Next week, Luxaviation will be launching on the US market in New York. Delano’s sister publication Paperjam spoke to the company’s CEO, Patrick Hansen, after a year that saw him buy five companies, launch LXA Flyer and reposition the firm to better emerge from the crisis.
“This time last year was the first time in my life that I saw cancellations of €20m. Normally, we have a turnover of €20m per day. And in April, the lowest day allowed us to earn a mere €7,586…There were reasons to be worried.”
Thierry Labro: Business aviation has taken advantage of the crisis, many have argued recently. In April, you worried about lockdowns and travel restrictions. What do you think about 2020 now?
Patrick Hansen: Once all the restrictions eased slightly during the months of June, July, August and September, we found that people were always eager to discover new places and experiences. A large number of flights went ahead as planned, but these flights were mostly one- or two-hour flights on “small” aircraft. No one was going to Asia, not to the United States, not to Africa, which was closed or passengers were forced to go into quarantine upon arrival. And no-one wanted that.
You have continued to evolve your company…
P.H. – After the shock phase, we wondered what to do. Instead of burying our heads in the sand, we decided to take every possible action to get out of this crisis. In 2020, we completed five acquisitions, either for the back office or for the VIP lounges. A company that makes ‘flight dispatch’ in Romania, which allowed us to restructure in view of Brexit because we had our ‘flight dispatch’ centre in England and we moved it to Timisoara. We bought the VIP lounges in Paris, Berlin and Munich. And we invested in a company of luxury experiences and culture.
I saw your campaign on LXA Flyer flights. What exactly is LXA Flyer?
P.H. – We told ourselves that there was a new customer who wants to fly to destinations close by, looking, on the one hand, to stay in his sanitary bubble while still keeping an eye on the price. We launched a new airline, LXA Flyer. We had to secure new planes. The first one has arrived, we are going to look for the second one in the United States next week, the third is ordered, and we should raise the fleet to 24 planes. The test market will be Luxembourg and Belgium. The first flights took place, from Luxembourg to Cannes with six people, for a return trip of around €5,000. Less than €1,000 per person! Extremely wealthy people would pay €65,000 for the same flight in another type of plane.
And where are you taking them?
P.H. – Wherever they want. The customer says he wants to go to Venice, Denmark, Stuttgart, Biarritz, whatever. We land at many more airports than commercial flights today.
How do you manage costs when customising flights this way?
P.H. – For 12 years we have had all the necessary experience in handling, we often do our handling at our airports. And we chose those types of aircraft because of these lower costs. We did our calculations very, very precisely.
Do you have to fly often to make the initiative profitable?
P.H. – With each plane, I want to fly at least 400 hours a year. Which seems reasonable. In general, if we go beyond the scope of LXA Flyer, we have an approach where the planes are not ours, but those of others. Their owners pay for the management of the aircraft on a monthly basis. We also have our lounges and our aeronautical service centres that include aircraft parking or parking in hangars. 2020 was not the year we hoped for, but it was better than the worst-case scenarios we imagined in April.
As in all companies, the issue of human resources also had to be key for you?
P.H. – Human resources management has been the most difficult for our company. Throughout Europe, we have been able to take advantage of government support, such as partial unemployment in Luxembourg, and we thank the authorities for this. And besides that, there are still places, like Dubai or South Africa, where this kind of support does not exist. In these places, we reached an agreement with our teams. We continued to pay them, even if it was a little less.
From our point of view, we had to keep those talents, whether they were pilots or mechanics, to which we devoted a lot of resources in training. We were able to keep them for the time when the activities resume. Fortunately, just before the crisis, we had sold all our maintenance activities to Dassault. That gave us a cash amount, which enabled us to finance those measures. It was a choice. At the end of the day, human resources are the most essential for a business.
Today, at what stade of the crisis do you think we are right now?
P.H. – Once the borders open and the quarantines are no longer in place, I am sure that our activities will resume more strongly than in the first months of 2020. It’s just a matter of time. We have a FBO in Saint Martin, the Dutch part of the island. It is always very seasonal because the richer people often go to Saint-Barthélemy. This year, a glimmer of hope appeared at the end of December-beginning of January: a record number of landings in Saint-Martin. Normally, 600 to 700 planes land every month in December. There, we reached 900 in December and January.
Is this an exception or a very good sign?
P.H. – People, as soon as they can – and not just the wealthy – will want to leave. They will rush to destinations, like Saint-Martin or the Seychelles, where we are also present and will multiply. Will it be the end of April or mid-June? Surely, starting in mid-June! It is also a message of hope that I would like to carry. Of course, we have to hold on, we have to keep going, but the crisis will end.
You have just returned from the United States. Is the launch of Luxaviation USA coming soon?
P.H. – The biggest market for business aviation is the United States, where we always had a small office in Miami to sell flights to Americans who wanted to fly to Europe, Asia or Africa. We will be selling flights to the United States to Americans. That is a big step for us. We have always avoided the American market, and the time has come to enter it.
Why has the time come now ?
P.H. – We are coming out of the crisis better than some of our smaller competitors. Given our business model, I think now is the time to enter a market where we probably won’t be the richest, but we have a better business model than a number of local players. I hope to be able to take advantage of that. At the beginning, we will hire a dozen people, mainly commercial people, before gradually growing. In terms of aircraft, in the coming months, we are targeting a dozen aircraft based in New York.