Al Jaber launches ultra luxury charter service

Al Jaber is a privately-owned diversified group of companies that was established in 1970 and is now the largest private sector employer in the UAE, with 55,000 employees.

Its latest offshoot, Al Jaber Aviation, is set to begin offering services in February 2009.

AJA will hit the skies with an all-new fleet of 21 aircraft that it has purchased from Airbus and Embraer for $1.2bn.

From its initial base in Abu Dhabi, and later in Dubai, AJA plans to serve clients from the Middle East, Russia, Asia, Europe, and Africa. The company believes that the VIP charter market in the Middle East alone is worth around $500m annually and is growing at a rate of 25%.

Financial slowdown an 'advantage'

AJA dismisses talk that launching a luxury charter company during these challenging economic times is risky.

On the contrary, it feels that the global economic slowdown will actually work to its advantage because of the type of client it is targeting.

'We are offering bespoke, discreet, and intuitive services to discerning individuals such as movie stars, rock stars, sheikhs, kings and queens, and wealthy individuals,' Mark Pierotti, AJA's chief operating officer told AME Info. 'Because our niche market is so high, we will have little competition as the barriers of entry at this level have increased.'

Rather than simply being an airline, AJA plans to be a door-to-door 'journey solution' that will be able to adapt to whatever the client needs. 'It's not just about the airplanes. Our service is going to lift us above anyone else,' he noted.

Pierotti likes to compare travelling on luxury jets to travelling on a yacht. 'We travel in yachts for pleasure; we don't go on a yacht to get somewhere. We want to create the same environment on an airplane,' he said.

The economic downturn is creating unprecedented challenges for the aviation industry. Low-cost carriers have the best prospects for weathering the storm, and they may even thrive.

On the other hand, companies that are likely to be hit hardest are small companies that sell jets to wealthy individuals, as these buyers are now finding it harder to get financing.

Flight options

'We give these potential buyers the option: don't buy an airliner, come and fly with us instead and have your own flights with us. So [the downturn] has created an opportunity for us too,' Pierotti noted.

Although liquidity is tight, one bright spot for AJA is that oil prices have fallen below $60 after having reached a peak of $147 earlier this year. AJA's business plan was done when oil was $100, so now that oil prices are much lower, the company has 'more slack to work with' in terms of its budget.

Oil price dips tend to help commercial carriers more than business jet operators because the big carriers 'don't change their price', Pierotti said. AJA will pass on the reduction of the price of oil to the customer by giving them either a higher level of service or a lower price.

With so many companies having entered the Middle East business jet market over the past few years, it is increasingly likely that there will be mergers in the sector. 'Some of the players, particularly the ones with smaller aircraft, might start to team up with companies with bigger planes', with the smaller companies feeding passengers to the larger ones.

'We have planes that can fly (non-stop) from Abu Dhabi to London. The companies who don't do that, maybe they will want to link in with us. We are open to that consideration. We are open to doing business with any of the smaller players.'

See also:
Gulf tourism faces challenges from economic downturn
Low cost carriers fly high in the Gulf