When you count royalty, government officials and high net worth individuals as your customers, you are expected to soar. And Rob DiCastri could be thankful for the high-flying business.
The chief executive of Abu Dhabi-based private charter operator Royal Jet was appointed in September to pilot the firm “through a period of transformation” and to regain speed in its growth.
With more than 25 years of experience in aviation and hospitality, including ten years in the Middle East, where he played a key role in setting up National Air Services (Flynas) and NasJet in Saudi Arabia, DiCastri might well be the man for the job.
But be is facing strong headwinds. Sustained lower oil prices since 2014 have hit the discretionary spending of most businesses in the region, as well as governments and high net worth individuals (HNWIs). Governments, for example, have dramatically slashed their spending budgets — prioritising key infrastructure and public services over items such as travel.
The most recent Wealth-X World Ultra Wealth Report, released in September 2016, shows the total wealth of the richest people in Europe, the Middle East and Africa declined by 2.4 percent in 2015. It was the only region to decline, while the rest of the world saw modest growth.
However, the private jet industry is remaining firm in the UAE. Dubai’s Al Maktoum International Airport opened a dedicated VIP terminal in April last year, quickly becoming the most popular landing location for chartered planes.
The total number of business aircraft departures in the UAE actually increased in 2016, according to analysts Wingx. There were 2,568 business aircraft departures from the UAE in 2016 compared to 2,165 in 2015, Wingx said.
Royal Jet is based in Abu Dhabi International Airport and has its own dedicated security, customs and immigration. Jointly owned by Abu Dhabi Aviation and royal flight service Presidential Flight Authority (PFA), the small business is the world’s largest independent operator of Boeing Business Jets, with a fleet of eight, including two mid-range Global 5000s.
As part of its fleet renewal programme launched in 2014, Royal Jet added two new Boeing Business Jets in November last year. They each cost $80m and are configured to include eight VIP, eight business class and 18 standard seats, as well as private front-end bedrooms. The interiors were designed by New York-based artist Edese Doret, who is known for modern layouts and the use of materials such as carbon fibre, which he used throughout the new jets.
DiCastri says it cost a staggering $60m to fit out both jets. But it is a price that must be paid to stay in the game.
“There’s the sort of standard wood and leather thing you see in photos, but [these are] different. And I think that’s why they will be very successful, because people are looking for something different and something new,” DiCastri says. “I felt a little Star Trek on it. You think it’s kind of space-age.
“They’re something new, because you have to remember that the people who fly on this type of aircraft have probably flown on private jets for a long time, probably for much of their life, whether they’re royal families or heads of state, so they’ve seen the same thing over and over again. It’s like driving the same car; even though it’s a really nice car, drive that car for years and years and years, and you want something new. A new design and a new feel create some excitement. I think that’s what [the new jets] will do.”
While Royal Jet is hoping to lure new customers with its made-over jets, time has proven the economy shows mercy to no one. And the upper class is no exception.
“There’s a smaller pot now so there’s less demand and the customers are more demanding. They want more for less,” DiCastri says. “Their budgets are all shrinking. It doesn’t matter who you are, it doesn’t matter if you’re government or private or what area you’re in in the region, because everybody’s budget is shrinking and the oil prices are down and they’re all trying to be more efficient with how they spend their money.
“We’ve had to be more competitive than we ever had to be before. Price pressure is there. We have to be more efficient as an organisation, financially, so we can survive and prosper. So we definitely see a result from [a slowing economy].
“Demand from our customers has reduced a bit or they’ve consolidated their trips. For example, where they’d fly twice to London or Geneva, maybe they’ll do it in one trip to keep their costs down. I think that’s throughout the industry and probably throughout the world at this point, because people are trying to keep their costs down, so it’s definitely affected us. But the insulation we have against that is we have a very loyal customer base and we’re able to continue to build up that business so we’re getting new customers as well as keeping our old customers happy. So we can get a bigger piece of that smaller pot. That’s the goal,” he says.
Prices have inevitably had to be cut. DiCastri says the firm’s biggest challenge has been increasing efficiency while simultaneously competing with the increasing number of operators.
“We have had to [lower prices]. Everyone has had to, to be competitive. We can compete on better service… but we always have to be committed to our price, so the challenge is being efficient,” he says.
“There are still minimums you can’t go below, because you don’t want to lose money, but we’ve definitely had to be flexible. If you’re not, your customers have a choice; they can go to someone else. Now can we get away with being a little bit more expensive because of our quality, service, safety and reputation. But not much.
“We’re still being careful; the people who fly on our aircraft are able to fly on our aircraft because they’re smart with their money. So that means they’re going to be smart with us too.”
While DiCastri claims Royal Jet had “pretty good growth” in 2016 compared to 2015, he expects a strategy to diversify revenue streams will see even better results in 2017. Royal Jet’s services now include luxury VIP aircraft charter, medical evacuation services (Medevac), charter brokerage, Fixed Base Operation (FBO)/VIP Terminal at Abu Dhabi International Airport and aircraft management and acquisition consultancy.
“Rather than focussing on one customer segment or one business line, we have the FBO, we have the medical evacuation and we’re brokering to other operators. So by spreading to other business, we’ve been able to grow out. Despite a shrinking of the pie in different areas, I think that’s the way to do it,” he says.
Similar to the hotel and taxi industries, the private jet sector also has been struck by ‘disruptors’. In its case, smartphone apps such as JetSmarter are connecting customers with available charter services — whether it is a business with a fleet of planes or a private owner with a sole seat available.
Instead of stealing potential clients, DiCastri says the app has been good for business.
“There are a lot of innovators out there like JetSmarter and organisations that consolidate the customer and then charter the aircraft. We love them because they bring us business. So innovation is key. I’m sure there are a lot of ideas out there yet to be hatched that could revolutionise the industry,” DiCastri says.
While there are entrepreneurial opportunities in the industry, DiCastri says it is important to continue to support the growth of new pilots and engineers.
“There’s always going to be demand for that. So we want to — as an organisation — encourage young people to get into aviation. Because we need people to come into our organisation and take jobs that people are retiring from or moving from,” DiCastri says.
“Aviation is an exciting business. It’s cool. I love being in it. Once you do it, it’s in your blood. Once you’re in aviation, you wouldn’t want to leave.”
Despite flying in the face of what many would argue is the roughest air for airlines in nearly a decade, it seems DiCastri is nowhere near jetlagged.
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