Interview: VistaJet U.S. President Ron Silverman

Swiss private jet service supplier VistaJet this past fall opened its first office in the United States. To lead its U.S. team, VistaJet tapped Ron Silverman, a former executive with competitor NetJets and membership-based private aviation company Wheels Up, which had acted as VistaJet's sales partner in the United States prior to its own office opening. Silverman, who's been building VistaJet's U.S. sales and marketing team, spoke with BTN transportation editor Michael B. Baker about the company's growth strategy, deal structure and corporate aviation outlook. An edited transcript follows.

What drove the decision to enter the United States?

Having the worldwide presence that he does, [VistaJet owner Thomas Flohr] has a lot of clients and corporations in the United States that were flying worldwide, and they would fly VistaJet everywhere but the United States. Thomas always felt the market wasn't ready for VistaJet here. Reciprocally, he would have a lot of Europeans who fly VistaJet worldwide who would come to the United States and not understand why there wasn't the same level of service with any of the companies here. Why wouldn't Thomas take advantage of that? After taking a very long time and putting a lot of effort into the research and analysis of the United States market, he decided it was time.

Why had he felt the market wasn't ready?

The economy, number one. 2008 was bad for everybody, and it took a couple of years to recover. Corporate aviation has experienced an increase in the amount of business year over year since then. The reason Thomas got into the business was that he was a businessman in the corporate world, and he used to charter airplanes. When you charter an airplane, it's like going out on a blind date. You don't know what's going to show up until the airplane gets there, for the most part. Thomas got tired of that and wanted to set a standard. The ultra-high-net-worth individuals are used to that level of luxury, and there's not a lot out there. Thomas felt that the U.S. really was aching for this type and level of service. He felt the business is out there and there are enough people to sustain the business, so let's enter the business and grow the market.

What is your business model?

In corporate aviation these days, there's this aviation pyramid. … At the bottom, from an economic standpoint, is charter. Above that, you have the jet card world. Above that, you have the membership model, the Wheels Up type of company. Above that, you have fractional, and above that, you have whole aircraft ownership. VistaJet is none of those. What we offer is our flight solutions program. Our aircraft were delivered in 2014, so they're less than a year old, and worldwide, the average age of the VistaJet fleet is 18 months. Typically, we operate only Bombardier aircraft from the Challenger 350 up to the Global. We have new airplanes with the sophisticated, elegant interior and the modern technology of safety and everything else that goes into these airplanes. We offer the [Bombardier] Global 5000 here in the United States. Our airplanes are operated by Jet Aviation in the U.S., because a foreign company cannot commercially operate aircraft here.

What differentiates your model?

We're looking for commitment of 100 flight hours per year, and that's occupied hours. When you fly on a VistaJet airplane from Teterboro to San Francisco, you only pay for occupied hours. If the airplane then has to go to Los Angeles or ferry back to New York, there are no ferry charges as long as you're in the operating region of your flight solutions program, which is essentially worldwide, with the exception of South America right now. You're not paying for anything else the airplane has to do after it drops you off. There's also no comparable investment or asset purchase required. Unlike our friends in the fractional model, where you have to write a big check up front and you're buying a piece of the airplane, Thomas and VistaJet own the aircraft. The aircraft are kept typically for five years, and they're under warranty with Bombardier, which does all the major maintenance. All of our aircraft have identical exteriors. Also, our interiors on all the airplanes are the same, so it's like having your own airplane. All the entertainment systems are the same.

You mentioned South America as an exception. Is that a market you're looking to add?

We actually do go to South America and are entering that region. We just haven't been selling in that region. Because you're paying occupied hours only, we have an expectation if someone needs to fly from Teterboro to London because of the size of that business and the network of our clients [that] we'll pick up a trip for that same airplane flying out of Paris back to the United States. Right now, we don't have that kind of volume in South America. We will, but we don't yet.

How is pricing structured?

We don't charge a monthly management fee like some companies. It's all in a very simple hourly fee that encompasses just about every cost that you can think of. CFOs love us, because they know beforehand what the trip is going to cost. We guarantee you an aircraft with 24 hours notice, as long as you're in one of our operating regions. There are some exceptions to that because there are countries that require three to four days to acquire permits to operate, but we make you well aware of that. We try to make it as simple as possible. Our contract is three pages long instead of the typical 40- to 50-page contract. One of the things our agreement allows for: If you're not going to fly all your hours in year one, you can roll leftover hours in year two. If you have a busy first year and need to borrow hours from year two, we allow you to do that. We'll customize however we can to make it work.

In what segments are you seeing growing demand?

About a year ago, when the gas and oil exploration business was booming, that was a great prospecting area for us: the companies in Houston that were traveling over to Nigeria and the Middle East and needed that long-range airplane that we have. Now, the gas and oil exploration companies aren't doing as much travel, but the finance world is doing an inordinate amount of flying again. We're also targeting Fortune 500 corporations that may or may not have a flight department. The companies that do have a flight department may not have airplanes with an international range; we're a perfect solution to supplement what they already have. [For] companies that do have bigger airplanes, we're a great solution to back up their fleet. Airplanes typically require a few weeks of maintenance a year. Pilots go on vacation or to training. While companies try to coordinate everything so the airplane goes down and pilots are on vacation or training at the same time, there's still that gap of a few weeks without coverage. I'm talking to someone now who has a global airplane and whose airplane has to go down for 90 days, and for those 90 days, he wants a guaranteed lift, so he's talking to us. Even though we're looking for commitments of three years and 100 hours a year, this one wants 100 hours in three months, and that's a great solution for us. It goes outside the norm, but we want to customize as much as we can to meet the individual or client's needs.

With whom do you typically negotiate for service?

We deal with anyone from an executive assistant or a personal assistant all the way up to the CEOs themselves. We have some ultra-high-net-worth people we deal with directly. We have CFOs that we deal with. We have another company where we deal with the company's legal department or head counsel. It's across the board. I haven't come across any procurement departments. VistaJet is a luxury brand, so if you're in a procurement department looking to save the company money and want to go the least expensive route, that isn't us. I'd be delighted to speak to a procurement department and explain to them the advantages of being with VistaJet, but we don't see a lot of that.