody’s put you on watch for a possible downgrade last week, are you concerned about that?
TF: I’m not, I think this is a review process where they didn’t understand or go into great detail on how we operate. At the same time, Fitch and S&P confirmed our rating into a positive, constructive communication with Moody’s.
IK: In terms of other places in the world where you are see higher demand, I gather the UAE has been particularly strong.
TF: Yes, UAE is certainly a hot spot in terms of travel, not a hotspot in terms of the virus. We are seeing the US being very active, actually we are seeing a record number of flights within the United States. Obviously transatlantic is very limited right now, flights to Asia, flights to and from India, it’s really a global demand round the world, but certainly the UAE is currently number one.
IK: Ok Thomas, we have to leave it there, hopefully see you again before too long, thanks for joining me.