ch-aviation interview: Sanjeev Gadhia, CEO Astral Aviation

Founded in 2000, Astral Aviation is a Kenyan scheduled and chartered cargo provider operating throughout the country as well as throughout East as well as West Africa. ch-aviation caught up with founder and CEO Sanjeev Gadhia during the recent World Routes 2015 conference in Durban, South Africa

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Sanjeev could you please introduce yourself and give us a little background on who you are, how long you have been in aviation, and about Astral Aviation itself?

First of all I would like to thank you for the interview. I am Sanjeev Gadhia. I am the CEO and founder of Astral Aviation which is a cargo airline based in Kenya. We have been operating now for the last 15 years, which is a very long time for a private airline to have been around in Africa. My background is: I am from Kenya – born and raised. I did my studies overseas and I am actually a banker by profession. It is only by coincidence that I actually got into the aviation business as about 15 – 18 years ago, we were doing a lot work for the United Nations (UN) and the aid agencies where we saw strong market potential for the supply of aircraft specifically for the aid relief sector in Africa. So we acquired some aircraft and targeted the aid and relief sector and as time went by, we expanded our business to the other aspects of the aviation sector.

According to our database, Astral Aviation still operates the DC9 freighter. Is there a reason for that given their age?

Yes, we are probably the only freighter operator of the DC9. What we actually have is a very unique DC9 model which is a -34 freighter that can carry the same amount of cargo as the comparable Boeing 737-200Adv. But I think the main reason why we are still operating the DC9 is because of their overhead engines. At certain airstrips, it is actually ideal to have engines which are mounted much higher up on the fuselage because of the danger of ingesting gravel as well as other foreign objects.

Astral Aviation DC9-30(F) – Copyright: Astral Aviation

So, it is not only for economic reasons but operational reasons as well?

It is more for operational reasons but another thing is that when we acquired the DC9 about four years ago, the aircraft were available at a very good rate. We also had some crew who were type-rated on the DC9. Overall, the DC9 is generally a very, very good narrow-body aircraft which can carry up to 15 tonnes of cargo. It also has a very reliable dispatch rate. We really feel that it is a great aircraft.

In terms of operating cost, how do they compare to other narrowbody freighters in the same category? Is there a downside in that respect?

The operating cost is not as high as what you’d think compared with the same type in the Boeing family, like the B737-200Adv for example. It’s a really good workhorse and it works really well for us. In Africa we have not seen anybody else that has operated the DC9, but we like them. Also low fuel prices make the DC9 a very competitive aircraft to have in the region and we hope to keep them around for at least one more year.

Looking to the future, can you tell us more about your fleet renewal plans?

Well, we have been looking at the Boeing 737-300 and the -400 now for a while. However, a key problem is that the supply gap between the -300 and the -400 is getting bigger and bigger because the -400s are being snapped up by integrators. Consequently, demand for the B737-400 is really high and at the moment they have limited availability, at least for 2015. So what we have now decided is to go initially for B737-300 freighters of which a few of them are available. After that, we would have the option of going up to the -400 series. We have done a very detailed evaluation based on the routes we want to fly and because we have actually found that the B737-300 is more cost-effective compared to the 400, we are already in talks with three airlines over the possible acquisition of two aircraft over the next three to six months.

So the first is expected to arrive in the next three – six months?


Will it be a gradual phase-in or will the DC-9s be withdrawn from service there and then?

Yes, it will actually be a gradual phase-in. As I mentioned, the DC9 still has certain advantages in flying to airports with shorter strips as compared to the B737-300 which we would like to restrict to the larger airports we plan to fly to. Some of the destinations we plan to use the B737-300 to serve include Kinshasa and Lubumbashi in the Democratic Republic of Congo (DRC), Brazzaville in the Republic of Congo (ROC) as well as Lusaka and Ndola in Zambia.

Astral Aviation Boeing B727-200(F) – Copyright: Astral Aviation

Why those routes in particular?

Well because of their range, but we also feel the B737-300 is better suited to the characteristics of some of those markets we plan to serve. On the other hand, we feel the DC9 and the B727 will still do very well on our existing routes.

Tell us more about your B747-400 freighter ACMI lease with Atlas Air. How does that tie into your network?

Yes. The B747 with Atlas Air has proven to be a fantastic opportunity which we currently operate at a tri-partite partnership. We have three partners – Atlas Air, our UK partner ANA aviation who that are based out of London Gatwick, and then there is Astral Aviation. So we fly twice a week from Nairobi to London with perishables from Kenya. We then fly from London Stansted to Liege, which is our European gateway, and then from Liege we fly to Lagos and then back to Nairobi.

Did you manage to secure 5th or 7th Freedom traffic rights?

We actually have 5th freedom traffic rights out of Liege with our Nigerian partner Allied Air. Allied Air is actually a partner on the B747 and the MD-11.

How has the whole deal worked out for you so far?

Well the Atlas Air B747 freighter is a great aircraft. It is a nose loader and we are very happy with it. We are also very happy with our partnership with Atlas because they provide is with back-up aircraft, it is a very professional airline and we really could not ask for a better partner.

Given that Nigeria is an oil-dependent economy, have you seen any knock-on effects in recent months as a result of plummeting oil prices?

Yes, definitely. There has been a reduction in oil and gas industry-related cargo, but that’s been quickly substituted by a rise in demand for consumer goods. What has actually happened is that as soon as the [Nigerian presidential] elections were over, a lot of Nigerian businessmen began importing goods from China and Europe by air again. Prior to that, things had slowed down because of uncertainty about the future and the risk of possible civil disturbances. As Africa’s most densely populated country with a population of about 160 million people Nigeria has a very strong middle class as well as a very vibrant economy and so demand for consumer goods is there. Given these two factors, we have not actually felt any impact on our fleet or on our load factors into West Africa. In East Africa we are also seeing a surge in demand for perishable exports. The reason for that is the weak currency. For example, in Kenya, the Kenya Shilling has actually depreciated by 15% so has the South African Rand and the Nigerian Naira.

Astral Aviation DC9-30(F) & B727-200(F) – Copyright: Astral Aviation

So you are benefiting from that?

Yes. You see if you have a weak currency, it actually stimulates growth in exports. But it also makes your imports a little bit more expensive.

But is there an impact on your lease agreements with Atlas Air? I am sure your contracts are in US dollars.

Yes, but our income is also in US dollars.

So you are perfectly cushioned?

We are perfectly cushioned because all the perishables we export are billed in dollars and we actually meet our lease payments in dollars so we do not have problems there.

What is your market forecast for the future then?

Our forecast for Perishables’ growth out of East Africa this year is around 15% and this is purely because weaker African currencies have made products such as Kenyan flowers and Tanzanian fish and vegetables more competitive in Europe. I really see that over the next 6 to 9 months, we will see tremendous growth in exports. I believe we also need to be cautious because for example in Nigeria as the Naira gets weaker, we could, at some point, see a gradual drop in imports. We, however, hope it will be less than 5% of 2014 levels.

Sanjeev, in terms of your other operations, we see that you also serve Somalia. How has that been going and how has the Kenyan market been affected by the ongoing civil war there as well as Al Shabaab terrorist attacks on Kenyan targets?

Well the Nairobi-Mogadishu market is one of our best routes as we have a very nice contract to supply food to UN peacekeepers stationed in Somalia. In fact, we are actually planning to expand the frequency to two flights a week. In terms of cargo, we carry a lot of perishables to Somalia and we are the only cargo airline that currently flies to Mogadishu. We have cargo coming in from the US, China all consolidated at Nairobi and then we fly it all to Mogadishu. So Mogadishu is a route with a lot of potential. Aside from peacekeeper supplies and relief aid, there are also a lot of consumer goods coming into Somalia as well.

Are you considering perhaps any other towns there such as Kismayo, Beledweyne etc?

At the moment, no, because we feel the level of insecurity at some of Somalia’s secondary airports is still too high. Mogadishu is however a safe airport. We have fantastic turnarounds there and we have a very good Turkish groundhandler named Favori taking care of us. Recently we established an office at the airport as we are very committed to its long term development. Yes, in short, there are a lot of problems, but Mogadishu is on the up. The American embassy recently reopened, which is a very good sign, and we also have the Turkish embassy, the Chinese embassy and the UAE embassy. So we are seeing a level of confidence in the city which we have not seen before. And despite the fact there are pockets of problems that we experience in Mogadishu every now and then, I am very happy to note that the airport is very safe and we will continue to fly there for as long as we can.

Astral Aviation Boeing B727-200(F) – Copyright: Astral Aviation

We saw recently that one of your Fokker 27 freighters was recruited for use with Air Djibouti. Is the lease part of a larger partnership agreement or just a one-off?

Well we have leased the aircraft out to Air Djibouti for a period of 3 months but we are really hopeful that it leads to a partnership. We want to help them to grow their airline and at the moment we want to support them flying some of their routes. We have a lot of confidence in Air Djibouti Cargo. They are in the right location as I’m sure you are aware, Djibouti is the logistics hub for the UN in Yemen and is home to US and French military bases as well.

But do you not think that Djibouti’s proximity to Ethiopia and Kenya could lead to strong competition from established players such as Ethiopian Airlines Cargo and Kenya Airways Cargo respectively?

I actually feel that Air Djibouti has an advantage because they have access to markets such as Somalia and Somaliland as well as Yemen. A flight from Djibouti to Sana’a is only one hour 15 minutes and to Aden is only about 45 minutes. So we feel that by virtue of its geographical location, Djibouti, if they play their cards right, can actually become a strong competitor in the region. There are also a lot of exciting developments taking place in their Free Trade Zone as well as with Djibouti Ports and Airports. What Air Djibouti Cargo is doing is really capitalizing on the traffic-niche which requires smaller capacities. So I believe there is potential for Djibouti to develop into a mini-hub to compliment other larger hubs, such as Addis Ababa.

Astral has been a cargo operator since its inception in 2000. But recently, you signed an equity agreement with China’s Hainan Airlines to commence passenger operations. What is the status of that deal?

There has been a bit of deliberation with Hainan Airlines and its parent HNA Group. They have big plans for Africa as you are aware. They have an airline in Ghana – Africa World Airlines (AWA) – and they recently acquired a minority stake in South Africa’s Comair. While we have held talks in Nairobi, we have not yet completed a strategic plan on the way forward. In any case, we only expect to be in a position to determine which direction we are going at the end of this year.

Is your entry into the passenger market contingent on the signing of that agreement or do you have plans to go it alone?

We have been really fortunate because the license that we have allows us to operate both passenger and cargo services. And with a strong management team already in place, there is nothing that can stop us from operating scheduled passenger services. However, there are two important things to consider: the first, which I think is the most important, is to have access to working capital which can actually support a passenger network because a Low Cost passenger carrier’s business model is very capital intensive – more so than cargo we feel. Secondly, there is need for a strong partner to make passenger operations work.. So to answer your question, our entry into the passenger market will only occur once we have a strong partner that has experience in passenger operations. We are not in a hurry to get into the passenger business as despite the fact it’s been 18 months since we signed the MOU with Hainan Airlines, we already have a very good business model, which is based on cargo. If it is going to happen, it will happen, if it is not going to happen life will still go on and we will continue to haul freight.

Astral Aviation Fokker 27(F) – Copyright: Astral Aviation

Here in Africa, we hear passenger carriers complaining about difficulties in securing bilateral traffic rights to countries around the continent. As a cargo operator, do you encounter the same obstacles?

Well, on the cargo side, it is more difficult because historically a lot of the bilateral air service agreements were based on a set model which viewed passenger and cargo rights as one and the same. But we have been lobbying the African Airlines Association (AFRAA) to have a separate set of rules for cargo and in many developed markets like South Africa, Nigeria, Egypt, Ethiopia, and Kenya there already have separate agreements for passenger and cargo rights. In all, I would say the biggest challenge we have in Africa is market accessibility. There are a lot of markets in Africa that are closed. Africa is a continent of 54 countries and I would actually say very confidently that at least a third of them are still not open while the remaining two thirds are open or fairly open. But for Africa to achieve its true potential we need full liberalization and there are some good initiatives taking place under the auspices of the African Union (AU) to this end. In April this year, eight countries got together and agreed to implement a more hybrid version of the Yamoussoukro Declaration (an AU-endorsed document for the liberalization of access to air transport markets in Africa) by 2017.

They actually committed themselves to opening up their markets, but only to each other or to Africa as a whole?

To each other and within Africa. There was a study done by IATA through a consultant called Intervista where they looked at the positive benefits of liberalization in 12 countries and they actually found that liberalization would benefit the market through lower fares and better connectivity. The African Union is also working on a continent-wide Open Skies agreement which would in essence be a more hybrid version of thee Yamoussoukro Declaration. The other very good thing is that trading blocs such as COMESA (The Common Market for Eastern and Southern Africa), ECOWAS (Economic Community of West African States), and SADC (Southern African Development Community) are beginning to open up to each other. Should it continue, it will greatly improve intra-African trade and thus Africa’s ability to solve its own problems as opposed to relying on the United States, Europe, and China where there are always strings attached.

Where do you see Astral Aviation in ten years time?

We actually have a very big strategy to expand Astral Aviation over the next 5 years, which will take us into West Africa and into Southern Africa. We are setting up a hub in Lagos and we also have big plans to set up a hub in South Africa and at the moment we are looking at Johannesburg and Durban. In particular, we are excited about South Africa as a potential hub for southern Africa because a lot of countries there like Madagascar, Mozambique, Zambia, Zimbabwe, Angola, and Malawi rely on Johannesburg. But all this will occur in 2016 as we are still in the process of setting up a hub in West Africa.

So that will take you head to head with Ethiopian Airlines which already has a hub in Lome (Togo)?

We respect Ethiopian Airlines because of their status as a national carrier, but we also feel that we still have an opportunity because we are a privately-owned airline. As a private carrier we have certain advantages that allow us to be more pro-active, and more focused on the routes we want to fly. In addition, we also want to focus on a sector which Ethiopian Airlines is not in and that is the 15-20 tonne category. This is where the B737-400 comes in as Ethiopian’s market segment is 35-100 tonnes. So in all, we have a unique opportunity of having our own footprint while at the same time not stepping on anybody’s toes. But, at some point in the future, we will have to collaborate on common routes with Ethiopian Airlines to a greater extent than what we are doing now.

Thank you so much for the interview.

My pleasure.


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ch-aviation interview: Elmar Conradie, FlySafair

Having been involved with Safair in various roles over the past ten years, Elmar Conradie was appointed CEO of the South African ACMI/charter specialist this year. Founded in 1969, Safair is a subsidiary of the Ireland-based airline group ASL Aviation. However, in 2013, Safair made the decision to enter the scheduled South African passenger market through its Low Cost Carrier unit, FlySafair. The LCC’s journey from drawing board to reality was not easy as just prior to its original October 2013 launch date, FlySafair was grounded by a court order following rival Comair’s concerns over its ownership structure. Over the course of the ensuing twelve months, FlySafair’s shareholding was revamped culminating in its eventual debut in October 2014.

ch-aviation’s Chief Commercial Officer Max Oldorf was in Johannesburg recently and had the chance to chat to Elmar Conradie about Safair’s current operations, challenges, and future plans.

Learn about Safair and FlySafair on ch-avation:

FlySafair: Airline Information | Aircraft and Fleet List | Recent News
Safair: Airline Information | Aircraft and Fleet List | Recent News

The first question is obviously about your history: Do you think it was worth waiting so long for your launch approval?

Oh yes, absolutely. I think the challenges that we had with the license just made us more determined to actually make it. Furthermore, I think the extra year that it took to go live with our website and start flying gave us a lot of time to rethink several matters before going to market – ‘Is this the right approach?’ ‘Is this the right business model?’. If you compare our product from when we tried to launch the first time with our current offering, quite a few things have changed. We made quite a number of revisions to the business model in the 12 months it took us to regroup.

Whom do you think profited the most from the long court battle?

Obviously the existing local carriers all benefited from it. It is difficult to say who benefited most because they all did. To put this into perspective, since FlySafair launched a year ago, we have saved South African consumers R614 million in airfares as the market adjusted pricing to compete.

FlySafair Boeing 737-400 in front of the Table Mountain – Copyright: Safair

What lead you to venture into the scheduled market?

We have been providing ACMI to scheduled airlines domestically and regionally for quite some time now. We also helped start up and maintain some of the local carriers by providing them with their initial aircraft, backup aircraft, training, pilots, etc. We’ve always operated on two principles: we don’t take risks with load factors and we don’t take risks with fuel. But what happened was that each time an airline went under, we were exposed – they owed us money in the form of outstanding ACMI bills that they couldn’t pay. Adding to that, actual ACMI contracts became harder to come by with airlines preferring to use theirown aircraft. So the next natural step for us was to say, ‘Listen, we take the risk anyway on these local airlines. We’ve been doing this for 48 years now and all we need to do is just to sell the ticket.’

The South African domestic market is a very tough one and carriers like 1Time and Velvet Sky have come and gone. So what is different this time round with Kulula, Mango, Skywise and FlySafair battling it out and Fastjet and FlyAfrica wanting to join in?

I think it’s difficult to isolate one particular reason as to why other airlines failed in the first place – it’s never just a single cause, it’s usually a combination of causes. It’s similar to when you succeed: it’s not just one factor but a whole list of things that allow you to succeed. Obviously the fact that we are not a start-up in the purest sense i.e. we don’t have to carry all the overheads and costs of establishing the business, helps. We all know that you aren’t going to start an airline and make a profit in the first year – that just doesn’t happen. But, if you start an airline with the support of an existing business, it makes it a lot easier to swallow the overheads and costs you have to incur, so that is definitely one benefit. Another aspect to consider is that early on, we took a long hard look at other cases and decided that if we do make a go of this, then we cannot do it halfheartedly. We aren’t just going to operate one or two aircraft and see if it works – No. We’re going to go full out and that is why we already operate five aircraft with a further three B737-800s to arrive by year-end. So we are really focusing on achieving economies of scale as quickly as possible so that we can get our cost per seat down.

You just mentioned the Boeing 737-800 is due to join your fleet shortly. Will they be replacing the 737-400s or are they there to enable more growth?

The immediate plan is to actually phase out the -400s and replace them with -800s in order to reduce our costs. I think we will keep a few of the -400s around as backup aircraft and maybe to cover seasonal demand – we have not yet decided on their future. For the two that we do own, we’re considering either selling them or converting them into freighters for use within the ASL Group. As I said, while we may keep the -400s around to cover seasonal/ACMI demand, you have to realise that the capital costs on the -400s are not that high anymore and the two that we own are paid off. It’s not like a leased -800, which absolutely has to fly.

New seats in the Boeing 737-800 – Copyright: FlySafair

Where do you want to be in five years’ time in terms of fleet size?

Fleet wise, I’d like to be where Kulula and Mango are, around that size. Ten to eleven aircraft domestically and if we then start flying regionally maybe some more

Do you think there will be a consolidation in the South African market? After all, it is one of the most competitive environments in the world.

It’s difficult to say if it’ll be a consolidation or someone simply falling out of the market. There is just too much capacity now. If you look at JNB-CPT – one of the busiest routes in the world – the capacity added since 2011/2012 has been tremendous. There are millions more seats in the market now on that route alone. If you look at the South African market as a whole, there was a period after 1time and VelvetSky collapsed when capacity was static. And it took a while for Mango and Kulula to increase their capacity. In retrospect, it would have been better for us to have launched operations a year earlier because the market was not as flooded with capacity as it is now.

So what do you think is the growth limit in terms of the domestic market?

I think growth at this stage is limited by the economic growth of the country and South Africa’s GDP growth has slowed down a little bit. Capacity in the market, at this stage, is growing much faster than demand so I see that as a real limiting factor. In all, I do not think growth in the South African market is limitless. Like I said, I don’t see us getting much bigger than a Kulula or Mango in the domestic market.

So you’re looking to take market share from them?

No. What I am hoping is that over the next decade the South African low-cost market will grow and there will be enough demand for maybe 30 aircraft. What is happening right now is that capacity is growing faster than demand so we will all have to wait for demand to catch up. Because of this, we aren’t planning to undertake any major expansion in the near future.

How have the established carriers reacted to your market entry? How have they tried to run you out of town?

A study done by an online travel agency showed competitors’ fares for routes where we operate have dropped by 39% since we entered the market. In addition, following our announcement of flights to East London and Durban in August, we have seen very, very aggressive pricing from both Kulula and Mango as we are all matching each other’s fares.

But the question to ask is will they keep on adding capacity? Well I guess it depends on how deep their pockets are as there is no demand for it right now. Obviously you can add capacity but you aren’t going to fill the airplanes right at the moment.

And how do you position yourself? Usually low cost carriers just go on a price differentiation.

Well while price is the key to any low-cost model, it can’t be the only thing you differentiate on. For example, if we drop our price, Mango matches it and they do it with any price we put on sale. So we really try to focus on other things such as on-time performance and this year we have been the most punctual airline out of Johannesburg and the second out of Cape Town. I think we’re considerably better than other LCCs in that respect. We also try to find ways to make travel more convenient by trying to smooth out the entire process of flying.

Low-cost carriers all over the world generate a lot of revenue through ancillaries. How far have you taken this?

Ancillary revenue is big for us. We were the first airline to completely unbundle our fares in that you pay for your bag, you pay for sports equipment, you pay for SMS confirmation, you pay for a preselected seat and you pay for insurance. You basically pay only for what you want. An interesting stat is that only about 50 percent of our passengers actually opt to take a bag.

So are you planning to go international?

Maybe regional. It’s something we’re looking at and I think it’s something that all airlines in Africa are looking at as well. I think anybody that says they aren’t looking at flying regionally is probably keeping something under wraps because everybody believes that is where the growth is. Everybody sees the potential for growth in Africa given the huge population and that is particularly appealing to a low cost business model. But I think one major issue is the lack of open skies agreements which curtail where you can fly to. You can’t just pick a destination and start flying there – you need to be allocated traffic rights.

Also, you need to pick your market carefully and establish where there is actually enough demand – a lot of regional flying works on business class seats and two- and three-class configurations. A Low Cost model on the other hand requires a route where there is high demand to generate the necessary minimum of 70-80% load factors. Also in southern Africa you have to pay more attention to distribution as there are far fewer internet users than say in Europe.

In other regions we have seen other Low Cost Carriers such as Nok Air and Spicejet venturing into the regional aircraft market with high-density Q400s capable of carrying 80 passengers. Do you have any plans to operate aircraft smaller than the B737?

Not at this stage. It is not something we’re looking at at this point in time but I can say we have looked at the ATR for our ACMI operations. In any case, there are actually several routes where smaller regional jets compete with a B737 with 189 seats but also routes where there are currently only smaller planes in service. Demand aside, on such routes we would rather fly our Boeing as opposed to using a regional aircraft as we can keep our unit cost down.

Regional budget operators such as Fly Africa and Fast Jet have been setting up joint ventures all around Africa in order to gain additional market access. Is that something Safair has considered?

We have considered it and we’re looking into it but we do not have any immediate plans to partner with any other companies at this time.

Are you planning to cooperate with other airlines and set up code-share and interline agreements? A lot of people transfer in JNB but they actually only have one airline to choose from if they want to have one ticket.

As a budget operator, you have to adhere to the confines of your business model and in our case, quick turnaround times are a critical component. However, that wouldn’t work with codeshare or interline deals as they rely more on convenient connection times. But that isn’t to say we aren’t open to the idea. While we would be open to co-operation, we would only invest in the necessary IT infrastructure and so on if we saw a real advantage for us. But for the moment, no.

Safair has been very active in other markets such as cargo, ACMI and special ops like flying for the United Nations. So which segments from your legacy business are still growing and what percentage do they contribute to your overall business?

Well our operations still make up half of our total business. In fact, in terms of fleet, it is the biggest because it has a total of nine aircraft. Unfortunately, it is very difficult to find suitable aircraft to meet our fleet expansion needs – the Lockheed Hercules is one example. We would like to grow our fleet with them but they are difficult to find. In fact, you might have seen the announcement that ASL is looking into the latest version of the Hercules – the L100J – but it still needs to be certified for commercial use and it is a much more expensive aircraft to operate. We actually did grow our “legacy” fleet recently by adding B737-400 Combis, which are working out very nicely for us in Africa. We have seen big demand for them there because you often have flights which require freight in one direction and passengers in another.

Safair Lockheed Hercules – Copyright: Safair

What are market conditions like for a capacity provider in Africa?

For us there’s a split – there’s the specialised work we do with the Hercules and the Combis, which still does very well. But the provision of back-up aircraft to other airlines or offering additional capacity on an ACMI basis to airlines is a very difficult niche to make work. Contracts in that segment are usually very short-term – when an airline has an aircraft undergoing a check or when they want to explore new route options – so it’s not easy. But on the other hand, for specialised aircraft you can find long-term ACMI contracts with organisations like the World Food Programme, the United Nations, and the Red Cross.

What are you future plans in terms of business diversification?

Basically we want to grow both businesses. We’re still looking at growing our legacy ACMI business but again difficulties in sourcing specialised aircraft like the Hercules and others are a limiting factor. In terms of FlySafair, I think the immediate desire is to settle down with the -800s. I don’t, however, think we’ll grow that fleet in the next year.

Overall, the game plan is to grow both businesses but if one should naturally overtake the other, well then so be it.

Thank you very much!

Learn about Safair and FlySafair on ch-avation:

FlySafair: Airline Information | Aircraft and Fleet List | Recent News
Safair: Airline Information | Aircraft and Fleet List | Recent News

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ch-aviation interview: Vytautas Kaikaris, CEO Small Planet Airlines

Announcing record first half year profits of EUR 4 million at a press conference, Small Planet Airlines announced plans to invest its higher profits in increasing passenger comfort on its fleet of A320-200 aircraft, its largest investment into fleet renewal in the carrier’s history. Small Planet has ordered 3000 new seats from Recaro and will equip its fleet with LED lighting, Economy Premium seats with more leg room and AirFi streaming in-flights entertainment to customer’s devices. With its German subsidiary launching operations in spring 2016, Small Planet plans to operate twenty A320-200 aircraft next summer season across its three airlines in Lithuania, Poland and Germany. Small Planet is also in the process of obtaining an air operator certificate in Thailand.
ch-aviation’s Thomas Jaeger had a chance to sit down with Vytautas Kaikaris, the Chief Executive Officer of Small Planet Airlines, on the terrace of his carrier’s new headquarters in the city center of Lithuania’s capital Vilnius.

Learn about Small Planet on ch-avation:

Small Planet Airlines: Airline Information | Aircraft and Fleet List | Recent News
Small Planet Airlines Polska: Airline Information | Aircraft and Fleet List | Recent News
Small Planet Airlines Germany: Airline Information | Recent News
Small Planet Airlines Thailand: Airline Information | Recent News

So you’re obviously growing very fast. What are the key drivers behind your growth in the European market and what have been the biggest challenges for you personally and for the company?

Our biggest growth has been in Poland which is where we have grown the most. This year, we operated eight aircraft plus a standby unit in Poland and that constitutes about 60% of our total revenue. So why are we growing so fast in Poland? Well I think it’s a combination of a few things. First, it’s still very much a developing market with natural demand which we have satisfied. We also came at the right time when a lot of weaker competitors were going out of business and there were a number of bankruptcies. As such, I think tour operators were very much in the hunt for reliable partners capable of providing good quality service for the long term, and not just a one-off as has happened in a number of cases. So I think we have established good relationships with tour operators whose growth requirements we were able to satisfy. In other markets such as Western Europe, I think our unique selling point against our competitors there is our lower cost structure. Obviously it helps coming from countries like Poland and Lithuania where labor costs are not as high as they are in Western Europe. Overall, this helps us to offer a very low unit cost wherein our CASK is one of the lowest in the industry. The way we are able to achieve that is because our utilization is quite high and it is getting higher because of the Asian ventures we have in the pipeline. Instead of keeping our aircraft parked, we are utilizing it and obviously that helps drive our total unit costs down. This allows us then to offer more competitive pricing and gives tour operators the incentive to choose us over the rest. In fact, if you look at the European charter market, operators from Eastern Europe have been gaining a significant amount of market share. When you combine us, Travel Service and Enter Air’s market share you’ll see we are now among the main charter operators in Europe.

So for you right now, tour operators are your key source of revenue. But you also do ACMI operations in winter. From a revenue perspective, how dependent are you on ACMI revenue and how does it contrast to other Baltic operators such as Avion Express and SmartLynx where it’s the exact opposite of what you’re doing?

We have chosen to pursue a different strategy wherein we are predominantly a full-charter business. This means we have our own call signs and our own customer experience. In summer, 100% of our operations are on a full-charter basis – we do zero ACMI. But ACMI operations, though a small part of our business, are still important to us because they mainly occur during winter – the low season. Last year, I think our Asian ACMI operations made up about 4% of our total revenue. So obviously, there is still a lot of room to grow.

You mentioned Asia before. Again comparing you to Avion Express, which is another Lithuanian operator, why did you chose Asia over the Caribbean like they have done?

We just divided the globe (laughs). No but seriously, I suppose Avion had some connections in the Caribbean and it worked out for them there. We on the other hand, established good relationships with partners in Asia and so for us, we see our future down there. So to answer your question, they looked West, we looked East.

Obviously as you grow your fleet, the winter problem becomes more pronounced. At present, you have a deal with Cambodia’s Sky Angkor for several winter seasons which protects you from competition there. But you have been struggling In Thailand as a result of external factors. When do you hope to be up and running and what is your take on the situation in Thailand given the ICAO’s recent imposition of a Serious Safety Concern against the country?

We knew that setting up in Thailand would be a long process but we didn’t expect it to take this long! As you say, there have been these external factors which have dramatically impacted the situation and prolonged it. As such, in November we expect to get an update on the way forward with the ICAO matter and we hope that everything will be resolved. We hope then that the Thai Department of Civil Aviation (DCA) will begin issuing licenses again. But even if things get going, it’s difficult to tell how long the whole process will take. Usually it takes 6 months to a year but in this case we simply do not know. In the interim, we are also looking at partnering some existing operators as that would be a ‘shortcut’ into the market minus the red tape. However, we also have to be careful whom we partner and under what conditions given that a lot of Thai operators are in a lot of trouble.

In Poland you’re competing with other Eastern European charter operators such as Travel Service and Enter Air. Have you considered other markets in the region or is your main focus to expand into Western Europe where there is less direct competition?

That is exactly right. We are already in a strong position in the Lithuanian and Polish markets and we intend to consolidate if not expand that position, especially in Poland. But with our entry into the German market next year, we will then be present in three of Europe’s Big Four markets – the United Kingdom, Germany, France, and Italy. While we did have a contract in France, that was two years ago and we will consider returning there in the future. But basically, we are busy addressing market needs in areas we already operate in as well as those we intend to enter – Germany in this instance. As for the Central European market like the Czech Republic or Hungary, while we have looked into them, we feel they already have strong players there such as Travel Service, which is a very well established brand. As such, we see no reason to compete with them in their home markets in the same way as we see no reason for them to enter ours. In all, our target market is Western Europe where we intend to compete with existing operators there.

Your next market entry is Germany. Why there and are you not afraid of being used by TUI and Thomas Cook to undercut others?

We were in a similar situation with leading tour operators in Poland but look what we have achieved. So we know what to expect and we don’t see why we shouldn’t be able to repeat the same success in the German market which is vastly bigger. Yes it is dominated by a few strong tour operators there but with our competitive cost structure, the size of the market, our very competent management team, and our partners we see a real opportunity there.

Travel Service recently took on Chinese investment. Are you looking for similar opportunities to provide you with added financing thus allowing you to more rapidly expand?

Obviously we’re looking at all available options. We have looked at going public (IPO) but have yet to decide on anything. Alternatively there is the possibility of taking on-board a private equity investor. But, in all, we have raised sufficient capital from our operations to finance our current growth requirements. Of course, if we decided to venture into the scheduled services market or to acquire aircraft and perhaps even other airlines, we would then definitely require either IPO or private equity funding. But no, no firm plans have yet been made.

Thank you very much!

Learn about Small Planet on ch-avation:

Small Planet Airlines: Airline Information | Aircraft and Fleet List | Recent News
Small Planet Airlines Polska: Airline Information | Aircraft and Fleet List | Recent News
Small Planet Airlines Germany: Airline Information | Recent News
Small Planet Airlines Thailand: Airline Information | Recent News

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ch-aviation pro – new features

ch-aviation has exciting new features ready for you and your colleagues with the new additions we have made available for ch-aviation pro. As of today, you will be able to use our airline intelligence information even more effectively thanks to the following new product features we have just rolled out for you:

1) Aircraft Search by Continent

You are now able to search the more than 43’000 aircraft we track in our database by continent as well:

2) Capacities, Frequencies and ASK/ASM for Airlines, Airports and Routes

Airline profiles now feature weekly capacity, frequency, ASK/ASM (Available Seat Kilometers/Miles) with Top 10 airports served by capacity/frequency, Top 10 routes by weekly capacity, frequency and ASK/ASM. Drilldowns allow you to easily look at the data on a route or airport level.

Airport profiles now feature weekly capacity, frequency, ASK/ASM (Available Seat Kilometers/Miles) with Top 10 airlines serving the airport by capacity/frequency, Top 10 routes by weekly capacity, frequency and ASK/ASM. Drilldowns allow you to easily look at the data on a route or airline level.

Analyze airline capacities using a combination of OAG schedule data and ch-aviation fleet data (for five cabins: Economy, Economy Plus/Comfort, Premium Economy, Business and First). Search by any combination of continent, country, state, metro group or airport. Filter by airline, alliance, aircraft type, service type or flight type (domestic/international) and either look up rankings by capacity, frequency or ASK/ASM. Results can be grouped by Airline and Origin, Airline and Destination, Airline and Route, Airline, Route, Origin or Destination:

Look up airline market shares on a route level by capacity and frequency:

3) Schedule Search enhancements
Schedule searches now also allow to look up schedules between continents or from a continent to a certain country, state, metro group or airport:

It is now also supported to search by schedule period instead of just a single date or a full week:

Flight details show flight capacity (for five cabins: Economy, Economy Plus/Comfort, Premium Economy, Business and First):

4) Airline Crew bases

ch-aviation pro now shows crew bases for each carrier …

… and for each airport:

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ch-aviation interview: Stefan Kissinger, MD Avanti Air

Founded over 20 years ago in Germany, Avanti Air is a well-known player within the ACMI charter market. The airline has operated turboprop aircraft since its inception but has recently introduced a first jet aircraft.

Max Oldorf talked with Managing Director, Stefan Kissinger about the current state of the charter market, the history of the company and their new Fokker 100 jet.

Avanti Air – Airline Information

Avanti Air – Aircraft and Fleet List

Avanti Air – Recent News

While Avanti Air has been an ACMI operator specializing in turboprop aircraft for the last two decades, you recently introduced your first jet aircraft – a Fokker 100. As such, how do you think the European wet-lease market for turboprops will pan out in the longrun?

The European aviation market has become a very tough environment making it very difficult to operate smaller aircraft as they require higher airfares. As a result, in recent years, many regional routes have either been discontinued or the equipment used has had to be upgauged. But despite this, there are still some niche markets, for instance in Scandinavia or between islands, where turboprop aircraft will remain in demand in the future.
However, the overall outlook is not good. Reacting to this trend, we decided to acquire a jet in order to help establish a second pillar for our business. In total, it took around eight months from the idea’s conception to the Fokker 100‘s entry into revenue service.

Avanti Air Fokker 100 at Saarbruecken Airport – Copyright: Avanti Air

Did you consider any other aircraft beside the Fokker 100?

Besides the Fokker 100, we also considered the Embraer E-Jet.
While on one hand it definitely offers better fuel efficiency and lower maintenance costs than the Fokker, on the other its capital costs are obviously much higher.
Since we only intend to use the jet for ad-hoc and charter services, we won’t likely reach the required utilization that would make a Embraer E-Jet a better option. We therefore decided to settle on the Fokker 100.

The keyword you mentioned there is “utilization”. When would an Embraer E-Jet make sense?

The Embraer would be a better option if we were to ply minimum of around 2,000 flight hours per year. However, in the market we are targetting, it’s not unusual to be inactive for periods of four to six weeks in a row, making it nearly impossible to attain those 2,000 flight hours.
Another advantage of the Fokker 100 is that maintenance provider Contact Air Technik, which specializes in this aircraft type, is located in Saarbrücken which is very close to our home base.

Avanti ATR 72-200 infront of its Hangar at Siegerland Airport – Copyright: Avanti Air

Did you consider the Boeing 737 or the Airbus A320 as potential options at all?

We actually considered them in the beginning but we soon realized that they wouldn’t be viable options. You see, the market is flooded with Eastern European carriers operating those types of aircraft at very low costs. We, as a German airline, are simply not be able to compete with East European carriers offering ACMI rates for a B737-800 at less than €2,000 ($2,200) per hour.

Avanti Air recently underwent rebranding. Is it important to invest in a corporate identity as an ACMI/charter airline?

While it isn’t absolutely necessary, it is certainly valuable. Our website really needed an overhaul and our corporate identity was no longer up-to-date. So, we decided that alongside the acquisition of our Fokker 100, we would also refresh our image and look.

Avanti Air ATR 72-200 at Koh Samui airport, operating for Bangkok Airways – Copyright: Avanti Air

What lead to the establishment of Avanti Air more than 20 years ago?

Well, Markus Baumann (Avanti Air’s second shareholder) and I originally worked as pilots before we decided to go independent.
We started off in 1994 with a share capital of just 50,000 Deutsche Marks with a business model that offered aircraft management to aircraft owners – the first ones to do so in Germany at the time. Though we started off with a single Piaggio Avanti and one Beech King Air, we soon expanded our business.
Our customers mainly used the aircraft for internal factory shuttles and a big advantage for them was that they could save fuel tax due to legal loopholes.

And soon you expanded operations with a first aircraft operating your own venture…

Our aircraft management model developed quite quickly back then. Before long, it had reached its peak where we were then taking care of up to ten aircraft including Learjets and Hawkers.
We subsequently began to operate our own aircraft. The first one was a Beechcraft 1900C followed by a Beechcraft 1900D both of which were used by Phillips and other companies. We financed the planes through a bank loan.
A very important contract was the one from Britannia Airways. Back in those days, they were just entering the German market and did not operate any fixed bases which led to excessive crew downtime. They then engaged us to operate crew shuttles with our Beechcraft 1900 fleet. To satisfy the increased demand, we introduced another Beechcraft 1900D. All in all, we sold around 1,200 flight hours per year through the Britannia contract.
Furthermore we relocated from Frankfurt to Siegerland Airport where we were offered a hangar. Today, it is still used for minor maintenance work.

Reception in Munich for some members of the German national football team after the won World Cup in Brazil – Copyright: Avanti Air

The heydays of the Beech 1900s are long gone and you have now transitioned to ATR aircraft. How did that come about?
The best time for the Beechcraft 1900 was during a brief period post 9-11 when a lot of companies tried to avoid scheduled services by arranging private flights for their employees. Back then, we flew almost exclusively for Microsoft and they paid very well. However, when all the hype died down, the market for Beechcraft 1900Ds began to slowly disappear and so during the early 2000s, we began operations with ATR aircraft.
Our first ATR was sub-chartered out to DAT Danish Air Transport and flew freight between Rönne, Copenhagen, and Aalborg from 2002 to 2003. After that contract ended, the ATR sat idle for six months. We were considering selling it off when finally we got another sub-charter contract – this time from Meridiana for flights out of Lampedusa and Pantelleria. The contract was soon extended, and so we acquired a further two ATRs of which the second was used for cargo flights between Paris and Warsaw on behalf of FedEx before it entered into service in Southern Italy as well.
In 2008, we won another ACMI contract in Italy – with FlyOnAir from Pescara. With the resulting growth in demand, we therefore had to acquire a fourth ATR.
However, in 2012, things began to change and our ATR ACMI business that had proven so successful in the years before slowed down dramatically with the loss of the Meridiana and FlyOnAir contracts. While we were able to secure new deals with Air Berlin and Darwin Airline for brief periods, we were not longer able to make use of all the capacity we had available. So, after having sold our Beechcraft 1900 fleet in 2007/8, we then began to dispose of our ATR fleet.
But, as luck would have it, we actually discovered that we had a knack for aircraft trading and so we moved to acquire more ATRs in order to resell them.

Has Avanti Air ever considered venturing into the scheduled services market on its own?

No. We have never offered scheduled flights and currently, have no intention of doing so for the foreseeable future.
A lot of people think that we did venture into the market in the early 2000s when we offered flights out of our Siegerland base, but in actuality they were operated on behalf of Rheinland Air Service and were supported by local subsidies.
However, two years ago we did give the move some consideration when a tender for scheduled services from Pantelleria and Lampedusa was flighted. As I mentioned, we had operated those flights for several years on behalf of Meridiana and were therefore very experienced with their operation. In addition, the increased subsidies made them a very attractive proposition but in the end, the tender was awarded to Mistral Air

Avanti Air ATR72-200 at Nouakchott/Mauritania during Paris–Dakar Rally – Copyright: Avanti Air

Would you ever consider venturing into the ACMI market abroad, for example, on another continent?

We could imagine operating abroad but we would only accept contracts where the security of our aircraft and crew are guaranteed. Some of our competitors operate in Libya, South Sudan and Pakistan and while we too should be able to obtain contracts there, we do not apply owing to safety concerns.

Thank you very much!

Avanti Air – Airline Information

Avanti Air – Aircraft and Fleet List

Avanti Air – Recent News

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ch-aviation interview: Luc Bereni, XL Airways France

XL Airways France is a French airline active in the leisure and charter market. Founded back in the mid-1990s as Star Europe the carrier subsequently adopted the name Star Airways in 1997. It later became part of XL Leisure Group and got its current brand, XL Airways France, in 2006. After having survived the shutdown of the XL Airways Group, the Paris-based airline is owned by X-Air Aviation since 2012.
XL currently has a fleet of three Airbus A330-200s of which one is operated by Air Transat and as well one Airbus A330-300 and two Boeing 737-800s. The six-unit-strong fleet has an average age of 7.2 years.

During the APG WorldConnect conference ch-aviation´s Managing Director Thomas Jaeger had the possibility to talk with Luc Bereni, Commercial Director at XL Airways France, about the airlines’ current business and its future plans.

XL Airways France - Airline Information

XL Airways France - Aircraft and Fleet List

XL Airways France - Recent News



On your scheduled long-haul services, do you still rely heavily on tour operators or have you been able to build up enough direct distribution by now?

The split is now around 50:50. Of our total revenue of €300 million per year, half comes from tour operators through direct contracts while the other half comes from GDS and direct sales on our scheduled services.
A lot of our flights serve passengers booked via tour operators as well as those who have booked directly with us, and of course the routes vary a lot in terms of passenger split. On flights to the Dominican Republic or to Cancun, around 80 percent of the passengers come from tour operators. In contrast to this, our flights to the United States are driven almost entirely by direct sales with just two tour operators being able to book special fares on these flights and not a single one with committed capacity.


XL Airways France Boeing 737-800 sitting at the ramp – Copyright: XL Airways France


You offer Business Class on your two A330-200s but then decided to go for a high density, all-Economy configuration when you took delivery of your new A330-300 from Airbus in 2014. What was the rationale behind this decision? Are you planning to eventually transition to an all-Economy layout on all aircraft?

The Airbus A330-200 can fly longer routes than the Airbus A330-300 which has a range of approximately 10 hours flight time. But since demand for our premium product is much lower on routes below 10 hours, we decided not to equip the A330-300 with premium seats.
Our A330-200s are now mostly used on longer routes like to San Francisco, Reunion, or Cancun and also on routes where there is demand for Business Class like to the Bahamas.
We don’t have any plans to reconfigure them into all-Economy aircraft.

Your commercial strategy seems to be different from most other European leisure carriers; you build long-haul capacity with external aircraft in the summer and wet-lease out short-haul capacity in the summer. What are the main reasons for this approach? Is this unique to the French market?

At the moment we see good opportunities to grow in the long-haul market. Here we can offer non-stop services and good fares while also offering good service. In essence, we can deliver good value for money while still being profitable. We also have a good balance on our long-haul flights with routes to North America performing very well in summer while destinations like the Caribbean are popular in winter. Since our summer business fares better, we have to lease in additional capacity.
On medium- and short-haul routes, the situation is more difficult – there are many competitors, in both the scheduled and charter sectors. As with the scheduled market, in the charter market there are not only other French carriers competing with us like Europe Airpost, but also operators from other countries such as Travel Service Airlines.
With the exception of July and August, many aircraft are idle from Tuesday to Thursday in France because there are not enough contracts. But the Boeing 737-800 flying on an ACMI contract with Luxair, is leased out seven days a week for the whole summer season so it performs more flight hours thus generating better financial results in the end.
In the winter, the Boeing 737s perform few regular flights and are often used on an ad-hoc basis – a niche where we have become very successful.


Departing XL Airways France Airbus A330-300 – Copyright: Airbus


There is heavy competition on flights to France’s overseas departments in the Caribbean and Indian Ocean; markets you have only entered in recent years. Why did you join the battle and how have things turned out for you?

While the French Caribbean is a strong market, it might not be versatile enough to sustain four airlines all year-round. So as the latest entrant into that market, we have decided to only operate seasonally and thus do not fly between September and December.
As for Reunion, we fly there not only from Paris but also from Lyon and Marseille. This is kind of a niche market for us.


Copyright: Tis Meyer /


Do you believe Air Austral will really be able to pull off a daily A380-800 operation on the CDG-RUN route?

I have not heard anything about Air Austral and Airbus A380 for a long time.

Other long-haul leisure carriers that are owned by big tour-operator groups, like Condor/Thomas Cook Airlines UK and Corsair, began entering into interline agreements years ago and now use other airlines to feed into their respective services. Do you already cooperate with any other carriers and if not, do you plan on moving in that direction?

First of all, we too were part of one such ‘big’ leisure group as you might well remember – the XL Leisure Group was our 100% shareholder when they bought Star Airlines back in 2006 and they were present in three European countries: the UK; Germany; and France. But we all know what happened. (Editor’s Note: the Group declared bankruptcy in 2008 with the airline sold off to the Straumur-Burdaras Investment Bank.)
But we still maintain a degree of integration because we own two French tour operators: Crystal and Héliades.
In general, and this was also the case with XL Leisure Group in the past, the tour-operator group owns the airlines. In our case however, the opposite is true because we own the tour-operators and are therefore able to keep their expansion in check. We limit them to ensure we do not compete too much with our other customers which are the other big French tour operators.
Regarding your question about interline agreements, we of course look at every opportunity that presents itself in the market and that includes every possible kind of alliance and/or strategic cooperation. But at the moment, we are extremely content with point-to-point operations not only because it is a simple model, but also because every cooperation agreement comes at a cost. However, while we are content with our present point-to-point business model which has no alliance participation, that does not mean that we are against the principle. It simply means we prefer to be more cost-efficient. Small is beautiful and simple is beautiful in terms of IT, passenger assistance, connections etc.
So at the moment we have not been through this process because we are strong enough in our market sector and we prefer to concentrate on our simple model.

Well understood. So if I am a Crystal customer and live in Marseilles, how do I get to my flight from Paris? Do the tour-operators sell SNCF connections or do they book Air France flights separately from long-haul flights?

Well, there are a lot of expensive connecting models one of which I can think of is the TGVs (French high-speed trains) where they offer a product called ‘TGVAir’ which a lot of “rich” airlines already use – including a lot of our competitors. But believe me it is not “free”. We would probably be stronger in the provinces if we had such agreements when you consider the benefits of competitive ‘expensive’ models (i.e. connections and alliances) and this applies not only to airlines, but also to trains and especially the TGV.
At the moment, a customer who lives in Marseilles and wants to fly to Pointe à Pitre with us has to book his own trip to Paris or has to ask his travel agent to sort the connection out for him. So of course there is a price to pay to keep our prices low.
But we are still very interested in the provincial market which means that as soon as we have identified a potential opportunity we would be willing to open up flights there.
Don’t forget we have non-stop flights from five of France’s main regional airports (Lyon, Marseilles, Bordeaux, Toulouse and Nantes) to Punta Cana. We fly from Marseilles and Lyon to Réunion, and we are also studying adding en-route stops at French provincial airports on routes from Paris to various other destinations as soon as we are sure to have at least 200 passengers boarding, so more than half of an A330.
Part of our model means that we are probably more efficient than other carriers which are bigger and stronger than us but which definitely have higher costs than ours.


Copyright: Tis Meyer /


This next question is probably meaningless by now as consumers forget quickly, but do you feel that the XL brand was damaged by your German and UK sister carriers going out of business some years ago? Have you ever considered rebranding?

Fortunately for us, all you read about them on the internet is about the collapse of XL UK and stories from their passengers. Of course we remember in 2008 when, due to the closure of XL UK, thousands of passengers were stranded around the Mediterranean and even in Florida and that could have seriously damaged our image. But luckily, we focus on the French market and none of the news of those events made it back there.
The closure of XL Airways Germany was quite clean – it was a full charter model with all tour operators involved having already been informed by the time flights ceased. The closure of XL Airways Germany did not harm any individual passenger.
The XL brand is a very nice brand. We bought the domain name and XL Airways brand from the assets of the bankrupt XL Airways UK. So really, it is something we now own not to mention it is also a very valuable brand as there are not too many two-character domain names in the world and XL speaks for itself. and XL Airways really mean something, especially when developing our business to the United States.

How does it feel to be independent again after all of these years in ownership “limbo“? Where do you stand right now on that front?

Without a doubt, XL will have a new owner during the next twelve months. That’s a given. We just hope that we have a long-term owner, not another short-term one, because this airline’s ownership history is a nightmare.
While we are very proud to still be in business and to have been nearly always profitable, believe me it is far more difficult if you do not have a strong owner or if you have an owner who interferes with your plans or who disappoints you, as has been the case at XL Airways for several years.
We first hope that we will be able to find an owner that will stand beside us, that shares our vision and development plans, even if we aren’t proposing to double the size of the company overnight. In all, finding an investment company or owner, whether from the airline/tour-operator industry or not, who really shares our vision and supports our development, will be something very special not to mention new to us.
Of course in tandem to that, the owner should really be interested in investing in and in developing the carrier which has not been the case of recent. And it’s no secret that our past owners were not only not interested in developing the company, but were also not really someone we could work with in total confidence, which should be the absolute minimum with any shareholder.

Where do you see XL’s long-haul strategy in two to three years time?Assuming you find a suitable, strategic owner, where will your focus be?

I think the model we have developed, which has shifted away from the full-charter business to a balance between tour operators and direct sales, is something which will be sustainable in the long run.
We are only interested in passengers who are price-driven, i.e. mostly people who pay for their tickets with their own money. Despite the economic crisis in Europe, and we are still going through a very tough crisis in France which affects demand because people’s priority is not their holidays or leisure travel, demand will generally increase, not only from Europe (and especially from France) to leisure destinations but also from emerging countries to Europe. So leisure travel will continue to grow.

Offering the best fares on the leisure market by using modern, high-tech aircraft with high density seating to be able to guarantee the best possible cost and therefore lower the price of tickets, is a model that has a future.
But I don’t have a crystal ball; I cannot predict the future and I do not have these skills. But by reading some industry newsletters and magazines I see some people think they can. I just laugh when I read statements from five years ago when those same people were telling us what 2015 would be like and then you realize we are in 2015 and, comparing it to where we are today, you realize it’s all a joke. We prefer not to pretend to be so smart as to predict what the future will bring as even the smartest people make mistakes when doing so.
Overall, I do not know if we will grow as part of a larger industry group or if we will be developing alongside a bigger, established airline. I also do not know exactly what size and network we will be focusing on, but I do of course have some ideas…
One thing is certain though. We know that even without XL Airways, the leisure-driven long-haul market will continue grow. So for us the question is simply where we do we have to be to be a part of it? There is no debate about growth; it will happen in this segment (Long Haul Leisure), no matter if it is denominated purely by tourists or by visiting friends and relatives. Those two segments – where people pay for their tickets out of their own pocket – will continue to be our target market.

Thank you very much


XL Airways France - Airline Information

XL Airways France - Aircraft and Fleet List

XL Airways France - Recent News

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ch-aviation interview: Bert van der Stege, VP First Air

Founded in 1946 as Bradley Air Services, First Air offers scheduled passenger and cargo flights as well as charter operations in one of the harshest regions on Earth: the Canadian High Arctic. Under extreme climatic conditions, the carrier serves a large number of communities in Nunavut, Nunavik and the Northwest Territories from Southern Canadian cities, using a diverse passenger and cargo fleet which includes ATR42s and ATR72s, B737 Classics, Hercules C130s and a sole B767 freighter.

ch-aviation’s Niels Trubbach recently caught up with Bert van der Stege, First Air’s Vice President Commercial, to discuss the airline‘s operations, its challenges, and the aviation market in the Arctic as a whole.

Bert van der Stege spent most of his career at Lufthansa and worked in similar roles for Arik Air and RwandAir in Africa, before arriving at First Air in November 2013.

First Air - Airline Information

First Air - Aircraft and Fleet List

First Air - Recent News

First Air - Airline Route Network

First Air currently serves small settlements in Nunavut, Nunavik and the Northwest Territories. How would you say air transport has evolved in this area over the past few decades?

We started off in 1946 as a flight school and expanded north in 1954 with air charter and aerial survey work in support of the DEW line construction sites. This transitioned into operating passenger and cargo scheduled flights into the area we currently serve. Prior to the start of flight services, a lot of the arctic communities could only be reached by ship for two months or so a year, as the ocean is frozen solid for a majority of the year.

As time went by, our fleet grew from small planes (Stearman and Super Cubs) to larger ones like the Hawker Siddley 748 and our first jet aircraft, the Boeing 727, which was introduced in the mid 80’s.

A very important addition to our fleet has been the ATR42 and more recently, the larger ATR72. We actually became the largest ATR operator in Canada and have an excellent Maintenance & Engineering unit for both the 737s and ATRs. The introduction of other aircraft into our fleet such as the Hercules, B737-400s and the B767 have of course also been important milestones in our development.

What still remains a big challenge for us is airport infrastructure. Most hamlet airports have only very basic airstrips with unpaved runways. While conditions have improved over the years, a majority of the strips are still gravel, making operations somewhat challenging.

Copyright: Tis Meyer /

What about government subsidies?

Airlines in Canada have to be self-sufficient. A few years ago, airlines were given subsidies to transport food from the South to the North, but this programme was superceded by another initiative some years ago which now subsidizes retailers instead.

There are no direct subsidies from the Government to Northern airlines, despite the fact we provide a vital infrastructure service to Northerners. This is very different from essential air services in the US or PSO routes in Europe.

Who operates the largest number of airports in the North?

They are all operated by the government. In general, air transport in Canada has to be self-sufficient, and this also applies to many airports, where operators have to pay for large part of the associated costs. If you are a sole operator with a small passenger base, this can become quite a lot to handle.

Copyright: Tis Meyer /

What are the main reasons for travel?

There are actually three main reasons for travel up in the North. They include work-related travel, medical travel as the smaller hamlets offer limited health services, and finally tourism or family visits.

Work-related travel makes up about 45% of our passenger base while medical travel accounts for another 30%. The remaining 25% travel mostly for private reasons.

On average, residents of smaller communities only travel a few times a year but this can vary greatly – some never travel while others fly frequently.

There are several different groups of work-related passengers. Some are policemen, teachers, nurses, doctors, with others coming from the south of Canada to work in the north. Another group are Northerners who work in the South returning to their northern homes.

In the Northwest Territories, workers from the mines account for a significant proportion of our passengers. We also offer charter flights to the mines for their companies. Aside from the mining industry, the oil sector is also an important market.

Medical travel is actually paid for by the government thanks to state-backed health insurance. Public health staff in the smaller communities decide whether a patient needs to go to hospital or needs to see a specialist. In the event they have to go to hospital, staff arrange the flight for the passenger, depending on how urgent it is. Which of the airlines the patient eventually flies with is decided by hospital staff and depends on schedule, price and availability. If the case is urgent, the passenger is usually put on the next flight out making it very important to offer frequent, reliable service.

There are currently three carriers – First Air, Calm Air and Canadian North – serving Nunavut with scheduled passenger flights all of whose networks overlap. The case is the same in the Northwest Territories. What led to the co-existence of so many carriers?

While there are many airlines operating in northern Canada, a lot of them do not offer scheduled flights. I think there is need for some consolidation in the North. Markets are thin and costs are steep. On some flights we face stiff competition from Canadian North, while on some others, we go head-to-head with Calm Air.There are only two routes where we are the sole carrier operating.

Copyright: Tis Meyer /

This past year, there were talks between First Air and Canadian North concerning a possible merger. What were the driving factors behind the move and why did the talks end?

Well as I just mentioned, I believe there is need for some consolidation in Canada’s northern aviation industry

One of our main objectives of the merger was to improve the efficiency of our operations – running an airline in Northern Canada is very expensive. A merger would also have benefitted our passengers and cargo customers substantially, as the combining of flights would have led to improved network coverage. Better connections, new services and more choice for passengers. However, shareholders own the two airlines. They have to agree.

How would you describe the relationship between carriers serving Nunavut and the market situation in general?

Due to heavy competition on flights to nearly every destination, fares are kept relatively low. We haven’t been profitable for a number of years now and have been working hard on reducing costs last year as well as improving our revenue. We expect to be back in the black in 2015.

We have no relationship with other Northern carriers outside of the fact that we help each other in the event of flight cancellations and/or delays with re-protection agreements.

In all, we attract passengers by offering the best network, most frequencies and excellent customer service. Ultimately, the airline that delivers the best connections, the superior product and an attractive price gets the passengers or cargo.

We differentiate ourselves through our generous on-board service. We offer the greatest seat pitch in North America and offer two different choices of hot meals on our jet flights with complimentary beer and wine included. Our flight attendants offer friendly personalized attention that you would otherwise experience in First Class only.

What criteria does First Air use to design its route schedule?

We have three local hubs – Yellowknife, Rankin Inlet, and Iqaluit. Our schedule is focused on connecting the North to South market which is most important as demand for flights within communities is much lower.

As soon as our B737s arrive at our hubs from Southern Canada’s major cities, the rest of our fleet, including our ATRs, spring into action offering connecting flights to the communities. After the B737s have returned, they again offer outbound jet connections to the South.

As a result of the hub concept that we employ, our aircraft utilization is low, ranging from around six to seven hours per day for 737s and a couple of more hours for the ATRs. Our schedule varies from day to day, so on some days certain routes see double daily frequencies.

Generally speaking, we serve all destinations at least four times a week. Many have daily service. On a number of flights, we use combi aircraft which allow us to carry both cargo and passengers while offering frequent departures to both the passenger and cargo markets. On certain routes we also use dedicated freighter or passenger aircraft. Cargo transport is very directional – from the South to the North with very little cargo going in the opposite direction.

Currently our split between passengers and cargo is roughly 65/35 in terms of revenue. As we also use some flexible combi aircraft, we can adapt our configuration for certain routes. When just a few passengers are booked on a flight, we can extend the cargo compartment and carry more cargo.

Copyright: First Air

Concerning First Air’s operations, what are the main challenges it faces in terms of maintaining reliable flight operations?

The three main challenges are high costs, harsh weather and under-developed infrastructure. The majority of the airports we use operate under VFR conditions with very limited instrument navigation and landing aids. Combined with the region’s harsh weather conditions and many gravel runways this sometimes makes it challenging to operate.

Reliability pretty much depends on weather and the time of year. If it is a very cold winter day with temperatures reaching minus thirty to forty degrees, we actually do quite well. During those periods, though it is very cold, the sky is usually blue and conditions are fine. But for approximately two or three months of the year, temperatures increase to around zero degrees. As a consequence, any fog, snowfall or snowstorms can make operations very difficult. As with nearly everywhere else, it is these temperatures that are the biggest challenge.
During our ‘better’ months, weather wise, we cancel a very low number of flights – maybe 3 or 4 per week on average – due to weather. Very often in those cases, it is only a particular airport that is closed. However, during more difficult months, the number of weather-related flight cancellations can go up to around 15-20 a week. If our hubs are affected, it’s worse of course. Currently we have around 240 flights per week so as you can see, we are well adapted to dealing with harsh weather conditions.

First Air currently operates some Boeing 737-200s which average 35 years of age. What makes it the best-suited aircraft for your operations and do you have any replacement plans?

Not really as there is no logical immediate replacement. The Boeing 737-200 is one of only a few jets that are able to operate on gravel runways. Unfortunately we won’t be able to extend the lifespan of these aircraft for more than a couple of additional years. They are in great shape, but will become uneconomical to fly. I expect that we will have to retire the aircraft in 2017-2018, as the maintenance costs are becoming too high.

There is no Boeing replacement. Since we use our ATR42s on most flights to smaller communities, we may have to consider looking for a turboprop replacement. Some of these flights could go to the ATR 72, We also look at a jet solution. There are currently a few potential aircraft that could be certified for gravel operations in Canada, including the Avro RJ85 and the larger RJ100. Our partner airline Summit Air already operates such an Avro RJ85.

Copyright: First Air

First Air recently replaced the Boeing 727 with the Boeing 767, and Hawker-Siddley HS 748 with the ATR. What are the advantages of the new aircraft and have they brought any new difficulties with them?

Not really. This replacement took place a couple of years ago, but we are very happy with these aircraft even though they aren’t really ’new’. Their operational costs are much lower, especially from a fuel consumption aspect. Overall, there have not been any problems with them regarding reliability.


First Air recently outsourced its Boeing 767 operations to Cargojet Airlines. What were the reasons behind the move?

We started a relationship with Cargojet in summer 2013 and this culminated in them operating the B767 on our behalf. We only had one B767 in our fleet and the industry saying goes: “one equals none” really. Cargojet is very good at operating B767s. This move allowed us to better focus on what we are specialized in, namely B737s and ATRs

Has First Air ever considered sourcing aircraft from Russia or Ukraine?

No. So far we are very happy with the airplanes we currently operate. The ATR is a great aircraft for the job in the remote and cold Northern parts of Canada. We are also actively looking at the Q400, in particular the new combi that Bombardier introduced.

Copyright: First Air

First Air also operates Lockheed Hercules. On which routes do you deploy them?

They are used on charter and scheduled cargo operations Both Hercules aircraft are based in Yellowknife and though they fly for mining companies in particular, they are also available for any customer that requires specialized bulk cargo capacity. A major advantage of the Hercules is that it can operate on gravel runways, a very important aspect of our business.

There is a lot of mining and oil business in the Northwest Territories and Alberta. Some mines are doing quite well and considering expanding, which would obviously be very good for us. Nunavut only has a single mine, which means there is little demand for those types of cargo planes in the Eastern arctic. The oil business, however, is currently one of our concerns. Due to falling oil prices, and a reduced need to shuttle staff to the sites, we lose business opportunities with oil companies.

The Hercules not only operates within Canada, but also flies foreign flights from time to time. For instance First Air’s Hercs recently completed contract flying from the USA to Bermuda and the Dominican Republic.

Your competitors use Dash-8s and Dornier Regional Jets. Have there been any aircraft types in the past that were not particularly suited to conditions in the Nunavut area?

I am not aware of an aircraft type that operated unsuccessfully in the past and had to be withdrawn from service because of that.The two aircraft you just named also seem to be doing a good job in the Arctic, as they are all able to operate under extreme weather conditions. Another important aspect is baggage capacity. Many of our travelers carry at least two or three pieces of checked baggage. We offer two pieces for free. Ensuring we can take all passengers, cargo and baggage is key to the selection and operation of an aircraft type.

Copyright: First Air

What are First Air’s main goals and what do you think its main challenges will be in the coming years?

Our main goal for 2015 is to become a profitable and sustainable company. First Air used to be a very profitable up until about 2009/2010 when revenue declined and costs went up. We have been loss-making ever since and are in the middle of a turnaround.

In 2014, we made very good progress in terms of reducing our costs and increasing our revenue, but there still is work to do.

In January 2014, we embarked on a major restructuring programme designed to make us more efficient by doing things differently and critically investigating where we could reduce our costs without compromising safety, quality and our well-known service standards. The cost-savings achieved in recent months have eminated from all over the company, while the measures implemented have already begun to make an impact as our numbers have actually improved since. I think that we will be able to post a profit again in 2015.

First Air - Airline Information

First Air - Aircraft and Fleet List

First Air - Recent News

First Air - Airline Route Network

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ch-aviation interview: Trevor Sadler, CEO interCaribbean Airways

Air Turks & Caicos has undergone a lot of changes during the recent months under Trevor Sadler, who was appointed as CEO in September 2013.  Aside of relaunching as interCaribbean Airways the regional carrier for instance began to transform from point-to-point into a hub airline. Thomas Jaeger had the opportunity to talk with Trevor Sadler at APG WorldConnect in Monaco about the new strategy and the future for the Providenciales-based airline.

interCaribbean Airways - Airline Information

interCaribbean Airways - Aircraft and Fleet List

interCaribbean Airways - Recent News

interCaribbean Airways - Airline Route Network

You recently rebranded yourselves from Air Turks & Caicos to interCaribbean Airways. What was the mitigating factor behind the move?

Well, with our old name, business appeal was ‘limited’ to the Turks & Caicos Islands. Our new name – interCaribbean – isn’t limited to one country and will therefore allow us to appeal to everyone from across the Caribbean.

With our new brand name, we‘re able to sell more easily flights between other points within the Caribbean islands – domestic Jamaican flights for instance.

How would you describe an average costumer on your flights?

On our traditional point-to-point routes from Providenciales to Haiti, 90% of passengers are Haitian labourers on their way home and/or relatives visiting them in the Turks & Caicos Islands. The rest are either from NGOs or tourists. Labourer traffic is also essential for other routes as it makes up a good percentage of the travellers as well on flights to Dominica and Jamaica.

In contrast, shoppers and US Visa applicants make up a percentage of our flights to the Bahamas. As the United States does not have a diplomatic presence in the Turks & Caicos Islands, residents therefore have to travel to the Bahamas to apply for their visas.

In order to improve the overall efficiency of our Providenciales hub, we recently revised our timetables by offering better connecting flights which leave at more attractive hours. The move has paid off as even on some routes where we’re able to offer a convenient connection in only one direction, the flight, we have found, still sells well.

Our little hub also allows us to offer a wide range of connections to the neighbouring region. In some instances, we’ve been able to connect islands where no routes had previously existed. As much as I know, 25% of a flight involve transit passengers, a vast majority of whom travel primarily for US visa reasons.

It is also worth mentioning that a market segment that is currently growing quite rapidly is the European transit tourist niche i.e. tourists arriving from Europe use us to visit the islands of the Caribbean.

In all, our new brand image has helped us to improve our regional market share as it appeals to a greater audience.

When and how do your passengers book their flight tickets?

The majority of our passengers tend to book a couple of days ahead of departure. In most cases, 30 days in advance would be an enormous fete of forward planning for many!
It can be quite nerve-wracking to see how few bookings there are a couple of weeks before a flight leaves only for it to suddenly fill up in the last 7 days or so.

On domestic flights, a lot of customers simply show up at the airport and expect there to be a flight and a free seat available. If we have a free seat then that’s fine but if not, and the plane is already fully-booked, the traveller is upset. Therefore we try to get our customers to book well in advance by giving them incentives to do so.

Who are your competitors?

On our international routes, there is only one where we face direct competition – Providenciales to the Bahamas. On the others, we are a sole operator. You’d assume that having a monopoly would mean charging excessive “monopolist” fares. But actually our fares have decreased over the last few years, resulting in higher load factors.

On our recently launched connecting flights, we of course face some competition. Our biggest competitor is Copa Airlines whose excellent flight connections are very attractive despite Panama City being so far away.

On domestic flights within the Turks & Caicos Islands, we have a good market share where our competition is Caicos Express. Even though they recently acquired a Beech 1900C which offers 6 more seats than the aircraft we use on the routes, we limit expansion for capacity demand on domestic inter-island flights. So we choose to compete by offering a good product that meets the customers’ needs.

On flights to South Caicos, there is also a ferry service but due to its slowness and sparse weekly rotations, it doesn’t pose much of a threat. While at present there aren’t that many tourists travelling to South Caicos, that should change quite soon due to new hotels being built there. As a consequence, domestic passenger numbers will rise in the future. The Turks & Caicos Islands are a popular tourist destination and international passengers can fly in directly via Providenciales.

Do you have any plans to co-operate with major international carriers by offering them a Caribbean feeder service?

We’re currently in talks with three major carriers concerning possible interline agreements. As they involve a lot of work, we are in the implementation stage to go live in early 2015.

Have you ever had or still have any plans to offer direct flights to the United States?

We’re currently considering flights to the United States using smaller aircraft. I think there would be enough demand on some routes to destinations that are not yet served, especially if we can feed the flight with our inter-Caribbean network.

In addition to requiring aircraft larger than our Embraer 120 (we’re looking at 50- to 100-seater regional jets right now) we will also need to enhance our schedule to offer a greater number of convenient connections.

On flights within the Turks & Caicos Islands you operate a Beech 99, an aircraft that has rarely been used for scheduled services. What makes it the perfect fit for you?

We introduced the Beech 99 because it offered a capacity ideally suited to our domestic needs. But as passenger numbers have increased, and will continue to do so in the future, we are studying larger aircraft with around 19 seats – the Beechcraft 1900D in particular. I therefore expect the Beech 99 to be retired at some point in the near future.

With its stand-up cabin and good performance we also have the option of dispatching the Beechcraft 1900D on international routes where it would replace the Embraer 120 on flights with low demand.

Your fleet consists of several Embraer 120s (Brasilia’s), many of which are currently in storage. Why is this so?

We have a fleet of Embraer 120s of which four are currently in active service. At present, two other Brasilia’s are undergoing a C check, following which they will get a new paint job and interior before being returned to service this month (December).

The other six aircraft can be used as and when demand dictates and will feature in our future fleet growth plans. Next year for example, we plan to base aircraft out of San Juan, Puerto Rico.

What does the future hold for interCaribbean Airways?

In the long run, I think we will evolve into a completely different airline in terms of our positioning within the Caribbean. We will operate a major network covering many destinations. We’ve already started down this path and will continue along it…

Thank you for the interview!

interCaribbean Airways - Airline Information

interCaribbean Airways - Aircraft and Fleet List

interCaribbean Airways - Recent News

interCaribbean Airways - Airline Route Network

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ch-aviation interview: Dirk Eggert, GM Rhein-Neckar Air

Having commenced operations in March of this year, Rhein-Neckar Air is Germany’s newest scheduled airline. Founded by several companies from the Rhine-Neckar Region, the airline has wet-leased a Dornier 328 to ply its only route – Mannheim to Berlin Tegel – previously operated by the now defunct regional carrier, Cirrus Airlines.

Niels Trubbach had the chance to chat with Dirk Eggert, general manager at Rhein-Neckar Air and also executive manager at City-Airport Mannheim, about the startup which thus far, has been able to sustain operations on a relatively meagre budget.

Rhein-Neckar Air – Airline Information

Rhein-Neckar Air – Aircraft and Fleet List

Rhein-Neckar Air – Recent News

What were the reasons for setting up Rhein-Neckar Air and how was the airline developed?

After Cirrus Airlines collapsed, we, as Mannheim Airport, had no success in finding a new operator for our Berlin route for two years. All of this was due to the operational restrictions in force at Mannheim which, owing to its relatively short runway (1‘066m), made it very difficult to find a new operator.

You see, the Dornier 328 is actually the only aircraft that is suitable to operate at Mannheim Airport, both in terms of performance and from a passenger’s point of view. While the Dash-8-100 and -200 could be used, there are just two regional carriers left in Europe, namely SATA and Wideroe, that operate them. The ATR 42-600 could also be used albeit with significant restrictions. Alas, the Dornier 328 is the type best suited to our needs.

Anyway, as I just mentioned, there are only a handful of Dornier 328 operators left in Europe and none of them were willing to come. We had held talks with some interested parties but all would only commit to the route on condition it was either subsidized or a Public Service Obligation (PSO).

This struck us as odd as all scheduled flights from Mannheim to Hamburg and Berlin had , been profitable.

So we began to consider our options.

During the Cirrus years, we, as an airport, oversaw customer care for the airline‘s passengers. We therefore knew the customers that flew the route. All in all, about 35 to 40 companies made up 70 percent of the revenue.

It then dawned on us that we as an airport should consider setting up our own airline should we be able to win back Cirrus‘ old clientele. So, we asked them [the old customer base] if they would use the route again and got positive feedback.

Following a meeting with some major local firms, it was decided to found an association which would later become the sole owner of Rhein-Neckar Air. The firms, which themselves have an interest in the flights, are stake holders in the association.

However, the setup doesn’t mean we don’t offer competitive fares as after all, a customer will only fly with you as long as it makes financial sense to them.

Rhein-Neckar Air Dornier 328 – © Rhein-Neckar Air

Do your current operations have any similarities to those of Cirrus? If not, where do they differ?

The only similarity Rhein-Neckar Air has with Cirrus is that we use a Dornier 328 on our Mannheim to Berlin route.

By the time Cirrus had suspended operations, their reliability and service had become a disaster, in my own personal opinion. So you could say we learned a lot from Cirrus – above all how not to operate.

Do you have any long-term plans to apply for your own Air Operators Certificate (AOC) which would then lead to you terminating your wet-lease contract with MHS Aviation?

There‘s no reason for us to do so at the moment. MHS Aviation is a very reliable partner and offers excellent conditions. MHS Aviation also has enough planes to cover an AOG (Aircraft On Ground ) or provide replacements during repairs and routine checks. Often times, you’ll see a second Dornier 328 here in Mannheim. This second Dornier 328 is used by Sun-Air of Denmark as well as on charter flights.

Boarding at Berlin Tegel (TXL)

The route from Mannheim to Berlin was abandoned for more than two years. Was it difficult to get the old clientele back?

We announced our flights just five weeks ahead of the launch date which, in practical terms, is leaving it a bit too late. However, our core group of 35-40 customers knew roughly when the first flight would launch and could therefore prepare themselves accordingly.
Therefor our business plan had estimated around 15 passengers per flight in March but in actuality, we exceeded expectations averaging 19 passengers per flight.

Is it more difficult to attract passengers in Berlin than in Mannheim?

Distribution is definitely more complicated in Berlin. While we are working with a sales agent that is active in Berlin and have also visited some travel retailers there to tell them about our product, we just do not have the funds to advertise as much as we would like to in Berlin.

Case in point, we have just rented one advertising panel at Berlin Tegel Airport, close to the counters where Lufthansa mostly handles their flights to Frankfurt. Though that space is very expensive, I think it makes economic sense.

Also, you have to consider the medium and the clientele being targeted. For example, in Mannheim, we don’t advertise in newspapers or on the street as this would not reach our target niche – business travellers. Instead, we are in contact with major firms and always have to convince them with our fantastic customer care.

In the greater scheme of things, while advertising would bring in more passengers, its costs would not be offset through higher revenue.

So, one impact of this policy is that our morning flight from Berlin to Mannheim is also our flight with the lowest loads.

Check-In counter at City Airport Mannheim

You’ve now been in business for a couple of months. How have your results been until now?

We have exceeded our own expectations. Though the yield could be a bit better, we are actually very happy about the results. Currently there are around 22 passengers per flight. In comparison, Cirrus, which operated four as opposed to two return flights, achieved 21 passengers per flight on average. And Cirrus was able to make money on top of that!

Do you have any plans to set up or join a Frequent-Flyer (FF) programme?

We‘re looking into this.. In all honesty, our customers are frequent flyers living around Mannheim with many of them having attained some level with some other airline‘s frequent-flyer programme, more often than not, Lufthansa‘s Miles & More. So, taking that into consideration, for someone flying 100‘000 miles a year, the 500 miles earned on our Mannheim-Berlin route is less important compared to the convenience and comfort we offer them.

In any case, I think there is a bit too much hype placed on frequent-flyer programmes.

Dornier 328 in front of the Terminal at Mannheim

Would the opening of the new Berlin International Airport (BER) have any impact on your business?

Obviously we would like to see Tegel Airport stay open for longer. Aside from its overall lack of attractiveness, there is also the prospect of BER charging higher taxes for small planes which would present us with big problems. With the way things are, small planes visiting Tegel are already paying more. Landing fees start at 26 tons while our airplane has a weight of just 13.9 tons. Landing fees will triple to €900 for a Dornier 328 which of course is not good for us.

Are you planning to open more routes out of Mannheim?

At this time we have no concrete plans to add any other destinations to our network. Currently, we are focussed on developing our Berlin operations into a solid business. But sooner or later we will evaluate flights to Hamburg which would then mean sourcing a second aircraft. While a second aircraft would of course be necessary, it would also be a big risk.

Another idea we have is to launch a weekly flight to Sylt/Westerland – possibly in 2015 using our existing aircraft during the summer season and operated only on weekends.
While using a cost-intensive 30-seater for leisure flights would generally make no financial sense as it needs average yields of around €300 to €350 per passenger on a short to medium return trip, we could make flights to Sylt work given the presence of wealthy tourists that may be willing to pay such prices for a ticket.

But other than those options, we as Rhein-Neckar have no intention of starting leisure flights to destinations other than Sylt as the distribution would require cost-intensive advertising.

But then again, leisure flights might also come about in the form of charters, so who knows.

Headrest covers from MHS Aviation reveal the operator of the aircraft

The Dornier 328 is renowned for its high operational costs. What makes it the perfect fit for Mannheim?

As I mentioned earlier, only a few comparable aircraft types are able to operate into and out of Mannheim: the Dash-8 -100, -200 and the ATR 42-600 with restrictions. When Cirrus used a Dash 8-100 on flights to Mannheim during [the Dornier’s] maintenance downtime, we received a lot of negative passenger feedback.

In comparison to these aircraft types, the Dornier 328 is very comfortable and convenient for passengers. And even if the type’s production run has finished, it is still up-to-date.

You also have to consider that while a used Dornier 328 costs around €2.5million, a brand new ATR would cost €18million which would, in turn, lead to increased capital costs. And just the fact that we are operating a newer aircraft does not mean an increase in revenue to cover those increased costs.

All in all, despite the fact that even with load restrictions an ATR could still offer more seats than the Dornier 328, in our case, if we want to increase flights, we will simply add more frequencies.

Despite of its high cost per seat, the Dornier 328 is our sole option so we simply cannot complain about it.

Is the Dornier 328 a reliable aircraft?
The Dornier 328 has an excellent record of reliability. In the event of problem, MHS Aviation often has a second aircraft available as back-up based here in Mannheim.

We are very focused on reliability and, of course, also on on-time performance. I can say that flight crews and engineering are collaborating very closely and to a very strong extent.

Located in the middle of the city Mannheim Airport has no space to grow

Is Mannheim Airport serviceable all year-round?

Mannheim City Airport sometimes becomes a problem in winter as we cannot offer CAT 2 or even CAT 3 operation. On average, for eight to twelve days of the year, when there is strong fog, it is impossible to operate flights and we are forced to use Karlsruhe/Baden-Baden as an alternative airport. Cirrus, for its part, used to land in Saarbrücken.

Actually this was one of our reasons for launching the airline in March. In our opinion, there are only two start-up dates that make sense: shortly after winter to avoid additional costs due to de-icing, cancellations etc. or at the end of the summer holidays..

City Airport Mannheim – © Rhein-Neckar Air

Where do you see yourselves going over the next five years?

Rhein-Neckar Air is not a company that expands for expansion’s sake. We don‘t want to serve a lot of destinations; we just want to focus on a few core markets where we know we can be successful. Maybe in the long-term we’ll serve Hamburg and possibly even a third destination. But, from a realistic point of view, Mannheim is only capable of sustaining flights to two to three destinations at max.

Rhein-Neckar Air – Airline Information

Rhein-Neckar Air – Aircraft and Fleet List

Rhein-Neckar Air – Recent News

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ch-aviation interview: Eric Vercesi, VP Air Incheon

In this sequel of ch-aviation interviews we present you our first interview with a cargo airline. Thomas Jaeger had the possibility to talk with Eric Vercesi Vice President Sales & Planning at Air Incheon. Air Incheon is a new cargo airline that commenced operations in 2013 and is focused on operations from Seoul Incheon Airport in South Korea to Eastern Russia as well as Japan and China. Currently, the airline operates two Boeing 737-400 freighters with an average age of 23 years.

Air Incheon – Airline Information

Air Incheon – Aircraft and Fleet List

Air Incheon – Recent News

Air Incheon – Contacts

You have launched operations 15 months ago. What were the key reasons for setting up Air Incheon?
It all started with the activities in Sakhalin. Air Incheon is a spin-off of another company called Air Cargo Charter, which also belongs to Mr. Park and which has been operating a Russian Antonov 12 on a charter basis between Sakhalin and Seoul Incheon for about eight years. Because of the demand and the need for a better and more reliable aircraft, Mr. Park decided to create an airline registered in Korea and to operate with a 737. So this is where Air Incheon comes from. And then of course it evolved into a scheduled airline from there.

But are you still working with Antonov 12s today?
No, we do not operate with Antonov 12 any longer and we are not sourcing additional capacity from partners. We only use our own aircraft.

You mentioned Mr. Park also owns Air Incheon, so it is entirely Korean owned?
Air Incheon is 85 percent Korean owned while the other 15 percent in the airline are owned by foreign investors. Concluding, you can say that Mr. Park has built up the business over the years and then saw the need to set up Air Incheon because of the demand from the oil and gas industry in Russia.

Air Incheon Boeing 737-400 Freighter at the inaugural flight to Yantai – © Air Incheon

What is the competitive landscape like on your key routes between Korea and Russia? Do you have competitors?
We do not have competitors per se in the cargo business. The passenger demand is low so competitors can only fly narrowbody aircraft between the two countries, so have very limited belly space available. But that is the situation right now. We cannot think that we will continue to be by ourselves forever so there might be some competition in the future. I would not be surprised if there would be some new players one day.

Who are your customers for cargo being sent to Sakhalin?
It is a typical oil and gas project area where the major project forwarders work, pretty much the same customers worldwide that you would see in Siberia, Africa, the US etc. Around 80 percent of the cargo is coming from seven major freight forwarders with the remaining business coming from a number of smaller agents.

So you are still operating under the radar of Asiana and Korean and they are not interested in this business?
I do not know whether Asiana or Korean Air are interested in flying into Russia with freighters. We are sure they are looking at it. The reason why they do not fly might be that they only operate widebody aircraft and there is just not enough volume to put a 767 or a 777 on those routes. In addition to that, the demand is only one-directional. There is only export to Russia but nearly no import. So the aircraft needs to be make money on the one-way. Only if equipment needs to be removed from Sakhalin there is demand on our flights out of Russia.

Air Incheon operates a fleet of two Boeing 737-400 Freighter – © Air Incheon

The equipment you move to Sakhalin does not all come from South Korea. Are you working with other carriers or does the equipment get shipped by sea to Seoul before?
We have been trying to establish some interline agreements with a number of different carriers. We had success establishing one with Polar Air Cargo so we are able to offer the customers to carry their cargo all the way from Houston to Sakhalin under a single Airway Bill.
I am basically aiming to set up a service for our customers in the mining, oil and gas industries making it possible for them to work with us from their origin to the final destination. Another option we have tried is to establish an interline agreement directly with the Korean carriers but obviously Korean Air is just not interested at all. So we will just have to wait.

Have you evaluated other aircraft before you chose to operate converted 737-400s and when did the decision take place?
We looked at different options. The Boeing 737 turned out to be the best option for us because of the high availability on the market and the low acquisition costs of the airplane. With that being said, the 737 cannot take all the cargo that should be traveling by air into Sakhalin. There are some long or very heavy pieces of cargo that do not fit in the airplane. But close to 92 percent of the cargo that needs to go air freight can be carried with 737s.

Air Incheon handles daily cargo for DHL Express on the ICN to NRT route – © Air Incheon

Are you worried that with so many B737-400s being converted right now you might run into a problem with your fleet strategy later on given there simply will not be aircraft available anymore for conversion?
I do not think it is a worry yet. Honestly, maybe the situation is going to change where we will need to turn around and go to lessors already in control of converted B737s as opposed to us going on the market to buy an aircraft to convert it ourselves. It is going to depend on the situation and we will have to play it by ear when the situation comes. It will be depending on price and timing. It is true that if we need an aircraft to be available quickly, meaning within four to six months from now, we will not have time to go buy an aircraft and send it through conversion. We cannot just buy five aircraft just in case.

Were there any challengers on getting the licensing or was that straight forward?
No, the process was according to the Korea Ministry of Transport regulations. There were a number of items and tasks to fulfill which were done. The AOC was awarded to Air Incheon as planned by the MoT without major problems.

You also operate in the express market between Korea and Japan. It that your side business to keep the aircraft busy or did you purposely do that from the beginning?
It is a little bit of both. Our business model is really oriented towards the Sakhalin projects. We have opportunities to fly to Japan in the evenings or to fly to China early in the mornings so we do it. We have the airplanes and we have the crews so there is no reason why not to get into that market. With that being said, we are always concentrating on the oil and gas projects as our basis but it takes a long time to get the traffic rights. We already have traffic rights for Russia of course. The next step is to be able to go to Mongolia. There is a big potential to fly cargo to the mines.

Where do you see Air Incheon in two or three years? You obviously want to go into Mongolia but are there any other steps that you have ahead?
The expansion depends on what is going on with China. The Chinese carriers are expanding very quickly outside of China as well so we have to look at how to continue in that market and under what conditions. Other development areas include Central Asia and South East Asia (possibly requiring larger aircraft like the B757) and we are also still looking at Japan as a very high potential market.

Thank you for the interview!

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