““[Bill Gates] has been historically one of my best supporters…One of my favorite e-mails he ever sent me…I proposed this crazy project. And he sent back this two-line response: ‘This has got to be the craziest thing you’ve ever suggested. Please proceed.’” ”
VistaJet's Thomas Flohr
Remember Victor Kiam-the man who liked Remington electric razors so much he bought the company? Well, you might say VistaJet chairman Thomas Flohr is Kiam's alter ego-he disliked an industry so much that he started a company to try to fix it. The industry in question is business jet charter. When Flohr began chartering aircraft he became frustrated at what he saw as great inconsistency in service and an absence of transparency. So in 2003 he bought his own Bombardier Learjet 60 and within two months found it was in such strong demand for charter that he could hardly ever use it himself. So he bought a larger model, a Challenger 604, and then he bought an operator and this became Salzburg, Austria-based VistaJet.
Six years later-with business aviation enduring a historic slump-you might well ask whether Flohr wishes he'd stuck to his first professional callings, computing and finance, and kept his aircraft to himself. But apparently he doesn't. On the contrary, Flohr sees the current crisis-which he believes has now passed rock bottom-as a catalyst for long-needed change and an opportunity.
What bothered you about business aviation when you came to it as a charter customer?
I didn't know what aircraft and crew would be coming or who the operator was. It's as if you book a hotel and have no idea what you are getting except a bed. Private aviation is like the Wild West. The industry gets away with it because it is still in puberty.
Also, the financial and contractual product was cumbersome and not transparent. It was hard to finance and expensive, while not giving you value. It was driven by a situation where there was no number two or number three, just one provider [NetJets Europe]. And there was no contractual framework that I felt was fair.
So we said, "It's very simple, Mr. Client. Either we own the aircraft and will give you 200 hours [per year] or if you insist on owning the whole asset, we will buy back 600 hours and you have 200. Either way, you are free to do what you like if it isn't what you want anymore. But the aircraft will be silver with a red stripe and we will operate it. If you want a pink carpet you need to go somewhere else, because this fleet has to be completely interchangeable. If I fly you to Dubai tomorrow and pick you up in four days, the likelihood that you are going to be on the identical airplane is close to zero but you won't notice the difference."
You've built your entire fleet around Bombardier aircraft, including the Learjet 60, the Challenger 605 and the Global 5000 and XRS. Why is that?
With NetJets, there are 15 or 16 types so it is highly complex in terms of pilots, landing permits, parts and maintenance. It is cumbersome and costly, and we
want to pass on as much of the economic benefit of our business model as possible to our clients.
Other than Bombardier, no one is really in the business of catering to a fleet. Bombardier understands the needs of a fleet because it comes from a regional airline business. So the interiors of our Challengers and Global Expresses are identical.
Surely this is a difficult time to be in business aviation. There can't be many other businesses that have been as badly hit by the financial crisis.
Any business on this planet has been affected. But in a crisis there is a flight to quality where people say that if they are spending that much money they might as well get the best product. Clients are more selective and value conscious, which is fine for me.
How do you back up the claim to be the "world's fastest-growing private jet company"?
We grew 20 percent in the first six months of 2009 when the market was shrinking 15 to 20 percent. In July and August, we set successive new records for number
of flights and customers in a month.
Are the ways in which business aircraft are being offered-charter, fractionals, jet cards and so on-right for the times? Or does business aviation need to reinvent itself?
Any business model will eventually go through a revolutionary phase. VistaJet's business model [reflects] this. Business aviation is in the process of industrializing itself, and 25-year-old business models are suffering from not reinventing themselves. Having a captive market that you can milk is not a long-term business model. The highlight of the current trend is that we are going to the type of branded product that you find in any other business.
But what makes VistaJet "revolutionary," as your Web site claims?
The global financial crisis has highlighted the significant capital commitment and asset risks associated with full or fractional ownership and our approach delivers the unique combination of a luxury brand, a customized solution and pricing transparency. Our program solution is built around customers who fly more than 100 hours per year. Guaranteed availability and the feeling of flying on their own airplane is our advantage.
Also, our program customers can now take advantage of the largest service area in business aviation-from the U.S. East Coast to Asia/Pacific. As a program customer, you can fly within or between regions in our service area with no positioning costs. Whether your trip is London to New York, Geneva to Riyadh or Bahrain to Beijing, you pay only for the hours you fly.
Doesn't positioning have to be built into your charges somehow? If so, how is it more transparent not to break out that expense?
While other programs break out positioning fees, monthly fees, ownership fees and hourly fees, our customers asked for a simple, inclusive occupied hourly rate. VistaJet delivers on that.
If you had a friend who wanted to charter an aircraft and, for whatever reason, VistaJet could not do the job, what would you tell him to look for in an operator and what questions would you tell him to ask?
We submit ourselves to an ARG/US Platinum audit every six months. I personally would fly only with an operator approved to this standard. I would ask whether pilots are subcontracted or under the control of an operator. I would ask the age of the aircraft. Older aircraft have more maintenance issues. And you need to ask what exactly is in the cabin because you can't assume what will be there in terms of things like entertainment systems.
Can the use of business aviation really be justified these days, given its impact on the environment as a generator of greenhouse gases?
Absolutely. If you are responsible for the growth of a company, you need to make sure you can be with your clients and colleagues at any given time with very little restriction. But there needs to be an environmental balance. The age of aircraft is a factor in the environmental consideration. I doubt the industry will self-regulate in terms of gas consumed so it is up to the government bodies.
And the authorities can contribute sustainability in terms of air traffic control. In some respects, it is an archaic system with flight plans that don't make sense and landing approaches where a tiny noise reduction is achieved by burning more fuel while circling for 15 extra minutes. Our pilots are trained to nag controllers for direct routing as soon as they enter new airspace.
VistaJet is strong in Europe and its growth is almost entirely directed through the Middle East and into Asia. Do you have any plans to head westward to the Americas?
We will fly any client into the U.S. and pick up passengers there, but we don't want to be in the domestic [American] market. We have an elegant solution to this through a code share with Flexjet, offering seamless service with true global coverage. Why are we not in the North American market? Companies don't seem to be able to successfully market a high-end product within the U.S. And we have so many growth opportunities in Europe, the Middle East and Asia. We were also surprised by African traffic in 2009. It is becoming our number-three destination, after Europe and the Middle East.
Résumé: Thomas Flohr
POSITION: Founder (2004) and chairman of VistaJet Holding.
PREVIOUS POSITIONS: In 1985, named European president of Comdisco, which became a leading provider in the IT financing sector. Appointed president of Comdisco (Finance) Worldwide in 1999.
EDUCATION: Studied business and political science at Ludwig-Maximillian University in Munich.
PERSONAL: Swiss citizen. One daughter.