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Filling Up The Niches

Apart from the annual traffic growth of approximately 30% and dynamic acquisition of aircraft, there is another positive sign of development on the Russian business aviation scene, which has become increasingly apparent recently. This is the emergence of companies which base their business on serving very specific market segments, and it is definitely an indication of growing demand on the customer side, but also of more flexible management on the operator side.

“We can’t exactly speak of business diversification yet,” says Alexander Yevdokimov, General Director of Jet Transfer charter broker, “but our customers have evidently become much more selective. Where five years ago there were not too many options when it came to a business charter flight, today’s clients search for the operator which would satisfy their demands as fully as possible both in terms of quality and budget.”

According to Yevdokimov, only about 60% of potential business aviation users in the region currently find services relevant to their travel needs, however. Perhaps the price/quality ratio is unreasonable, or there are no aircraft of the right size, or that won´t fly where that clientele need to go. However, to capitalize on the potential 40% that are not catered for, simply expanding the fleet is not enough. Operators have to find creative approaches to customer travel needs. There are several niches which are still waiting to be filled. For example, helicopter operations are hardly visible on the market. That is why charter brokers on behalf of their clients salute the new players in the Russian marketplace - meet Moscow Sky and Dexter...

For a party of 30

The concept for converting a regional 100-seat airliner into a spacious aircraft for corporate travel was a result of a thorough comparison of local market preferences against global industry offerings.

“Our experience shows, that the size of a Tupolev Tu-134 matches our Russian clients’ idea of convenient travel,” explained Igor Makarov, General Director of Moscow Sky. “However, operations of this type in Europe are restricted, so we had to look for a better option. We also considered the Yakovlev YAK-42, Embraer 190 and Bombardier CRJ200, and came to the conclusion that the Fokker 100 was the right solution.”

The aircraft cabin dimensions help prove Makarov’s point: 3.05m width and 2.1m height, provides plenty of space for interior design ideas. The fleet of three Fokker 100s are on the AOC of Austrian operator International Jet Management, but are actually based at Moscow’s Vnukovo airport.

The aircraft, formerly operated by American Airlines and JetsGo have undergone substantial modernization at Sabena Technics DNR. Their cabins were completely refurbished and divided into sections to include a club area, a private lounge (or two in a different configuration) and a “business-class” section in the rear fuselage for 12 accompanying staff.

The company’s target clientele is corporate management teams heading for business meetings in Europe, the Middle East and Siberia. After auxiliary fuel tanks are fitted into huge luggage compartments (which Fokker Services will carry out in the near future) the range of the aircraft will reach 5,000km.

“The Fokker 100 is a real value for money,” continues Igor Makarov. “On European routes it is as good as a BBJ, only with a different price tag. It wouldn’t take you across the Atlantic, but 90% of our orders are for Europe and inland.”

According to Moscow Sky management, charter demand for corporate delegations is big. In the first months after the service was announced each aircraft accumulated around 60 hours of flight time, and that figure is not expected to decrease.

Competition isn’t an issue either, Makarov revealed, since Russian operators do not dispose of such aircraft, and Western operators would charge the empty leg from Europe to Moscow, adding to the price.

Away from Moscow

Meantime, Avia Management Group was established three years ago by financial giants Kaskol and Industrial Investors with the purpose of ‘creating an alternative to night trains and rocky roads’. A revolutionary concept for the Russian charter market, air taxis took more than a year to win over expert skepticism and customer cautiousness - both primarily caused by the unusual selection of aircraft types for pairing cities within the distance of 350-850 km from Moscow.

Created by Myasischev Design Bureau and produced by Nizhny Novgorod “Sokol”, the single-engine 5-seater M101-T powered by the Walter M601F-32 is perceived as a typical General Aviation machine - hardly fit for revenue operations. There is a definite plus to using the aircraft, however. The same engines powered the Czech Let L-410 widely used as regional airliners in the Soviet Union. Consequently, almost any aerodrome would have a technician ready to trouble-shoot the aircraft if necessary. The M101-T operated by Dexter are also equipped with Honeywell avionics suites.

Evgeniy Andrachnikov, AMG Chairman of the Board, explains the operator’s ambitious goal is to eventually increase monthly flight time from April’s ca. 30 to 170 hrs per aircraft, and annual traffic of up to 1 million passengers.

Today, Dexter (the brand under which AMG sells its services), operates a fleet of eight M101-T’s, out of a total 45 ordered. No more are expected to be delivered this year, and to satisfy growing demand AMG has signed an MOU for 25 Pilatus PC-12s, and purchased eight, three of which are to arrive this year. The operator is also considering twin-engine aircraft, but no decision on type has been made yet.

Dexter’s clientele is middle-level management, self-employed businessmen and local administration. To compete with business charter operators Dexter is offering the price of 100 Rubles (US) per kilometer for the aircraft. For the PC-12 the price will be slightly higher.

The company actually entered the market with two programs. One was a regular shuttle operated by an aircraft which flew along a chain of seven cities, with a reserve aircraft based in Nizhniy Novgorod, in the middle of the chain. The shuttle program started out successfully: the load factor on some routes reached 80% of capacity, and this may well have been the final factor which inspired one of the regional carriers to start regular operations from Moscow’s Bykovo airport to Nizhny on Yak-42s.

Regular service easily won over the shuttle passengers, making part of the Dexter shuttle chain obsolete - Samara-Nizhniy Novgorod is the only route that has survived. Consequently, Dexter fostered a second program, the air taxi - or the “on-demand” service.

“The advantage is that the airplane is ready for take off within three hours after we receive the order,” explains Andrachnikov. “We’re really flexible. And the cost would be 30-50% less than that of the regular business charter offer”.

Dexter is the first business charter operator which has aircraft based outside Moscow. The operator’s line stations in Nizhny Novgorod and Samara allow more flexibility for customers, both time- and budget-wise. To make the service more attractive for its target clientele, Dexter has introduced a corporate program similar to that of NetJets’, but instead of offering pre-paid hours, Dexter sells pre-paid kilometers. As of this writing, four corporate clients had opted for the deal.

Serving polar ends of business charter customers, Moscow Sky and Dexter are helping develop the culture of bizav operations and diversify the demand. If they manage to keep it up in spite of the challenges, it will be beneficial for all market stakeholders.

/ Новости