Royal Jet keen on global alliances

Dubai Private jet operator Royal Jet is keen to strike global alliances and does not rule out consolidation taking place in the private aviation business in the future. The Abu Dhabi-based company's President and Chief Executive Officer Shane O'Hare said while there is nothing in the pipeline yet, if such an opportunity arises, Royal Jet would be "keen to look at a global company to align with". "We might start the opportunity," he told Gulf News in an interview. "I won't name them but I could name five companies that Royal Jet would be very comfortable habitating with globally as a global alliance. I think there is a strong future in this concept." O'Hare said it's "not going to be an intra-regional alliance but a more commercial cooperation". "The proxy would be, for example, Star Alliance, with around 22 airlines in the fold," he said. With spiralling fuel prices and other industry challenges, consolidation is the way going forward for the commercial aviation industry. According to O'Hare, the private jet business is likely to go the same way in a few years. "A setup like that [Star Alliance] doesn't exist for private aviation as yet. My sense is that there is room for this concept to develop. It has benefits for customers as well as operators," he said. At the present time a private jet customer relies on a broker to provide that global solution, he added. Alliances are formed in the airline business due to regulatory constraints because one airline can't serve the needs of the whole market, so it needs to rely on partners to do that. "The same exists in the private jet business. So I can envisage — though it's not happening yet — the emergence of like-minded alliances for like-minded private jet companies around the world." As the industry matures, there will definitely be consolidation in the form of some mergers and acquisitions, says O'Hare. "It might take five to eight years as the business matures," he said, adding that the private jet business is not that tightly regulated. Worth about half-a-billion dollars, the private jet market in the Middle East is currently growing at 5-8 per cent, says O'Hare, with Saudi Arabia taking the lead and the UAE fast catching up. Royal Jet commands about 15 per cent of this market. "The private jet industry is relatively mature in the Middle East when compared to the US or Europe," he said. Having posted a 226 per cent increase in net profit in 2011, Royal Jet expects about a 15 per cent jump in revenues in 2012, said O'Hare. Asked about the breakeven target for the company, he said: "We are hardly profitable," adding that the company has, however, been profitable every year since its second year of operations. He also said the company has just begun the fleet planning process for the next 5-10 years.