While Qatar has embraced the idea of private aviation, the ambitions of the industry locally have remained grounded. Rizon Jet CEO Hassan Al Mousawi talks candidly about trying to break even in a sector that is dominated by monopolies
Flying on your private jet is the new frontier of luxury travelling in the Gulf: business class is still there for those who want to be pampered, but the comfort of getting on board in five minutes instead of two hours is just impossible to beat, especially if you are a businessman with no time to lose.
More people every year spend thousands of dollars just for an hour-long flight, but big figures do not necessarily equal big gains. Private aviation is still a highly volatile industry, and it’s a high-cost business with very limited revenue margins in Qatar. Rizon Jet is a Doha-based private aviation company attempting to make its own way in this market, and is trying to build a viable business having to deal with two tough giants: Qatar Airways and Qatar Civil Aviation Authority.
A one-hour flight on an eight-seat Hawker 900XP costs around $4,000 for the customer, but the operational costs faced by the private aviation company every year are much higher. Rizon Jet is, in fact, spending around $11m (QR40m) a year just to keep the business working in Doha. The start-up investment injected by Rizon Jet when it was founded in 2006 came to $137m and it has not been amortised during this six years of activity. The government supported the initiative by allocating the land, but then Rizon Jet had to build the full infrastructure. In this business, the costs quickly add up. A private jet can cost between $10-65m. A single plane tyre costs around $15,000 and you need at least six of them.
Mechanics for the planes’ maintenance, ground services, electricity, air conditioning, security, and salaries of around 100 staff in Doha are just some of the listed expenses and to start making revenues the firm needs to fly around 600 hours a year. So far, Rizon Jet hasn’t come close to that level. The company registered around 300 movements in 2012 and 50 percent of its revenue came from third party customers using their facilities in Doha.
According to Rizon Jet CEO Hassan Al Mousawi, the company was accused of providing ground services — which is a monopoly run by Qatar Airways-owned group Qatar Aviation Services — and in November 2012 the Qatar Civil Aviation Authority (the local regulator) started rejecting all applications from other private jet customers to use Rizon Jet’s facilities, cutting off a significant source of income. A committee of five members, three of which were from Qatar Airways, was created to solve the issue. But in the meantime, Rizon Jet just keeps on haemorrhaging cash.
“It’s not viable for us to pay for staff, to have this facility open just for our 300 movements. We were counting on gaining more market share from third-party aircraft, so that it was viable to provide the service,” says Al Mousawi, who is considering taking Qatar Civil Aviation Authority to court as a last resort. Going in front of a judge is a costly and lengthy option for Rizon Jet but the company feels that it has reached a crossroads: either go to court or quit.
Qatar Civil Aviation Authority has also withdrawn Rizon Jet’s travel agency licence just six months after it was granted, cancelling another possible source of income. “Even gate passes for our vehicles have been stopped,” Al Mousawi says. “We asked for additional gate passes for our vehicles, they refused. For the ones that we already had, when our vehicles went out for annual inspection, the gate passes expired, and they refused to renew it.”
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