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Q&A: At the leading edge

John Moore is Chief Operating Officer at Elix Aviation Capital. He joined Elix in late 2017 as Chief Commercial Officer and assumed the role of COO in 2018. His career spans thirty years in the regional aviation industry, notably with aircraft manufacturer ATR for nearly twenty years, and at British Aerospace prior to joining ATR. For the past 10 plus years, just prior to joining Elix, John was Head of Global Sales for ATR.
 

Tell us about your job function at Elix Aviation Capital?

 

As COO at Elix, I work with a team of skilled and experienced senior executives to manage the overall direction of the business and to ensure that we are maintaining a strong presence in the market to identify and develop opportunities for aircraft placement and investment, and to provide a high level of service to our customers. 

Elix has an efficient platform for managing all aspects of the business, from customer development, managing the portfolio and assets, financial structuring, risk assessment and management, and aircraft technical oversight, redeliveries and deliveries. 

We currently own or manage a portfolio of 73 aircraft with 20 customers and Elix is unique in that we are singularly focused on the regional turboprop market.

 

What’s the best and most challenging part of your job?

 

At Elix we take pride in being able to develop customised leasing solutions for a wide range of airlines’ requirements, for either new or previously operated aircraft. It is exciting and challenging to work in a competitive marketplace to craft the right business solutions and to convince our current and potential customers that Elix is the best partner to meet their long-term objectives.

The regional aviation sector is quite dynamic and challenging – every day is exciting with the challenge to ensure that Elix remains at the forefront of the regional turboprop leasing market.

 

How did the company come about?

 

A team of experienced airline professionals conceived and established Elix based upon the opportunity that there was a far lower percentage of regional aircraft (and especially turboprops) that were financed under operating leases when compared to the mainline sector.  The regional segment had fewer leasing solutions – there was one main lessor in the regional market servicing this demand. So, there was an opportunity for a new entrant to provide a bespoke, customer focussed, high quality service market offering to meet a developing market.

 

Why was turboprop leasing chosen as the business model?

 

The turboprop market is highly specialised and requires a different skillset for asset management as compared to the narrow and widebody sectors.  This provided an opportunity to develop a unique platform for the market. Furthermore, turboprops fill a niche in the market where they often provide short distance transport or essential services to remote or island communities where other forms of transportation are less developed or uneconomic.  These markets are thus less cyclical, with aircraft tending to be utilised over longer time periods making a strong but niche investment proposition. 

 

UK-based regional airlines have found it tough recently. What are your projections for this market?

 

We don’t profess to be experts on the UK market, but it’s evident that the Brexit referendum has resulted in a period of uncertainty in the business environment and this is also generating currency instability – for example, the devaluation of GBP against the USD.  This places an added strain as many of the airline’s costs are USD denominated. The market is in a period of transition and consolidation and, like all stakeholders in UK businesses, we continue to monitor developments closely and believe this also creates opportunities for our product. 

 

The business continues to expand in Africa, is this a significant growth market for leasing services?

 

Africa is a wide and varied continent with 54 different countries.  There are two key factors that are driving the market growth. First, as the economies of many African nations continue growing and infrastructure is being developed and expanded, there is a rapidly increasing need for better transportation, especially connecting smaller towns and communities.  Second, there is a gradual liberalisation towards more open skies between countries and regions in Africa.  Turboprops are the ideal platform to support that growth and develop cost effective regional connectivity.  Leasing is an ideal solution to provide the much-needed capital for airlines to develop their fleets. Elix is well equipped to provide solutions to African operators.  We are already quite present in the market, we have a diverse portfolio, and we are uniquely positioned to support both the regional scheduled markets as well as the more specialised charter missions in support of the various aid agencies and NGO operations.

 

Elix Aviation is the launch customer for ATR’s new STOL version. Where do you see the market penetration for this variant?

 

This new version of the ATR 42-600S offers capabilities to take-off from and land on runways as short as 800m.  There are communities in many regions of the world that will be able to benefit from the increased connectivity and capacity that this aircraft will supply.

Elix’s desire is to be the first lessor to offer slots on the new ATR 42-600s and is part of its strategy to strengthen its lead as the largest all-turboprop lessor, and to continue to focus on the performance-intensive segment of the turboprop market.

The wider market also includes replacement opportunities – there are 1,200 in-service turboprops of between 30 and 50 seats with potential requirement to be replaced in the coming years.

 

Bombardier has bowed out of the regional aircraft sector. Will this affect your support of those platforms?

 

Increasingly, Bombardier had focussed on the larger regional jet sector and had invested heavily in the C-Series with less focus on the Dash 8 programme.  Therefore, we see it as a positive development with De Havilland taking over the Q400 programme as well as being focussed on the support services for the DHC8-100/200/300 programmes.   From the perspectives of Elix as a lessor, and our customers as operators, this is encouraging both in terms of asset value retention and the continued economic operation of the aircraft for the long term.

 

What’s next in the pipeline at Elix Aviation Capital?

 

Elix will continue to look for strategic investment opportunities to grow the portfolio and to maximise the value of the portfolio through aircraft trading.  Underlying this will be a continued focus to develop and enhance our platform to provide the best level of risk management and customer services to our ever-growing family of operators.


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