Jean Sémiramoth of Altair provides an outlook on the outfitting marketplace
Why did you choose to present on this topic at the Business Aviation World Conference 2012 (part of Business Jet Interiors World Expo 2012)?
Outfitting is an extremely complex area that can be littered with costly pitfalls for the unwary buyer. The selection of the right outfitting centre and negotiation of the completion contract is therefore crucial to the successful outcome of any VVIP project. Altair’s experience tells us that that buying and outfitting a business jet is not a quick or easy purchase – the needs for the next 3-5 years must be considered as a minimum. We are keen to share our knowledge with financiers, owners and completion centres and stimulate not only an interesting discussion, but also identify some unique solutions for a developing industry.
Altair offers a very exclusive, sophisticated service that purposely limits the number of projects that it manages. Typically the teams work on just 3-5 transactions a year with projects often lasting several months or even years. We specialise in airliners converted to VVIP bizliners, advise on smaller jets, and manage remarketing projects for banks and heads of state.
What are some of the biggest challenges?
The market is growing. In addition to the traditional governments or heads of state, an increasing number of high-net-worth individuals are acquiring business jets. This is a trend that has been developing over recent years as financially well-off individuals and entrepreneurs perceive business aviation as an indispensible business tool. Statistics indicate that today, 20% of buyers are first-time buyers. The challenge is therefore to guide the inexperienced buyer through the decision process of selecting the right aircraft, with the right range and performance. This requires not only a depth of expertise that can only be gained from many years in the industry, but also the ability to act as a sensitive interface between all parties – particularly the completion centre and the frequently capricious and unpredictable client. And especially first-time buyers who, most of the time don’t have the slightest idea of the numerous, diverse and complex hurdles and pitfalls they’re going to face. In fact, more often than not, they see the project as buying an expensive and customised Mercedes.
Often the project requires a much greater investment than originally envisaged and even those who have previously owned aircraft find the acquisition and outfitting process difficult. So managing the team of legal, financial, insurance and operational experts who can guide them on performance, price, contract terms, finance options, tax implications and legal issues is essential to structure the acquisition, avoiding regulatory traps and expensive pitfalls.
Do you have any proposed solutions?
The supervision of the completion process is naturally our main area of focus for the Expo and it is an area that is itself suffering from lack of capacity and limited expertise. There is a limited number of outfitting centres and only a handful of these attain the pinnacle of craftsmanship and quality that is demanded. Waiting lists can extend to four years so demand exceeds supply and prices are exceptionally high. It can be tempting for a first-time buyer to opt for an immediate slot with a second- or third-league provider. New technologies add to the value of the aircraft, but they are expensive and need to be properly specified and expertly fitted.
Completion centres need to examine how they can improve their service to meet demand and work more effectively with buyers. Sharing expertise through mergers and joint ventures between the top performers and the less experienced providers is one solution that deserves serious consideration. Not only could standards be raised, but waiting times would be reduced and the throughput vastly increased. This is a win-win for everyone.
The installation of a proper project management team is also a simple solution but one that is rarely adopted and unachieved objectives, poor performances and delivery delays combine to create huge frustrations and conflict. Such situations pose significant problems for the buyer as well as financiers.
Jean Sémiramoth is chief operating officer of Altair. He made a presentation on this topic at the Business Aviation World Conference 2012, an integral part of Business Jet Interiors World Expo 2012 (held on 22-23 February 2012).