Airline interview

Back to basics
After a tumultuous few years, Belgiums VLM is back to doing what it does best
serving a scheduled operation to Europes smaller airports. Martin Rivers reports
from Antwerp

rthur White knew he had his work cut out

in July 2012 when he became Managing
Director of VLM Airlines, the Antwerp-based
charter and ACMI (aircraft, crew, maintenance and
insurance) operator.
Parent company Air France had already subsumed the
VLM brand under CityJet, its exclusive ACMI customer,
and was supposedly pursuing a full merger. Yet the
flag-carriers new restructuring programme made
no mention of either subsidiary, and within weeks
of Whites appointment it was clear that a sell-off
was the only option being considered in Paris.
German turnaround specialist Intro Aviation would
soon emerge as a white knight for the sister carriers,
offering to buy them in December 2013. But it was
not long before VLM faced yet more headwinds. After
Intro announced a de-merger of the two companies,

32 / Low Cost & Regional Airline Business

it began devoting all its energies to restructuring CityJets

operation at London City Airport. VLM, which was by now
broadening its customer base as a semi-independent
airline, was beginning to look side-lined.
Then, in October 2014, barely two years after joining
the company as Managing Director, White spearheaded
a management buyout of VLM. Peter Oncken, Intros
boss, described it as an offer he simply could not refuse.
For White, who duly became Chief Executive and
majority shareholder of VLM, the buyout presents an
opportunity to return the 23-year-old airline to its
roots as a niche scheduled operator serving Europes
smaller airports a role that pre-dates its takeover by
Air France-KLM in 2007.
At the same time, however, the buyout necessitates
yet another round of upheaval after what has already
been a hectic few years for the airline and its staff.

Scheduled operations are a key

route development strategy
(all photos: VLM Airlines)

www.lowcostandregional.com / July 2015

Airline interview

One thing Im convinced of is that change can be

good as well as bad. What we have to do here is change
the organisation in a good way, the veteran airline boss
tells Low-Cost and Regional Airline Business. So far, its
been done with minimum trauma, and I would like to
keep it that way. But we do have to change the culture
and change the way we do business,
By far the most obvious change since the management
buyout has been VLMs concerted push back into
scheduled operations. The airline had long avoided
competing head-to-head with its main ACMI customer,
but with CityJet now tying up just two of its 12 Fokker
50s, there is plenty of spare capacity to deploy elsewhere.
Antwerp to Geneva became the first scheduled link,
launching as a double daily service in January 2015.
Since then, VLMs home base has become a sixthfreedom stopover for flights between Southampton
and Hamburg. Liege has also been joined up with
Avignon, Nice, Bologna and Venice, while Waterford has
gained links to London Luton and Birmingham. Finally,
Hamburg has been connected with Rotterdam.
When I bought the company we had two revenue
streams, White recalls. We had the ACMI, which was
predominantly dependent on work with CityJet
though over the last 18 months weve been reducing
that amount of work and we had our charter product.
So the choice that we faced was either to restructure
the company and bring it down to five or six aircraft,
or invest in the company and put it back into the
scheduled market.

July 2015 / www.lowcostandregional.com

Although the business plan envisages a slight

reduction of the Fokker 50 fleet down to 10 units, White
is determined to build on rather than scale back the
airlines unique offering in the 50-seat market. Its scheduled
routes were selected according to a clear set of criteria,
keeping competitive threats at bay while tapping into the
appeal of low-volume, point-to-point connectivity.

Arthur White: Change can be

good, as well as bad

Low Cost & Regional Airline Business / 33

Featureinterview
Airline
title here

The Fokker 50s will continue

in operation for at least
another five years

There are four things that Ive always had as a mantra:

dont compete with a flag-carrier; dont compete with a
low-cost carrier; dont compete with a high-speed train;
and dont compete with anywhere people can drive,
he explains. When a flag-carrier turns up on your route,
you have two choices: you can stay, slug it out with
them and go bust, or leave.
This unavoidable cost-per-seat handicap means that
VLM, like most regional airlines, aims to leverage its small
size as an advantage for the customer.
What we can offer is the most stress-free transit,
primarily by flying from regional airports, White says. The
car parking is outside the terminal, the transit through
check-in and security is very short, while the time at
the other end is as short as it possibly can be.
From this perspective, Antwerp is an ideal home base
because of its 1,500-metre runway too short for a
Boeing 737 or Airbus A319 and its proximity to the city
centre. But other airports with operational restrictions
are in plentiful supply.
Liege and Rotterdam were obvious candidates for
the scheduled network. Being just a short drive from
Antwerp, both cities can function as secondary bases
without incurring crew-positioning costs. That in turn
softens the blow of starting up new routes, which White
admits will likely push VLM into the red this year.
Two additional services Liege-Geneva and
Antwerp-Dublin are already under evaluation, with
seasonal reductions to the existing Liege and Waterford
routes expected to free up some capacity.
Asked whether certain destinations are off-limits due
to the ongoing partnership with CityJet, White chooses
his words carefully. The relationship between the two
carriers is arguably stronger than ever, he says, but make
no mistake, VLM is a fully independent entity that will
act in its best interests at all times.
Theyre a valued customer, and I hope that moving
forwards well continue to have an ACMI relationship
with them. We give them value for money, we know their
network, and they know us. Its a far better relationship as

34 / Low Cost & Regional Airline Business

a customer-supplier than it ever was as a group customer,

White insists. But we really have gone our own ways.
The field is open for us, and obviously there are
European laws against people having non-compete
agreements. If theres a suitable route whether ACMI
or scheduled then well take the opportunity.
On the scheduled front, he points to Rotterdam and
Waterford as clear evidence that VLM is not steering
clear of CityJets home patch. Although the two airlines
do not compete head-to-head at either airport, CityJet
serves both Rotterdam and Dublin (north of Waterford)
from its London City base. Indeed, White does not rule
out eventually operating scheduled flights to London
City itself, resurrecting the market that VLM debuted on
more than two decades ago.
Diversification of the ACMI business is also increasing
the scope for network overlaps with CityJet. VLM recently
completed an eight-month contract for Aurigny Air
Services, for example, operating from Guernsey to
London City. Other ACMI customers have included
Air Frances HOP! and Switzerlands Darwin Airlines.
VLM chief operating officer Steve Blair now has
day-to-day responsibility for dealing with the CityJet
contract. Having only joined the company last August,
Blair brings a fresh set of eyes to the commercial
relationship, ensuring that no legacy issues creep
into dealings between the one-time sister companies.
Alongside the re-launch of scheduled operations and
the expansion of ACMI work, the final piece of the puzzle
for VLM is charter flying. The airline presently commits
three aircraft to charters full-time, rising to five or six units
on weekends. Charter customers come in all shapes and
sizes, including tour operators, sports teams, musicians,
governments and NGOs.
VLMs reliable, simple and comfortable on-board
product lies at the heart of all three strands of the
business. Its somebody smiling at you, giving you
something to read, a drink, a snack, not trying to sell
you anything, White affirms. Its all based on that
less-stress experience.

www.lowcostandregional.com / July 2015

Airline interview

Looking to the future, the next big development for

the airline should be the introduction of the 100-seat
long-range Sukhoi Superjet.
However, after signing a letter of intent for two units
with Ilyushin Finance in October 2014 in the process
becoming European launch customer the status of
the agreement is now far from certain. VLMs deposit
was returned after EASA certification of the long-range
type slipped behind schedule. White is now keeping his
options open for expansion into the 100-seat category
and will not rule out scrapping the deal in favour of a
rival next-generation type.
The four contenders are the Mitsubishi [Regional
Jet], the Superjet, the [Embraer] E-Jet [E2] and the
[Bombardier] CSeries, he confirms. Well continuously
follow the development of the various 100-seat aircraft,
and well look at a re-evaluation certainly by the end of
the summer. With three of the four options not entering
service until at least next year VLMs Superjets are now
officially due to arrive in the third quarter of 2016 White
is in no rush to play his hand.
Dont forget where the money comes from though,
he stresses. The money comes from the Fokker 50s. Its
very easy to get enticed away by the shiny new jet, but
the focus must not be lost on the turboprop operation.
Although he insists the Superjet is a great aeroplane,
Sukhois recent difficulties are hard to ignore. As well
as ongoing EASA certification issues for the long-range
variant centring on modifications to its take-off and
landing flaps doubts persist about the scope of
SuperJet Internationals aftermarket support. Financial
difficulties and management upheaval at Sukhoi Civil
Aircraft Company have only added to the Russian
manufacturers woes.
VLMs rationale for selecting the long-range Superjet
had centred on its wide fuselage which opened the
door to a plush business class cabin and its ability to
reach destinations in the Middle East. Favourable pricing
is also believed to have been a factor in the deal, which
included two options and 10 purchase rights.
Whether or not those charms have since lost their
sparkle remains to be seen. Either way, White is keeping
an open mind about the advantages of the other
100-seat contenders.
He calls the CSeries the Bentley of the aviation
world, for example, and says its transatlantic
capabilities could open up exciting new options
for VLM. Are North American flights really on the
cards? I would be unashamedly opportunistic, he
smiles. The aircraft has to be available, the finance
has to be available, and either the ACMI partners or
the customers have to be available If you look at
some of the other things Ive done in my career, that
evolution into a new aircraft type and a different sort
of operation is not a daunting factor.

July 2015 / www.lowcostandregional.com

Indeed, Whites prior tenure at DHLs European Air

Transport (EAT), a cargo carrier, has prepared him for the
challenges at VLM in more ways than one.
In 2010, as managing director of EAT, White oversaw
the closure of the Brussels-based carrier and its evolution
into EAT Leipzig, a new airline. There were 850 people
that effectively didnt continue in the organisation, he
recalls. But they had to stay engaged to the very last
day. They had to transfer the knowledge and the aircraft,
and they had to assist in starting the new project. So Im
not daunted by big tasks. Ive got a history of being able
with a good team around me to perform. But all of the
building blocks have to be in place.
For the re-born VLM, those building blocks are indeed
falling into position. Immediate cost restructuring after the
buyout has now given way to long-term fleet planning. As
well as advancing the 100-seat project this summer, White
is considering his options for replacing the 50-seaters. He
likes the range and speed of the Q400, but stresses that the
Fokker 50 will stay in the fleet for at least five more years.
In the meantime, promoting VLMs fledgling scheduled
network is the top priority. You have to look at route
development over a six-month period, White emphasises.
You have to put the marketing in, you have to put the
public relations in, and you have to put the persistence
in then the most important thing is to see a steady
increase in the load factors and yields from the levels
you start with. Im really encouraged by what Ive seen
happening so far.

In early 2015, VLM began

linking London Luton with
Waterford in Ireland

Low Cost & Regional Airline Business / 35