Making a Go of it

“We decided we weren’t going to buy another organisation. We were going to start afresh and that’s exactly what we did,” he explains.

While not revealing any names, he says the company has the backing of a syndicate of people within and outside the industry Most of the principals have had extensive business jet and other aviation experience both in Australia and overseas.

Mr Mulder has flown a variety of business jets and Boeing narrow-bodies over a 20-year career and previously was chief pilot of a regional airline.

Before receiving its AOC, the company took delivery of its first aircraft, a 2003, 37-seat Embraer ERJ-135LR, registered VH-JTG, which arrived at Brisbane in March. The aircraft is leased from Embraer’s ECC Leasing subsidiary and previously flew with US regional Chautauqua Airlines and Mexican carrier FlyMex.

With the choice of the ERJ-135, some industry observers have begun to notice some similarities to the now defunct SkyAirWorld — the Brisbane-based carrier began with a single E-170 and later added two ERJ-145s to start RPT services from Brisbane to Cloncurry. It collapsed in March 2009.

Mr Mulder says that in establishing JetGo he and his partners looked very carefully at the failures of SkyAirWorld and in particular its fleet decisions: “We were able to use the right machine at the right time at the right price, where the people before us, specifically SkyAirWorld, had the wrong aircraft at the wrong time.

“We looked at it from the ability to complete the job operationally then we looked at the financial viability of it — and that’s why we have wiped out half the other aircraft out there on the market.
“They didn’t look at it from an operational point of view, they looked at it from a money point of view.”

As one of the long-range variants, JGT has a range of 1750nm with a cruising speed of M0.78. It is powered by two Rolls-Royce AE3007A1/3 engines, which produce higher thrust than the engines used on the base model ERJ-135.

The aircraft also has an airstair integrated into the forward passenger door, making for easier access at remote airfields.

Since gaining its AOC, JetGo has been busy demonstrating the capabilities of its ERJ to potential customers, visiting a number of mine sites and towns across north Queensland, the Northern Territory and northern parts of Western Australia.

Another difference, Mr Mulder maintains, is that SkyAirWorld did not have any contracts in place whereas his company will soon begin operating its first contract charters for an undisclosed client. It’s also working to secure more, which will require it to potentially expand its fleet to four aircraft over the next 18 months.

“We have three outstanding contracts and when we are able to satisfy their requirements for having a backup aircraft, we will be commencing operations,” he says.

JetGo has its eye firmly on servicing the lucrative resource charter market, particularly in Queensland where a number of gas, coal and other mineral projects through the state are gathering momentum.

Mr Mulder believes this will present great opportunities for his company to enter the market and is likely to see it competing at some level against the likes of Alliance Airlines, Skytrans and QantasLink.

Nevertheless he believes that there will be room for all the current market players as well as JetGo: “The amount of work that is out there will sustain the existing players and provide room for specialised operators like ourselves who are bringing something new to market,” he says.

But rather than offer a wide variety of aircraft in the 100-seat and above market, already being contested by Alliance, Skywest and Network Aviation with Fokker 100s, JetGo will focus on the sub-50 seat market.

At 37 seats, the ERJ-135 matches the capacity of the turboprop Dash 8s and Saab 340s flown on many FIFO routes. But with the speed and range available from the aircraft, JetGo is targeting the longer routes flown by turboprops.
“For way too long Australian customers have been forced to endure 20-year-old turboprops on sectors they were never ever intended for,” says Mr Mulder.

Instead, the ERJ offers the ability to fly at jet speeds over a longer range. And he points out that despite the added cost of operating a jet over a turboprop, once other considerations were put in place the jets actually came out ahead on longer charter flights.

“When you’re not paying for it by the seat but by the aircraft, anything more than 400nm is fair game,” he observes.

A key to this is the additional speed, which for some mining companies could allow them to lower their labour costs and boost productivity.

“Quite a few of the mining companies pay a duty travel arrangement which is essentially calculated on a per hour basis,” he says. “So if you can wither reduce your travel time and you have 30-plus people at $50 an hour, you are knocking that off salary costs that you wouldn’t put down to the aircraft cost.”

With the labour market in the resources industry extremely tight, it’s possible some companies may look to the lure of flying in on a jet and having less travel time as a point of difference for prospective employees.

There are also opportunities growing in regional areas, with many resource companies adding new connections from regional towns and cities to their mine sites in recent years. For example, Rio Tinto now employs workers from towns in southwest WA including Albany, Busselton and Manjimup, who fly in and out of the Pilbara for work.

To service the distances required, most of those services are flown by Fokker 100 jets, often less than half-loaded. JetGo believes that in such circumstances that the ERJ could provide a more economical alternative.

“Instead of these companies flying around in half-empty Fokkers all around the place, we can provide a realistic difference,” Mr Mulder says.

Further out, opportunities may also grow for flights between north Queensland and mining and petroleum destinations in Papua New Guinea. Currently those services are mostly flown by Dash 8s and ATR 42s , and given the length of those routes, the ERJ could make an attractive alternative.

The ERJ is also expected to be popular on ad hoc charter services with JetGo already flooded with enquiries from prospective customers outside of the resources industry.

On the positive side, JetGo has an advantage in the high number of ERJs available to help it expand its fleet. Many US regional carriers have shed their smaller regional jets in favour of more economical 70-100 seaters, with many likely to be parted out in the next few years.

But Mr Mulder stresses that while there are a number of ERJs currently available, JetGo is very particular with the aircraft that it’s seeking: “There are lots of the MP or EP variants available but they’re no good to us, so we actually have to be pretty picky and choosy.

“The aircraft are out there, we just have to find the right ones that meet the needs of our customers.”

He says that while the airline is focusing on the smaller ERJ-135, JetGo easily could add the larger, 50 seat ERJ-145 in future. But this would mean having an extra flight attendant, adding to the operating cost. He adds: “We’ve got to work out what’s best for us, what the market will sustain and whether the cost of operating a higher capacity variant is there.”

With its focus firmly on charter and because of the tight market, JetGo is not looking to expand into RPT operations, even with the temptation to launch on low capacity, longer regional routes that may be suited to its operations.

Added to this, the company is still open to operating aircraft on RPT services under a wet-lease in the right circumstances.

Ultimately, JetGo believes its strategy of focusing on tightly targeted charter services for the resources industry will prove successful as it will be the only company to offer a 37-seat jet aircraft on the market.

And Mr Mulder predicts: “We see that there is an opportunity and we believe that we can fill that. There is no one else in the market.

“We have two years to prove that it works or we go the way of the dinosaur.”