AirX chairman John Matthews says that much of the market is saturated, and always keeps an eye out for jets that have dipped in value. His company hopes to generate plenty of business with the Embraer Lineage.
Following the success of its first Embraer Lineage 9H-NYC, even before ETOPS approval that allows transatlantic flights, AirX has confirmed two additional Lineage 1000E aircraft will be joining its fleet in the next few months.
The Lineage 1000E offers double the cabin space of its main price range competitor, the Global Express/5000 series, and brokers are enjoying price matching the Lineage to high-end Global Express variants for flights under an eight-hour duration. The aircraft is a strong contender for brokers with a BBJ/ACJ passenger load request, but restrained by a more stringent budget.
“The popularity of the Lineage within the brokerage community has been overwhelming, for which I’m grateful,” says AirX chairman John Matthews.
“We are executing a planned expansion at the moment with several Lineages arriving. We don’t have ETOPS approval yet, however as soon as approval is given, we can start targeting the transatlantic market. We are now moving into true intercontinental jets with the Lineage expansion. Next on my list are ACJ/BBJs, plus a second A340 is in discussion at present and I hope to have that signed in a couple of weeks.
“The upcoming recession is going to hit the saturated section of the market so hard – that is to say heavy jet, super midsize and midsize, light – that it is important to not rely solely on that sector, expanding into market segments that hold less competition. I believe the areas that are buoyant in the market are for the 15-plus passenger market, that is really interesting; below 14 pax is saturated. We see Global Express rates falling each year, to the extent where we are watching brand new Global 6000s sell at close to a 12-year-old Challenger 850 rate. Logically, if you think about it, that’s a $50-60 million aircraft and it doesn’t make much sense. It’s kicking the can down the road and each year the can gets heavier.”
He says that to expand, you can either raise debt and hope for market recovery, or buy distressed assets that have a niche, and AirX prefers to do the latter. “With the Lineage we can take a Global Express load and be really competitive while offering double the cabin and baggage, or we can take a ACJ/BBJ load and be 30-40 per cent cheaper than the BBJ price, so the Lineage has a really interesting elastic price advantage. Lineages have the safety redundancy systems of any modern airliner and these days airliners are so safety-centric that they are pretty much level-pegging. If you look at the cabin, you are getting double the size. If you look at the financial overheads of the aircraft, you have got an airliner, it’s not a VIP jet that’s facing massive balloon costs. I can buy our parts from other airlines, can service them at airline MROs as opposed to purpose-built executive jets that have huge cost in parts and labour.
“Say for example we shifted from the Lineage to a Global 6000 or a Falcon 7X, trying to get type ratings or parts and/or a qualified 7X engineer on a Friday afternoon AOG is pretty tough, but the Lineage is really an Embraer 190, so you have got the airliner overheads, and extensive support coverage which is fantastic for us. I call the Lineage a rich man’s Global or a poor man’s BBJ.
“We are already enjoying many forward bookings for winter. We had nearly 70 per cent growth of EBITDA in 2019. After seven years, we have stopped growing for the sake of growth, now its growth with knowledge increase in terms of the industry and marketplace. We are aligned with the marketplace – we know how it’s moving, where it’s moving. We are carrying out business intelligence into market data giving us the ability to forecast.
“I’d like to see the two Lineages come online within the next couple of months, I’d like to see the second A340 arrive, and get ready for Q1 2020 for further VIP airliner aircraft arriving. As the industry gets worse I aim to take market share,” he concludes.
Orignally published from Business Air News