Mr. Atedo Peterside
Atedo Peterside is the Chairman of Anap Jets, a business aviation company that has created a niche market in the private charter service in the aviation industry. Among other issues, he spoke on the economic rewards of fractional ownership of private jets. He spoke to Chinedu Eze. Excerpts:
What is the concept behind the Anap Jets project?
ANAP Business Jets Limited (ANAP Jets) offers a unique fractional ownership platform for private jets. In its most simplistic description, it is akin to a time/ownership share arrangement. Most high net worth individuals and/or medium sized companies cannot fully utilise a private jet by themselves.
Accordingly, tying up so much cash flow to buy a private jet and maintain it is both wasteful and inefficient. Warren Buffett (one of the wealthiest men in the world) famously said that he cannot justify buying a private jet, but he can justify buying a fraction of a private jet. ANAP Jets makes it possible for you to own half, a quarter, 1/8th or even 1/16th of a brand new private jet.
When dealing with ANAP Jets, the big saving is upfront. Instead of paying, say, $10 million to own 100per cent of a light business jet, you can pay $2.5 million to own a quarter (25 per cent) of the same aircraft and we supply owners for the balance of 75 per cent. If that takes care of all your annual regional flying needs, then you have already saved $7.5 million in cash flow terms upfront. The second area of savings is in the fixed costs associated with maintaining the aircraft, crew, insurance, hangar/parking expenses etc. You pay a quarter of these charges instead of 100percent and yet the aircraft is available to meet your flying needs. By far the busiest route out of any Airport in West Africa is Lagos/Abuja or Abuja/Lagos and this is a one hour flight. So after the plane drops you in Abuja or Lagos, why can’t it fly other fractional owners instead of sitting down at Abuja Airport for days collecting dust?
Why is your company venturing into business aviation?
We ventured into business aviation because we saw a vacuum in the industry. We saw lots of waste/high costs and inefficiency and the opportunity to replace that with reliability and efficiency combined with convenience. A typical light business jet can fly for 600 to 1,000 hours a year and yet the typical owner would probably only manage 150 to 200 hours of actual flying time in a year. Fractional ownership, as practised by ANAP Jets, is as much a financial product as it is an aviation product. It is about the intersection of innovative finance and aviation to yield a cost-efficient product that minimises waste, while catering to the owner’s convenience and comfort.
Looking at the commercial charter market in Nigeria and in Africa, do you think it will be worth the huge investment you are committing to this project?
If we did not think there was a long term future for this business, we would not do it. We are there for the long haul. We are not there just to make a quick buck today. In any case, there is no quick and easy money to be made from this business if you are doing it properly. Our margins are exceedingly thin and deliberately so. There are comparable businesses to ours in Europe and elsewhere. We deliberately set out to deliver a competitive product using European prices for similar products/offerings as a benchmark, even though we know it is more expensive to service and maintain quality aviation services far away from developed aviation markets. For now, every expert engineer and every spare part has to be flown in from overseas. If you were doing the same business in the USA you may not have to go more than ten miles to access expertise and/or necessary spares.
In terms of regulation and business environment, do you think that you will realise the lofty concept of giving your client the ultimate satisfaction?
We are confident that we are delivering client satisfaction. All that a businessman really wants to do is to just turn up and fly at a time that he chose and to a destination of his choosing in our sub-region. Even the conventional sole owner of a private jet virtually gets sucked into managing an airline business because the headaches of crewing, maintenance, regulatory compliance etc. fall on his shoulders ultimately. ANAP Jets takes away the hassles of ownership in terms of managing an aviation business but delivers the convenience of ownership in terms of enabling the fractional owner to fly when he wants to fly. If his own aircraft is tied up, then we will roll out a comparable aircraft from our fleet.
What are you committing into the project in terms of funds and manpower?
We are a private company and are therefore not obliged to discuss our finances with the public. Suffice to say that we have all the resources that we need to attract quality personnel and to motivate them and see them grow with ANAP Jets. We are offering stable and rewarding career paths. Our business model is also frugal, conservative and cost effective. We do not believe in rushing out there to borrow large sums of money. If we maintain our credibility and we remain patient and methodical, our business will be largely self-financing.
As you plan to base your operation in Lagos, are you going to build Fixed-based operation (FBO) facility?
We are focused on our core business for now and that is delivering the fractional ownership platform that we are pioneering in Africa. Yes, Lagos is our initial base. We are not seeking to be all things to all men. If we tried that too early, we would lose our focus. We plan to augment the fractional ownership platform with some ad hoc charters, but that is after we have obtained an Air Operators’ Certificate (AOC) that we applied for. We have no desire to be a Jack of all trades and we are a responsible business house that will not break rules, cut corners or disobey/undermine regulations. It is not in our DNA.
How can one key into the Anap Jets plan, what are the benefits and which ways can it be a better alternative to one owning one’s own jet?
As I explained earlier, owning your own jet is a far more expensive proposition. I think only very large companies that have several executives moving around almost every day should contemplate owning their own private jet. The typical medium sized company or high net worth individual/family cannot really justify it. If they are lucky, they will tie up 100per cent of the upfront costs associated with purchasing and aircraft and they will be stuck with the annual fixed costs also and then they will incur the variable costs associated with maintaining an aircraft that will be heavily under-utilised. If they are unlucky, they will incur all those costs and fail to fly safely because there is no professional management in place. Our Fractional Ownership Platform enables them to share the upfront aircraft acquisition costs and the annual fixed with third parties, while allowing professional managers to handle all the complexities and intricacies for them.
Why do you choose Embraer Phenom 300 for your operations and what is the flight range of the aircraft?
Embraer’s Phenom 300 was actually the most delivered business jet globally in 2013 and 2014. The serial number of our first aircraft is 261. This means that 260 units of the same aircraft were built before our first aircraft. Our second aircraft is number 315. I am a little bit surprised that ANAP Jets was the first client to take delivery of such a highly successful and popular aircraft in West Africa. I think there are two broad reasons for this:- 1) Many private jets in the country were not purchased brand new. They are pre-owned (“second-hand” in layman’s parlance); and 2) many people buying business jets in Nigeria were doing so with “easy money” or windfall income and so their primary focus was not value for money. A few were also looking for status symbols and so “bigger meant better” even though they are largely flying from Lagos to Abuja and back.
The range of the Embraer Phenom 300 is 1,971 nautical miles. In layman’s terms, we have flown from Casablanca in Morocco to Lagos before and still had fuel to spare. That range is more than sufficient for movement within our primary operating area which is Nigeria, West Africa and Central Africa. With a singling refuelling stop, we can therefore go beyond the African continent.
Can you give more details about your technical partnership?
Our technical partners are Eurofly Services S.p.A. of Italy. They have been in business aviation for upwards of four decades. They also have a shareholding in ANAP Jets because we wanted a technical partner that would also have “skin in the game”. It was also about finding a technical partner that had the same shared vision that I had. The Chairman of Eurofly, Mr Rodolpho Baviera, is also the Chairman of The European Business Aviation Association. They have pedigree and a very good track record and they are the Continuing Airworthiness Management Organisation (CAMO) for our aircraft. They oversee all aspects of the maintenance activity concerning our aircraft and they are paid separately for this and properly incentivised to do this thoroughly.
ANAP Jets will build up its own expertise over the years, but that is a long term project. We are not in a hurry. We are content to hire the best people that we can get and to train and develop them steadily and have them understudy experts who have been doing this for decades. On matters that have to do with safety, we are not interested in short-cuts and we are not in a hurry. Over and above knowledgeable personnel, we want to institutionalise good processes and procedures. Global best practise is the only target.
Will your technical partner support wet lease or dry lease fleet? If it is the latter, how do you intend to source manpower to run your service?
We opted for dry lease arrangements. Nigeria has surplus pilots and flight attendants. For each vacancy in ANAP Jets for crew, there must be twenty to thirty applicants. We use some experienced expatriate Captains/Pilots, but then that is because they are the only ones that have experience on this aircraft type. To my knowledge, no single Nigerian Pilot was type-rated for the Embraer Phenom 300 Aircraft before ANAP Jets introduced the Aircraft to West Africa a few months ago. Accordingly, we have had to send Nigerian pilots to CAE Dallas in the USA for training. Already, we have trained two Nigerian Captains and a First Officer successfully in Dallas i.e. three in total. We are sending more Nigerian pilots to Dallas and will continue to do so, if the U.S. Embassy will grant them visas.
Will you register your operating aircraft locally and will you build Maintenance, Repair and Overhaul (MRO) facility or would start with third party maintenance?
From the onset we made it clear to Embraer (the aircraft manufacturer) that a condition precedent to our buying their highly successful Phenom 300 aircraft was that they must establish a fully functional and equipped Embraer Service Centre in Lagos that would have qualified engineers and necessary spare parts stocked in advance of the arrival of our first aircraft. We made it clear to Embraer that any agreement that we signed to purchase their aircraft would be voided if they failed to deliver the promised Service Centre in Lagos. I am pleased to confirm that Embraer delivered the Service Centre in Lagos as promised.
The Embraer Service Centre in Lagos meets all our immediate needs and so there is absolutely no need for us to reinvent the entire wheel.
How do you hope to coordinate your flights in the African region and are you not limiting your market by limiting it to Africa, as many Nigerian businessmen and women travel to Europe, the US, South America and Asia for business?
Our primary/initial focus is regional travel. It is about the last mile and that is not classified as luxury globally. Personally, I have absolutely no interest in flying in a private jet from Lagos to London, Dubai or New York. If I am travelling long haul then I want to be in the largest commercial jet such as a British Airways Boeing 747 that will fly me straight from Lagos to London’s Heathrow Airport. I can get up halfway through the journey and go on a stroll around the aircraft and stretch my legs. Conversely, I want to use an ANAP Jets 7-seater light business jet to take me efficiently from Lagos or Abuja to Bauchi, Makurdi, Jos, Owerri, Uyo, Asaba, Warri, Accra, Kumasi, Douala, Yaounde etc. That is why I say that ANAP Jets is about the last mile. It is not about the seven or eight hours from Lagos to Dubai; Emirates will do that for me efficiently.
Business Aviation has become a necessity in Nigeria that must be effectively harnessed to tap its full economic benefits”. How do you think government can help private investors like you to harness and develop this segment of the market?
Business aviation is a necessity in Africa because Africa is a large continent geographically and the major urban centres are interspersed. It is not easy, for instance, to fly efficiently from Abuja to Yaounde on a commercial flight. To get to Yaounde from Abuja, you may have to fly from Abuja to Lagos to Douala and then on to Yaounde. You then have to go back the same way. The entire journey might take you three or four days – meanwhile, you are going to attend a one or two hour meeting in Yaounde? ANAP Jets will take one of our fractional owners from Abuja straight to Yaounde and back to Abuja in a matter of hours. That is why I say that ANAP Jets is also about filling a vacuum in our sub-region for the business traveller who has a recurrent need.
What is your projection of the company in the next five years in terms of its market, fleet and manpower?
This is a marathon. It is not a sprint. We will keep on expanding our fleet in a disciplined and cost-effective manner and it will be demand driven. We will not buy aircrafts ahead of the demand. We will procure aircraft in response to firm orders from our target clientele. Furthermore, we cannot even allow ourselves to procure aircrafts faster than we can get qualified pilots and/or train pilots to fly these very modern and sophisticated aircrafts. Nor can we expand our fleet faster than the entire maintenance, servicing and back-Office arrangements that we have on the ground in Lagos and augmented by the expertise of European technical partners. ANAP Jets is also about discipline and safety.