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Saudi Arabia Report
Marcopolis presents the Saudi Arabia Report focused on the investments, doing business, economy and other topics featuring interviews with key executives. The sectors under review in this issue are industry, real-estate, ICT, investments, banking sector, telecom sector and many more.
InterviewsJune 04, 2015
Private Aviation in Saudi Arabia: 60% of Regional Market, 20% Growth
Faisal A. Alsaddik, Executive Chief Commercial Affairs of Saudia Private Aviation
- Written by Peter Matay
- Published: June 04, 2015
Faisal A. Alsaddik is Executive Chief Commercial Affairs of Saudia Private Aviation.
Interview with Faisal A. Alsaddik, Executive Chief Commercial Affairs of Saudia Private Aviation
According to the recent statistics, the private aviation industry is poised for tremendous growth - about 20% a year. Is this true? It is an exciting industry to be in. Please give us an overview of the private aviation services in Saudi Arabia.
This is true. Private aviation services is a very fast growing business. Due to the fast-developing economy, with new economical cities and growth in business, Saudi Arabia needs special private aviation services for business to move to and from the main capitals of Riyadh, Jeddah, and Dammam. Therefore, the Saudia Private Aviation initiated this step in 2008. Our vast experience of more than 40 years has led us to believe that it is very important to have SPA (Saudia Private Aviation) to serve the business people, the business aviation industry, and to come up with a legitimate 135 operator. SPA invested more than 250 million dollars and bought 10 brand new aircrafts, 4 of them Falcon 7 X, top of the line, and 6 of them HAWKER 400XP for businessmen who do not want to spend a lot. This can carry 6 passenger for short haul flights.
SPA started this in 2008. Due to our extensive experience, the growth is really tremendous, beyond all expectations. The market contains around 480 aircrafts. It is expected to double to about 1000 in 2020. Saudia Private Aviation has the best knowledge in this field. We built out biggest and largest FBO in Saudi Arabia for private aviation. We are now in Jeddah. We have our FBO in Riyadh and in Dammam as well. Our staff have extensive experience in serving private aviation industry, because of our experience in special flight services, which used to be exclusively for the government. But now, we offer this chance to everybody who can afford and are ready to pay for the service.
Saudia Private Aviation has huge potential. In the near future, we expect to cover most of the stations. We have a partnership with Saudi Airlines, with a presence in 28 domestic airports and more than 50 international airports. This by itself gives us a big push. None of the private aviation services have the power to cover all these destinations with their existing staff, manpower, and management. SPA also benefits from the excellent relations that our country enjoys with all countries of the world. This gives us great accessibility to serve in any given destination. Our staff is a great asset for us. We invest a lot in providing them the best training, the best of facilities. This boosts their morale. This is the reason why SPA became very powerful within a short period of time. In the near future, SPA will be the number one private aviation company in the region.
Saudi Arabia represents more than 60% of regional Middle East business for private aviation with an annual growth rate of 20 percent.
The Gulf countries represent about 10% of the private aviation business. Our growth is really tremendous. As the business grows, the owner will acquire more aircrafts. We believe that we will be able to manage even more aircrafts. But it is not only about buying aircraft alone. What is more important is to provide proper service to our clients. Handling things on ground, aircraft management, technical service management with our sister company SAI and SGS, our ground team in Saudi Airline. Our FBO is well situated in the best of locations accessible to all VIPs.
You have travelled all over the world. You have seen different business models in the aviation industry in multiple countries that are thought of as one of the best in the world. When it comes to Saudi Arabia and private aviation, do you feel that the services are still less sophisticated and less developed than say in Western Europe and in the United States? Or do you think that you can you find some of the best services right here?
Having worked abroad as the regional and country manager of Saudi Airline for more than 25 years, I can confidently tell you that the scale of our service and our facilities are much higher than many countries. In Europe and America, you only need to serve a cup of coffee to the businessmen in transit. Our facilities here give you the real luxury, the real location and the real experience beyond expectation, because our customers are very sophisticated and very demanding. They want certain services to match our culture and habits. That’s why we are really much advanced than many places I have worked before. This doesn’t mean that we are the best. We have to continue to look for customer satisfaction, because this is a service industry and the expectations are high. We are very finicky about meeting complete customer satisfaction.
What is your business development strategy? How do you want to always be on the top and continuously increase customer satisfaction?
Firstly, you have to offer the customer with the right service and the right equipment suitable for his demand. Punctuality and on-time performance and service on board are important. You have to constantly conduct surveys and get a good consultant to give you the right feedback in order to meet customer expectation. Businessmen or VIPs expect to leave on time in a safe aircraft, and with efficient and good quality service on board, and the correct arrival and departure information regarding pickups and drop-offs. It is very important to also give the right information about our services to the VIPs. SPA is the first company to introduce IPads onboard. Our VIP Falcon 7X is equipped with a very advanced system. We are proud to have this kind of aircrafts.
In the near future, we will also look into having more advanced aircrafts, because I think the market is growing very fast, about 20% a year. This year, we have gone beyond our set target, because of our excellent teamwork, our sales team, and our excellent management.
What did you achieve?
Saudia Private Aviation has gone beyond our sales target. I cannot give you the right figures, because it is confidential, but I can say that we have achieved more than 50% of the set target. This by itself is a remarkable achievement. We always care about maintaining the schedule of our aircraft to be tailor-made to our sales. If you try to sell more, and your aircraft is not available, you will destroy the business. We have to be balanced, rational, and realistic. We are really make the best use of the aircraft, crew, facilities and manpower. This really gives enhances our efficiency and profitability.
One of the main challenges for the aviation industry in Saudi Arabia is the infrastructure. The domestic flights are often crowded. What do you think should be done to improve the infrastructure?
I don’t think that the problem lies with the infrastructure. Sometimes, when there is a high demand for the scheduled flights, this works out for our benefits. We are here to serve our VIPs and offer our private jets, which are ready in the main airports in Jeddah, Riyadh, and Dammam. Even though we are the only private jet company, we can still position our aircrafts in these three locations, without charging the customers anything for aircraft positioning.
We have very good marketing tools. We have three different membership programs - silver, gold and platinum. Our customer can buy these for a period of 13 hours and he can use any of the available aircrafts. Besides he has the options of remaining a night or two free of charge. This has been promoting our business quite a bit. We have 3 main stations as a base for our operations. Sometimes, if there are problems in one area, will turn out to be for the benefit of others. But we are here to serve our customers. Sometimes, there is a sudden demand for movement towards certain cities and the demand decreases during certain times. So, you cannot increase your scheduled flight just because of certain operational requirements.
Who designed this membership scheme? What was the rationale behind it?
The membership scheme was formulated to offer a product to our client - a tangible product to select offers that suit him. Some businessmen need to travel every weekend to certain destinations, be it Riyadh, etc. Some of the high-ranking officials, for instance ministers in Riyadh, have families living in Jeddah.
We have to device a product for them, which is in accordance to their need. This gives us a competitive edge in the market. We are able to do it and somebody else with one or two aircrafts can’t do it. So, we decided to offer our clients the best service possible.
What about competition? I see that you don’t have competition in Saudi Arabia. Perhaps there are some regional competition. As Saudi opens up for foreign investment – we see this already happening in the stock market - there may be some newcomers coming to the market in the future. Are you ready to face that competition and what about your expansion plans?
On the contrary- there is heavy competition in Saudi Arabia. But we believe that we have the biggest piece of cake. It is a very positive trend for our client because healthy competition always pushes you to give your best. I believe that there will be more competition in the future, but we will try to remain one of the best and we are sure that we will do our best to serve our clients and to continue to strive to reach all of our clients’ expectations.
One of the most important elements in the luxury section is to build up your brand and reputation. You must be particularly concerned about your brand, your brand identity, the values and your emotional appeal. What is your branding strategy for the airline?
Branding is a very important aspect of our business. SPA is one of the only 10 airlines in the world for private aviation and we have a brand. This is because most of the private aviation companies have their own aircraft, but they don’t have the branding that we built since we started. Now, we are really well identified as SPA. It is a big name, it has a quality and standard. It has an organized fleet running under the registration 135. It has our high standard training scale for our cockpit and cabin crew. We have introduced one of the best systems for operations, marketing, for customer profile, for market sales for private aviation. We are really proud of our branding. These steps taken by us ensure higher and better level of service to our customers.
Do you think there is a bright future for private aviation in Saudi Arabia?
Affirmative. Saudi Arabia is the biggest market for private aviation. In this market, we need to invest more. We have certain plans for the future. We have a lot of potential customers for aircraft management. Saudia Private Aviation is a very big potential company for the future. It is a big name. I am proud to be a part of this team in order to develop this. I was lucky that when I started working in SFS in 1979, I worked in the first group that started up flight operations. I was a junior back then.
I can never expect to be in this position now. This has taught me how to support my staff, my employees to offer a positive contribution to our success. Because we believe that we are one team. We are proud of our people. They are very service-oriented and very professional. We have a very good team with good positive integration with the top management and the communication is very positive. The expectation within the company is high and everybody is very optimistic. This is very important environment for any business to grow.
Can you mention some key companies or key executives that are your clients? Or is it confidential?
60% of our key clients are business people. 20% to 30% are from the royal and VIP families. 10% are miscellaneous. We have a very solid base for our business. That by itself gives us a very positive ground for our growth.
We have a very good relation with our client. We get direct feedback from them. We do our best to meet their needs and expectations. Besides, we have the facilities and required strings with Saudi Airlines…. So, we really have a strong backup in case of technical glitches. We can immediately arrange for alternatives for the client, because the client needs dependable and reliable companies that protects and respects his rights. Besides, our membership program is very flexible.
If he can’t take HOKER, he can fly in Falcon. If the client does not like our service, we are ready to reimburse him, but this has never happened. We have the backup of Saudi Airline, in case we need any help from the fleet of Saudia for our client. SPA has a very big potential. We have a very promising future. We are lucky to work for this company. We are best and we will do our best to grow and to be the best. This is our goal. We have the best results. We have the support of the top management of the Saudi Airline. And most importantly, our clients are very loyal to us. We are proud of them and we do the best for our clients.
Can you mention the number of clients that you currently serve and may be chart down the growth figures over the years?
We started this business less than one year ago. I cannot give you the exact figure. Our growth is more than 10% every month. Our excellent membership offers the client very good deals. For the amount paid, the options and services we offer is excellent. This is a big value for the client. Our expected growth is high. We try to rationalize the growth to meet customer expectation. We don’t want to grow fast, because otherwise you will fall fast. It is better to have a steady growth by taking careful steps, to give the customers what he expects.
Maybe you can mention some figures. You mentioned that about 10% of the Saudi businessmen tried this airline, and 90% will try in the future.
No, We have 10% of expected growth due to our membership. Hundreds and thousands of businessmen have used our service. It is very important to retain the client. My main objective to continue getting business from the clients and have a continual growth. Because it is not a good indication if a businessman takes your service once and never returns. It is very important to know how to maintain and retain your clients. We work towards having a loyal clientele. With direct communication and feedback, we try to be more close to our clients, we look into seeing how we can further improve the services offered to the clients.
You are facing certain challenges, because some businessmen would want to economize. They just want to take the business class in a regular airline. How do you deal with this?
Yes, there are a few. But our clients need some kind of luxury, like the ease of being allowed to come from the car directly to the VIP lounge or immediately to the aircraft. He cannot find this in regular airlines. Besides, he needs privacy. He wants to discuss business in his aircraft with his partners or prepare his presentation. He cannot do this in a regular airline. This can only be done is Saudia Private Aviation. So, our client is very loyal and very accustomed to private aviation. Our new facilities and service provide the right environment to meet the client’s expectations.
Time is the number one resource for any businessmen. How much can you deliver in this respect? Time-saving?
Normally, you need a minimum of 24 to 48 hours to order a private jet. It depends on the crew and aircraft availability. But sometimes, we can provide an aircraft within 6 hours prior to departure. But we don’t encourage this, because this is very taxing on crew planning and aircraft utilization. But sometimes we really do offer this based on availability and operational needs.
Let’s say, a businessman needs an aircraft 48 hours prior to travel. How much time can you save for the client when compare to someone going through the normal procedures of check-in etc.?
In our case, the client can arrive 10 minutes before departure. It is just a matter of hopping on to the flight from the main door. Some clients don’t like waiting in the VIP lounge. Normally VIPs wait in the VIP lounge for their partners etc. or read the newspaper or to be ready ahead of flight. If they are ready, we take them immediately to the aircraft in our luxury Porsche cars. The aircraft is normally in front of our building. This whole process will take a maximum of 10 minutes. Our service is highly efficient. The client doesn’t have to walk through the hustle and bustle in the airport and pass the customs, immigrations etc. Here you go directly. Our FBO is equipped with all the facilities such as security, immigration etc. In 5 minutes, he will be in the plane. Our cabin crew welcomes him with a smile and our cockpit crew is ready to fly the aircraft and he will be flying immediately.
You mentioned your partnership with Porsche. You are trying to develop partnership with leading luxury bands. What is the rationale behind this?
We picked Porsche. We have a strategic alliance. Porsche is a brand of luxury cars that matches the customer’s expectation in SPA. Our company is for the elite of the society. Therefore, we have to bring in a brand that meets their expectation. We have Porsche Panamera in Jeddah, Riyadh Dammam and Medina to serve our customers from the gate to the aircraft and back. This adds value to the services that we offer our customers.
Why did you pick Porsche? There are other brands as well. Aston Martin etc.
There are quite a few options, but we decided based on our careful study in the market. We want to show our clients that our service is efficient. It doesn’t necessarily mean that the other brands of cars are not good, but Porsche has a very special unique quality. For us, our customers are very special and that’s why we chose to pick Porsche.
At the same time it is one of the most reliable cars.
Yes, very reliable and very good brand. We never faced any technical failure. They are brand new cars, very presentable, with good comfort, luxury and with efficiency and speed. We cannot drive fast at the airport, because there is a speed limit at the airport, but at least we have always been there on time.
It’s a premium service and it costs much more than the other airline. Do the costs actually justify the benefits, the time that the CEO or executive saves? Is there a balance between the price and the benefits?
If we were not making a profit, we would not be continuing in this business. We are a reasonably profitable company. As I said before, gradual rise is better than sudden rise. The other thing is that our cost and efficiency is a very important formula for our business. We do cover our costs and we have a very good pricing strategy due to our relationship with Saudi Airlines. It covers all of Saudi Arabia’s domestic airports. No other airline boasts this facility. We have a very practical formula for our clients. We offer them extra perks like the option of overnight stay. Or aircraft positioning. No other airline can do that. Our pricing has been studied carefully to meet the customer’s expectations. Besides, we also carry out market surveys to check the prices of other companies. So, we are really the best and we offer the best of services to our clients.
Who did your market study with regard to pricing? Did you have it contracted? Did you do it in-house?
We did it in-house. We have one of the finest departments, the operations – the fixed and variable costs. We have looked into the depreciation costs of the aircraft, which is always expensive for any company. We are really particular about building our formula carefully. We are continually moving in the positive direction. This is with customer satisfaction. This formula is difficult to combine, but our service and our reliability besides our suitable price has been our best strategy to meet customer expectations.
