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And for my Nexus trick...

Posted 3 December 2018 · Add Comment

If you can’t find a suitable partner to provide ground services for your executive jet offering, why not create your own? Continue by opening training academies, start organising airlines… and then set up one yourself. That, as Alan Dron reports, is the remarkable story of Saudi Arabia’s Nexus.

When Abdullah Al-Sayed was running the Middle East operations of the world’s largest executive jet company, he had a constant concern: What organisation could provide him with the type of ground-based services to match the quality that his aircraft were providing in the air?
“When I was CEO of NetJets Middle East, I was always asking my team: ‘Do we have a company to which we can sub-contract, so we can hand over all the flight operations to them?’ We couldn’t find such a company.”
Perhaps no surprise, then, that in 2010, when Al-Sayed left NetJets, he decided to set up Nexus, his own flight services company. “People said I was crazy,” he admitted. They doubted that any organisation would trust his new company with their flight operations services.
The breakthrough came with a major oil company, which was known to have high standards and against which Nexus benchmarked itself. “I said to them: ‘Just give us a try’ and they gave us the opportunity.” The relationship lasted for several years and has recently been renewed.
Jeddah-based Nexus does not own aircraft itself, but it manages them for others and handles every aspect of ground-based flight services, from flight-planning, dispatching and in-flight catering to obtaining visas, arranging ground transportation and maintenance.
It does this with a staff that has grown from seven to 700 in eight years and which now operates from 14 locations in 11 countries. Some are purely representative offices, but seven – Jeddah, Dammam, Mumbai, Kigali, Houston, Chengdu and Manila – provide the full range of services.
One region currently not covered by Nexus is Latin America, and that is something that Al-Sayed hopes to remedy shortly. “We are looking at it right now. We’ve gone to Mexico, Brazil and Colombia and are still evaluating those,” he said.
“The challenge is always finding the right local partner who can understand our business and be with us for the long term. All our partners outside the Middle East have been with us for a long time. This is especially important now, as we’ve built a brand and image, so you become more careful about selecting people and learning about their previous business relationships.”
Although the Middle East has an image of high-value individuals flying around in their luxurious privately owned business jets, Al-Sayed believes that this is going to change.
“I believe that the trend in private aviation is very strongly into fractional ownership and block charters, rather than individuals owning their aircraft,” he said. This follows the path that has been marked out by NetJets: “I believe that if companies like NetJets and VistaJet push more aggressively into the Middle East, the needs there are tremendous.”
Also, he feels that, whereas Arab executive aircraft owners previously looked for luxury, today there is a move towards the western pattern of using them as business tools, to allow senior personnel to conduct their business more efficiently by travelling faster than the service provided on commercial airlines.
Although Nexus is best known for the flight operations side of the business, it is increasingly focusing on training future aviation professionals at its academies in Saudi Arabia, Africa and China. The academies cover all aspects of the ground services for which Nexus is known, including safety training, crew resource management, maintenance and flight dispatcher and scheduling service.
Simulators for pilot training, meanwhile, are located at Kigali in Rwanda and Chengdu in China.
The academies have become “the bread and butter” of the group’s activities, said Al-Sayed. Not only are their overheads relatively low compared to the flight operations services side of the business, but “training and development are becoming priority number one for many regions, such as China and Africa”.
One of Nexus’ advantages over rivals in the field, he believes, is its flexibility in tailoring training courses to the needs of individual clients – commercial organisations, government ministries or air forces: “Other companies are too inflexible. They have one training model. If we ever get like that, it will be the beginning of the end.”
This flexibility extends to the aircraft under Nexus’ management. Some rivals have their logo
all over their clients’ aircraft, even down to the cutlery and the cabin crew’s uniforms. Passengers in aircraft managed by Al-Sayed’s company, however, will find it difficult to locate any trace of Nexus’ presence. “We even tailor the uniforms of staff to the colours of each aircraft – and sometimes to the taste of the owner’s wife. As one client said: ‘I have to feel that it’s my aircraft, my home.’”
Nexus is heavily involved in supporting the Saudi Arabian Government’s efforts to diversify its economy by training Saudi nationals in the skills necessary to run its flight operations.
“The government has many initiatives. They subsidise your training if you’re training Saudis. We request people who would be suitable for certain positions. The government send us CVs, we interview the applicants and choose the most suitable. All we then have to do is tell the government that these individuals are working for us and they will pay their salary for one year. After that year, we have the ability to keep them, or ask them to leave.
“It’s a very smart initiative; if the individual is good and we keep him, he already understands our system. It’s good for him and it’s good for us.”
One added incentive for Saudi nationals paying their own fees at Nexus, rather than having them paid by a company or the government, is that the three best-performing self-funded students are guaranteed jobs. This encourages them to really focus on their studies.
It is also one reason why Nexus exceeds the Saudi Government’s requirements for the percentage of Saudi nationals employed.
One of the biggest opportunities open to Nexus, believes Al-Sayed, will be the growth of religious tourism. Numbers of pilgrims coming to Saudi Arabia for the Haj and Umrah have been rising steadily in recent years and this growth is forecast to be maintained, or even accelerate, in coming years.
In 2017, more than 13 million pilgrims came to the kingdom and the Saudi authorities are targeting 30 million by 2030.
“This means you need a huge transport system and aircraft will become very important. I believe religious tourism will be one of the biggest contributors to our economy in Saudi Arabia,” said Al-Sayed.
Pilgrim traffic is “the only sustainable business you will never have to worry about or advertise. Dubai, Abu Dhabi, Bahrain – they all have to advertise to get you to fly there, but Haj and Umrah is one location where you don’t need to persuade anyone to come to.”
Nexus is working on its business plan to tap into this stream of traffic. It hopes to submit an application in 2019 to the Saudi aviation regulator, the General Authority for Civil Aviation (GACA), for a Part 121 licence for unscheduled air services to allow it to transport pilgrims.
Current plans call for the airline to start operations with four narrow-body jets, with Egypt, Iraq, Nigeria, India and Pakistan the new carrier’s initial destinations. All five countries are currently under-served by charter providers, said Al-Sayed.
The aircraft will be pre-owned, leased models to reduce operating costs. Nexus is weighing up the merits of Boeing and Airbus models, with financial calculations at present favouring the European manufacturer.
Nexus hopes to start pilgrim flights by late-2019; probably under a name other than that of the parent company.
Consultants who have been analysing Nexus’ business have said that it will be unusually quick to get into the air, as its existing flight service organisation is already fully staffed and in place. “They said: ‘You’re not going to have to spend money to hire staff, because they already exist.’”
Similarly, the company has prior experience of running an airline in the shape of RwandAir. Talking about commercial aviation in the region more generally, Al-Sayed said that, as with executive aviation, Saudi airline passengers were now adopting many of the same traits as their North American and European counterparts, with ticket prices and timetables becoming increasingly important factors.
That constant flow of business from pilgrims is also one of the factors that Nexus believes will help it launch its initial public offering (IPO) in the near future. Contracts with governments and oil companies can eventually expire, but not the demand for transport to Islam’s holiest shrines.
An IPO office has been established within Nexus, staffed by a senior member of one of the world’s leading banks, a human resources policies and procedures specialist, and, on the technical side, an aviation specialist.
 

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