Canada's AirSprint Upbeat About Fractionals | ch-aviation
AirSprint Private Aviation (ASP, Calgary) is optimistic about the prospects for growth in the Canadian fractional ownership market as the concept of business jet ownership rose in popularity during the Covid-19 pandemic, president and chief executive James Elian told ch-aviation in an exclusive interview during the NBAA-BACE conference in Las Vegas.
"Canadians have historically been very conservative [when it comes to business jet ownership]. When Covid happened, all of a sudden Canadians kind of gave themselves permission to fly private. Covid really put a focus on the benefits of private aviation from a health perspective, and we've seen a lot more adoption of private aviation. They always had the means to fly privately, but now they could do so," he said. "A lot of businesses purchased shares of aircraft because they wanted to keep their employees safe. And they absolutely stuck around."
As the only fractional ownership specialist in the country, AirSprint has captured two-thirds of the growth in the Canadian private aviation market since 2019. Elian underlined that this model was particularly well-suited for first-time owners, given the lower financial burden associated with fractional ownership. As such, AirSprint's growth is associated with the expansion of the overall size of the market.
Fleet Strategy
The operator's fleet currently comprises six Cessna Citation CJ2+, sixteen Cessna Citation CJ3+, six Embraer Legacy 450, three Embraer Legacy 500, and six Embraer Praetor 500 aircraft. Elian underlined that the light and midsize jet segments will remain the core part of the fleet - most customers are interested in such aircraft. However, AirSprint is now evaluating adding a larger type to its fleet, although no decisions have been made just yet. The operator will look at a fleet of at least five aircraft of the new type to ensure sufficient flexibility and economies of scale.
"As you look at larger and larger aircraft, there's just not as many [potential owners] in Canada as you would see in the US. We think that the majority of the market still remains in the light and mid-sized aircraft segment," the CEO said.
While AirSprint has no immediate plans to renew its fleet and is satisfied with its current types, Elian conceded that there is "a very high likelihood" that at some point it will look at the recently announced Citation Jet 3 Gen3, even though the current Citation CJ3+ is "a great platform" that is "not an old type by any means". The remaining Citation CJ2+ will be renewed within the next three years or so.
The operator is looking to grow through acquisitions of "lightly used" aircraft built around 2020 or later as this approach allows it to avoid the long waiting period for delivery slots for new aircraft, which can extend to two years. At the same time, used aircraft are exempt from a 10% luxury tax in Canada (in force since September 2022) which new-build jets are not.
"Our customers are very clearly telling us that they don't want to pay a luxury tax on top of other taxes. And so our strategy is to stick with the current CJ3+ and Praetor 500 aircraft. If that tax ceases to exist, then we would take a good look at incorporating Gen3," Elian outlined.
While he would not comment on the long-term plan regarding fleet size, AirSprint sees "significant potential" for further growth.
Focused Strategy
AirSprint has a narrowly defined business strategy, focusing exclusively on fractional ownership and the Canadian market. While Elian conceded that the US market is significantly bigger, it is also more mature and competitive. This means operators there compete for market share among existing owners rather than growing the market. AirSprint has no plans to vie for US owners and will stick to the Canadian market. Likewise, it does not plan to expand beyond fractional ownership. It has a charter certificate but has no plans to become a charter operator.
"When we look at other segments of the market - there's an absolute need for those. But for us, sticking to our niche, doing what we do best is important, and we think that the market has a lot of room to grow, we can bring more people into aviation," Elian opined.
He added that AirSprint's business model is hard to replicate due to its operating efficiency. Despite operating only 6-7% of all business jets registered in the country, it has a 30% market share by number of flights due to very high utilization, which exceeds the market average by a factor of five.
"We are, by far, the busiest operator in the country, and we feel that the market still has more to grow," Elian said.
He added that nearly all of AirSprint's customers use the aircraft for both business and leisure flights, although the split can vary greatly. Overall, leisure flights currently represent a slight majority of the operator's business - a legacy of the Covid era and various travel restrictions. Business flights are now coming back, and in the long term the demand split will likely be skewed more towards corporate travel. As many companies need to fly to cities in Canada with relatively limited commercial service, the business case for private aircraft ownership is strong.
"It's really not effective to send your workforce to locations that they can't travel back to [easily]. So you can become very, very effective when you have access to a private aircraft. I think we'll see more and more adoption," Elian said.
Operational Issues
As part of its utilisation optimisation strategy, AirSprint does not base its aircraft in any one city. It has hangars and maintenance facilities at Calgary and Toronto Pearson airports, two of its busiest locations. However, as owners do not pay for empty ferry flights as part of the operator's service, it retains high flexibility with aircraft positioning.
Elian estimates that around 35-40% of the operator's flights are domestic within Canada, while international flights are predominantly to the United States and sporadically to Europe.
Even though supply chain issues persist in the industry, Elian is not too concerned about them. The situation was difficult during the pandemic and immediately after but has somewhat improved since then. However, the flipside of those problems is that they allow more efficient operators to distinguish themselves in the market.
"Although I still don't like these challenges that exist, they really set apart the companies that can work through them and those that can't. I think they're kind of a natural filter, in some ways, for the truly good operators out there," Elian said.
The shortages no longer occur "across the board" but are limited to specific parts. Pilot training can also be a challenge "from time to time", partially due to the demand for pilots in the US market. Other issues stem from the "unbalanced market", where aircraft supply is limited but demand continues to grow.
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Source: ch-aviation, originally published October 31, 2024, by Dominik Sipinski; republished November 1, 2024.