Patrick Hansen has an unassuming explanation of how the company he founded just 10 years ago, Luxaviation, has become one of the most powerful players in business aviation, and driven consolidation in a highly fragmented sector. “We had good capital and good people, and a certain amount of luck,” he says. “In a lot of instances, the timing was right.”
After launching operations with a single Cessna Citation XLS under its own air operator’s certificate in 2009, Hansen’s Luxembourg-based firm – which is exhibiting at EBACE – embarked on a dizzying six-year series of takeovers. It added to its portfolio Belgium’s Abelag, Fairjets in Germany, Masterjet in Portugal, France’s Unijet, London Executive Aviation (LEA), helicopter operator Starspeed, and, most notably, global, blue-chip business aviation brand ExecuJet.
The buying spree has left Luxaviation with a managed fleet of around 250 fixed-wing aircraft, 40 rotorcraft and some 25 fixed-base operations, generating a turnover of some €600 million ($712 million) – just over half of it from Europe. The recent addition of a San Marino air operator’s certificate means its customers have a choice of 15 countries in which to register their aircraft.
The company also last year sealed “strategic alliances” with Chinese business aviation operator BAA – owned by Minsheng Investment, a 33% shareholder in Luxaviation since 2015 – and US FBO operator Paragon Aviation. The companies promote each other’s services to customers, and collaborate in areas such as procurement and staff exchange programmes.
Hansen is an engineer by education with a distinguished record in banking and finance, establishing and selling a number of start-ups before founding Luxaviation in 2008. He admits that when he began he knew little about private aviation but sensed an industry in need of rationalisation that could benefit from some of the capital he and his colleagues were sitting on after exiting other ventures.
He says they identified successful enterprises throughout Europe with a strong brand but lacking sufficient scale to take them to the next level. In some instances, owners were keen to cash-in and retire or move on to other things. “We saw a sector in which there were a huge amount of players, but very few that were making large positive margins,” he says.
From the beginning, he and his colleagues concluded that the route to success was not to purchase aircraft, but to provide a global network of services to corporations and high net worth individuals, deploying other people’s equipment.
“Although we did buy our first aircraft, we decided that we did not want to own any assets, but rather to focus purely on aircraft management,” he says. “Our thought process was to add numbers of aircraft to our fleet and then start adding additional services such as FBOs and maintenance.”
The first major target, in 2011, was Padernborn-based Fairjets. This was followed two years later with the absorption of Abelag, the biggest business aviation company in Benelux with a 50-year heritage in the sector. The following year, the takeover of Unijet saw the Luxaviation fleet grow to almost 60 jets, making the company few had heard of three years earlier one of the largest management and charter specialists in Europe.
That same year, 2015, Luxaviation took a majority stake in LEA, one of the UK’s biggest providers of business jet charter, changing its trading name to Luxaviation UK. But ExecuJet, later than year, was the deal that vaulted the company into the industry big league. The purchase of the Zurich-headquartered group from South African entrepreneur Niall Olver took Luxaviation’s fleet from around 100 aircraft to more than 250 and gave it FBOs and a presence in regions such as South Africa, Latin America, Australia and the Gulf.
At the time, Olver, who had led ExecuJet since 1993, insisted Luxaviation had the opportunity to consolidate a highly fragmented European charter market, characterised by more than 1,000 operators, many with one-tail fleets. “It has the money, the vision and now the platform to really shake up this market place,” he said.
As with most of the other acquisitions, and in keeping with Hansen’s role as a financier rather than an industry “face”, ExecuJet has retained its brand, identity and most of its management team, while benefiting from group “synergies” in purchasing and administration, as well as a wider choice of aircraft available to charter brokers.
Luxaviation moved into the rotorcraft market early last year, setting up Luxaviation Helicopters. In September, it snapped up UK charter, management and training company Starspeed, which added more than 20 managed helicopters to the fleet, making Luxaviation the world’s largest VIP helicopter operator. Hansen describes helicopter charter as a “local business model” and a sector that is “even more fragmented” than fixed-wing, but it is a product he says fits well into the wider Luxaviation VIP offering.
The USA had been one of the biggest gaps in Luxaviation’s map and November’s “strategic collaboration” with Paragon helps address that. Although ExecuJet has 25 FBOs in Africa, Australasia and Southeast Asia, the Caribbean, Mexico and Europe, it has no presence in North America. Luxaviation will offer the services of Paragon’s 27 US FBOs to users of Luxaviation’s fleet, but more importantly for Hansen, it gives his company a foothold in the world’s biggest business aviation market.
“There is no mystery that I wanted to go in [to the US market], and this was a very nice way to do it,” he says. “The market is different to Europe and Asia so first of all we wanted to understand it and start building a team. It means we can truly operate as a network around the globe.”
It seems unlikely that Luxaviation’s appetite for acquisitions is sated, although Hansen admits that the company is now so large that adding small fleets “does not make much sense”. Instead, it may concentrate on expanding what he describes as “complementary services”. With a significant charter and aircraft management presence in most continents and an FBO network spanning most of the globe, additional muscle in MRO or even cabin completions might be a possibility. So too might be a fleet acquisition in North or Latin America.
For now, however, Hansen is leaving the industry guessing.
Source: Flight Daily News