Guy Leitch chats to Absolute Aviation Group CEO, Neil Howard, and new Commercial Director for Group Sales in Africa, Paolo Fra.
Hi Paolo, let’s start with you as you are new to the Absolute Aviation Group, and indeed to aviation. You used to sell Lamborghinis, which must make it a big jump into aviation?
Paolo Fra (PF): I consider myself a brand specialist and Absolute has some fantastic brands in Textron, such as Beechcraft and Cessna, plus many others, particularly for upgrades, such as Blackhawk, BLR and Raisbeck.
Yet the aircraft original equipment manufacturers (OEMs) are moving away from agents. It seems they would rather cut out that layer of cost by going directly to the customer?
PF: That may be the case in Europe, but specialised markets will always need specialised skills. Smart American manufactures know that they need local knowledge to operate effectively in key markets, which are difficult for Westerners to operate in, Africa and South America being prime examples. So they are keeping, and in fact encouraging, their channel partners.
How does your background in selling Lamborghinis help you sell planes?
PF: Lamborghini is a great brand. And it is a good parallel for owner-pilots. It is said that people buy Ferraris because they we want to be seen in a Ferrari, but people buy Lamborghinis because they like to drive them. In the same way, owner-pilots don’t buy planes to be seen in them, but to fly them. Also, my purpose in life is to maximise brand value by delivering appropriate customer service and support. This is very much part of Absolute Aviation’s ethos for quality customer service.
Is aviation still a growth industry that can give you the opportunities you need?
PF: Some parts of general aviation may be struggling, but Absolute Aviation is growing strongly. For instance, we are building a new FBO and support facility in Cape Town, having taken over an existing facility at Cape Town International Airport which is about to undergo renovation. And we have expanded hugely at Lanseria, with a big new customer service centre and FBO on the south side, which is also scheduled to undergo a full renovation shortly.
How are you finding the current economic environment?
PF: It's tough because of all the political uncertainty. Many companies are sitting on piles of cash and are not making buying or investment decisions. But I am optimistic that things will soon start to improve.
And you Neil? I understand you are spending a lot of time in Switzerland. Does that mean you have given up on South Africa?
Neil Howard (NH): No, not at all. Our vision remains unchanged, in relation to the significant opportunities in Africa, and to continue to grow the business on the continent. We have just completed a major restructuring of the company board, with a view to delivering more experienced and engaged leadership to the Africa business, and this has made it possible for me to channel some of my focus to other opportunities abroad. For business reasons, it made sense for us to relocate our Group Head Office to Switzerland, but I am still very much a South African, and remain very engaged on key issues affecting the African business. I have spent a few weeks a month in South Africa to this point in the process of setting up the new structure and plan to continue to spend around 30 percent of my time in South Africa going forward. I still have my home in SA, and have no plans to change this.
From your high-level perspective, do you find that aviation leads a recession and lags a recovery?
NH: Tricky question, but on balance I think that aviation’s long lead times means that it probably lags a recession by a few months and also then lags the recovery, also by a few months, but unfortunately longer than the lag at the start of a recession. But the important thing is that we are seeing signs of a turnaround, particularly in Africa, where commodity prices are beginning to increase. This is important to the mining companies, and we are now seeing signs that they are ready to start buying new planes again.
What has been the impact of the current economic downturn to date?
NH: The sad thing is that South Africa is going down while many other countries are going up. Many general aviation aircraft have left the country, particularly pistons and jets. Two years ago was a great year for us. Then last year things took a nosedive, but this year things are picking up already.
What about new aircraft deliveries?
PF: Grand Caravan sales have been going fantastically. Although the upgrade from the original PT6A-114A engine to the more powerful PT6A-140 engine in the EX version took some time to drive increased sales in Africa, we are finding that now that operators are experiencing the value of the increased performance, we are seeing demand outstripping supply. We believe that the Garmin G1000 NXi version will now drive even more activity
You must be looking forward to the Cessna Denali, which is pitched as a direct competitor to the very successful Pilatus PC-12.
PF: Yes. Cessna really knows how to bring new designs to market, and on time. In the ten years to 2013, they introduced 32 new products to market, and in the five years preceding 2017 they introduced 10 new products. No other aircraft manufacturer can claim anything close to that. We are expecting the Denali first flight later this year and certification by mid-2019. There has been strong interest in it from across Africa.
How do you think African operators are going to take to a new General Electric turboprop that doesn’t yet have Pratt and Whitney’s proven reliability and has the added complication of a FADEC system?
NH: Textron Aviation have staked the Denali’s reputation and success on the GE turboprop, so I reckon they have done their homework. It will have been thoroughly tested – and remember it is just a refinement of the already well-proven Walter range of turboprops that have been successfully powering aircraft for many years and millions of hours. GE have been successfully powering aircraft since the advent of the turbine engine, and have accumulated 3 ½ billion flight hours on airliners alone. By the time it gets to market, I reckon any bugs will be well sorted.
Textron Aviation are the undisputed leaders in bringing new aircraft to market, and they don’t gamble with technology or suppliers who will impact their record, so whilst this is an angle that competitors may try to use to downplay the threat of Denali to their products, I have absolutely no doubt that this new FADEC-controlled engine derivative, which burns 20% less fuel than its competitors, whilst producing 10% higher cruise power and 30% higher time between overhauls, will make the Denali a world leader in this segment. Watch this space … Cessna has a long history of delivering aircraft to the market which exceed their stated performance when launched.
King Airs have been a large part of Beech’s and your success, but the Denali will make further inroads into King Air sales, and they have already become very expensive with a Standard Equipped 350 list price of US$7,385 million – as much as many comparable jets.
NH: King Airs are quality and versatile machines, which have a well deserved loyal following, and they still have plenty of life in them. We are expecting that at some point Textron Aviation is going to invest in upgrading the venerable King Air range, however it is not easy to improve on a world-beater, and sole surviving twin engine turboprop in the leisure/business segment.
Blackhawk Modifications have just certified an upgrade to the King Air 350, which sees them replacing the original PT6A-60A with a PT6A-67A, a derivative of the dash-67D installed on the enormously successful Beechcraft 1900D, which has seen the performance of the King Air 350 increase substantially, with a climb to FL350 in under 18 minutes, and cruise speed of up to 340 knots TAS – in line with many of the VLJs, but carrying up to nine passengers with baggage 1,400 nm.
We are hoping that as Beechcraft did with both the King Air 200 (replacing the dash-42 engine with the dash-52 engine) and King Air 90 (replacing the dash-21 engine with the dash-135 engine), they will use the enormously successful Blackhawk upgrades and incorporate the dash-67A engine into the production line on the King Air 350.
With the worldwide reduction in unpaved runways, as we have seen in South Africa, the requirement for aircraft in the King Air 350 class with unpaved runway capability is greatly reduced, and Cessna has jets such as the Latitude which has been a great success, particularly when operating under the new Part 93. Its class leading short field performance means that it can operate easily in and out of the shorter runways, whilst still carrying a full load, and then cruising at FL450 at 440 knots.
How are you doing against Embraer?
NH: Embraer makes good planes, but they are not seeing great market penetration, as they don’t have a dedicated after sales support structure anywhere in Africa. Clients, therefore, have to take their aircraft to a third party maintenance organisation once they have acquired the aircraft, and these organisations do not have an invested interest in ensuring that the customers’ entire after sales experience is seamless. The Legacy 450 is being thoroughly beaten by the Latitude in sales. According to JetNet, to date Embraer has delivered 22 Legacy 450s compared to 93 Latitudes in the same period (both certified at the end of 2014).
The new Part 93 regulations must be affecting your clients.
NH: Yes, this is true. However, fortunately the CAA has listened to the protests about some of the more inappropriate sections and put them on hold for six months while they reconsider. What seems to have happened is, in the pressure to get things done before the ICAO audit earlier this year, they did a copy and paste of Part 135 regulations, many of which are just inappropriate for private turboprop and biz-jet ops. I am hopeful that common sense will prevail, and that the sector of operations for which this type of regulation should apply, being the corporate operator with three or more aircraft, will be the ones regulated in this manner.
But why do we need a Part 93 at all? It’s not as though there are big problems with business aviation. A business jet pilot I know says Part 93 is like the rule requiring hi-viz jackets airside. It’s not as though anyone has actually been run over by a plane because the pilots didn’t see them.
NH: Maybe not, but there have been issues in corporate aviation where a corporate flight department which employs a whole bunch of pilots, and essentially operates an air service to its company and their employees, could operate as they see fit, and perhaps without the necessary testing and standards which would have been applied if done under the guidance of regulations such as Part 93. There have been examples of this in South Africa, as there have been the world over. My overall view is that it is actually good for the industry to have regulations to protect the passengers who are being put onto company owned aircraft as part of their employment, by having a flight department write its own Ops Manuals and then adhere to them. What these regulations should not be doing is over-regulating private operations of owner/pilots or owners who employ a pilot to fly their aircraft for them and their families from doing what they have always done, and historically have posed no threat. Very few accidents have occurred in this segment in South Africa (what the SACAA is calling High Performance Aircraft). If one is to analyse where the accident problem lies in South Africa (and I don’t actually believe there is one), it is the light aircraft segments, or weekend warriors as the industry likes to call them, where the Part 93 regulations do not apply.
Isn’t Part 93 unique to South Africa?
NH: No, not entirely. EASA already has two categories: Non Commercial Ops (Part NCO) and Non-Commercial Complex Operations (Part NCC) which is similar to Part 93. However their separation of those to whom it applies is much more practical and realistic. Instead of trying to overregulate and police operations, it provides guidance and parameters, and then relies on self adherence, which is then tested when something goes wrong. The consequences of having not complied with the regulations are very serious. However, it doesn’t try to ‘police’ every operator with limited resources, as is the case in South Africa
Absolute Aviation has been phenomenally successful. What’s your secret?
NH: Good old-fashioned customer service. We are committed to owning our customer – not simply selling him a plane and then having him take it to our opposition for maintenance. The customer is the responsibility of the whole business, and we take this responsibility very seriously indeed. We make a bold claim to be with our customers “for the journey.” In order to do that, we have to move away from operating in silos and to delivering value in our service support at every touch-point relevant to them.
So, if our success was due to any one thing, I would say it is the fact that we invest as much effort in our customers as we do in our product portfolio, and view them not as a means to an end, but rather as a critical element of our past, present and future success. We are not a transactional business and believe in giving aviators good reasons to trust and to stay with us.
But if you are providing a really broad range of services to your clients, don’t you increase your risk of losing the client by having some division mess up the relationship over some, perhaps, small thing. After all, maintenance is always tricky.
NH: No, it’s all about controlling your service and ensuring that every aspect of your business is focused on providing the same seamless service to the customer, and not taking a short term or ‘silo’ view based on a particular interaction (such as maintenance) – and certainly not letting it out to third party providers. It is not possible to be without fault, particularly in the aircraft maintenance arena; it’s about how you treat the customer when you do make mistakes that makes the difference.
And that’s a formula that has certainly worked well for you so far.