Saudi selection
Posted Date: 01/09/2007
Issue: Executive & VIP Aviation International September 2007
Publication: Executive & VIP Aviation International
National Air Services (NAS) has announced its new aircraft selection, namely: 20 Falcon 2000LXs, 20 Gulfstream G450s and 20 Hawker 750s. Taher Agueel, President and Chief Executive Officer of NAS, explains to Executive & VIP Aviation International the purpose of these orders
Orders for a score of aircraft at a time comprise happy news for Dassault, Gulfstream and Hawker Beechcraft. NAS has been on a huge shopping spree in recent months and is ordering significant volumes of aircraft that will change the shape of the fleet in the Middle East. Taher Agueel, President and Chief Executive Officer of NAS, explains that the order for the 20 Falcon 2000LXs, the Gulfstream order for the 20 G450s and the order for the 20 Hawker 750s are directed towards the NetJets Middle East fractional ownership and leasing business. NAS has an interesting relationship with NetJets in that NAS provides the local aviation services presence while NetJets provides operational expertise so that NetJets’ fractional owners and prospective purchasers receive the same service throughout the Middle East as that offered in the US and Europe.
“NetJets Middle East covers the region from Morocco, India and Turkey to South Africa,” explains Agueel. “There is heavy involvement from NetJets’ key management in designing and upgrading the programme in the Middle East. It is a very smooth process in which we provide VIP services that do not differ in any way from those in the other NetJets operations in the US or Europe.” Agueel is proud to be part of the NetJets network. “We provide the NetJets standard,” he says confidently. “NetJets Middle East is a complimentary service to that in the US and Europe.”
Confident but risk-averse
The Dassault pre-purchase agreement is for four firm and 16 options while the Gulfstream order is for three firm and 17 options. Why the desire for latitude when the Middle East market is so obviously strong? “We seek flexibility to tailor the supply of aircraft to market demand. Today we are operating 10 aircraft which are either owned or under management in the NetJets programme. We are adding a fleet that is six times the size of the fleet we have today. That kind of growth has to be tuned to actual market demand,” comments Agueel. “While we are confident the demand will be there, the reason for this structure is to ensure that we are able to accelerate or postpone deliveries as actual demand emerges in the market.” The Middle East market is obviously growing but what is powering this growth? “Aviation in the region is going through substantial structural change,” comments Agueel. He talks of demand in the region shifting, partly into the budget airline model at one end of the spectrum but also into the executive services offered by NAS at the other.
It is no accident that NAS is involved in four business lines that accommodate both ends of the passenger spectrum. The aircraft management business, the NetJets fractional ownership business, Al Khayala Airlines (the VIP and corporate single-class airline) and nas air (the recently launched budget airline) are all poised for expansion as the structural change in the market, of which Agueel speaks, is realised. “In each one of these businesses we expect substantial change and growth,” comments Agueel. Confidence in NAS’s ability to pre-empt the market accurately and order appropriate aircraft to fit current and future demand in each segment is exhibited by the willingness of banks, such as Calyon and RBS, to back the aviation company’s buying decisions. Agueel comments that NAS’s strategic business plan can only be executed if financial institutions act as partners. “To acquire capital to execute our strategic business plan, we are approaching the capital markets on all fronts: the international banks, the regional banks and the local banks in Saudi Arabia. Furthermore, we are bringing to the financial markets financial instruments that are unique and first of their kind in the region,” Agueel says. “This is the key pillar that will distinguish NAS and allow it to achieve its strategic business plan.”
More than just a plan
It has to be said that the strategic business plan at NAS is complex because it involves the four strands mentioned above. But it is also transparent because each strand has been clearly defined by the man at the top who clearly understands his market. “We are unique. There is no other company in the world that is executing these four businesses under one umbrella,” points out Agueel. At present, the Middle East fleet of private aircraft stands at about 300 units and NAS currently enjoys less than 10% of that market. “We are targeting substantial growth in that segment,” says Agueel confidently.
This brings us back to the NetJets slice of the business in which NAS currently supports 10 aircraft. As the next 60 aircraft join the fractional plan over the next five years, NAS’s involvement in supporting this fractional fleet will grow exponentially. In fact Agueel has committed to invest more than $800 million in expanding the NetJets Middle East fleet over the next five years to accommodate the predicted 8% annual growth in the Middle East executive aviation market. Total NAS fleet delivery costs to accommodate all four strategic business costs could be as high as $2 billion. This is not only huge investment, requiring significant financial support, but also a massive management commitment from the top.Agueel is not fazed by the task ahead: “We are optimistic about all four businesses’ growth potential and we are happy we have the management team that we have attracted to ensure that the execution of our strategic business plan will be on budget and on time.”
