Photography by Eryl Crump
Dutch wet-lease specialist Denim Air is not your typical carrier. It is one of only a few wet-lease carriers providing regional aircraft, a very small niche that is not exactly registering explosive growth. And Denim is not even your typical wet-lease carrier because it often provides additional services, such as ground handling, and operates in unusual environments such as Afghanistan where other carriers refuse to go.
Chief executive Matthijs Boertien does not foresee torrid growth for Denim’s unique niche but expects steady growth, especially as Denim expands its offering to include regional jets.
“In the regional airline business this niche is there because there are always capacity problems at airlines,” Boertien says. “If airlines grow or shrink we’ll continue to be in business. If things stay the same we’ll be out of business quickly.”
Denim now operates a fleet of 11 Bombardier Dash 8 Q300 and 10 Fokker 50 turboprops. Its Dash 8 operation, backed mainly by Iberia regional partner Air Nostrum, has been growing steadily since it was launched at the beginning of 2001. But Denim’s Fokker 50 operation, which has been its staple since the carrier was established in 1996, is shrinking as the aircraft decreases in popularity in Denim’s traditional market, northwest Europe. Denim now flies four Fokker 50s for sister carrier VLM Airlines and one in Norway. But the rest of its fleet is now based overseas.
“The Fokker 50 isn’t so hot any more with airlines in Northwest Europe,” Boertien says. “The number of operators has shrunk so our client base is shrinking.”
Denim has already reduced its Fokker 50 fleet over the last two years from 14 to 10 aircraft. A further reduction to nine aircraft is possible in 2007 but Boertien says there are also potential new opportunities outside Europe. Denim has two Fokker 50s currently operating in Africa, one with Gabon Air Services and one with the United Nations in the Central African Republic. Until earlier this year it was also flying a Fokker 50 for Air Senegal and for the World Food Programme in Congo.
In Asia, Denim is now flying a Fokker 50 in Afghanistan for the Norwegian army and has high hopes for securing new business elsewhere in Asia as well as in the Middle East.
Denim’s operations in Africa and Asia often include more than the four traditional components of a wet-lease contract - aircraft, crew, maintenance and insurance (ACMI). For example, in Congo and the Central African Republic Denim has been flying refugees from remote airstrips. Its flight attendants have received special training and a special inspection programme for propellers and tires has been implemented. In order to access unpaved airstrips, the aircraft also must receive a special coating of paint and a modification kit.
“It gets complicated. It’s a little more than just normal ACMI,” Boertien says. “It takes a lot of preparation to do these kinds of operations. It’s hard for someone else to just step in. Normal ACMI operators don’t work in this niche.”
In the Central African Republic, for example, Denim’s ground aircraft support group is working with Swiss logistics firm Kuehne and Nagel to truck in fuel, which must be sampled and tested before being uploaded to the aircraft. Denim is uniquely positioned to provide these types of highly specialised services in remote parts of the world because its managers and crews have experience operating throughout the world. Boertien himself is a former pilot and worked at Dutch cargo and charter carrier Martinair for 19 years, raising through the ranks to senior vice-president of flight operations, before joining Denim three years ago.
For Europe and other traditional airline markets, Boertien sees growth in its Dash 8 business and potential regional jet operation. Denim now operates eight Dash 8s for Air Nostrum as part of a flexible long-term arrangement between the two carriers which could decrease or increase over the remaining five years in their contract. Denim is now looking to find new homes for two Dash 8s which until recently were with Air Nostrum. Boertien says there is a lot of interest in Dash 8s from several potential new customers and he is close to completing a two-year deal with one.
Denim also operates one Dash 8 Q300 in Libya for Veba Oil and is talking to Bombardier about adding a larger Dash 8 Q400 in 2007. The Q400 would be used by VLM to test larger capacity aircraft on some of its London City routes and by a second undisclosed customer Denim is now working to secure.
Denim also plans to add Fokker 100s in early 2007 and Boertien is confident he will finalise a deal by the end of January with an undisclosed Fokker 100 launch customer for an undisclosed number of aircraft. Denim has long looked at adding jets and Boertien promises “a decision will be made soon”.
He says Denim is open to operating multiple types of regional jets, including the BAE Systems RJ100, but the key is always securing an initial customer or group of customers that are willing to commit long-term to multiple aircraft. “To set up a new type isn’t so complex for an ACMI operator,” he says. “We don’t have a preference for a type of airplane. We have a preference for clients. We fly for anyone who pays their bills on time.”
Denim also operated scheduled services within Europe until shortly after it was acquired by VLM parent Panta Holdings in 2005. VLM is now focusing on the scheduled side of the market and Denim on the wet-lease sector. The two plan to remain separate entities, with VLM staying in Antwerp and Denim moving early next year from Eindhoven to Amsterdam, where it will be more accessible to its overseas customers and able to more easily recruit qualified aviation industry personnel. Denim has 250 employees including 180 flight crew members, half of which are based in Amsterdam.
While remaining separate, Denim and VLM are trying to share resources where possible. Denim last year decided to close its line maintenance operation and transfer most of its 23 mechanics to a new joint maintenance business being set up in Antwerp by Denim and VLM. The new combined business will open in early 2007 under the name Panta Aircraft Maintenance. It will be responsible for line maintenance and A- and B-level airframe checks of all the Fokker 50s in the Europe-based Denim and VLM fleets. Panta Aircraft Maintenance will contract out C and D checks.
Denim plans to continue to use Air Nostrum and Maastricht-based SAMCO to provide Dash 8 maintenance. SAMCO will also continue to provide specialised Fokker 50 maintenance for Denim’s overseas operations.
Panta also owns an investment company, Mass Invest, which Denim intends to use when acquiring any new aircraft.
Regional carriers do not seem your typical wet-lease customer because they are essentially wet-lease providers themselves, operating aircraft on behalf of network carriers and not typically providing services such as sales and marketing. But Boertien sees a small but steadily growing niche for regional aircraft wet-lease specialists because most regional carriers are part of big organisations that are unable to make fleet decisions quickly. Some regional carriers such as Air Nostrum also like to pursue a mix of wet-leased and dry-leased aircraft in order to maintain flexibility, according to Boertien.
“It is a niche. If we tried to do it with 200 airplanes we’d have a problem,” he says, adding Denim expects to grow, in particular on the jet side, “but nothing big bang”.
Source: Airline Business
