Banking on recovery
Claudio Lasagni, CEO, Air Service Basel, on life after the pandemic
Q: How badly have you been affected by this latest wave of COVID lockdowns across Europe?
CL: It has been troublesome. We were worried, of course, about the prospects of Germany closing the borders for aircraft. If the airlines cannot fly then we cannot fly either. However, we have some reliable revenue streams that have continued, including from Camo and aircraft management.
Plus we have had a little ground handling activity from the limited amount of local traffic here in Switzerland. We still have some ambulance flights, and then there are some clients, like the big pharma companies that have permission to fly to their branches all around the world. Aside from all this, there hasn’t been much happening during the lockdown.
It has been particularly rough for the air taxi operations. And of course, once things get tough people start competing on price and you get the race to the bottom on pricing, which helps no one. Once you drop your price with a client you will never get it back up again, so that is not business that interests me. But it is what it is and you have to be prepared to refuse business when clients are trying to drive fees below what is reasonable.
Q: How optimistic are you that we will see a good bounce back once the vaccinations cause the number of new COVID cases to fall significantly?
CL: I am basically an optimist by nature, so I always look forward to better times. However, we are now well into the second year of the pandemic and it looks like it will be the Autumn, at the earliest, before we return to something like business as usual. We need to be able to vaccinate the vast majority of the population and until we get there, the whole travel industry is going to be adversely impacted.
Q: Do you expect any positive outcomes from the pandemic?
CL: Certainly. Everyone who can afford it will now want to travel by private jet to avoid crowded airports. However, the airlines are going to be fiercely competitive. We see that they are already dropping their first class pricing, trying to attract business passengers away from charter. They are really going to fight for those wealthy customers who can afford to charter.
Q: Do you expect to see a wave of company closures in business aviation as a result of the loss of business caused by the pandemic?
CL: In every business you need reserves that can get you through any rough patches. This is a very competitive industry and there are bound to be a number of companies that had very little by way of reserves before COVID hit. So yes, I expect to see both closures and consolidation across the industry. However, that in turn will make space for new players to enter.
In the late summer of 2020 we stopped our aircraft maintenance operation, and that turned out to be a very good move, despite the fact that we have had an MRO arm since 1967. It is a very investment heavy part of the operation and it is something that we can get via partnering arrangements with specialist MRO shops.
When we analysed our figures over the last two years it was clear that we were not making money on MRO, we were losing money. There is just too much competition these days from the likes of Poland and other Eastern European countries, with lower labour costs. There are also new MRO players in North Africa so a Western European-based MRO shop has no chance.
The earnings possibilities in maintenance are actually very limited. You need to constantly monitor your business and you have to be honest with yourself about what is profitable and what is not. We started aircraft management in 2016 and we have added clients all the time since them. We focus on providing an excellent service for a good price.
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