Story ID: 722 Royal Jet
Royal Jet Now Has Eight BBJs
By: Peter Shaw-Smith
Caption: Incoming Royal Jet CEO to leverage assets and prioritize safety, service excellence; says Saudi market size only 20pc bigger than UAE’s.
Word Count: 996
New Royal Jet CEO, Canada’s Rob DiCastri, will seek to diversify company revenue streams and leverage existing business lines without resorting to large additional capital expenditures. The Abu Dhabi-based VIP-charter operator now operates 13 aircraft, including eight BBJs, thus maintaining its position as having the world’s largest fleet of the type.

DiCastri said that growth in competition has made certain segments of the bizjet market more difficult in the current downturn, but added he was optimistic about the company’s performance in 2016. “[To date] 2016 is far better than 2015, and even better than 2014, to be honest. The trend is heading in the right direction. My focus will be safety, service excellence and leveraging the capabilities we already have,” he said.

After officially taking up his position on September 29, DiCastri’s first task was to oversee delivery of a new Boeing Business Jet in October, and a second BBJ was scheduled to join the fleet in November.

The arrival of the seventh and eighth aircraft brings overall fleet size to 13, with two Global 5000s, a Gulfstream G300 and two Learjet 60s making up the balance of the roster.

MRO, management, medevac and charter are all areas where DiCastri is hoping to find opportunities. He said, “The days of just buying aircraft and hoping you can generate the business [are over]. We see management and MRO as different ways to generate income with little or no capital expenditure. That’s going to be our focus. We do a lot of our own MRO, but we could do more.”

Royal Jet, which is jointly owned by Abu Dhabi Aviation and the Presidential Flight Authority (PFA), the royal flight service, has a stand here at the MEBAA show in conjunction with Boeing (A9, A10), replicating the shared display model used by the two companies at Abu Dhabi Air Expo 2014. It will be showcasing one of the two new BBJs on the static display.

DiCastri said that VIP charter currently accounts for 60 to 65 percent of revenues, with medevac at around 15 percent, a slice of the pie that had shrunk slightly given successes elsewhere. The company has expanded some areas of its business, last year signing a new training contract with the UAE military, for example. “Some other revenue streams have increased the diversification of the company,” he said.

Close to Record

“The three months [to the end of October] saw an almost record summer for Royal Jet,” said DiCastri. “It’s very positive, with charter demand strong. Pricing is a challenge. The yields you used to get are difficult today. It’s all about utilization. If you get the number of hours you need, you are fine, even with lower yields.” To cover operating costs, utilization is his top priority. “The magic number is 60 hours a month [per aircraft]. Seventy or even 80 to 100 hours a month is [ideal],” he said.

“Royal Jet is lucky in the sense that it does have a committed and loyal customer base. The market is tough, with more competitors every day, it seems. In the smaller-aircraft market there is a lot of competition. At the BBJ level, there isn’t that much. It’s a niche we want to dominate.”

Although the company has a regional focus, its outlook is global. “We have a diverse range of customers, with a good deal of business in Abu Dhabi and the UAE. We have a fairly large customer base in Saudi Arabia, which is a huge market. We are also in Kuwait and do ‘empty-leg’ flights into Europe. Demand is pretty spread, with 30 to 40 percent of the customer base not captured, but loyal. We do have to keep them happy.”

With 25 years of aviation and hospitality experience under his belt, DiCastri, an accountant by profession, spent 10 years in Saudi Arabia, where he played a key role in establishing National Air Services (flynas) and NetJets Middle East, now NasJet, as CFO and head of strategy.

“When I was back at NAS [in Saudi Arabia], in the mid-2000s, there were not nearly as many competitors. Demand, options and customer [levels] have [all] grown. We do from 8,000 to 10,000 hours a year, mostly on the BBJ. You can see how much demand there is.”

Customers now have several charter options, which are diluting the market, he said. Royal Jet is lucky to be in the VIP niche, providing a service that is differentiated from the rest of market, said DiCastri. New entrants like JetSmarter and other fractional players mean that entry-level competition is getting “a bit crazy.”

Turning to the UAE’s GCAA, DiCastri said: “Our relationship with the GCAA is very strong. We are audited on a regular basis, and it is as good as any other audit procedure. They care very much about the safety and quality of operators here. They respect that we have always taken safety as a Number One priority. “[GCAA] is very strict with regulations, and shut operations down if they are not properly licensed, or do not have proper systems in place.”

He said a region-wide crackdown on the gray charter market is under way, although in the UAE it is not as public as in Saudi Arabia, where the General Authority for Civil Aviation recently banned Part 91 operations. “These two organizations really drive the region when it comes to private aviation,” he said.

DiCastri cited Boeing data to say that there are 700 private or VIP-configured business jets in the region. “There are almost 200 in the UAE now, including those on order. I remember [in the past], the UAE was far behind Saudi Arabia on market size. Now the Saudi market is only 20 percent bigger than the UAE’s.”

Royal Jet is content to leverage the niche it has. “People know us well. They trust us,” he said.