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Could busines aviation benefit from an operator alliance?

Richard Koe Business aviation in Europe had a ragged time of it in 2012, losing ground on an already disappointing 2011. At the MIU year-end conference in London, the operators gathered to debate how to ride the waves. The EU’s economic writing is on the wall; they won’t get much help from new customers. Consolidation was debated, but the consensus was that alliances of one sort or another would be a more pragmatic way to increase efficiency and stay afloat. Sure enough and not a month later the Air Club was born. There are eight founder members, including fleets in Switzerland, UK, Germany and Austria, from bizliner 757s to air taxi Cessna Mustangs. The Club promises to be the first business aviation venture to imitate the airline networks of oneworld et al: combined fleets to complete multi-leg itineraries, cooperative purchasing including fuel uplift, shared airport access, and joint loyalty schemes for their overlapping travellers. Brave words, so let’s see how they go. For all their resemblance, business aviation and commercial aviation are very different. They won’t be interlining schedules services or selling miles, and they have nothing like the airline alliance scale to get decent discounts on operational costs. Maybe they can share some overhead but that will take some heads knocking together. It’s unlikely to happen in an industry characterised by big egos and turf war (and that’s compared to commercial aviation). The Air Club is bullish too about building a direct sales channel to its customers, even to the extent of making charter booking as easy as ‘hailing a taxi’. Here the Club’s members appear to share a common frustration with the airlines; just as the latter increasingly seek ways to bypass the stranglehold on distribution held by the GDS and OTAs, business jet operators are mostly bound to trade through Avinode, the dominant online intermediary. The Club may be onto something here, but again, it will be some challenge to walk this talk; B2C platforms work well for airlines, hotels, now taxis, but searching and transacting private jet flights online brings unique challenges. How is the Club going to manage and pay for this investment? Maybe they should invite Avinode to do it for them. Business aviation won’t always be intermediated by brokers, so perhaps Avinode would be wise to hedge their bets and seek such an offer. A longer version of this article appears in the February 2013 Aviation Intelligence Reporter.

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