INTERVIEW: Stormy weather for private jet carrier business

By bne IntelliNews February 5, 2009

Dominic Swire in Prague -

It's not every company that can boast an eclectic client list that includes the likes of Brad Pitt, Ozzy Osborne and his holiness the Dalai Lama. But these and the photo portraits of other world famous celebrities are the faces that beam down at you inside the headquarters of Prague-based private jet carrier Grossmann Jet Service.

The high profile passengers are in contrast to the rather modest offices situated in a quiet residential area close to Prague Airport. The company itself is small, too, owning just three planes and employing a staff of 25. But Austrian CEO Dagmar Grossmann is at pains to dispel the idea that this is in anyway a handicap.

"It's not about size. The important point in this business is that you are trusted and well known. I've been in this business for 25 years. During this time I gained lots of experience and connections. Now my clients ask for me and book me again because they know they can rely on this and on this and on this."

The major threat to the private jet carrier business today is from the financial crisis. As businesses pull their belts ever tighter to lower costs, companies operating in the luxury sector arguably have the most to fear. But while there may be storm clouds ahead, Grossmann still sees a silver lining. Firstly, she points out, there is no need to lay anyone off because they are already small. Secondly, pilots can now no longer demand such astronomical salaries as they could before the crisis. "At this time, pilots were shopping around like in a game of poker - you offered this amount and your competitor doubled it because they were desperate for an experienced pilot. Now the market's calmed down and people think twice before switching jobs."

For now Grossmann's plan is to sit tight and ride out the crisis. After this, expansion could be a possibility. Hungary, she says, is still not ready; Slovakia, possibly. But the market she is focusing on is Poland. "Poland is quite modern with tremendous economic potential. There's not much competition. I wonder why there are no companies like us. This could be our chance."

An arm and a leg

Grossman's experience in the airline industry began even before she had finished her studies, when she worked as flight attendant in the 1980s for Austrian Airlines. Shortly after this, she got married and set up the Vienna-based company Grossmann Air Services with her husband. The company grew fast into one of Europe's biggest private jet companies in the late 1990s, managing 15 aircraft. One of the reasons for the success was that the company was able to utilize their planes 24/7. In the daytime they would fly regular clients, then at night they shipped human transplant organs across the continent from hospital to hospital after winning a tender from the Austrian government.

"We always had flights, either to transport the team of doctors or the organs. Normally transplantations are only done at night or the weekends when day-to-day routine operations are not done. During weekdays, we made charter flights, so we were really busy 24 hours. It was very stressful, to be honest."

Shortly after this, however, a disagreement in how the company should develop led to the breakup of her marriage. Her husband wanted to branch out into larger planes and buy a 32-passenger Dornier 328 jet, but Grossmann viewed this move too risky. As it happens, she points out, this transpired to be the right decision, as shortly after the purchase the Dornier firm went bankrupt.

From this point, Grossman turned her focus towards consulting and it was during this period she started researching possibilities in the emerging markets of Central and Eastern Europe. "I was always thinking of which country to go. Of course, Hungary was close to me, being originally Viennese, but for me the Hungarian market was not ready. However, Prague at that time had a really booming future because everybody wanted to go there, so I focused on this market and saw there was potential and no competition."

Business plan in hand, Grossmann then knocked on the door of local oil tycoon Karel Komárek, who decided it was a good idea and now owns the business. The next hurdle was fighting against preconceptions of the country they were based. "It was a big disadvantage operating out of the Czech Republic. It had the stigma of a communist state: low standards, unreliable; and of course our competitors in London and Switzerland were happy to promote this image."

Nevertheless, the company rallied against this, knowing that the slightest mistake - even if it wasn't its fault - would reflect back on it because of where they were based. Grossmann recalls that for a while the firm was mainly booked as the "second choice" airline, but this quickly changed when clients saw that the quality was no different from their competitors. Now, when asked if the Czech Republic is pulling the business back, she responds emphatically: "not at all."

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INTERVIEW: Stormy weather for private jet carrier business

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