Apandi Lakhiyalov, president and CEO of aircraft charter provider Aerovista, tells Aviation Business about developing the company, flying to hazardous territories and hosting presidents.
When was the company set up?
It started in 1997 and was set up at the Sharjah Airport Safe zone. It started as a basic operation that didn't include flying - it just provided aviation services and parts.
There were three people: myself, the secretary and another founder, with the three of us investing $100,000 combined. It was more a warehouse than an office because we stored all these aircraft parts. In 2000 we launched airline services, acting as a broker before building our own fleet from Russian aircraft.
Some four years after launching the operation, we had around 15 aircraft but all of them were Russian. They were standard passenger and business jets from the Eastern bloc.
To keep up with market trends we phased out the Russian aircraft and brought in more Western planes from Boeing. We placed an order for four used aircraft; two 737-200s which are still in the fleet and two more pending delivery. One was re-sold and the other is expected this year.
Right now, the fleet is two passenger aircraft with one cargo expected, but we want four passenger aircraft by the end of the year. In 2005, we secured a UAE aircraft operators certificate, which was a strategic move. It usually takes about a year-and-a-half to get one.
You need to comply with various procedures and the civil aviation authority has to approve certain aspects. We secured ours in June 2005 and have since been operating charters to the Mideast, North Africa, CIS and Indian Subcontinent. Most charter operators in this area reap good benefits from war zones, such as Iraq and Afghanistan.
We fly everyday and most of our flights go to those countries, so we're dedicated to hazard areas. It's usual because you don't have many operators flying to those countries.
How has the company changed since it was launched?
In terms of aviation, we have been operating since 1997 and reached a set of customers after building a name for this product. We are one of the key charter operators with this kind of fleet.
We want to take this to the next step by increasing the fleet and getting more aircraft to operate on existing routes. We also need to operate to further destinations with newer aircraft, so that's something we are working on.
How many aircraft are you keen to bring in?
Two more - they will be 737s, 300s or 400s because those have a longer range and can reach Eastern Europe. The existing aircraft we have can't fly to Europe, so the 300s and 400s would be ideal.
There is big potential in this region, with destinations such as southern parts of CIS, Egypt, East Africa, and the Indian Subcontinent served by 200s, 300s and 400s. We may then look at bigger aircraft such as the 737-800, which is quite an expensive investment even if you leased it.
You need enough passengers to do that and we are ready for 120 people, so the 300 and 400s, ranging from 140-160 seats, are ideal. But an 800 with more than 180 passengers is too much for us at the moment.
What were you doing before joining the company?
I was an aviation engineer with vast experience in Russia. It's a place where there are a many charter operators. There was huge scope for that market in Dubai, which is why I came here. I started off acquiring and running aircraft before branching out to supplying aircraft parts and brokerage.
I developed a customer base before acquiring a fleet. I found brokerage easy because you don't need much investment; it's your network that's essential.
Once we built up a good customer base, we realised getting our own aircraft would be the next logical step. After launching this business segment, we eventually had 15 aircraft in different destinations, such as Sharjah, Africa and CIS.
How was your operation different to other air charter providers?
We have flown interesting personalities such as Kofi Annan and Tony Blair because we used to work for the UN on various projects. This was in North Africa when we had aircraft there. We also carried scheduled services, flying to Tbilisi in Georgia.
There were no Georgian airlines operating from Dubai or Sharjah to Georgia but we used to do it. We stopped it when there was a change in government over there and things became more complicated.
We have had experience in various models, including scheduled, chartered and business jet. We felt of these the ad hoc charter is what we did best and that's why we concentrated on flying 737-200s to Iraq.
What other typical charter jobs do you carry out?
We've worked with sports groups to move football teams and rugby clubs within the region. We also work with airlines, leasing aircraft to them. For example, there are North African airlines requiring aircraft, so we provided short-term leases for one or two months.
We also did it for Hajj season, basing our aircraft in the region to fly to Jeddah. We did this in 2006 and moved around 7000 people between Iraq and Saudi Arabia.
The existing operation uses two planes but work for the UN and Georgia was carried out with more planes.
The aircraft we have in our fleet has been there since 2006. We work with companies that sell tickets one-by-one to customers and operate the flights. If it's larger groups, they will come to us asking for the entire aircraft specifically for them. For smaller groups we don't get involved because it isn't economically viable.
Airlines are a small part of our customer group. We also provide back up services, so when Air Arabia needs extra aircraft we can provide it. The airline probably has its own crew and the service and product is theirs, but the aircraft is ours.
What other services do you offer?
Leasing is another area where we provide aircraft for existing airlines. When you are in the ad hoc charter industry it is risky to keep a huge fleet of aircraft unless you have business. It's not scheduled, it's ad hoc so we try to be flexible with our fleet.
If we have two aircraft and work that requires additional planes we can always source them. We will only expand the fleet when we feel there is considerable amount of business.
The utilisation of the aircraft is important and it's expensive to keep planes on the ground. An aircraft flying frequently in one day works better than one that has a few jobs over three days.
Our aircraft are well utilised and fly almost daily. We're happy with two but they can only handle x amount of business for x customers, which is why we're looking to bring in new aircraft.
Do you need to plan ahead when chartering aircraft to local carriers?
Yes. There are situations where a company requires aircraft for three to six months, so this is when we look for replacement planes. We are now getting a third plane because one of ours will be tied up on a job.
When you are a charter operator, the operation is more flexible than a scheduled carrier, so when you need extra aircraft it becomes available. But it's not always easy because it's taken two months to find the latest plane. You need to find something that fits your budget, while satisfying local regulations.
When Emirates wants new aircraft it can take the airline some time get a new one. It has to be produced and delivered, taking four to five months, whereas ours may take just one or two.
Where does Aerovista operate charter flights from?
The base is Sharjah because that's where we started. Dubai doesn't have much space to keep aircraft parked. We fly out of any airport that our customers want because we are a licensed UAE carrier.
Most of the time it's from Dubai because that's where our customers are. We also bring people from another country to the UAE, and organise traffic rights on a case-to-case basis.
It's different to how a scheduled airline works. It doesn't work that way for charter because you can fly to any airport you want as it's considered a different request.
Do you still work with high-profile celebrities or politicians?
We worked with one of the GCC national teams when they wanted to fly to Turkey last year. We've also worked with rugby clubs coming to Dubai. We haven't had any VIPs recently because we don't have business jets.
When we flew Tony Blair we had business jets, which is something we are not looking to go back to.
That said, it's an interesting segment for a lot of people right now and the market value for this is close to $500 million, with it doubling in five years.
Maybe 10 years ago there was one operator and now there are 22 in the region. Everybody is buying aircraft, which are becoming more expensive. You need to have backing to buy these planes and then wait for them to be delivered.
What are the immediate objectives?
We could operate to hazard areas for the next few years but we don't want to relax; we want to build our own segments because it's an area that you are not in control of. There are many political factors that can change drastically.
We want to build our own segments where we offer something new. We also want to offer products where there is a gap in the market for us to exploit.
Most airlines struggle to make a profit, so how are Aerovista's revenues?
You have to bear in mind that most of the major airlines are government backed, so profitability isn't always the core importance - political reasons are. Some airlines have never made a profit and they don't care.
It's a different mentality; we are a private company and have to run our operations to make a profit. In the past 10 years, we have not made a loss. The year that we didn't do considerably well was 2006 where we broke even because six months of the year we didn't have aircraft.
We expected aircraft deliveries by March but received them by the end of June. We had our travel agency up and running but that had only just started.
Other years, we have always had a profit. We are looking at 20% growth compared to last year. The first quarter is finished and we are on track, but some of the growth would depend on getting new aircraft. We have grown from purely an airline into an aviation and travel business.
That requires us to reposition and re-brand ourselves. The name Aerovista is airline-driven, so we re-branded recently. This new identity makes more sense when we grow into other areas.