FlyCorporate Magazine ISSUE 22

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FC BRINGING BRINGING TOGETHER TOGETHER BUSINESS BUSINESS AVIATION AVIATION AND AND BUSINESS BUSINESS LEADERS LEADERS

FLYCORPORATE

Business aviation in the Americas

FC Interview:

Marco Túlio Pellegrini

President & CEO Embraer Executive Jets Market Focus: Latin America • Aerocardal Sector Focus: Finance, Insurance, Catering • BizApps

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Contents FC UPFRONT 8 Meet the team

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10 Memo and index of advertisers

FC Interview

FC INTERVIEW 12 Embraer Executive Jets President & CEO Marco Túlio Pellegrini talks to FlyCorporate’s Phil Rose about prospects for bizav, not only in Latin America, the US, and Canada, but the rest of the world.

MARKET FOCUS

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18 Business aviation review: Latin America Economic conditions and regulatory environments across South and Central America vary widely. Nick Klenske reports on the current state of business aviation.

Bizav in Latin America

26 Helos in Latin America — buoyant and rising Latin America has long been a receptive market for helicopters. Rod Simpson reports on the likely prospects for rotary-wing sales.

OPERATOR PROFILE 32 Aerocardal — 23 years of excellence The largest private aviation company in Chile, Aerocardal is both diversified and highly successful. Phil Rose reports on the company, its history, its present, and its future.

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Aerocardal

Cover photo: Embraer Legacy 500

It has been 25 years since we at Jet Support Services, Inc. opened our doors and became the business aviation industry’s first independent provider of hourly cost maintenance programs. Since that day, we have enrolled more than 10,000 engines, airframes and APUs on our broad offering of programs. Today, JSSI enhances resale value and provides cost predictability and world class service to owners and operators of over 340 makes and models of business jets, turboprops and helicopters.

As we continue to expand our business, it is important for us not to lose sight of those who have supported us along the way and made our 25-year anniversary possible.

We want to thank Boise Cascade for being the initial customer to take that leap of faith to enroll on a JSSI program. It required foresight, an open mind and the willingness to take a chance on a new concept and a young company. We thank you, our loyal customers, who have entrusted us with your aircraft over the years. Thank you to the OEMs, who have worked hand-in-hand with us as we developed innovative programs like Tip-To-Tail®, the industry’s only single-source maintenance plan. And thank you to all of the maintenance providers that have worked alongside our technical advisors to deliver outstanding service.

All of this begs the question, “Where do we go from here?” Stay with us throughout this, our 25th anniversary year, and we’ll share some of our future plans. Because, thanks to you, even after 25 years, we’re just getting started.

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Contents SECTOR FOCUS

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36 Aircraft financing today Recession changed the world of aircraft financing. As Rob Seaman reports, banks and other institutions are lending again.

Aircraft financing today

42 Insuring your aircraft You hope you’ll never need it, but one thing’s for sure — you can’t fly without it. Rob Seaman explains what you need to know about aircraft insurance.

46 Dining in the clouds When it comes to food safety, there are no minor details. Rob Seaman talks to corporate flight attendants who know what to look for.

OPERATOR PROFILE

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48 PrivaJet and its two-star Michelin BBJ With its newly refurbished BBJ, PrivaJet is bringing service — and two-star restaurant dining — to new levels. Jason Zappa Janse reports.

Insuring your aircraft

Game-changing ideas

FC REVIEW 54 Beyond the business of business aviation Bizjets do more than carry executives and technicians to where they need to be. Nick Klenske reports on one of business aviation’s less publicized activities.

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60 Game-changing ideas from smaller OEMs Several smaller manufacturers are introducing technologies and products that may help revitalize parts of the industry. Jason Zappa Janse looks at some recent innovations.

66 BIZAPPS – the latest tools for business aviation

Connecting flight departments with systems that work.

8 YOUR BIZAV RESOURCE

FLYCORPORATE.COM

Natalya Berdikyan

Phil Rose

Mike Vlieghe

Nick Klenske

Jason Zappa Janse

Senior Writers

Nadia K Del Rio

Taunya Renson-Martin

Newsdesk

Publisher natalya.berdikyan@flycorporate.com +32 (0) 475 969 105

Contributing Editor nick.klenske@flycorporate.com

Marketing Manager

Editorial Director phil.rose@flycorporate.com

Online Editor jason.janse@flycorporate.com

Editorial Board

Agatha Lo

Editorial & Production Assistant, China

Creative Manager mike.vlieghe@flycorporate.com

Rob Seaman Rod Simpson

editor@flycorporate.com

Cameron Heffernan Editorial Board

MACHMEDIA.BE Luc Osselaer

Taunya Renson-Martin

Chairman

Managing Partner

Joris Allaert

Chief Financial Officer

Ilse De Bruyckere Operations Manager

Is your company featured in FlyCorporate? If so, why not share your story with colleagues and customers through FlyCorporate’s reprint service?

For more details contact natalya.berdikyan@flycorporate.com.

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10 YOUR BIZAV RESOURCE

FC UPFRONT

GETTING THE WORD OUT Recent months have seen a number of articles in the mainstream press that seek to raise public awareness of the dangers posed by GA aircraft and their pilots. These are essentially scare pieces, written to provoke indignation among readers. Typically, such polemics generate more heat than light and achieve little of value beyond the limited goal of boosting readership — and thus, presumably, sales.

One predictable side effect of articles like these is that they raise the ire of GA pilots, aviation association leaders, and anyone else in possession of the facts.

Those of us who read (or watch, or listen to) any kind of news report with a critical eye (or ear) know only too well how truth and accuracy can fall victim to the requirement to be snappy. The argument goes that the average consumer has no taste for detailed analysis and wants his/her news served up as bite-sized chunks. Digestion then requires minimal effort.

This is a dangerous philosophy, all the more dangerous because of its insidious appeal. Of course, biased or ill informed writing in the mainstream media makes it all the harder for aviation writers to get the real story out into the world.

These are hardly new observations. But only by becoming more vocal and using the tools at our disposal in an increasingly digitized world can we spread the word. FlyCorporate is moving more and more rapidly down that path. We invite you to join us on the journey.

As North America and much of the world digs its way out of recession, Latin America is showing promise as a growing market. The 11th annual LABACE takes place in São Paulo, Brazil from August 12–14, giving the world the chance to see how far this region has come in terms of developing business aviation.

The biggest event in the bizav calendar is, of course, the annual NBAA extravaganza — now the seventh largest trade show in the US — which returns to Orlando this October 21–23.

FlyCorporate will be in attendance, naturally, and we look forward to seeing you all there.

Phil Rose Editorial Director FlyCorporate phil.rose@flycorporate.com

@FlyCorporate

Index of advertisers Avfuel www.avfuel.com

FlyCorporate www.flycorporate.com

RUAG Aviation www.aviation.ruag.com

Cessna Aircraft Company www.cessna.com

Honda Aircraft Company www.hondajet.honda.com

Shell Global www.shell.com

CIT www.cit.com

Jet Support Services, Inc (JSSI) www.jetsupport.com

Signature Flight Support www.signatureflight.com

Duncan Aviation www.duncanaviation.aero

Marshall Aviation Services marshallas.com

TAG Farnborough Airport www.tagfarnborough.com

ExecuJet Aviation Group www.execujet.com

NBAA 2014 www.nbaa.org

Total www.airtotal.com

FinServe Aviation www.finserve.aero

Rockwell Collins – ARINC Direct www.arincdirect.com

Vector Aerospace www.vectoraerospace.com

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FC INTERVIEW

Business aviation in the Americas and beyond An interview with Marco TĂşlio Pellegrini President & CEO, Embraer Executive Jets

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FC INTERVIEW

L

atin America is a supremely diverse and promising market. It includes the second and third largest business aviation fleets in the world — Brazil and Mexico.

Embraer Executive Jets President & CEO Marco Túlio Pellegrini talked recently with FlyCorporate’s Phil Rose about how Embraer sees the prospects for business aviation in Latin America and the rest of the world.

Brazil has demonstrated spectacular growth in recent years. Do you think the business aviation sector and ground-based infrastructure will continue to grow at their current rates?

Marco Túlio: Our 2013 sales results certainly reflect the economic growth of recent years. However, we’re seeing a number of trends that indicate a lowered rate of growth in the foreseeable future.

That said, we continue to see investments in aviation infrastructure, such as our own new 20,000-squaremeter customer service center in Sorocaba, west of São Paulo, SP. We will also be expanding our support and service network as our fleet continues to grow in Brazil.

Some predictions suggest that over the next five years demand for business aircraft in Latin America will represent as much as 18–20% of global demand — outstripping traditionally strong markets such as Europe. Does this correspond with what you’re seeing across the region?

Latin America’s steep growth in global fleet share over the past years has fueled these projections, accentuated

by Europe’s extended downturn. As business aviation demand drivers soften in the region, we expect to see a slower pace of demand.

Economic conditions in Latin American countries vary widely, as do market prospects and operational environments for private and business aviation. Are you seeing positive signs for growth in countries outside Brazil, the Cono Sur, and Mexico? Do these nations continue to represent the greatest opportunities?

Demand outside Brazil and Mexico is very low — it accounted for no more than 17% of the region’s deliveries over the five-year period starting in 2009.

Brazil and Mexico will continue to have the world’s third and second largest business aviation fleets, respectively.

These two countries will also represent the strongest demand, not only in the region, but worldwide. Together, they will account for the shipments of nearly 700 jets in the next 10 years, with Brazil being responsible for more than 75% of the total.

When we talk about business aviation in Latin America, how important would you say are nonmarket forces, such as government policies and regulatory changes?

In fact, non-governmental forces are very important in the region, especially when it comes to infrastructure investments. Such investments enable business aviation to reach more remote locations. Alternatively, they permit new airports in regions of high population density.

Fiscal matters are also relevant. For example, aircraft charter companies have been relieved of high payroll taxes, thus increasing their competitiveness.

Embraer considers the US one of its prime markets, which is why the company set up the production/delivery facility and customer center at Melbourne, FL (MLB). How do you view the South and Central American markets as compared to North America and the rest of the world?

Our projections still point to North America being the market that will be responsible for slightly more than 50% of demand over the next ten years.

In the same period, Latin America will account for an average of nearly 10% of total demand. And, although the business jet market for all of Latin America is slightly less than half that for Western Europe, it surpasses the market for the Middle East and Africa combined by more than 130 jets. Latin America is a very important market, and it will continue to play a key role over the next decade, generating revenues of more than US$16.3 billion.

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FC INTERVIEW Dollar exchange rates have occasionally been an issue for nonUS manufacturers. Does Embraer price its business aviation products differently for MLB-built aircraft versus Brazilianbuilt examples?

No, the list price is in US dollars, regardless of manufacturing location.

However, aircraft features and options may differ from one region to another, depending on the country and its regulatory authority.

What percentage of MLB Phenom 100/100E and 300 production is going to non-US customers?

The majority of Phenom deliveries from Melbourne are to the North American market, but customers can choose to receive their aircraft in Melbourne or in Brazil — whichever is more convenient for them.

Which Embraer models are most popular with Latin American customers? And what factors are behind that popularity?

The popularity of each model is analogous to its introduction.

The original Legacy 600 gained popularity for delivering both transcontinental and intercontinental range for up to 13 passengers. The Phenom 100 not only had great acceptance among aircraft replacement buyers, but became the preferred jet among first-time jet owners. The Phenom 300 became the upgrade aircraft for Phenom 100 owners, as well as the light jet of choice for corporations and pilot/owners with longer and faster mission requirements — so much so, in fact, that the Phenom 300 became the most delivered business jet in 2013.

The intercontinental range of the Lineage 1000E drew corporations and executives for North America and Europe-bound missions, as well as for destinations in Africa, or Australia, Japan, and China.

Worldwide, which regions would you say are showing the most promise? Do any particular countries or regions stand out as favoring particular types?

The US market is — and will continue to be — the largest market for business jets. Brazilian demand has also been a great spot for entry-level (Phenom 100) and light (Phenom 300) jets. Today, the light jet market is showing signs of recovery, and the Phenom 300 has responded well to that demand.

Asia and China continue to prefer the Legacy 650 and Lineage 1000E — much like Europe, the CIS, Africa, and the Middle East — but the Phenom 300 is also gaining traction in India, China, and Southeast Asia.

We see the entry into service of the Legacy 500 as a game changer in the midsize markets in both US and Europe.

The Lineage 1000/1000E has been built in relatively modest numbers. Has the program been a success, would you say?

Yes, it has. The Lineage 1000E delivers a unique combination of range, an ultra-large cabin with five cabin zones and premium amenities like a suite and shower. It also supports “bottom-line” goals with low operating costs and high utilization capability. The Lineage 1000 has held a market share of 20–25% among airliner derivative models. This segment is not as large as others, but yes, the Lineage 1000 has been very successful in its jet class.

FC INTERVIEW

Today, the light jet market is showing signs of recovery, and the Phenom 300 has responded well to that demand

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FC INTERVIEW The Legacy 650 is still a consistent seller for Embraer. Are you considering any significant upgrades or further enhancements?

The Legacy 650 continues to deliver all the benefits of a large cabin aircraft. It has the largest baggage compartment and offers the lowest operating costs in its segment, in addition to meeting and exceeding highutilization demands in major markets across the globe.

We’ve optimized this aircraft model over the years, and we will continue to respond to customer feedback by introducing improvements.

After some delay, Legacy 500 deliveries are due to start this month. Do you see good prospects for the type? What characteristics appeal to customers?

Absolutely. The Legacy 500 is a game changer — it appeals to customers who have always wanted a stand-up cabin in a midsize aircraft, and it represents unprecedented value. Full fly-by-wire (FBW) technology in a midsize jet is one of the features that most amazes customers, who will benefit from smooth and efficient precision flying.

Customers also stand to gain from lower operating costs, and from the Legacy 500’s Honeywell HTF7500E engines, which have a low noise signature and excellent fuel efficiency. And they produce lower emissions. Rockwell’s Pro Line Fusion avionics are a perfect match for the FBW system’s sidestick controls, and in 2015 we’ll be introducing an enhanced vision system with HUD. Is the Legacy 450 program on track? Is Embraer benefiting from synergies with the 500 program?

The answer to both questions is yes. The first flight of the Legacy 450 was in December 2013, and it’s on track for entry into service in mid-2015. With commonality between the Legacy 500 and Legacy 450 at around 95%, a significant amount of the testing for the Legacy 500 will

apply to the Legacy 450, which will also benefit from the Legacy 500 maturity campaign.

The Phenom 300 has become a strong seller for Embraer. Is the Phenom 100 continuing to do well, or have sales fallen back somewhat?

We received great feedback from our customers on the Phenom 100, and we implemented various improvements in the Phenom 100E, which is now recognized as the standard for entry-level jets. This category of business jets has been especially susceptible to the lingering economic crisis, which has affected Phenom 100 sales.

We expect this scenario to continue for the foreseeable future. However, the Phenom 100 has been a market leader in its segment, with very impressive market share levels worldwide.

When you look at economic conditions around the world, how optimistic are you that business aviation will ever return to a pre-2008 state of health?

I think that business aviation’s recovery will take place at a conservative pace, and that this will extend the cycle and affect demand over the next decade. The recovery of business aviation will be driven by the US market, while Europe’s woes will continue to linger. At the same time, the recent run of emerging markets is cooling down.

We do see some good indicators in the market — for example, the growing number of ultra-high-net-worth individuals worldwide, as well as GDPs and pre-owned aircraft inventories returning to more reasonable levels. However, we’re still experiencing a lack of confi dence in the market, which is also related to the global economic scenario. For that reason, I’d say we’re “cautiously optimistic” about a return of the market to pre-2008 levels.

The Lineage 1000 has held a market share of 20–25% among airliner derivative models

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MARKET FOCUS: LATIN AMERICA

Latin American business aviation

all fired up and ready to go

Images courtesy Marcelo Kahn, ABAG

MARKET FOCUS: LATIN AMERICA

T

he World Cup may be over but the show goes on in Brazil and the rest of Latin America, where business aviation continues to take off. LABACE, the annual Latin American business aviation show, takes place from August 12–14 and is set to showcase all that is happening in this important market. Nick Klenske reports.

What started as a small, regional business aviation show in São Paulo 11 years ago has grown up to be one of the leading regional — if not global — events on a busy business aviation calendar. In part, this is because as the rest of the world was busy coping with an economic downfall and a collapsing market, business aviation turned its eyes southward in a search for a much needed spark.

Latin America not only provided this spark — it lit a fire.

Today, the region boasts one of the industry’s most dynamic markets, a leading OEM in Embraer, a host of aeronautical universities, the world’s second and third largest bizav fleets and one of the industry’s largest conventions. In fact, last year LABACE welcomed a remarkable 14,000 visitors — a number that is only expected to grow this year.

Getting down to business According to the Associação Brasileira de Aviação Geral (ABAG) — otherwise the Brazilian Association for General Aviation — which organizes the show, LABACE differentiates itself by being all about business. Whereas other shows seem to focus more and more on product launches and networking, LABACE prides itself on the fact that it’s a show where business gets done.

“In the past, many negotiations were begun or concluded at the fair, including aircraft sales,” says ABAG President Eduardo Marson Ferreira. “We typically have more than 70 aircraft on the static, and our exhibition halls are crowded with a mix of both domestic and foreign manufacturers, operators, maintenance providers, interior finishers, and equipment suppliers — showing that this truly is a global-scale event.”

“At LABACE we typically have more than 70 aircraft on the static”

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MARKET FOCUS: LATIN AMERICA

One sector that consistently performs well in the region is helicopters, particularly for business executives shuttling across congested cities like São Paulo. In terms of numbers, there are approximately 4,000 civil helicopters operating throughout Latin America. Of these, nearly 40% are types produced by Airbus Helicopters (formerly Eurocopter) and its Brazilian Helibras subsidiary. To support this evergrowing fleet, the company is continuing to increase its maintenance and support footprint in the region. Latin America also has one of the world’s leading forecasts for helicopter fleet replacement and expansion, competing with Asia for the world’s third largest helicopter market.

The key to the region’s success? Necessity. For example, Brazil is a huge country with hundreds of cities and towns, only a handful of which are served by scheduled flights — so business aviation and the integration is provides is a must.

“Latin American companies are becoming more international, some are buying smaller firms in Europe and the US, and more and more they are using business aviation to travel abroad,” says Ferreira. “Thus, at least in Brazil, business aviation is not a luxury item but a means to productivity.”

A substantial fleet If it’s true that numbers don’t lie, Latin America is a behemoth of business aviation.

Looking at fleet size alone, most analysts consider that Brazil and Mexico have the world’s second and third largest fleets. Granted, they are small compared with the US bizav fleet, but they still come in ahead of European leaders.

With such figures in mind, it may be a stretch to continue to categorize Latin America as an emerging market. For example, in 2013 the Brazilian fleet grew 7.2% from 2012 (from 1458 to 1564 aircraft). Argentina also posted an impressive growth rate, with its fleet growing by 5.2% (from 307 to 323 aircraft). Another country that is becoming a hotbed for business aviation is Colombia, which enjoyed a 10.0% growth rate (from 287 to 317 aircraft).

More so, with the exception of Brazil, many countries have fleets consisting of aircraft that have been in operation for over 10 years — meaning huge opportunities both for replacing aircraft and for adding to the fleet. According to statistics generated by Embraer, Brazil has the region’s youngest fleet, with approximately 45% of its fleet exceeding 10 years. Some 70% of Mexico’s fleet has crossed the decade line. On average, 75% of the region’s fleet is older than 10 years.

Looking at fleet size alone, most analysts consider Brazil and Mexico to have the world’s second and third largest fleets

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MARKET FOCUS: LATIN AMERICA

39% of the total Latin American fleet will be replaced or added to with new jet purchases within the next ten years To phrase this another way, according to Honeywell’s Business Aviation Forecast, 39% of the total Latin American fleet will be replaced or added to with new jet purchases within the next ten years. At the same time, planned acquisitions remain more front-loaded than global averages, with nearly 52% of forecast purchases set to take place over the course of the next two to three years. The report shows that backlogs have slowed down. Overall, due to the high level of planned purchases, the region’s total share of projected demand last year came in at 18%.

Likewise, Bombardier’s Market Forecast has Latin America pegged as one of the globe’s preeminent markets for business jet sales. According to its figures, an estimated 1,000 aircraft will be delivered by 2022, and 1,300 between 2023 and 2033 — bringing the region’s total fleet number to 3,085.

Further boosting these numbers is what the report says is to be a record number of billionaires calling the region home — of whom a high portion are private jet owners. “As in the past, the most significant growth in billionaires occurs in Latin America which, during 2012, saw a year-over-year increase of 54%,” says the report.

The report goes on to state: “Due to structural reforms, fiscal discipline, improved commodity revenues and governments’ proven ability to generate public savings, the region has recovered the production output it lost during the recession.”

As to makes and models, Dassault continues to be a favorite, especially in Brazil, where, in 2014, it is estimated to have delivered five Falcons. It currently enjoys approximately 60% of the country’s large-cabin market.

“Brazil is a dynamic country with a very healthy and diversified economy,” says Dassault Falcon Jet President & CEO John Rosanvallon. “Our commitment to the country has steadily progressed since we sold our first new aircraft there over 30 years ago.”

Likewise, Textron Aviation also keeps a close eye on the region. “Latin America has traditionally been a strong region for Cessna, and we have an enduring relationship with our customers there,” says Textron Aviation Senior VP Sales and Marketing Kriya Shortt. “Brazil, in particular, is an important country for us, with nearly half of all light and midsize jets currently operating in the country being Citations.”

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MARKET FOCUS: LATIN AMERICA

Gulfstream too reports ongoing fleet growth in the region. The company says a majority of this growth is happening in Brazil, where its customer-operated fleet has quadrupled since 2008. “Brazil’s economic growth has sparked an increase in trade with countries around the world,” says Gulfstream President Larry Flynn. “The growth in the number of customers operating Gulfstream business jets in Brazil goes hand-in-hand with that desire to conduct business worldwide — whether it’s in China, Europe, or Africa.”

Another operational challenge is ensuring that all required permits are obtained properly. “The level of documents that are required prior to arrival far exceeds what is typically required in other regions,” warns Rockwell Collins Supervisor of Flight Support (Ascend) Rick Ballew. “Although true for the entire Latin American region, it is particularly true for Brazil, where local authorities have even cross-checked filed documents against the FAA website to ensure all filed documents are the most up to date.”

Focus on Brazil

That being said, the best advice is to always plan well in advance, leaving sufficient lead times to obtain permits and all necessary documentation. Further, as the São Paulo area is notoriously busy, it’s worth considering using alternative airports such as Boa Vista (BVB), Cabo Frio (CFB), Campinas (CPV), Florianópolis (FLN), Goiânia (GYN), Rio de Janeiro/Santos Dumont (SDV), and Sorocaba (SOD).

With Brazil being one of the primary destinations for business aircraft, having a general understanding of what to expect when flying there is important. In general, it can be said that airport availability, infrastructure and services in the country are of high quality for business jet operators. Although airport restrictions are not onerous, challenges do exist — in particular as regards availability of aircraft parking.

Turbulence ahead?

“When operating to Brazil, it is best practice to confirm airport-of-entry curfews with your third-party provider, as well as operating hours of any domestic airports you intend to use,” says Universal Aviation Brazil Country Manager Andre Camargo. “Always provide prior notice to your local ground handler for fuel uplifts and any other service requirements.”

According to Camargo, while security is generally very good at Brazilian airports, securing airport parking can be a challenge. “This is particularly true when planning operations to the São Paulo area, when it is important to always confirm parking as early as possible,” he says.

Last year, ABAG launched its General Aviation National Asset campaign. Similar to NBAA’s “No Plane, No Gain” message, ABAG’s campaign aims to show both the public and decision-makers the important role the industry plays in the country’s growth. This message is taking on a sense of urgency as global investors grow guardedly skeptical toward the Brazilian and larger Latin American market.

The source of this skepticism are market estimates that show a potential slowdown in growth — perhaps going as low as 3% a year. This is in comparison to China’s expected 8% growth and India’s 6%.

Images courtesy egom.com.br

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MARKET FOCUS: LATIN AMERICA

Starting with the 2008 economic crisis in the US and European markets, manufacturers have repeatedly discovered the potential of the Latin American market — a potential that can be expected to endure

As if this weren’t enough, other challenges lie ahead. For instance, high costs and burdensome bureaucracy make it difficult to do business in some countries – deterring potential foreign investment opportunities. There is also a general lack of infrastructure, resulting in restrictions on the use of numerous airports.

In addition, corporate owners have the largest share of the Latin American market. Corporate ownership is estimated at 62%, compared to other regions where fractional owners, management and charter companies all hold large market shares.

That said, it’s not all doom and gloom in Latin America.

In fact, a case can be made that the region is actually underappreciated, meaning it is well positioned to play a key role in sustaining the global business aviation industry.

“Overall, the Latin American region continues on the path to economic development, confirming its position in the global marketplace,” says Ferreira.

“The world knows what this means, and many companies — in particular, many business aviation companies — are watching the promising growth of the region’s market.”

“For example, Brazil stands out with the expansion of business to new regions, which has boosted demand for light jets,” explains Embraer Press Officer Ricardo Santos.

“This has been meeting the growing need of companies that look to the executive jet as a tool for productivity, which assists in prospecting and developing business in promising areas around the region that are often inaccessible via scheduled carriers.”

Starting with the 2008 economic crisis in the US and European markets, manufacturers have repeatedly discovered the potential of the Latin American market — a potential that can be expected to endure.

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MARKET FOCUS: LATIN AMERICA

Latin America — a buoyant

helicopter market KA-32 of Helicargo demonstrates firefighting operations (Photo courtesy Russian Helicopters)

I

t is always convenient to talk about the Latin American aviation market as though Latin America were a single territory. In reality, it is as varied as the countries it embraces. The geography alone decides many of the aviation challenges — with the magnificent and challenging Andes, the flat lands of Argentina and Paraguay, and the dense Amazon rain forests all presenting specialized requirements for aviation in general and for helicopter operations in particular. Rod Simpson reports.

MARKET FOCUS: LATIN AMERICA

Moreover, Latin America, stretching from Mexico to the tip of Argentina, has had more complex politics over the years than most other continents. Add to that the amazingly varied economic assets of the territory, and you have not only huge challenges but huge opportunities for the world’s helicopter industry.

Getting down to details The make-up of the Latin American helicopter fleet reflects two key factors —economics and politics. Smaller countries such as Paraguay, El Salvador, and Uruguay have relatively small helicopter fleets, while the giants — Brazil, Mexico, and Venezuela — have been adding to their capability at an increasing rate. In total, Brazil has nearly 2,000 civil helicopters, and Mexico and Venezuela follow with around 1,000 and 400, respectively.

Law enforcement agencies in all these countries have big fleets of helicopters, particularly to support drug enforcement activities. They use a range of aircraft from Robinson R44s up to Bell 412s and Mil MI-8s. However, the main economic driver in almost all Latin American nations is the oil and gas industry, which has gained momentum in recent years — and brought expansion to the large helicopter companies.

One of the most important operators in the region is Brazilian company Líder Táxi Aéreo, based in Belo Horizonte, MG. Líder is a major charter business.

Established in 1958, it took off in the 1960s as an operator of Learjets for air taxi work. The company started helicopter operations in 1973 with a fleet of Sikorsky S-58Ts supporting Petrobras platforms along the Brazilian coast, and now employs some 60 helicopters, including Bell 212/412s, JetRangers, and Sikorsky S-76s together with a new batch of S-92s.

Bristow Helicopters is a major investor in Líder, which has been building up a string of maintenance facilities along the Brazilian coast, including at São Paulo/ Congonhas (CGH) and Rio’s general aviation airport at Jacarepaguá. It also has seven operational bases for the oil support shuttles.

Helicopters flown by major international companies such as PHI and CHC, and by local businesses, such as Argentina’s Helicópteros Marinos, are also key components of the oil and gas infrastructure in other countries, including Argentina, Chile, Peru, and Venezuela.

In total, Brazil has nearly 2,000 civil helicopters, and Mexico and Venezuela follow with around 1,000 and 400, respectively

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MARKET FOCUS: LATIN AMERICA

In the economically prosperous countries of Latin America, private helicopter use is booming. This applies particularly in Mexico City and in Brazil’s major business centers of São Paulo and Rio de Janeiro. The Greater São Paulo area (whose reported population is over 16 million) has nearly 200 registered heliports — mostly on the tops of office and apartment buildings and in the grounds of gated residential communities. More than 450 helicopters operate in the city area — but then, for São Paulo’s millionaires, the cost of a Robinson R44 is no more than a couple of luxury cars. Even a turbine Bell 407 or the larger EC135 is affordable to many businessmen, and heli-commuting from home to work avoids the city’s legendary traffic chaos, reducing two- and three-hour road journeys to 20 minutes in the helicopter. And, perhaps more importantly, a helicopter also offers security against the regular kidnappings and car hijackings which blight the urban sprawl.

Helicopters are also available through fractional ownership programs such as the one operated by Avantto, a company founded in 2010 by Rogerio Andrade. The scheme allows clients to acquire a 10% stake in a single-engined type such as the R44 or 20% in a twin-turbine-powered Sikorsky S-76.

Bell 407

Robinson R44

Market diversity Helicopter manufacturers are certainly very aware of Central and South America as a key and profitable market. According to the well respected Honeywell forecast, a survey of turbine helicopter operators concludes: “Latin America continues to have the highest fleet replacement and growth expectations among the [world’s] regions. In terms of projected regional demand for new helicopters, Latin America now rivals Europe to claim the world’s second largest regional market, behind North America.” Honeywell’s survey also shows that 36% of the turbine helicopter operators surveyed in Latin America are planning fleet expansion.

AS350 Ecureuil

Taking an overview of the present helicopter fleet across Latin America, Bell and Airbus Helicopters (formerly Eurocopter) each represent just under 30%.

They are followed closely by Robinson, which has 26% and dominates the small piston-engined sector with the R22 and R44. Robinson is seeing considerable success with its turbine-engined R66 and has already delivered 150 examples to Latin America, some of which are replacing older Bell JetRangers. Bell clearly sees the area as a good opportunity for its forthcoming Model 505 JetRanger X, but its main focus is on the 407GX and 429 which are popular as executive/charter machines and for law enforcement. The Bell 412 is also in widespread use both for offshore transport and with national police forces in Mexico and other Latin American countries.

The particular strength of Airbus Helicopters has been its investment in Helibras in Brazil, which has been producing the AS350 Ecureuil for 35 years as the Esquilo. Helibras is headquartered at Itajubá, MG and has expanded its product range to include larger Airbus Helicopters machines as a result of Brazilian military orders. A new production line has recently delivered the first EC725 to be acquired by the Brazilian armed forces, and this is expected to lead to output of the civilian EC225, which is in demand for offshore oil support.

MBB BO105

Bell 412

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MARKET FOCUS: LATIN AMERICA

The Russian-built Mil MI-8 and MI-17 are operated in Venezuela for servicing oil and gas platforms Photo by Rod Simpson

AgustaWestland is also very active in Latin America and, in addition to delivering a substantial number of AW139s, has been successful with the various AW109 models. In 2013, AgustaWestland had talks with Embraer with a view to setting up a joint venture to manufacture helicopters in São Paulo, but these negotiations have been abandoned.

However, it is clear that both AgustaWestland and Embraer would like to develop new helicopter manufacturing facilities in Brazil. Indeed, Embraer may have ambitions to develop its own line of helicopters.

Russian Helicopters has a strong presence in Latin America, with military users of the Mil MI-8/17 heavy transports including Mexico, Nicaragua, and Peru. However, these versatile helicopters are also in use for oil support in Colombia, Peru, and Venezuela, and Russian Helicopters recently delivered a new MI-171A1 to Brazilian company Atlas Táxi Aéreo. The big Mils are well suited to work in the Brazilian rain forests, where they can carry large loads of drilling equipment on external slings. Russian Helicopters has also supplied examples of the KA-32 heavylift helicopter to Brazil, Chile, and Colombia for industrial, construction, and firefighting work. In the future, Atlas will also be the first export customer for the new medium twin-turbine KA-62 helicopter, designed by Russian Helicopters’ Kamov bureau.

Seven are to be delivered during 2015–16 for use primarily in offshore transport.

Sikorsky has nearly 200 helicopters in Latin America, mostly in Brazil. More than 20 of these are the S-92 Helibus, which is in service with Líder and Bristow supporting Petrobras’s offshore platforms. The remainder are different versions of the S-76, in use for a range of charter, executive, and utility roles together with some offshore supply.

Legacy fl eets and the future Quite apart from the modern turbine helicopters, many older types continue to give excellent service.

Sikorsky oversees a large fl eet of Schweizer 300 and Hughes 269 light helicopters, mainly in Mexico and Brazil, while MD Helicopters supports a substantial number of MD500-series light turbine helicopters (some built by RACA in Argentina), as well as a handful of MD900 Explorers in Brazil, Mexico, and Venezuela.

The MBB (Bölkow) BO105 remains popular as a medevac helicopter, and nearly 700 JetRangers and LongRangers serve with private, charter, and utility companies. There are also plenty of piston-engined Hiller UH-12s and more than 100 venerable Bell 47s still in active use. They all contribute a Latin American helicopter scene which is not only buoyant but seems set to grow rapidly in the next decade.

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32

OPERATOR PROFILE: AEROCARDAL

Aerocardal

F

ounded in 1991 by pilot entrepreneur Michael Kaufmann, Aerocardal is the largest private aviation company in Chile. It is well known as both an executive aviation and aeromedical company, and today boasts a large, modern FBO at Santiago International/ Arturo Merino Benítez (SCL). Phil Rose reports on Aerocardal past, present, and future.

Aerocardal operates business charter, shuttle, medical, and tourism flights, and it does so with a diverse fleet of fixed- and rotary-wing aircraft. It also manages every aspect of its own aircraft and operations, and offers turnkey management services for customers’ aircraft.

These include ground services, hangarage, maintenance, catering, cleaning, flight dispatch, deicing, and pushback.

Aerocardal also carries out all maintenance work on its own aircraft in-house.

By way of background, the Kaufmann family has been established in Chile since 1950, when Walter Kaufmann arrived from Germany to conduct market research into the feasibility of representing Daimler-Benz in Chile.

Today, Grupo Kaufmann is known throughout much of Latin America as a car and commercial vehicle dealer.

Not long after Michael Kaufmann founded Aerocardal, he identified a need for flights that would enable executives to move more easily and quickly around the country than was possible using commercial airlines.

This, he reasoned, would enable key personnel — notably those engaged in the mining and extractive sector — to travel from secondary airports to meetings

and to conclude and sign contracts. Commencing in 1992 from the company’s base at Santiago’s downtown Aeródromo Tobalaba, these executive flights represented the first such service in Chile.

And a successful idea it proved to be. Soon there was sufficient demand to justify a second aircraft, followed by the company’s first helicopter.

In 1996, with business continuing to grow, Aerocardal made the move from Tobalaba to SCL. For the next 15 years, it held the distinction of being the country’s only executive airline. Air ambulance operations commenced in 1997. The FBO segment of Aerocardal’s business dates from November 1996, at which time it was the only official FBO in Chile.

Structure and diversity CEO Ricardo Real joined Aerocardal four years ago, in June 2010, having previously worked for LAN Airlines for 17 years in a variety of roles, including European operational director (based in Spain) and, ultimately, cabin crew director. He holds an MBA from Chile’s Universidad Técnica Federico Santa María.

33

OPERATOR PROFILE: AEROCARDAL

Aerocardal CEO Ricardo Real

Aerocardal employs a total of 86 people, says Real. This figure includes 17 pilots and five cabin crew, 15 mechanics, two engineers, and six maintenance administration personnel. It also includes a staff of 17 who report to FBO Manager Marco Nuñez.

The current fixed-wing fleet consists of two Cessna Citation S/IIs and a Gulfstream G150, which are used primarily for executive ops, both domestic and international; three Dornier 228s and two Dornier 328 turboprops, which are employed in the executive charter role; a PA-31 Panther Navajo and a PA-31T Cheyenne I; and a Cirrus SR22T, which serves as a demonstrator. (Aerocardal is the designated Cirrus distributor for Chile, and has sold 14 in the past five years. According to Real, Aerocardal has 60% of the singleengine market in Chile.)

On the rotary-wing side of the house, Aerocardal operates an AgustaWestland AW109 Grand, a Eurocopter EC135, and two MBB BO105s. All can be configured for medevac and VIP operations. Aerocardal also conducts worldwide medevac flights using fixed-wing assets. This operational capacity is achieved in part through alliances with other medevac operators in the US and Europe.

Diversity brings benefits, and Aerocardal has grown steadily over the years. Real says he hopes to add another jet to the fleet — hopefully as soon as October — to accommodate future traffic. “The most probable choice is the Gulfstream G150,” he says, “because we already operate one with very good results — and acquiring a second G150 would increase our jet fleet capacity by 25%.”

Activity, growth, and prospects Real reports traffic levels as quite healthy. “We fly 420 flights a month,” he says, “so in one year we fly almost 5,000 hours across the whole fleet. Our G150 flies between 900 and 1000 hours a year. In total, our different business units move more than 7,000 passengers a year. This includes business flights, executive charter, medevac flights (fixed- and rotary-wing), and executive helicopter operations.”

Lately, Aerocardal has seen relatively modest growth in its executive business. “We’ve seen a little slowing down in the past two years,” says Real. “This is due to regional and countrywide economic issues. Nevertheless, we still have 80% of this market, with customers such as major mining companies, retailers, and local banks.”

34

OPERATOR PROFILE: AEROCARDAL Aerocardal’s executive operations are run as an integrated service with the FBO, meaning that fuel and catering are available without the need to leave a secure area. In-flight service is available too, if required.

Executive charter work tends to fall to the Dornier 228s and 328-100s. Aerocardal has contracts with a number of Chilean mining companies, many of which are located in the north of the country.

There are also ad hoc missions. Real lists some of the destinations. “We fly scientific teams to different locations,” he says, “like the Antarctic, San Pedro Atacama, Easter Island, Robinson Crusoe Island, Argentinean and Chilean Patagonia, Torres del Paine...”

The list goes on. “And we carry out ‘itinerary flights’ at certain times of year in joint ventures with travel agencies like Turismo Cocha and Travel Security. We also go to locations where normal commercial airlines don’t go, like Pucón, Robinson Crusoe Island, Vallenar, and Calafate.”

The medevac side of the business is doing well. As Real notes, “We’ve been in the business since 1997. Since then, we’ve performed 3,750 evacuations [as of June 2014].” He continues: “The market has been growing at between 10 and 15% for the past six years, and there are almost 85 flights a month. Ten years ago, there were only eight flights a month. Today, we have 65% of the medevac market.”

Aerocardal occupies a unique niche in Chile’s aeromedical sector. Real explains: “We have major contracts with two private hospitals in Santiago — Clínica Alemana and Clínica Las Condes — in which we place one helicopter at each hospital (the EC135 and the AW109, respectively).

We’re the only company in the country to have this type of contract,” he says, “and we have 100% of the market.”

The FBO business is thriving, too, in part because Aerocardal operates the largest and most modern GA facility at SCL — the new terminal was opened in March — but also because it has its own parking ramp and fuel trucks. “We’re seeing an average annual growth in FBO business of 8%,” says Real. “A lot of new foreign customers — many from the US and Europe — see good opportunities to invest here.” He adds: “We have 75% of this market.”

As mentioned, Aerocardal is authorized to do maintenance work on all its own equipment. (It has the added distinction of being the only facility in Chile permitted to perform an in-house Citation Phase V inspection. Also unique is its authorization to do complete Rolls-Royce C20–28 engine overhauls.)

Aerocardal is further licensed to undertake Eclipse 500 maintenance and Global Express line service.

Distinguishing marks It’s no accident that Aerocardal is Chile’s largest executive jet operator. And an accident-free record is a significant part of the company’s identity.

“We have been recognized as a highly professional company in safety and security throughout our history,” says Real. “We’ve been in business for 23 years with no accidents — and that fact is very important in this business because it’s part of our reputation and it’s important to the VIPs and executives who fly with us.”

He continues: “Another important issue that makes Aerocardal stand out is the capacity and flexibility that we have because of the different types of aircraft we fly.

We have aircraft types to suit all customer and mission needs — whether that means executive travel, business meetings, helicopter charter, or short-notice medevac.

“It’s also the case that Aerocardal flies anywhere a client needs to go,” concludes Real. “We’ve flown to Russia, Australia, Fiji, the US, Mexico, all around South America, and many other locations.”

Corporate culture and added value Aerocardal manages to retain market share and to increase sales by around 10% a year. To account for this, Real starts by citing the company’s five guiding principles: • • • • •

Safety and security Excellent service Efficiency Personal effort Flexibility

“We always work with the client,” he continues, “and we try to give them a solution for whatever trip or mission they may need, whether it’s in Chile or outside Chile. For this we have a fleet of ten airplanes and four helicopters — a mix of jets and turboprops — for anywhere between five and 31 passengers. We’re always adding new products to the market, including new destinations.

“No less important is our quality program,” says Real.

“This is crucial when it comes to serving our customers, and we demonstrate it through our certification with BARS, Hart Aviation, Wyvern, ARGUS International, International SOS, AMPA, ISO 9001-2008, and TRACE International. We’ve been developing these skills internally to allow our team to provide the market with a safe, distinctive, and consistent product every time.”

35

OPERATOR PROFILE: AEROCARDAL Aerocardal’s new FBO terminal The official opening of Aerocardal’s new FBO terminal at Santiago International, Chile (SCL) took place on March 27, 2014.

The opening was timed to coincide with FIDAE 2014, Chile’s premier annual aerospace exhibition and air show. Aerocardal has been the official FBO of FIDAE for four years in succession.

With a total floorspace of 7,700 sq ft, Aerocardal’s new two-story facility is one of the largest private terminals in Latin America. It boasts crew rest areas with showers and rest rooms, and separate rooms for domestic and international boarding. Flight crew members can avail themselves of a flight planning and weather room, with terminals running Jeppesen and Universal software.

Catering service is arranged by outsourcing to specialized high-end companies. In addition, Aerocardal has agreements with Budget and Hertz for personalized car rental service, including pick-up and return to the FBO terminal. Security measures include more than 25 cameras and CCTV. FBO Manager Marco Nuñez has been with Aerocardal for three years. He oversees a staff of 18, consisting of line techs, CSRs and dispatchers. What distinguishes Aerocardal from its competitors in the FBO business, he says, is its focus on making sure that all client needs are fulfilled.

Aerocardal is the only FBO at SCL to have its own ramp — more than 118,000 sq ft in all — and is also unique in having its own fuel farm and three tankers inside the airport. Nuñez notes that Aerocardal’s new 36,000-gallon below-ground fuel farm came on line last September, more than tripling the previous capacity.

“We offer complete fuel supply, cleaning, parking, and aircraft moving services,” says Nuñez. “In a typical month we handle 140 flights. We’ve actually handled an Airbus A380 and a Boeing 787, but the largest airplane we operate on a weekly basis is a Boeing 737.”

He continues: “We operate throughout Chile. And we have the capacity to internationalize any airport in the country, giving the opportunity to any client to travel abroad from any point in Chile.”

Nuñez explains that what prompted Aerocardal to establish an FBO at SCL in the first place was “the growing need of clients to make a fast entrance and departure from the only international airport in the country. [Consideration of] the resources that many of them had to pay for highly personalized service made us invest in this business line.”

Now, in 2014, he concludes: “We offer a more complete service than our competitors. It starts with our fuel farm, the new building and ramp — and our operation and presence throughout Chile.

The package we offer makes us the best option in the market.”

Aerocardal’s new FBO terminal at SCL is among the largest in Latin America

36

SECTOR FOCUS: FINANCE

Aircraft financing today Lenders speak about doing business in a changing environment Rob Seaman reports on developments in the world of aircraft financing.

T

he global recession hit the private aviation community hard, especially when it came to financing aircraft acquisitions. Regardless of whether the aircraft you were considering was new or “pre-owned,” money was suddenly extremely tight and many familiar names and friendly faces simply disappeared.

37

SECTOR FOCUS: FINANCE

Slowly, however, the climate has changed. There are some old friends back in the lending game — along with a few newcomers. So what are they looking for before they lend you money? And how do they see the years that follow? We asked three different lenders to share their thoughts with us.

Some established names and ground rules Mention the name CIT, and most people think first of that company’s support to commercial aviation. That said, they are longstanding supporters of private aviation interests, and they continued to work with customers through the darkest of recent hours. In fact, CIT Business Aircraft Finance Group was named Best Business Aviation Lender in Europe for 2013 at the Annual Corporate Jet & Helicopter Finance Conference in London.

Mike Kahmann is group head and managing director of CIT Business Aircraft Finance. His group provides financing and leasing programs for owners of business jets and turbine helicopters, both in the US and overseas.

Kahmann identifies certain key elements in considering an application for financing today. He says: “We focus first and foremost on the aircraft and the operator. The type of aircraft, the way it’s been maintained, and the way it will be operated in the future are key elements of our analysis. With respect to the prospective obligor, we look primarily for two things — liquidity and persistence of cash-generating capability.”

Chris Partridge is director of aircraft finance at Deutsche Bank’s London branch. As to client qualification criteria, he explains: “The first thing I would highlight is that I work within a private banking environment, and therefore my clients all have to appreciate that our offering here at Deutsche Bank is based on a full-recourse relationship to an individual who is prepared to bring assets under management (AUM) to the bank and enter into a broader

banking relationship, rather than just providing an asset financing. I’m ‘asset agnostic’ and thus will look at aircraft from almost every OEM.” One of the biggest deterrents to buying an older preowned aircraft in a depreciating market has been that some lenders have put lower limits in place. This practice of “not lending below X dollars” has made buying certain older, lower-valued (but still sound) aircraft an extremely difficult proposition, especially for entry-level and firsttime buyers.

As a case in point, CIT, while it doesn’t have a preference for factory new or gently pre-owned aircraft, does tend to gravitate toward aircraft worth US$10 million and more. Similarly, Deutsche Bank’s Partridge states: “The minimum lend for me is typically in the region of $15 million. I have no upper limit — after all, the type of client who can afford a $200-million aircraft is someone who could benefit from the full breadth of banking capabilities of Deutsche Bank both on a private and a corporate basis.” As for the “brand new versus resale” question, Partridge says: “I’m happy to finance both old and new aircraft. In my portfolio I have 20-plus-year-old bizliners, and I have current-generation executive aircraft sitting on the production line where we’re providing pre-delivery payment or completion support.”

New players in town Some friendly faces that are popping up in the lending market have a different focus and overview of the resale opportunities that abound.

Martin Ormon is the president of Aircraft Finance Corporation in Newport Beach, CA. He is excited by aviation. While Ormon is an experienced lender and investor, he has only been active in aircraft financing since the recession — a fact that may help explain his fresh perspective.

Some relative newcomers in the lending market have a different focus and overview of resale opportunities

38

SECTOR FOCUS: FINANCE

“We at AFC don’t rely on Blue Book or Vref for valuations,” he says, “since we underwrite, service, and maintain most of our loans. We look at the maintenance history of each individual aircraft, as each one truly is [unique]. We believe that the core to valuations is maintenance history and the pedigree of its manufacturer. We base our underwriting on a few key factors — the asset (aircraft), the credit of the purchaser, and in many cases their history as an aircraft owner.”

The good news for resale aircraft borrowers with Ormon is that AFC will lend on both new and used aircraft, up to $35 million. “We love used aircraft,” he declares. “Where other lenders shy away, we look to fi nance each one that comes our way.”

Location, location...

Given business aviation’s global reach, questions naturally arise about geographic limits to where lenders will fi nance and restrictions on where they will allow an aircraft to be operated.

CIT’s Kahmann draws on his experience. “Certainly, first and foremost we look at the laws and precedents that govern creditor rights in the individual jurisdictions in which we do business. Our concern is simple: If we must repossess or recover an aircraft due to a customer default, how quickly can that be done? How certain are we that it can be done?”

In addition, he continues, “As a US institution, we will not finance aircraft that will be based or will operate in certain sanctioned countries.

Otherwise, we may also restrict flights from regions or countries in which there are limitations on insurance coverage or where we feel there may be safety concerns.”

As Deutsche Bank’s Partridge explains, “We have no geographical limits as to where we will fi nance aircraft — although I think it’s fair to say that, in the global industry we’re operating in, the structures we apply to fi nancings are such that they mitigate, as far as possible, some of the jurisdictions we have to deal with on a day-to-day basis. As for where our aircraft can’t fl y, like all other professional aircraft fi nanciers, we work within the scope of US, EU, and other global operating restrictions, and are guided in this by our operators, who have very precise restrictions on their insurance coverage.”

Asset preservation Maintenance provider and insurance restrictions are frequent caveats to lender requirements. As CIT’s Kahmann puts it, “One of the great things about the aviation industry is that there are strict guidelines on who can repair an aircraft, so those controls are already in place. In addition, the aircraft that we finance are typically managed by independent third-party operators, and these operators have good reputations for solid maintenance and safe operation of aircraft.”

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40

SECTOR FOCUS: FINANCE

Partridge offers a slightly different perspective.

“We’re generally guided on this point by our clients and their own demands and requirements,” he explains. “Typically, we’ll be fl exible [about such things], but we inspect our aircraft and their respective technical records, and we audit the operators of the aircraft on an annual basis to help us satisfy ourselves that the aircraft are being maintained in accordance with best industry practices. If, in the opinion of our independent advisers, practices are substandard at the operator, we will tell clients — and we have done — that they can’t use those operators.

“Our insurance policies are typically fl eet policies from our operators — however, we have independent insurance opinions commissioned on each of our aircraft transactions to ensure that standards are maintained. If, in the opinion of our advisor, terms and conditions are weak we will raise [these matters] with the client and push for better terms.”

AFC prefers that aircraft it fi nances have a maintenance program — but this isn’t a requirement.

In general, the company leaves the provision of maintenance to the discretion of the borrower.

Trends in fi nancing Opinions vary as to whether it’s becoming easier to borrow — and indeed whether there’s a trend one way or another. CIT’s Mike Kahmann notes: “We see more availability of fi nancing today than a few years ago. The fi nancial system continues its slow but steady recovery from the fi nancial crisis, and we think that companies and entrepreneurs who are interested in obtaining fi nancing are the benefi ciaries of that trend.”

A glance into the crystal ball leads Kahmann to suggest: “We think that the business is poised for continued growth as a replacement/upgrade cycle

takes hold in the more mature markets, and as the emerging markets continue to embrace the value and utility derived from owning or operating a business jet.”

Deutsche Bank’s Chris Partridge observes: “I think there still remain problems in the lower end of the market. However, I think the advent of the HondaJet and captive fi nancial packages for clients will force other OEMs to turn back the clock and reintroduce similar programs. This should help the small end of the market.” He continues: “With respect to the large jet market, there are options here for both private banking type solutions and commercial banking solutions, but I would say that this sector does not face the same level of global competition as the commercial aviation market. I think we’ll see the advent of a number of new operating leasing companies for bizjets over the coming 24 months, and this will help, particularly for the corporate part of the market.”

Lastly, Martin Ormon offers this view: “We feel that the market place is getting much more favorable for lending, and valuations are grossly oversold.” At present, his portfolio comprises 65% personal and 35% corporate customers —an illustration of the depth of his optimism and belief in the recovering market.

Conclusion The great news here is that we called some bankers and they answered us —happily and willingly. This was certainly not a likely outcome a few years back.

Not only did this group answer — they also provided honest, sound advice from their unique perspectives on how we can do business with them in the recovering economy. And we feel justified in using that term because, while for many there is still no recovery in sight, at least this sector is showing some optimism.

“Our insurance policies are typically fleet policies from our operators — however, we have independent insurance opinions commissioned on each of our aircraft transactions to ensure that standards are maintained”

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42

SECTOR FOCUS: INSURANCE

Insuring your aircraft Preparing for something you hope you never need

I

nsurance is one of those things in life we pay for because we have to — but in the hope that we never have to use it. It’s the “rainy day fund” for when things have gone wrong or are out of our control. Rob Seaman reports.

43

SECTOR FOCUS: INSURANCE In business/private aviation, good, detailed, and extensive insurance coverage is most important. You are dealing with far more than your own direct interests — you’re dealing with the needs and concerns of many people, some of whom may or may not be under your control and influence at the time an incident occurs. In the increasingly litigious society we live in, a good insurance policy and relationship with the underwriter are important components of a well-managed flight operation.

So what are the basic insurance requirements for business aircraft? A great deal of this subject is influenced by which authority you operate under, whether you are private only or charter, and the size or type of aircraft — not to mention where you operate. But there are obvious elements that are applicable to all.

‘Must-have’ requirements The first of these is liability insurance. This is heavily influenced by where you fly and live. In Canada, for example, minimum requirements are based on usage and weight. The minimum is C$1 million third-party public liability plus $300,000 per passenger seat. Obviously, the amount will be higher depending on aircraft weight.

If your aircraft is flying outside of North America, certain regions will require higher minimums. The EU, for example, has very high liability minimums, which vary by region.

Belinda Bryce is executive VP for The Magnes Group — an independent professional risk and insurance advisor. Her firm “brokers” coverage with international insurance underwriters on everything from airliners and business aircraft to small GA aircraft. It also works with flying schools, FBOs, and aviation maintenance/support firms. All of this gives Bryce a somewhat broader overview of the aviation world. She says: “Deciding on the appropriate level with respect to business jets, we usually see at least $100–250 million for a two-crew, professional-pilot-flown aircraft. It’s not unusual to see bigger jets carry up to $500 million.”

Photo by Tyler Olson

The second “must have” is hull insurance. In general, regardless of your country of registration or area of operations, this coverage should reflect the cost to replace the aircraft with similar vintage, condition, and additional equipment. Usually, the deductible on corporate jets is zero — on turbine and piston aircraft it will vary.

The third compulsory part of an insurance package is premises liability insurance. This is liability coverage for the owner/policyholder’s use of airport premises and has become a basic requirement in the past ten years.

Minimums are exactly that The minimum required components are just the beginning. Most savvy operators work with their broker to include additional items that cover different scenarios. Insurance providers only offer something if it has been an issue in the past. If they suggest something, there is usually a case or specific reason behind it, and you’d best give it fair consideration. The time to consider this sort of thing is in the calm and quiet of a meeting where you focus on planning — not in the reaction mode of an incident. Just like an emergency plan, taking the time for this today is the best approach.

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SECTOR FOCUS: INSURANCE

As to what the recommended added elements are, the list is endless — but they are worth pondering before you need them. Why? Because the ancillary coverage can be thrown in upfront for little or no fee — but could end up costing a lot in a claim if you don’t have them. The most important ones that come to mind for a typical broker are: •

•

•

•

•

•

• • • •

• • • • •

• • • • •

War risks (hull and liability) — A requirement if you’re flying in the EU and important to have in certain regions in the world. Can also be relevant in North America as it includes sabotage, malicious acts, etc.

Non-owned aircraft (hull and liability) — Important to have when your normal business aircraft is unavailable and you borrow/rent/charter another.

Can usually be included at no additional cost.

Emergency expenses (search and rescue, fire, foaming of runway, etc) — In our “charge-for-everything” era, you can expect cost recovery from an airport after an incident, so make sure you’re covered.

Liability for hangar damage — If your aircraft (or an act that your department is proved to have initiated) causes issues in the hangar, you can be held responsible.

Baggage liability/personal effects/cargo — Typical private aviation clients have lots of expensive take-along items. Make sure you’re covered for even simple things like a scuff on that Gucci bag.

Liability for sale of aircraft, aircraft parts/services — Whether you operate your own aircraft for business use, or manage a fleet for various owners, you’ll always have incidental liability when you sell the aircraft or provide service to a third-party aircraft.

Contractual liability — For the liability you assume when you sign contracts.

Could be for service, support or even occasional staff.

Voluntary settlement — Ability to offer a settlement to an injured passenger or third party to avoid legal proceedings.

Medical expenses — For passengers and crew.

Extra expense payment — For temporary substitute aircraft when your aircraft is down due to a loss; temporary replacement component parts after a loss; trip interruption for passenger/crew to get them home or to their destination after a loss.

Spares coverage — For spare engines, parts, engineer’s tools, etc.

Lay-up clauses — Return premium for days aircraft not used.

Contingent employers liability — In event workers compensation doesn’t apply.

Constructive total loss clause — Allows aircraft to be written off once repairs hit a certain percentage of insured hull value.

Host liquor liability — In the event alcohol is served on the aircraft. (With business aircraft, that would be all of them.) Somewhat akin to barkeeper policies on letting client who may have had one too many, but insists on driving, leave anyway.

Mexican/EU certificates — If you are from outside these regions, you’ll need to comply with specific requirement by region.

Quarterly installments Two-year rate guarantees Training credits Open pilot warranties — Ideally, pilots would be approved by “named insured,” to prevent operational or claim delays. However, this may only be available for aircraft managers or professional-pilot-flown aircraft.

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SECTOR FOCUS: INSURANCE

These are the most common things to consider, but the full list is very long and complicated beyond this. It doesn’t mean that any of this is a scam — the intention is to protect you and your operation from otherwise crippling litigation and costs, and to be sure you have the right amount of coverage to be able to fly worry free.

According to Belgian-based FinServe, which has been in the aviation insurance business for over 25 years, insurance providers are under a lot of pressure in today’s economy to lower premiums by offering less inclusive coverage.

“Although this may save money up front, it costs more when an incident occurs,” says FinServe CEO Guy Broddin. “And really, what’s the point of a policy that only covers half of your risks?’”

The other side of the fence When you start “shopping around” for insurance for your flight operation, it helps to know what the broker or underwriter is going to look for.

With regard to the requirement for pilot qualifi cations that are typically included in insurance policies, the broker or underwriter will want information that includes: • • • • • • • •

Whether single pilot or two crew Whether professional pilot or owner flown License type Total time Jet time Make and model time Formal simulator schooling Claims/violations

As Bryce explains, “For managed fleets, we typically want to see the policy carry an open pilot warranty, where any pilot decisions are made by the named insured and do not have to be specifically approved by the insurance company. The pilot details may be reviewed periodically (every 2–3 years). However, on single-aircraft operations, the above list would be the minimum information required to be able to approve pilots on an annual basis.”

Today’s challenges to insuring business aircraft In Belinda Bryce’s view, insurance pricing is very low at present. She says: “We’ve seen premiums fall over the past 5 years by over 60% in some cases. This cannot be sustained in the long run and [premiums] will eventually start increasing. Increases will likely happen one year

over the next, which can put an unexpected financial challenge on the operator. Operators should enjoy the benefit of lower premiums right now, but be cautious and budget for increases in the long run.”

Bryce also has a comment about making sure the aircraft is insured to its proper value. “We find that many owners are not aware that aircraft actually depreciate in value, and keep the insured value at the amount they originally bought it for. This can become a challenge at the time of a loss [say, three years later, by which time] the aircraft is overinsured. As such, the aircraft may be repairable within the insured value, even though it could be replaced with a similar age and condition aircraft for much less.

This can lead to long repair waits and an aircraft that’s repaired but now has a damage record.”

Many turbine/jet business aircraft that are presented to a broker like Bryce are part of a managed fleet. The manager/operator is the customer — not the aircraft owner. In this scenario, it’s the operator who will take out a fleet insurance policy for several aircraft that they manage. This can be beneficial for improved fleet pricing and is an inherent benefit to “managed” aircraft.

Typically, operators or management firms will work with the broker when putting a bid together for a new customer. They are encouraged to try to gather as much information as possible on the bid and include such things as where they are currently insured, what they are paying, and how the management fee is structured.

For individual owners who are not in a management arrangement, Bryce recommends contacting a broker before purchasing an aircraft. For example, if they are trying to decide between a turboprop, an older jet and a newer jet, insurance will play a role in budget, pilots, training requirements, and so forth. Brokers are there to help and can be very informative. Dealing with an aviation specialty broker is also recommended, especially if you are new. How you are “presented” to the underwriter is important, and a broker helps confirm the best price and make sure there are no gaps in coverage.

Clearly, insurance is not a simple matter where aircraft are concerned. There are many more considerations and unforeseen elements to contemplate. In most cases these are things the average operator will not have encountered before and so may overlook or miss.

Asking questions and doing some research ensures that you’re properly covered for the time when you need it most.

46

SECTOR FOCUS: CATERING

Dining in the clouds Taste and the corporate traveler Rob Seaman examines the key issues in on-board catering.

Y

ou have the best trained, most interactive and courteous flight crew. Your aircraft is first rate, with a great cabin layout and amenities second to none. The flight is going completely as planned. Your passengers arrived on time. Pre-flight catering was served without incident — of course. The departure went without a hitch. Weather looks fine en route. You’ve climbed out and settled into what should be a no-worries flight.

The cabin crew has started food service for the passengers — at which point the flight attendant comes forward to advise that the catering is not good. So now, despite all the hard work, expertise, and excellence of your operation, your flight’s “customer satisfaction” is at risk because an outside service has let you down.

While passengers may forgive a lot of things, sub par food and beverage service is not one of them. For most experienced FAs, the catering is a direct and personal reflection on them. Some have been known to refuse an order if it does not meet their expectations and standards. Fussing the details is, after all, their role.

Personal taste is a driving force in private aviation.

Bringing personal wine from a home collection (or finding out what that is and making sure you have it on board) is the norm for many. Likewise, some FAs who know their passenger well will shop at several locations while preparing for flight, just so that they can have products that the passenger wants. For frequent users, the flight department usually maintains a lexicon of passenger “likes” from food through to reading material and in-flight entertainment. This helps plan excellence every time.

Consistency makes for a good trip.

There are some extremely important safety and control procedures to follow. Regardless of whether you’re the FA or the FBO handling the catering, here are some insights to consider from a veteran — Philadelphia, PA-based Susan Friedenberg, president and CEO of Corporate Flight Attendant Training & Global Consulting.

Friedenberg offers courses and consulting on the proper planning, execution, and handling of catering for private aviation operators and FBOs. According to Friedenberg, “The importance of food safety involves safeguarding it from anything that could harm the health of consumers. It’s all about best practices.

“High standards enable everyone to enjoy their food without illness, injury, or other problems, but poor standards can lead to all types of harm and possible death. A pilot who is physically compromised due to food poisoning is not a good thing! An ill CEO cannot attend the meeting that he was en route to, resulting in loss of business and time-sensitive productivity. Food safety is important to everyone, and the people who work with food or order the catering have legal, ethical, and economic responsibilities for keeping food safe to eat.”

“High standards enable everyone enjoy their food without illness or injury. Food safety is important to everyone.”

47

SECTOR FOCUS: CATERING

Using Friedenberg’s expertise and some interviews with both FAs and FBO staff, here is a quick checklist for ordering or handling catering — whether you’re a member of the flight crew and work at the FBO. • •

• •

•

• •

•

• • •

Be cognizant of galley compartment size constraints.

If you are unfamiliar with the aircraft, review the galley equipment (oven/microwave, and their respective sizes).

Check packaging for accuracy.

Be aware of food allergies/religious food restrictions/ food-eating trends and special diets (inclusive of your pilots).

Familiarize yourself with the aircraft seating configuration before ordering trays that will accommodate the space and passenger seating.

Always order totally different crew meals to avoid possible food poisoning.

In the case of FBOs, ensure that you (or a manager or flight department representative) have visited your catering facility.

Be sure to look at their paperwork from FDA/ insurance paperwork/local Board of Health inspections.

Request your catering in sealed boxes to mitigate possible food sabotage.

Review how catering will be stored at FBO until needed on the aircraft.

Before taking it aboard, check food on the ground for correct order fulfillment, presentation, and quality.

As Susan Friedenberg says, “It’s all about accurate information and communication skills. At the end of the day, it is called due diligence — and you as a business are liable if a passenger gets ill when you were charged with obtaining the catering.”

If you want to know more about local catering, ask another FA what they’ve experienced and what they think. For example, Krista Devitt is an experienced professional private aviation FA. These are some people who stand out for her from all her travels.

“There are three caterers that are unusual and outstanding at the same time,” she says. “First is Iacofanos Catering and Food Service, located in Aiken, SC. These caterers operated out of a semi transport truck during the Masters.

They created beautifully plated and top-quality catering on the ramp!”

Second on Devitt’s list is Par-Avion Exclusive Catering in Cape Town, South Africa. “The catering I received from this company was the best I’ve ever received. It was top-quality catering with every attention to detail. They even delivered the catering with hot towels that were actually towels!”

Third is Café Pushkin, on Tverskoy Bulvar in Moscow, Russia. Devitt says: “They provide top-quality food and now actually cater to the aviation industry. In addition to great food, they provide take-away containers and cardboard boxes with handles for easy transport. They’ve also become members of Dellos Air Service, which provides catering from a number of local establishments.

You can order from Pushkin through the airport, or you can stop by the restaurant.”

Catering can be make or break your flight. Angry clients don’t like paying for poor food service, and some have been known to dispute the entire trip bill over it. It’s a quality and safety element of your planning and execution that deserves as much attention and detail as possible. Business aviation is about quality and service excellence. Don’t let a bad sandwich sully your reputation.

48

OPERATOR PROFILE: PRIVAJET

PrivaJet and its two-star Michelin BBJ

49

OPERATOR PROFILE: PRIVAJET

“The main plan and focus is here — an aircraft with fantastic capabilities combined with the highest level of comfort”

I

n late May, the unveiling of a completely refurbished Boeing Business Jet (BBJ) brought FlyCorporate to Jet Aviation’s Basel facility at Basel–Mulhouse, Switzerland (BSL/MLH). PrivaJet celebrated the inauguration of the company’s flagship, returning from a six-month, 40,000-man-hour refurbishment project that engaged 250 Jet Aviation personnel. Jason Zappa Janse reports.

PrivaJet was founded in Malta in 2010 as a European charter and management services provider, specifically targeting large-capacity corporate airliners, such as Boeing 737s and Airbus A320 types.

modernizing the entire cabin. We also modified the cabin’s configuration, because the market told us we had too many installed divans and we needed more individual seats to make it more in line with our customers’ requests.”

“It’s a very young and small company, and consequently very customer-orientated,” explains PrivaJet General Manager Christian Weber. “Our refurbished start-product projects the best image of what we try to achieve and have achieved through this aircraft — offering an incomparable flight experience. The main plan and focus is here — an aircraft with fantastic capabilities combined with the highest level of comfort.”

The importance of being configured

Jet Aviation was responsible for the entire six-month project, although the design phase lasted over a year.

“We came to a 12-year check — the longest one possible — as we wanted to take the original cabin out entirely,” explains Weber. “So we took our time in redoing and

According to PrivaJet Commercial Director Jérôme Franier, the BBJ’s new configuration provides the perfect fit. The aircraft features four zones, which include a relaxation area, dining area, work area and rest area — well suited for a total maximum occupancy of 19 passengers.

From back to front, the BBJ features a master bathroom — the first of two —offering a lavatory, a shower, and storage room. Adjacent to the bathroom is the master bedroom, where a queen-size bed has been installed.

Both bathrooms have showers as well, and the aircraft has a total capacity of 700 liters of water.

50

OPERATOR PROFILE: PRIVAJET Considering the aircraft also carries six auxiliary fuel tanks (AFTs) and has a passenger capacity of up to 19, additional onboard weight is something the company always keeps in mind. As Franier points out, “The more weight you take on board, the shorter the maximum range of the aircraft will be.”

Continuing with our internal tour of the BBJ, the first bedroom is followed by a private office. This brings the “home-away-from-home” idea within aviation to life, as the space can be converted easily into a guest bedroom with an additional queen-size bed. Located right next to the private office is the second bathroom (or potential guest bathroom), with a shower and a lavatory as well.

Now follows the dining area, which features a table and seating capacity for six people, followed by a forward relaxation area with club seating capacity for 14. A relaxation area, located close to the front of the cabin, features a divan for five people on the left side and one individual seat on the right side, followed by a club area for two people on the left side and four on the right.

Moving toward the cockpit, a small hallway appears, with an impressive storage system in which the flight attendants — note the plural — can store anything from cutlery, plates, and glasses to bottles in designated cooling compartments. There is also an extensive range of sweets, snacks and other kinds of nutrition.

Standard crew

A door to a modest, but practically designed, crew rest room follows on the right side of the hallway. Whenever the BBJ departs on a mission, at least two flight attendants and one engineer go on board. With frequent transatlantic hauls in mind, a crew rest room enables both flight attendants and cockpit personnel to take breaks in between shifts.

The hallway forks into a welcoming area with the main entrance and exit door of the aircraft and a spacious galley divided into two primary working areas. Practical efficiency was a prerequisite throughout the redesign, and the galley features working tables and platforms hidden behind every cupboard, door, and wall.

Destination everywhere As this Maltese company focuses primarily on corporate airliners, PrivaJet is ETOPS-180 authorized. Extendedrange twin-engine operations (ETOPS) authorization grants a certain performance standard, which allows the BBJ to fly long-distance routes that fall within a certain margin of single-engine time from the nearest suitable airport. ETOPS-180 allows the BBJ to fly any route within 180 minutes’ single-engine flying time.

The BBJ’s six AFTs allow it a range of 6,000 nm — useful for an aircraft such as this, since it often flies non-stop from London, England to Los Angeles, CA.

One or two captains, one first officer, one flight engineer, two flight attendants, and a flying chef

Passenger capacity 19 Beds Two double queen-size beds and eight single berths, for a total of 12 sleeping berths Showers Two showers, with a total water capacity of 180 gallons Leisure

Four independent areas with DVD and CD players; Rockwell Collins Airshow; iPod/ iPhone/iPad connectors; four HDTV screens, and iPads for all passengers

Communication Satcom six-channel telephone; fax Internet Broadband Wi-Fi Voltage 115 and 230 volts Surface area 810 sq ft Width, length and height 11 ft 7 in, 78 ft 9 in and 7 ft 1 in Luggage capacity Cargo compartment for up to 35 items Cruising speed 530 mph Maximum altitude FL410 Range with max load 4,800 nm Galley equipment

Two steam ovens, microwave oven, freezer compartment, open bar, Nespresso coffee machine.

51

OPERATOR PROFILE: PRIVAJET “Of course, you can easily find smaller aircraft that are able to fly further — a Dassault Falcon 7X, a Bombardier Global 7000 — but not with this kind of cabin,” Franier continues.

“In addition, you cannot provide the level of service in a smaller aircraft that we are providing, because you only have one flight attendant. If you want to fly directly from Paris to Los Angeles, there is simply no other option.”

However, as Franier points out, the advantage of chartering a corporate airliner is that you do not require an owner’s authorization to get on board. “If the aircraft ends up in the US and has no missions scheduled for the upcoming weeks, we can easily wait for an empty leg to get us back to Europe — which grants us a significant amount of flexibility.”

Admittedly, chances are that if you’re among PrivaJet’s target users and have two aircraft options, you’ll probably go for the one that doesn’t require a fuel stop in the middle.

Between-mission locations are often determined based on scheduled maintenance checks, during which the pilots and flight attendants often take training courses to keep their skills up to date. Weber notes that PrivaJet imposes strict training standards on flight attendants, other cabin personnel, and flight crew.

Cockpit personnel are given regular long-absence training courses in case they are not flying more than once in one duty period. “This mostly happens when the aircraft is on the ground for a maintenance check, to avoid long AOG times,” Weber adds. “We’re not forced to do this, but it proves to the customer that we’re staying ahead of the curve.”

Franier continues: “Our main concern was to address that segment of the market where no other aircraft — with this range and that cabin — would be able to go. Our company was created based on the idea that there was a lack of VIP corporate airliners available for charter. Of course, there were HNWIs who purchased these kinds of aircraft, but they only operated them privately — rarely would you find one on the charter market. We aim to provide private VIP service to [that specific market segment] which families, heads of state, and royals are looking for.”

Although PrivaJet clearly aims to provide services to a very specific market segment, its reach is global. “The US is a popular destination,” explains Franier, “especially for Middle Eastern clients, who make up for the majority of our client base. Our most popular routes would probably be Riyadh to London, and London to Los Angeles. We also fly regularly between Russia and the Maldives.” Franier notes too that PrivaJet organizes a world tour starting and ending in the US for entertainment-related events.

Demand from Asia is currently low, says Franier, but he anticipates this changing as more BBJ-type aircraft enter the continent. “Wherever there’s competition, there’s a market,” he says. During the past few years, the company hasn’t experienced a drastic change in the type of clientele, as the Middle East didn’t suffer as much as Europe and the US during the economic crisis.

Convenience PrivaJet’s effective home base is hard to pinpoint — usually, provided no mission is imminent, the aircraft remains where the last mission ended, or is repositioned to what Weber terms “a convenient location.”

One such location is in the Middle East, explains Franier, as the company’s primary customer base originates there. “[The Middle East is] still close to Africa for potential African customers — and, from South Africa, the distance to Europe and the Middle East is more or less the same, so we prefer to go for our biggest regional source of clients.”

Company flexibility is also reflected in its personnel mix. The chief pilot is based in Zürich, Switzerland, chief flight attendant in Paris, France, and the principal chef in Brussels, Belgium. “We focus on hiring the most qualified people, wherever they’re based,” says Weber, adding that clients appreciate this diversity.

Ready for the future “We’re ready for the future,” says Franier. “We will aim for similar long-range VIP aircraft as we focus on a niche market. We’re a small boutique company and we want to grow without compromising our philosophy of close client relationship.”

One example of this, and reflective of PrivaJet’s relatively small customer base, is that Chief Flight Attendant Angélique Salviati has developed such close connections with her clients that she knows exactly when to serve which kind of tea — even how many spoonfuls of sugar.

The company plans to retain this philosophy while maintaining its current level of flexibility. “We’re not in a rush,” Franier says. Weber adds: “If a company becomes too big, it runs the risk of becoming industrial. With a customer base of four to five loyal customers, you can remain dedicated — you know their habits and preferences. With too many customers, processes are put into place that lack that level of dedication, and that’s precisely what we want to avoid.”

52

OPERATOR PROFILE: PRIVAJET

As for future aircraft acquisitions, Weber says he’s open to Airbus Corporate Jets too. “ACJs are complimentary to BBJs [rather than a fit] for the same missions,” he explains. “It depends on the configuration. Look at commercial airlines. Most of them have a mix of Boeings and Airbus, though it probably would be easier [to have a one-type fleet]. Finding the perfect solution for everything and everyone in one aircraft is impossible.”

for over 12 hours. Not only is the freshness of the food at risk of being compromised — the chain of control between hotel and end product is completely absent.

The rigorous training undergone by the flight attendants also applies to these flying chefs, who are required to complete the same courses.

Cockpit and cabin systems The flying chef — two Michelin stars at FL410 PrivaJet has introduced a unique feature by actually taking aboard a two-star Michelin chef. In collaboration with Yves Mattagne, the head chef and owner of the Sea Grill restaurant in Brussels, this service will see one of two alternating dedicated private chefs from Mattagne’s culinary team prepare and serve high-quality inflight menus.

“We have spent the last six months with Yves Mattagne and his team to develop something unique,” says Franier.

“Through this, we aim to become the first two-star restaurant at 41,000 ft.”

Of course, when you have a two-star restaurant at 41,000 ft, everything else needs to match that level of service.

From the ops side, the BBJ offers the PrivaJet crew that advantage as well. Franier notes: “As we bring several flight attendants aboard, and have a crew restroom at the front of the cabin, we can double our duty time, which is very convenient for long-haul flights.”

The usual drill would be to go to locate the best restaurant in the vicinity of the airport, order the best menu and reheat it on board. “What we want to do,” explains Weber, “is to locate the best ingredients and bring those on board for preparation in flight, instead of locating the best end product.”

The company came up with this concept after reflecting on the drawbacks of conventional methods. Imagine your flight is being prepped at a remote location. There is no aviation caterer serving your departure airport.

Consequently, you order food from a luxury hotel, which requires the food to be ready no more than an hour before the crew leaves for the aircraft. The crew arrives at the airport two to three hours before the client arrives — if he arrives on time — in order to prepare the aircraft.

A potential ten-hour flight follows. This means that the breakfast served at the end of your journey has existed

Further cabin upgrades included installation of a Rockwell Collins Venue cabin management system. According to Weber, “all boxes were ticked” in selecting Venue options.

The bedroom, office, club, and dining area are all outfitted with HD monitors, iPads and Wi-Fi, all available for Apple-, Windows- and Android-based devices. Weber notes that, since the BBJ is available for charter, it was important to select as many options as possible. “It took some brainstorming with Rockwell Collins to ensure we’re able to offer any required option to any customer at any time,” he says, “but the charter market doesn’t dictate one option, so neither should we.”

When it came to upgrading the cockpit, little was required, as it was already quite up to date. Weber explains: “[We have] TCAS 7.1, CPDLC, which makes our BBJ NextGen compliant, so no drastic upgrades or updates were made.

We’re very iPad-minded as well — we only use electronic flight bags — and try to achieve a completely paperless cockpit. An absolute minimum of paper that is required by the authorities is brought on board — license, noise certificate, passports, and that’s about it.”

Director of Flight Operations Stefan Fischer says: “The flexibility of our operations and of flying a BBJ both come in handy when we encounter weather issues. The benefit of an aircraft like this is that, when a customer is not satisfied with the route we’re taking, in case of bumpy weather ahead, we can easily divert and use another route. In addition, we often get requests to enable two or three other routes, due to whatever reason the customer proposes. As I said, we’re extremely flexible.”

For PrivaJet, flexibility, high-quality service, and close customer relationships are vital aspects of its business offering. The redesigned and refurbished BBJ departed for its first long-term charter operation the day following the official unveiling ceremony, epitomizing all those aspects of PrivaJet’s business, together with elegance and hospitality.

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54

FC REVIEW: HUMANITARIAN MISSIONS

Beyond the business of business aviation W

hen people think of business aviation, they often imagine it as limited to corporate executives jetting around the world from one meeting to the next.

But to many people, business aviation isn’t about business at all — it’s a lifesaver.

FlyCorporate’s Nick Klenske reports.

55

FC REVIEW: HUMANITARIAN MISSIONS Did you know that volunteer private aviation pilots fly over 118,000 hours a year on charitable and medical missions? Or that these disaster relief missions include shipping food, medicine, and clothing to where it’s needed most? That business jet owners regularly volunteer their aircraft to transport patients for life-saving medical procedures, emergency organ transportation, blood and serum transfers, and other related missions?

Although not often in the spotlight, these special missions are an important part of business aviation. What follows is a brief look at some of the companies and organizations that regularly use business aviation to provide life-saving services to people in hard-to-reach communities.

Quick response in Haiti Immediately following the devastating earthquake that hit Haiti in early 2012, the business aviation community was looking to help. While it’s impossible to estimate the total amount of time, aircraft, and expertise contributed to the cause, an NBAA online support registry indicates that within two days of the earthquake hundreds of flight departments, companies, and even individuals had registered to offer assistance.

Estimates show that nearly 100 GA aircraft flew from the US to Port-au-Prince, Haiti (PAP) within a week of the airport’s reopening to humanitarian missions.

In fact, during the first weekend after opening, FAA reported that 300 landing requests had been approved, nearly half coming from civilian aircraft.

As an illustration of these efforts, consider Bob Penkhus, an auto dealer in Colorado Springs, CO, who volunteered his company’s Beech King Air 350 to transport 16 doctors, nurses, and their medical equipment to Haiti. He even volunteered to pilot the aircraft himself. “It was an amazing experience,” recalls Penkhus. “I delivered the best team of doctors that life has to offer, along with $100,000 worth of donated medical equipment.”

Just days after the tragedy, eight medical team members arrived at Penkhus’s hangar at Colorado Springs (COS). Their pre-dawn departure could carry only the medical team and a quarter of the gear they intended to bring. The remainder of the team and supplies flew to Fort Lauderdale/International, FL (FLL) by airline, with the remaining supplies being express-shipped there.

It took Penkhus several round trips from FLL to PAP to deliver all the team members and supplies.

“You really have to appreciate the level of talent right in the middle of that devastated community,” says Penkhus. “Any day of the week these victims would have died from their wounds, but because of business aviation they were cared for by 16 of the most talented medical professionals in the business.”

Although not often in the spotlight, these special missions are an important part of business aviation

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FC REVIEW: HUMANITARIAN MISSIONS

A very special kind of mission Since 1987, Cessna has been organizing what is now its signature community endeavor — the Citation Special Olympics Airlift (CSOA). The program calls on more than 100 Citation owners and operators to help transport 1,000-plus athletes and coaches from across the US to and from the Special Olympics USA Games, which were held this year from June 14–21 in New Jersey. Dozens of Citations flew into Trenton, NJ (TTN) for the event.

Corporations and individual Citation owners and operators in every state are called on to donate aircraft, pilots, and fuel for the airlift

Cessna Senior VP of Marketing Roxanne Bernstein remarks: “This is a signature community endeavor for Cessna and a unique opportunity that enables everyone — from our employees to our customers –— to get involved and be a part of the games.”

Corporations and individual Citation owners and operators in every state are called on to donate aircraft, pilots, and fuel for the airlift. While this year’s games were held in the Northeast US, more than 3,500 athletes traveled from all over the US to compete. Thanks to CSOA, more than 1,000 of them arrived by Citation.

Special Olympics North America President & Managing Director Bob Gobrecht calls CSOA “one of the most spectacular traditions of our national games.” He adds: “The generosity of Cessna, their industry partners, and the Citation owners not only provides our programs with a much needed solution to the costs associated with transporting delegations, but it also gives our athletes a once-in-a-lifetime aviation experience.”

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FC REVIEW: HUMANITARIAN MISSIONS

This year saw the addition of Beechcraft airplanes to the airlift fleet, thanks to Textron Aviation’s new organizational structure. More than 100 Beechcraft airplanes took part, each carrying between three and seven athletes, coaches, and sponsors.

Planning for this massive undertaking begins two years in advance and, in addition to volunteer pilots, involves more than 100 volunteers stationed at various airports. Since its first airlift, the company has transported nearly 10,000 athletes and coaches from across the US. Speaking of this year’s airlift, CSOA Director Rhonda Fullerton says: “The team effort behind the scenes with all of our many partners — Citation customers, FAA, Ronson Aviation, Cessna employees, and so many others — is unbelievable, and makes the airlift a great success. But the most important part is bringing the athletes to the games and taking them back home safely.”

Serving those who serve From the outside, the MES Group looks like any other company. It is a profitable and growing Houston, TX-based company offering independent medical evaluations. However, unlike other companies, the MES Group is using business aviation to help disabled veterans.

The company, which doesn’t advertise its community work, provides free business jet transportation service for disabled veterans returning from combat. “I just can’t say enough about this company,” says MES Group Chief Pilot Al Brandley.

“MES Group uses its company jet for business about 30% of the time, but 70% of the time we’re taking wounded vets where they need to go — for family reunions, career seminars, interviews, family emergencies — whatever they need.”

“All the veterans are so appreciative,” says Alicia Camp, a MES Group employee who accompanies many of the veteran flights. “They can’t believe so many companies in the US with business aircraft would donate them for these flights.”

The program is part of the Veterans Airlift Command (VAC), a volunteer organization launched by veteran Walter Fricke. VAC receives requests from disabled veterans and matches those requests with flights donated by companies and individual pilots. According to Fricke, MES Group is just one of many companies donating flights to disabled veterans in their corporate aircraft.

“Every single one of these wounded vets has this amazing attitude, even though they’re all severely wounded, and they’re all positive and uplifting and they have big smiles on their face,” continues Camp. “I’m so thankful to have had the opportunity to spend time [with them]. They’ve all touched my life and inspired me.”

“They can’t believe so many companies in the US with business aircraft would donate them for these flights”

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Join 25,000 industry professionals for the most important three days of business aviation this year, with over 1,000 exhibitors, 100 business aircraft on static display, and more than 100 education sessions. Visit the NBAA2014 website to learn more and register today.

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FC REVIEW: OEMs

Game-changing ideas

from smaller OEMs

A

recent FlyCorporate On The Fly report discussed the revitalization of business aviation from an innovation point of view. The report aimed to show that while (understandably) innovation simmered down during the economic depression, the past few years have seen smaller players kick off, introducing potentially big products.

Jason Zappa Janse reports on some promising OEM innovations.

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FC REVIEW: OEMs Contrary to recent trends that continually put (ultra) long-range and large-cabin aircraft on the path to recovery, these smaller players are bringing products from other aircraft categories to the market, which are capable of revitalizing their specific market segments in the business aviation industry.

Light jet versatility Pilatus is one of them. The Swiss OEM launched its twin-engine PC-24 business jet at last year’s EBACE in Geneva. Self-titled the world’s first super versatile jet, core aspects of the PC-24 include — not surprisingly — versatility, efficiency, and precision. With 2,690 ft of required take-off distance and 2,526 ft for landing, the PC-24 can use significantly short runways, both paved and unpaved — just like its older turboprop brother, the PC12 — in addition to having a 90 cu ft baggage and cargo compartment. These features underline Pilatus’s promotional description of the PC-24.

“Over ten years ago, we started asking our PC-12 NG customers what they would like to see in the next Pilatus aircraft,” comments Pilatus Chairman Oscar Schwenk. “The answers were always the same — further and faster.” Powered by two Williams FJ444As, each producing 3,400 lb of thrust, the PC-24 has a predicted maximum speed of 425 kts and a range of 1,950 nm.

Pilatus has introduced a completely new cockpit design it calls the advanced cockpit environment (ACE). The most important contributor to this system is Honeywell, which has combined components of its Primus Epic and Primus Apex systems for the basis of ACE. (Pilatus’s long-established PC-12 also uses Primus Apex.) Also contributing to the cockpit is Latitude Technologies. The British Columbia, Canada-headquartered company has installed its SkyNode S200 satellite communications system on board the aircraft.

The comm system should fit the PC-24 perfectly, as, according to a company statement, it was “designed with application versatility in mind.”

Together, these aspects make the PC-24 an effective competitor with Embraer’s Phenom 300 and Cessna’s Citation CJ4. On a price-comparison level, the PC-24 is capable of topping the Phenom 300’s current $8.7 million and the CJ4’s $9.05 million with its projected $8.9 million for first delivery three years from now. Cabin-wise, the more than 500 cu ft PC-24 cabin far exceeds both the Phenom 300 and the CJ4. However, the “versatile” aspect must be kept in mind, since the 90 cu ft luggage compartment is included in those 500 cu ft.

According to GAMA statistics, there are currently 177 active Phenom 300s and 144 CJ4s in the installed fleet. One year after the official launch of the PC-24, on the aircraft’s first anniversary, Pilatus returned to EBACE with a giant order book, on which — due to what the company called “overwhelming interest” — it displayed the actual progress of confirmed sales made during the show. The company logged 84 orders in three days — confirming the PC-24’s potential in a struggling light jet market and booking its production line completely full until 2019.

“We asked our PC-12 NG customers what they would like to see in the next Pilatus aircraft. The answers were always the same — further and faster.”

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FC REVIEW: OEMs

In addition, at last October’s NBAA convention, Pilatus announced a worldwide authorized service center (ASC) network to support sales of its new fl agship. Six ASCs in the US will service, sell, and support the PC-24 — Tempus Aircraft Sales & Service of Denver/ Centennial, CO (APA); Western Aircraft of Boise, ID (BOI); Skytech of Westminster, MD (DMW); Pro Star Aviation of Manchester, NH (MHT); KCAC Aviation of Olathe/Johnson County, KS (OJC); and Epps Air Service of Atlanta/DeKalb–Peachtree, GA (PDK).

Central and Latin America have two ASCs on their radar — Synerjet at Panama/Tocumen, Panama (PTY), and Pilatus Center de México, based at Monterrey del Norte/International, Mexico (NTR). Canada will be supported by Pilatus Centre Canada at Thunder Bay, ON (YQT).

The company also established two subsidiary service centers in Adelaide, SA, Australia and Gaborone, Botswana. European customers can count on the company’s headquarters facility in Stans, in addition to four ASCs in eastern Europe.

The PC-24 prototype was due to roll out of Pilatus’s Stans headquarters on August 1, as part of an offi cial ceremony attended by local offi cials and a pool of business aviation affi liates. Maiden fl ight of the PC-24 is scheduled for later this year or early 2015.

Three prototypes will take part in the certifi cation program. Pilatus anticipates EASA and FAA certifi cation by 2017, with customer deliveries slated to follow immediately. Time will tell if the PC-24 will fulfi ll its promises and revive the light jet market.

Evolution at Piaggio Aero Another smaller but important player is Piaggio Aero, which recently introduced an upgraded version of its long-established P.180 Avanti II — the Piaggio Evo. Easily distinguishable by its twin-turboprop engines mounted in pusher confi guration, the history of the Avanti dates to the late eighties; certifi cation and service entry followed in 1990.

In November, 2005, the company introduced the improved Avanti II, featuring an improved version of the Pratt & Whitney Canada PT6A66 — the PT6A-66B — and a glass cockpit. A successful entry into service was underpinned by 70 orders, of which just over half went to Clearwater, FL-headquartered Avantair. Ten years after its launch in 2003, the former aircraft fractional ownership company reached an all-time high with a fl eet of 56 P.180 Avanti IIs. Following a series of allegations and law suits over maintenance records and the Avanti fl eet’s poor condition, Avantair’s fl eet was grounded and eventually FAA suspended all 56 airworthiness certifi cates. The company went bankrupt by the end of 2013, seriously jeopardizing the future of such a large group of active P.180s. GAMA’s statistics show that Piaggio delivered 200 Avantis and Avanti IIs between 1999 and 2013.

Piaggio Evo

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FC REVIEW: OEMs Between the beginning of 2014 and today, a couple of significant things have happened. Firstly, the future of the Avantair fleet of Avantis isn’t completely lost, as Piaggio’s North American representative, Piaggio America, has created an OEM-trained team to assist every P.180 owner to return their individual aircraft to full airworthiness.

a better maintenance program, and new components with a longer life.”

Secondly, at this year’s EBACE — shortly after Abu Dhabi, UAE-based Mubadala Development Company took over the company’s majority of shares — the Italian OEM launched a third generation of the Avanti — the Avanti Evo. Recently appointed Piaggio Aero Industries Chairman Alberto Galassi described the launch of the Piaggio Evo as a “historical moment under the new ownership of Mubadala.”

Logli also emphasizes the Evo’s environmental friendliness. “Nowadays, restrictions have tightened substantially when it comes to the environmental impact of business aviation,” he explains. “Not only did we reduce the chemical production of the aircraft, but also the acoustical production, due to the Evo’s new propellers and exhaust nacelles. We’ve produced an aircraft exactly according to what the market is asking of us — better performance, increased range, improved economics ... and ‘green’.” He concludes: “These are the key characteristics [that make] this aircraft capable of revitalizing business aviation.”

Although the Evo builds on the P.180 Avanti II’s DNA, it has been given an extensive range of improvements — winglets, redesigned nacelles, and a reshaped front wing, which cuts down emissions by 3% and boosts the turboprop’s climb performance by 3%, have been added to the original airframe. In addition, the Evo comes with new five-blade scimitar propellers, which reduce external noise by 68% and internal noise by 20%.

For $7.395 million an Avanti Evo can be yours. So far three orders have been placed. Due to a financial boost given by Mubadala, the company is also relocating its assembly line to a new facility in Villanova d’Albenga in Liguria, Italy, which opens this month. While the Avanti II may have experienced a setback due to the Avantair affair, the Evo has the potential of bringing light to a somewhat hazy sky.

The aircraft’s cabin has undergone a complete metamorphosis, as a design by Poltrona Frau now dominates the interior, combined with Iacobucci HF seats.

Innovation at Nextant Aerospace

The turboprop also underwent a profound system upgrade process, during which anti-skid braking, landing gear, digital steering, and LED lighting — inside and out — were installed. Lastly, the company is offering an optional increased-range configuration, which allows for a 17% increase in range to 1,720 nm compared to the Avanti II’s range of 1,470 nm. EASA recently certified the required additional auxiliary fuel tanks.

First flight testing with the Evo’s redesigned engine nacelles and propellers took place in spring 2013; testing with the winglets began over the summer. According to a company statement, the majority of certification requirements have been completed and the company brought its prototype to the Farnborough International Airshow in July. During the show, Piaggio also received an order for 10 Avanti Evos from Hong Kong-based Bravia Capital, with options for an additional 40.

“We hope to certify and immediately deliver the Evo to a first launch customer by the end of September,” comments Piaggio Aero CEO Carlo Logli. “The Avanti II already was a very fast turboprop. The Evo keeps the same high-speed capability and great performance at a turboprop cost, but comes with improved economies,

A third important player is remanufacturer Nextant Aerospace. In its seven-year history, the company has successfully introduced the first remanufactured business jet, upgraded that same jet, and now plans on introducing a second product to the market before year end.

The success of the modified and modernized Beechjet 400A/Hawker 400XP — as the Nextant 400XT — led swiftly to the birth of the Nextant 400XTi — the “I” standing for innovation. The 400XTi wasn’t developed as a direct competitor to the PC-24, the Phenom 300, or the CJ4, for one specific reason — its price.

Remanufacturing comes at a price – a significantly lower one, of course, as the 400XTi currently stands at $4.95 million. By definition, remanufacturing doesn’t require a clean-sheet design process. Quite the opposite. Nextant is proud to be able to convert a Beechjet 400A into a Nextant 400XTi in approximately 6,000 man hours. The conversion brings all life-limited components to zerotime — the not-life-limited airframe is the only significant remaining part of the Beechjet, making the Nextant 400XTi an 88% new aircraft.

Since its FAA certifi cation in October 2011, Nextant has made 45 deliveries, including fulfi llment of a 40-strong, $150-million order from fractional company Flight Options.

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FC REVIEW: OEMs Three years later, at last year’s NBAA convention, Nextant announced its next product — the G90XT. Based on the Beech King Air C90GTx, the G90XT will be remanufactured in slightly fewer hours than a light jet, but with the same philosophy in mind — to revitalize the performance of an aging design and for half the original purchase price — north of $2 million, but well below $3 million.

Nextant President & CEO Sean McGeough comments: “We explored all different market segments and went for the [King Air] 90 series because it’s in the light jet segment — and I specifically say light jet because the King Air turboprop is a turbine-engine aircraft. Thanks to the 400XTi, we’re very comfortable working in that segment.”

He continues: “While we could have gone for a larger aircraft, we felt that the turboprop segment is growing, and the 90 market segment particularly is the ideal entry-level business aircraft solution, which will grow our customer base substantially.”

“The King Air 90 series has a great reputation,” McGeough adds. “There are about 1,500 airframes out there, of which a significant part can only [continue to] fly as long as they [incorporate] the improvements that you see happening on new aircraft platforms as well. In the [past 15 to 20] years, the real improvements in aviation technology have been in the engine, avionics, and cabin sectors.”

Consequently, instead of creating a clean-sheet design, Nextant is collaborating with GE Aviation and Garmin — who will supply the H75 engine and G1000 avionics suite, respectively — to boost a proven airframe.

McGeough reveals that his company aspires to looking into larger turboprops as well. For now, thoughts of developing a G90XTi are perhaps premature rather than non-existent. “We’re going to focus on the back of the cabin right from the beginning,” says McGeough. “When we deliver the G90XTi, there will be a range of new and innovative products already, but, certainly, if there’s an opportunity to roll out a new product line in three to five years from now, we would probably do an ‘i’.”

Of course, the choice between upgrading an existing product and acquiring a new STC for a larger turboprop or even a larger business jet isn’t easy. “We’re very methodical about how we go about announcing our next product,” McGeough says. “I think we took everyone by surprise when we announced the G90XT at NBAA last year. There was a lot of speculation about what the next airframe would be.

“For now, we’re really focused on bringing the G90XT to the market before we announce another product,” he adds. “That has been the success of Nextant — we do what we say and focus on the object at hand.”

Nextant 400XTi

SWEETER ARRIVALS, PAINLESS DEPARTURES

FC REVIEW: BIZAPPS

The iPad has totally changed the way we work and communicate, providing a new platform for business applications and information sharing. FlyCorporate looks at some of the latest apps designed for the bizav market.

Name of app Direct Access Target user Crew, owners, operators What it does Your Honeywell business aviation customer support network now travels with you. Quickly connect with AOG desks, easily locate and contact your nearest avionics dealer and mechanical service center, and receive the latest news from Honeywell.

Cost

Free

Name of app FlyCorporate Target user Business and professional general aviation users What it does FC is the premier multimedia resource for business aviation. It is dedicated exclusively to international operators, industry professionals, and users and owners of corporate aircraft.

This quarterly publication is now available as a downloadable app for your iPad. Cost

Free

Name of app Airshow Target user Crew and passengers What it does Rockwell Collins Airshow is available to view on a personal device while in flight. This version offers the latest innovations and allows passengers to see the world around as if looking through a transparent cabin.

Cost

N/A

Name of app PlaneBalance Target user Gulfstream pilots What it does Designed by Gulfstream pilots for Gulfstream pilots, PlaneBalance allows you to compute a weight-and-balance report and elevator trim setting before each flight.

Cost

Free

Name of app Falcon Customer Service Target user Falcon users and owners What it does The Falcon Customer Service app puts global resources at users’ fingertips, offers instant touch-call features for its AOG hotlines, technical center, spares, and field service.

Cost

Free

Name of app CSS Guide Target user Embraer users and owners What it does Access Embraer Executive Jets Customer Support and Services contacts using a customdesigned Android application. The app provides all information to connect to the nearest ASC. Cost

Free

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