In the past, executives would generally buy a small jet to start with and then move up the scale, learning as they went on. Today, high-net-worth people are typically ready to make a large investment straight away, starting from scratch, and what they need is the right information. This is what they get at The Jet Business, a totally immersive and interactive experience, with a giant TV screen on which a cabin can be shown full-size, and a life-size business jet cabin. The Jet Business also commissioned an iPad application that enables the comparison of business jets, their interiors and performance, with data on aircraft availability. We spoke to Steve Varsano about his new approach to the business.
"The fundamental idea behind this concept is to have more direct, face-to-face contact with the client base, and to be able to educate them on a much higher plane. It's not like a student-teacher relationship, it's more like Socrates-Plato, very high-level. That's the reason for the app, it's very easy to understand, presenting them with all the information that they need to know. I wanted to simplify the process. In the industry we think that we're losing ten to twenty percent of the potential clients, because they think that the process of buying a jet is long and complicated. My concept eliminates all this, and makes it possible to learn everything they need to know in an hour, instead of the two or three months it would take to go through all the manufacturers and brokers. At The Jet Business, in one hour they can get through the process, and then go back and think about it and move from there."
Interestingly, Varsano opened the showroom in London, and not in the USA where there are already about 11,000 business jets operating. London is an important aviation hub as well as a financial centre. Undoubtedly the showroom adds a personal touch to a high-tech business sector. It sounds like an act of courage to make this sort of move at a time dominated by talk of crisis. Even the luxury sector has suffered to a degree. However Steve Varsano has his own privileged outlook on the global financial situation. "I like to invest in my business, and I intend to be in my business for the rest of my life. I think that the best time to invest is when everyone else is not, because you get more opportunity to get better pricing and better people. My personal business couldn't be better at this time. Apart from the airplane market, I am confident that the economy will improve globally. The world economy is in better shape than you read about and watch on TV. I talk to the biggest entrepreneurs in the world, the ones who buy airplanes, and I talk to them about a lot of things apart from airplanes. I think that the general public is misled about the time that it will take the general economy to recover."
Asia is a focal point for future developments in executive jets. It is a market wide open for development, because in Asia today there are just under a thousand business jets, while in the USA there are eleven times as many. "That's right, in Asia there are one thousand jets, but China accounts for just 125! Consider that they have about a third of the world population, and you immediately understand the potential. There are approximately 4,000 people in China alone that have more than $150 million. Being a target market for long-range aircraft, there is an abundance of demand. There are two problems: seventy percent of the airspace in China is controlled by the military. It's very difficult and time-consuming to get permission for flights through the airspace. The second problem is that there are only 165 airports in the whole of China. China is about the same size as America, but America has about 5,000 airports over 5,000 feet long. Even so, in 2011, the large-cabin aircraft manufacturers saw between 30 and 40% of their orders coming from China.
"Then there is the tax problem, with the equivalent of VAT in China which is at 26%. They're trying to get it reduced to 6%. Some people are not registering in China, they're registering in Hong Kong, Singapore and in some other offshore locations. The problem is that if you're a Chinese operator and you're not Chinese-registered, the amount of money it costs to fly in and out of China or land in China is really high."
Steve's expansion plans therefore include China, as well as other capitals worldwide. "Now that I'm open in London and the model is complete, my plan is to open in a few different locations throughout the world. The technology has been perfected, the database is ready, and replicating my model is going to be much simpler. The next showroom could be in Shanghai, Beijing, Honk Kong, it may be a location in America, in the Middle East, Russia, Sao Paulo."
Steve Varsano knows that there will always be a demand for this sophisticated means of transport. "If someone is trying to run a multi-billion company with a million employees, you don't want them to be stuck in a passenger airport waiting for a plane to bring them to the next meeting. That type of entrepreneur has confidential meetings 24 hours a day, they need security, they need to visit five cities in one day." In other words, a business jet is not just a status symbol, but a tool used by people with jobs in which time is of the essence. That's why a few years ago, there were some rumours in the industry about the first supersonic business jets. "The Aerion came to the market five years ago with a lot of fanfare, it sounded like a very viable model. They're were having trouble in finding an OEM to partner with them, because that was right in the crisis period. There is talk of another company that's working on a supersonic jet, it's an area that might eventually come to fruition."
While the industry waits for this, Steve will be continuing to sell these high-tech vehicles. Though sometimes, the deciding factor is not entirely connected to the technology. "It's amazing to see someone spending $30-40 million, and making a choice based on the colour of the seats! Even if one model costs $2 million less than the other, they'll take the other if they like the colour. You're in the luxury business, you understand what I mean!"