Aviation Tribune talks to Jumber Yakobadze (CEO) and Dmitriy Korshunov (CCO) of Aerovista, a successful aircraft leasing, trading and management solutions provider with its headquarters in Dubai.
Can you briefly tell us about the past, present and future of Aerovista?
Aerovista was setup with a vision to support the existing infrastructure in the region and demand for companies providing aviation consultancy, logistics and aeronautical spares, retractables and consumables trading. In 2005 we took delivery of our first B737-200. Since then we have grown our fleet with both Boeing and Airbus aircraft. We are gradually expanding our fleet of narrow body aircraft as well as our presence in emerging markets; this is in line with the objectives set out in our rolling three year Strategic Plan.
When we commenced business in 1999, it was with a single-minded passion and commitment to help contribute the growth of the aviation industry and support customers on a global platform. Today, our enthusiasm continues to grow, as we look to establish long-lasting business relationships with a mission to lead the aviation industry through innovation, finding new and improved solutions for our customers and global partners, and by adding value services. Transparency and flexibility are the key elements which form the basis of our competitive edge.
Where do you see Aerovista in five year’s time?
Our strategic plan, Vista 2016 ,is targeting to operate 11 aircraft by 2016 averaging 2500 hours per year per aircraft. We will be operating in three target markets: CIS, Africa and South Asia either through our own AOC or through a partnership with an AOC in the region. We plan to build our fleet around two types of aircraft and have already decided on the A320. Now we are running feasibility studies as to the other type.
Your current fleet consists of jet aircraft only. Would any other type of aircraft, like turboprops, be suitable for your type of operation?
Maintaining a two type fleet is a challenging task. We are gradually introducing an A320 fleet; at the same time we cannot say no to our current customers who see us as a reliable provider of leasing solutions with the B737 fleet. We are also running feasibility studies on other fleet variations which can be complimentary to the narrow body fleet – either a wide body solution or regional turboprop aircraft. We believe we will complete these studies by early 2015 and you will see a new fleet entering service by mid- 2015.
Can you tell us some words about your staff?
We have a great, multinational team of passionate aviators having more than 120 years combined experience in the airline industry. We find that working together as different nationalities gives us an advantage because we bring fresh ideas to the table coming from many perspectives.
We see that Aerovista is expanding its range of services. What is the best performing service in terms of customer demand?
Earlier we were mostly focused on the long term wet lease operation for our customers. So far this year, our best performing service is adhoc and on-demand charters. Having our own fleet allows us to respond quickly and with a high degree of flexibility. It is important for us to continuously analyse demand and to revisit the scope of services we are offering to our customers. Apart from the standard set of leasing and charter solutions we are also supporting our customers with consultancy services related to the improvement of their operational efficiency.
Can you explain what is the “Hybrid ACMI”?
Hybrid ACMI is our niche which offers a menu of different leasing and operating solutions. It allows full flexibility and cost transparency while combining all available resources for the customer so that they are only purchasing what they need and therefore benefit from better cost efficiencies. In this model the “A” component could also be sold as finance or operating lease or on a conditional sales basis and our customer “pays to own” the aircraft during the ACMI tenure. A key aspect, and probably the most important, is that through the hybrid ACMI approach our customers are able to utilise their capabilities to the fullest while using our services to complement airline service while keeping costs low.
How is 2014 shaping up for Aerovista?
2014 brought us a number of challenges but we are coping with them successfully. First, we created a dedicated sales team to promote and market our charter and ACMI solutions. Secondly, we have expanded to adding A320s to our fleet. Thirdly we launched a scheduled operation in Georgia under the flyvista brand name. This summer we also provided successful evacuations from Libya and Iraq and operated Hajj flights.
What would you say are the biggest challenges to your growth strategy?
The biggest challenge in is volatility in the airline market and difficulty in forecasting the aircraft and passenger transportation markets. The changing dynamics of the market, as well as stability in the world economies, are challenges to growth. For us stability means a smoother demand whereas instability has proven itself to provide a quick influx of cash but we find it is not sustainable for the long term.
We can see now that big players are still struggling even though the economy is supposed to be on an upswing. Aircraft delivery delays affect not only the legacy carriers but also smaller carriers who rely on the secondary market.
Where are the bottlenecks to growth?
We grow with the training of our team; each business is very unique and experiences organic growth. We can adapt to our factors which affect our growth but training requires time and dedication and we invest in this aspect of our business and growth. It is important to us to properly train our team and keep up with and ahead of what is required in the industry.
What about the worldwide crisis? Is it over and how is it affecting your performance and strategy?
Aviation is a tough business no matter what the stock markets are telling us. We try to lessen possible affects by staying close to our customers and being supported by strong stakeholders from lessors and vendors to manufacturers, regulators and of course our team. The key is to find a balance that keeps our business activities flowing smoothly even when the situation becomes rough. We have been operating for over 15 years and we are here to stay; one could almost say that we decided not to take part in this economic crisis. The worldwide crisis is not the only aspect that can inhibit performance and strategy; political situations and the resulting instability can pose both opportunities as well as problems for the airline industry as a whole. Being flexible and adapting to these changes are some of the components to success and have served us well in the past years.
Recently, Aerovista successfully operated evacuation flights from Libya and Iraq. What are the highs and lows of operating into this kind of areas?
Our company looks at this as responding to a need and getting people to safety. We are proud of our team and their quick response, flexibility and industry relationships. Our priority to get people to safety as quickly and efficiently as possible and because of this we require support from all partners involved. This can be facilitated by more open lines of communication and flexibility from regulatory authorities. Fortunately, with the help of our stakeholders, this is made possible.
Aerovista has established successful working relationships with leading airlines, governments, NGO’s and brokers around the world. How has this strategy translated into your financial performance?
A company cannot expect to make money when it does not maintain good relationships. We are in a people industry and we focus on long term returns which we achieve through our long lasting relationships and client retention. The aviation industry is small and it is important to maintain credibility with all stakeholders.
Looking in the future, what do you think the market will develop like in the next years and in which ways will you have to change your business model?
We have seen that airlines are expecting a 31% increase in passenger demand by 2017. It looks like more people will be able to afford travel and also place a higher value on the connectivity aviation provides. Cost will be the major factor for business to succeed. We are flexible and will adapt to changes in the market as needed.
To understand the market: who is the standard customer of Aerovista?
We serve both established airlines and startups in the Middle East, Africa, Europe and Asia, as well as private companies, by providing aircraft charter and leasing services.
The ACMI market has always been known as a tough market, with low margins and fierce competition. What are the main challenges your company is facing at the moment?
Yes, the market is tough. A challenge that the industry faces as a whole is the seasonality of our industry and the shift in demand and supply between the high and low seasons.
Looking at your competitors, how do you differ in service and rates? Why should our readers make business with Aerovista?
We have found our niche mostly in the ACMI market while also providing charters. We provide flexible solutions depending on the need of our customers. Because we are a very customer-centric company we value feedback from our customers. Our product adapts to the need of the customer and market, we are not a “one size fits all” company. When we work for our customers they become our partner.
Can you detail your environmental strategy at the airline level?
Our environmental strategy is quite organic. We look to reduce our paper usage in the office, use paperless flight plans, utilize better route planning to reduce fuel burn and other initiatives. These small changes add up to a big difference.
Is the environment a commercial or a political problem? Do customers want to see airlines being environmentally friendly?
The environment is not a commercial or political problem; it is a problem which affects the community. If we work together as a global community, even with small efforts, we can make a big difference. The most important thing is that we take the initiative and make a difference.
In the past 40 years, the industry has managed only a 0.1% margin. Does the industry structure mean it is a poor investment?
Back in 1984 Sir Adam Thomas said “A recession is when you have to tighten your belt; depression is when you have no belt to tighten. When you’ve lost your trousers — you’re in the airline business.” This holds true even today.
Aviation is, for us, all about tough and efficient cost management. Success comes from implementing tough cost measures.
We thank Aerovista, Mr. Jumber Yakobadze, Mr. Dmitriy Korshunov and Ms. Michelle Gebert for their help in facilitating this interview. If you want to know more about Aerovista, please visit www.aerovista.aero