Alexander Evdokimov, Jet Expo - Джет Экспо
Release Date: 2009-04-10
Your company has a wide range of different products: the JetExpo Exhibition, the Jets Magazine… all complementary to business aviation. Could you explain to us how your business was created and what was the main driving force behind it?Five years ago we created Jet Transfer, an aviation broker without AOC (Aircraft Operator Certificate) based in Russia. We have 4 aircraft, we provide charter sales for these aircraft, but we don’t operate them. Two years later, we set up Jets Magazine. At first it was a bilingual publication; the English version was distributed in Europe. Now, Jets Magazine has been on the market for four years and become an interesting magazine for aircraft operators, brokers and owners. It’s not technical. Its main feature is luxury style, and, in terms of content, its purpose is to explain how a business aviation works.
A year after we launched our magazine, we decided to set a JetExpo. In Europe, the central business aviation exhibition, EBACE (European Business Aviation Congress and Exhibition), is held in Geneva and I had been visiting it for the last eight years. But the Russian market started to grow very intensively, with the growth rate reaching 100% per year, and a lot of operators from Europe had to come to Russia. So, here in Russia, we organized JetExpo as the Russian analog of EBACE, which took place for the first time in Moscow in 2006. We have organized three so far, one every year.
How has the market evolved in Russia in the last few years?
The business aviation market is quite democratic, there is a lot of choice, and here jets are a tool for doing business. If we put the figures for charter jets in perspective, in 2002-2003 there were 10-15 aircraft flying in Moscow and now the number has reached 200 aircraft - which can be chartered -, with a total volume of about 400 aircraft in Russia.
Where does Russia stand with regard to other business jets markets? Is there a correlation between the number of millionaires – a great number of them are here in Russia as we all know – and the business jet market? How well-placed is Russia as a market for this business?
This is an interesting question. If you take the American market, 7,000 aircraft out of 14,000 are small aircraft for 3-4 people. The Russian market is completely different: clients need big aircraft due to huge distances between Russia and Europe.
But the most important difference is the concept of what is a corporate jet versus a private jet; the concept of corporate aircraft in Russia is not as clear and cut as in, let’s says, the West. Here, business owners use their companies’ aircraft for both private and corporate matters. In Russia there are very few corporately owned aircraft, maybe two or three companies have registered their aircraft in Russia. Others, the majority, choose to register their aircraft elsewhere - Aruba, Austria, Germany… - in the name of their owners, which poses the question of whether this is a corporate or a private jet. The reason for this, before the crisis, was that the import tax was 20%, so nobody wanted to bring foreign aircraft for registration in Russia. And, since the majority of owners have to fly to Europe for business anyway, they could register them there. In Europe, for instance, it is vox populi that Russians own a lot of aircraft.
Of course, all of this means that the quality and type of offer and type of the proposed services is also extremely different.
Apart from operating foreign jets, is there an after-sale and maintenance market present on the Russian territory?
The field is ready for the business but it depends on who is doing it.
If a Russian company wants to organize service facilities for a foreign jet manufacturer like Bombardier or Cessna it’s impossible unless the manufacturer is involved, even if all equipment and trained staff is available: approvals only will take a lot of years. If the initiative comes from the manufacturer, who approaches the authorities, it will most likely get a green light.
When it comes to JetExpo - who is your public?
The common stereotype is that people coming to JetExpo are reach people who want to buy an aircraft. In reality, maybe 1 or 2% of the people who attend can buy an aircraft or thinking about it; because those who want to buy do not wait for an exhibition, they just buy what they want whenever they want it. In reality, this exhibition is a B2B event for professionals: brokers, operators, airports etc.
The situation has changed since JetExpo-2008: broker and operator business is now 60% down in Russia in terms of volume of flights which is the most important indicator.
When a sector loses 60% of its market value, what is the solution?
Crisis is a very good time for doing business. When we started 5 years ago, we had four people, one car, three computers and one office, and the company was doing 15 flights per month. Last year we did 90 flights per month and, now, with the crisis, the current rate is 30 - 40 flights per month. If necessary, I can shrink the business to the previous level keeping the core of the company and cutting extra expenses. Besides, people are more motivated for work and it’s easier to evaluate their performance.
In the present context, is there a niche within the business aviation with more potential in Russia? Apparently, many owners of jets are going to sell their aircraft. Will it affect the broker market?
70% of market will remain the same: for some people a big aircraft is a question of principle. But 30% of people who use big aircraft as a business instrument will use smaller aircraft, which is cheaper.
In general, 90% of aircraft owners are just starting to calculate their expenses. For you to have an idea, the cost of flying a private aircraft is about 10-15,000 Euros per flight hour. Flying a rented aircraft costs 6,000-8,000 Euros per flight hour. An aircraft is merely a question of prestige and keeping your high profile but renting an aircraft allows more flexibility depending on the kind of meetings that you have. However, nobody is going to want to buy those aircraft which will go on sale.
So, we’ll probably see a switch to selling private-owned aircraft and using broker services. Many people will enter the broker market. If we compare different broker markets, the total in Europe is less than 100 brokers whereas in Moscow only there are more than 100 brokers. In London there are just 10-15 brokers. In Switzerland, also 15-20. It takes nothing to become a broker, a cell phone, fax, a computer and a list of contacts.
According to the Association of Business Aviation, two months ago a new requirement appeared for brokers: now it is obligatory to get an accreditation. We hope than 20-25 authorized brokers will be working on the market. We have a small agreement with foreign operators with aircraft in Russia that they will use only approved brokers.
How do you imagine the next JetExpo as compared to the previous year in the current economic context?
The situation is very interesting: general volume of the business went down in terms of flights and charter sales. As we need new customers, JetExpo is the place to present the company. 10% of visitors are potential customers who are interested in our services, so my objective is to have them at JetExpo.
The exhibition is also important in terms of aircraft sales: Cessna, Gulfstream, Bombardier, have all confirmed their presence. The coming JetExpo will be smaller but we’ll stick to the same quality level. I expect a lot of people coming because the conditions have changed for people and for the business. Two years ago people didn’t need to know about the market because everything was good, but now everybody will come to feel the atmosphere on the market.
What would be your message through www.RussianAvia.net?
Russia is a big market and if you are interested in having a place on the Russian market, you have to be here. A lot of companies think about Russia but cannot do it for many reasons. If they want to be here with any small products, the right place for them to be is JetExpo to meet people and make new contacts.
I have worked with foreigners for 10 years and they were surprised to see how good things were going in Russia. But Russia and Moscow are different, almost like two different countries, and most of the business, over 90%, is concentrated in Moscow. On JetExpo you can see what is happening in Russia, what are the differences with regard to Europe, and make sure that it can really work in Russia, sometimes even better than in Europe.
| Company: | Jet Expo - Джет Экспо |
| Position: | General Director |
| Country: | Russian Federation |