You are on page 1of 5

Tal till Aviation Market

INLEDNING - Good afternoon Ladies and Gentlemen.


We are happy and honored to be here today, part of the Aviation Market Conference.
All of us have heard interesting speeches from some major, known players in our industry.
Now, Scandjet Aviation Group has not been invited here today as a major player in the industry. We
have been invited to represent a different; much smaller, very entrepreneurial company that also
represents a business that so far is pretty unique and new in Scandinavia – the business of Air
Consolidation and its benefits.
I’m Jelena Orheim Milisic, Business Coordinator at SAG, and this is my college Pavel Maksimoski,
Operational manager and we hope to answer the question that was posed to us - Can air
consolidation fill airplanes?

How it all started


I want to start off by telling you a bit of how Scandjet Aviation Group started. Why is this interesting
you may ask? Well because this is the same way most of the great American air consolidators started,
it explains the core of the air consolidation business. We will get to the big Americans later, but start
off with Air Consolidation from our perspective as the only air consolidator in Scandinavia and what
we know all of Europe.

✔ Unfortunately the founder and CEO Sasha Djakovic can’t be with us today to tell his story,
but I hope I can make him justice.
✔ With a background from former Yugoslavia, now living in Sweden and a profession as pilot,
Mr Djakovic decided in 2003 that he would start a small business, Scandjet, to help his
countrymen to get fair airfares to Visit their Friends and relatives “back home. This is actually
the way many air consolidators have started off.
✔ He chartered some planes and the business started, just wanting to keep it small.
✔ Pretty soon the company saw that the demand for these tickets to Croatia was much bigger
then they could have anticipated and could offer. And also… there where soon more Swedes
then VFR’s on the passangerlist.
✔ So, Sasha started asking small and medium sized tour operators “Why don’t you do the same
thing as us?” And he got the answer “ Of course we are interested but we are too small to
charter our own airplanes, we don’t have the know-how and it’s too big of a risk for us.
✔ Well, after some thinking, Sasha came back to these Tour Operators and asked “What if we,
Scandjet, charter these airplanes and you can buy allotments of seats for your need at a
prize/seat as if you almost had chartered the plane yourself?”
✔ I think you can pretty much understand the answer and in 2005 Scandjet Aviation Group was
formed. An Air Consolidator of the Leisure segment and VFR-traffic.

So how does air consolidation work and what do we think is needed to make it successful? My college
Pavel Maksimovski will tell you more about this.
INLEDNING: I would like to give you an insight in our operations and the way
we work as an air consolidator.

CAPACITY ON EXISTING ROUTES – What we basically do is that we evaluate


market demand for a certain destination. If this is the case, then we first see if
some airline operates on that route on the regular basis.

If there is, then we buy blocks of seat on those regular flights. But if demand is
larger than available capacity on those regular flights or if there are not any
airline flying on that destination then we charter a serial of flight to meet market
demand.

Often, like this year, we come to the conclusion that both options are necessary
to meet the market demand. Our goal is to use the available capacity on the
market and only charter is we have to. The goal is always to avoid over capacity.

SELLING THE CAPACITY – After we have secured our production we sell blocks
of seat to small and medium tour operators that make packages with those seats
and sell them to the end customers (travelers)

On the picture you can see that on the each self charted flights we sell
approximately 70% of the capacity and rest of the seats as sold to ethnic
travelers.

Since the beginning, the consolidation concept has helped us reach an average
cabin factor 90 %.

So this sounded pretty easy, didn’t it? Well why do not more companies do that?
What are the requirements for becoming a successful air consolidator?

REQUIREMENTS TO BECOME A SUCCESSFUL AIR


CONSOLIDATOR
LARGE NETWORK - To be successful consolidator is very important to have large
network of well established airlines and solid tour operators. If we go one step
further, our responsibility as a consolidator and charterer is to select right and
reliable partners for our operations.

MONOTORING ECONMIC AND MARKET DEVELOPMENT - Our operation is


built on firm guidelines, agreements and commitments. As a consolidator we
need to have knowledge and understanding for the aviation industry and rapid
changes in the market place. We need to constant monitor the economics and
market development.’

FLEXIBILITY AND QUICK DECISIONMAKING - Flexibility and quick-decision


making is a necessary requirement in order to help our partners to handle issues
that can arise. This can be an airline that has to cancel one or several flight or a
Tour Operator that doesn’t manage to sell their seats. In order to maintain
operations we have to make quick decisions and find alternative solutions. Either
if it’s finding a substitute for the canceled flight or help Tour Operator via our
large network to sell their seats.

These examples are big one. But the really challenging thing in our business is to
every day handle the hundreds of small details that arise. As an Air Consolidator
you have to love laying puzzles all day every day!

URN TRUST - What is important to underline here, is that it is important to earn


the trust of our partners. We do not only have to think about our own operations,
but we have to think about the success of the entire operation. We often have to
act as an adviser to Tour Operators. They rely on us to know about the market
situation and competition. We rather see that they buy fewer seats on the flight
then having problems with too many seats to sell. Buying the wrong amount of
seats can result in tough economic consequences.

The Air Consolidation business is built on trust and relationships. And being an
open, reliable partner has earned us the trust we need to succeed.

So , what are the benefits of the Air Consolidation Business? I leave this to Jelena
to continue with.

BENEFITS FOR TOUR OPERATORS

As an Air Consolidator we do firmly believe that there are many benefits with Air Consolidation and
that it can create win-win for all the partners involved.
Let’s look at the benefits for Small and Medium Sized Tour Operators.
Does anyone want to take a guess?
✔ Risk that suits their potential. We always have a discussion with the TO. We never push
them to take more then they want, instead we always advise them to be careful. And if they
sell everything we usually can help them with more tickets. If they do not sell all we can help
them with this also! We lay the puzzle, we want them to succeed and be our partner for the
years to come!

✔ When they buy allotments the ticket prize is the same regardless of date of departure. And of
course these flat rates make it easier for the Tour Operator to plan production and marketing
for the whole season. From us they get a net prize and can mark up them as they want.

✔ On their own the TOs are small, but together with an Air Consolidator they can get airfares
that are close to the same as the major Tour Operators gets. And what small TO will say
no to this?

✔ The knowledge of the Aviation Business and the flight destination differs greatly between
the TOs. An Air Consolidator can therefore be a very valuable partner as we ourselves have
experienced many times. It can be everything from small questions to bigger problems.

BENEFITS FOR AIRLINES


Does anyone take a guess?
✔ Cost-effective sales outlets – Instead of having to deal with many small Tour Operators or
individual customers they get one solid bigger partner. This may many times be the cheapest
way of distribution.

✔ Reducing overcapacity on existing routes. In the Air Consolidation business we sometimes


joke that the airlines love us in low season and hate us in high season. However you put it,
when an Air Consolidator buy blocks of seats on existing routs we help the airlines fill up
their capacity.

✔ Solid partners when establishing a new flight route. Starting up a new flight route is always
a risky business for an airline. With an air consolidator as a partner the risk can be divided
between more than one company. The latest example for us is that Croatia Airlines has
established a route between Gothenburg and Zagreb from the 12th of June this year. Here
Scandjet Aviation Group has played a big part as an Air Consolidator of making this possible.
Most importantly

Through bringing partners together and striving for cooperation...

…Air Consolidators can help maximise the utilization rate of existing air capacity...

…minimize flights with overcapacity which leads to...

... Lessening the impact on the environment

THE FUTURE
Ok, we hope to have given you a picture of how we at Scandjet Aviation Group work with air
consolidation today and also that we are the only ones to our knowledge that work this way in
Northern Europe and possibly all of Europe.
So the future for us and the business is pretty clear! More air consolidation on regular flights in
Europe!

✔ First of all we greatly welcome more colleges in the air consolidation business. With more air
consolidators the benefits we have talked about can get even greater and for us as a company
we absolutely welcome healthy competition!
✔ C

✔ But let us go one step further. In the beginning I said that there are great American Air
Consolidators and that they play a very important part of the aviation business in The US.

So why is this? In the US the airlines have fully understood the benefits of Air Consolidators
as an addition to their own sales channels. The consolidator is the partner that brings all the
small- and medium sized Tour Operators together and deals with all the small details that the
airline does not want to deal with/or has time to deal with. They view them as strong means to
filling their airplanes, instead of competition.

This close relationship is only possible if the airlines fully understand the benefits of air
consolidation and commits to the partnership. They see that by selling excess capacity at very
reduced prices to air consolidators, they can sell tickets that otherwise might not be sold.

So to answer the question that was asked from the start. Can air consolidation fill airplanes?
We answer – Yes we can!