Charles Alcock is managing editor of the AIN Media Group, having rejoined the company in 2019. He has been an aviation journalist since 1986, and previously worked for AIN from 1990 to 2017, most recently as editor-in-chief. His main focus is on covering new aviation technology and business models, as well as international news.
Having been raised in the London area, Alcock studied at the University of Manchester in the UK and earned an honors degree in Politics and Modern History. He speaks English and French, and some German.

Managing Editor

Charles Alcock

Club Airways, the members-only service offering business jet flights in Europe, has temporarily scaled back its operations as it scrambles to secure more financial backing. The Geneva-based company encountered a $1.4 million (€1.2 million) funding crisis in September when two of its four shareholders reneged on agreements to make additional investments. 
But according to chief executive Hans Schwab, two new investors have agreed to provide an additional $2.4 million (€2 million) in capital and a new board of directors was due to be in place before the end of last month. In the meantime, he has rebuffed what he described as a “hostile” takeover bid from operating partner Club328, the UK-based executive charter firm that flies many of Club Airways’ services.
Club Airways’ debts to suppliers total around $1.2 million (€1 million), but, according to Schwab, only about 60 percent of this is due immediately. As of October 14, many of the remaining invoices had yet to reach the 28-day payment deadline. 
The company has suspended services to Basel and Zurich, Switzerland; to Dusseldorf, Germany; and to Milan, Italy in an attempt to contain costs. Club Airways has continued to fly three round trips between Geneva and Paris and twice daily between Geneva and London. Schwab told AIN that the company will gradually reintroduce the other services, probably at a rate of around one every three months. 
Plans to expand the network to cities such as Moscow, Berlin, Munich, Rome, Barcelona, Madrid and Valencia are on hold. Club Airways had eventually hoped to increase the number of daily round-trips on its routes to six per city pair.
Through the end of last month, Club Airways continued to provide weekend flights to southern European resorts such as Nice and St. Tropez in France and Olbia in Italy. During the winter season (November to March), it also intends to fly from Geneva to a variety of leisure destinations such as Marrakesh in Morocco and St. Moritz in the Swiss Alps, as well as from London to the ski resort gateway of Sion.
According to Schwab, the support of Club Airways members in the wake of the cash crisis has been “extraordinary.” The company wrote to its 1,600 members (1,000 of them are individuals, and the remaining 600 are corporate members) to explain the suspension of services and so far has not had a single one leave the program, Schwab told AIN. 
“Yes, there has been disappointment,” he said, “but the members do seem to understand that the problem has been beyond our control. Several took the view that we have continued to provide flights even if only one of them was traveling and so they in turn will continue to support us. This is an addictive service, and the members know we have taken a risk to provide it for them. If we don’t survive they have to go back to Swiss or Air France.”
Club Airways began operations in February last year and since then, AIN was told, only about four members have not renewed their subscriptions (see box). “I had expected that the drop-out rate might have been about 5 percent (80 members) of the total and regard 10 percent (160 members) as the upper limit for what would be acceptable,” explained Schwab. Club Airways has been working toward the goal of having 3,000 members by the end of this year.
Financing Woes The problems began in September when two Club Airways shareholders, Jet Finance and Elbe Air, failed to make payments that, according to Schwab, they had promised in legally binding agreements. “We got slammed and our expansion plans were based on funds and resources that should have been available to us,” he explained. The Club Airways management has focused on creating a survival plan and it has decided to launch legal action against the defaulting shareholders.
On October 5, Southampton-based Club328 announced unilaterally that it had made an offer to take a controlling interest in Club Airways and that the board of the Swiss company had accepted the offer. Club Airways insisted that the board of directors had rejected the unsolicited bid, which Club328 had then formally withdrawn. Club Airways confirmed that Club328’s offer had been to assume responsibility for Club Airways’ debts in return for a 75-percent stake in the business–a bid that Schwab dismissed as “a lousy offer.” 
But Club328 has contested this version of events. A spokesman told AIN that the Club Airways board had initially accepted the plan, which was about to be put to shareholders for approval. The UK company says that it was Schwab and the rest of his management team who blocked the bid by assembling a new board of directors that rejected the offer, prompting Club328 CEO Warren Seymour to resign from the board over the issue. Club328 still owns a 4-percent stake in Club Airways and is one of the company’s main creditors.
According to Club328, it launched the bid only as a way of protecting creditors and the interests of shareholders and members. It had previously proposed a joint venture with Club Airways, through which Club328 would have spearheaded efforts to launch more routes from the UK market. “Had it [Club328] taken over the company [Club Airways] there would have been more cutbacks. In Club328’s opinion, Club Airways grew too fast,” said Club328 management in a statement.
Following Seymour’s clash with the Club Airways management, Club328 is continuing to operate the majority of flights for Club Airways using its Cessna Citation V and a British Aerospace Hawker 800. Club328 is in the process of replacing its fleet with eight new Avcraft Dornier 328 Envoy jets, and took delivery of the first of these in late September.
However, Schwab told AIN that he is now “reviewing options” as to whether to keep Club328 as an operating partner, adding that he is close to finalizing a new arrangement for flight provision with “one of the biggest charter operators.” Major charter firms TAG Aviation and PrivatAir both have their headquarters almost next door to Club Airways at Geneva International Airport.
Club Airways flights are also operated by Zurich-based Jet Aviation and by Berne-based Swiss Eagle–both of which provide various Citation types for the services. The program continues to depend on occasion on five or six other charter operators.
Service Expansion Schwab said that he would now like Club Airways operating partners to provide larger aircraft for its services. All new operators–including the one major supplier with which he is now holding talks–are required to be able to provide a 15-seat business aircraft within three months of starting flights. Schwab added that his preference is for Dornier 328s or Embraer 135s (but not the Legacy business jet version, which he maintained is too costly) configured for executive travel. Occupancy on Club Airways’ flights to Paris is currently averaging around five or six passengers, and Schwab argued that this service would comfortably achieve breakeven load factors with a 15-seat aircraft.
Meanwhile, Club328 is working to have its 328 Envoys approved for the 5.5-degree steep approach at London City Airport, which Club Airways is determined to use for its operations to the UK capital. It now says that this approval will be in place by next month, having had to delay plans to achieve this by September. The company has completed flight trials at Sion Airport in Switzerland, which has a similar steep approach.
In fact, Club Airways had always intended to standardize services, but Schwab said he found through market research that the service’s members did not particularly care about riding on different jet types. He added that they are generally more concerned about the credentials of the operators used, and several corporate members require Club Airways to provide them with full details of insurance, crew qualifications and so on.
This begs the question of whether at some point Club Airways might opt to own and operate its own aircraft, rather than rely on charter providers. Schwab conceded that the company will likely take this step. He predicted that within 24 to 30 months the company will probably either take over an operator to acquire its fleet and flight crew, or be absorbed by a larger operator. “Ultimately, this will be the only way to optimize the service,” he stated. At the European Business Aviation Convention &amp; Exhibition (EBACE) in Geneva in May, Schwab had spoken of a public share flotation for Club Airways next year, but it is now questionable whether this will happen.
Under current arrangements with its charter contractors, Club Airways reserves the right to cancel flights with 24 hours’ notice if there are no passenger bookings. Schwab claimed that operators accept this loss of revenue because overall they are still getting a lot of revenue flights out of the partnership. Although Club Airways cut back its flights during the July-August vacation season, the company hasn’t dropped any of the Geneva-Paris rotations for three or four weeks. Schwab said that over the course of a year, each of his operators’ aircraft is flying about 1,200 to 1,400 hours for Club Airways, which he estimated is about three times as much revenue flying as they would get in the ad hoc charter market.

<h2>Club328 Forms Its Own Club</h2>
UK-based executive charter firm Club328 has formed its own membership program called The Club. Each year members pay $394,000 (€328,000) into a Swiss bank account run by Schroders Private Fund. They can apply this money to the cost of private jet flights, as well as yacht charters and sports car rentals.
Each Euro in the account equates to a point and The Club offers services on the basis of a points tariff. For instance, an occupied flight hour in one of its Dornier 328 Envoys costs 6,840 points (which equals €6,840, or $8,200 at current exchange rates). An hour in a Hawker 800 costs 5,700 points and an hour in the Citation V costs 3,825 points. Members get five free 328 flight hours when they join The Club and five more each year.
The Club’s members can withdraw their money from the account at any time without penalty. The points never expire and can be carried forward from year to year. Similarly, members can add money to their accounts if they want to use more services.
Club328 gets the interest earned on the money in the Schroders account and uses it to develop the services it offers to The Club members. Funds are secured in the name of each individual fund holder, and Club328 can withdraw the money only when a service has been provided.
According to Club328, The Club complements Club Airways because it offers a more bespoke service for those customers who need to fly more regularly and with more flexibility. In fact, The Club is offering its members free membership in Club Airways, although Club Airways has insisted that this has not yet been agreed upon and that, in any case, The Club’s members would not be automatically accepted and would first have to pass its own vetting procedures.
Among the other member benefits promised by The Club are the following: American Express Centurion Service (the Black card); personal insurance with Berry, Birch &amp; Noble; exclusive offers through the Cartier boutique in Cannes, France; 24-hour concierge services from Couture; sports-car rentals from VIP Executive Cars; membership in the Executive Golf Club; helicopter transfers in the south of France; access to the Monaco Grand Prix auto race; discounts on Camper Nicholson yacht rentals; and use of an executive box at London’s new Wembley soccer stadium. However, although these benefits&nbsp; are featured in The Club’s marketing materials, as of late last month Club328 had yet to finalize the arrangements with several of the companies concerned.
When members use and pay for services, they earn Gold rebate points as additional credits to their account (at rates of 5 or 10 percent of the cost of the service). They are also given a free Blackberry PDA with free NetAway Internet connection to make it easier for them to book services.
Under The Club’s FlyFree program, members and their nominated guests can fly free of charge on any otherwise unoccupied positioning flights. They are notified about any such capacity via e-mail. 
Under the ShareFly program, members can anonymously display their flight plans and make spare seat capacity available to other members on these flights. Each member is billed for the requisite number of points on a pro-rated basis.
Meanwhile, Club328 is set to take delivery of the second of eight 328s that it has on order in the middle of this month. A third aircraft is expected to arrive by the end of next month, followed by four more next year and the final unit in 2006. It holds options for five more of the aircraft.
Club328 CEO Warren Seymour said that he has decided to build the company’s fleet around this type because the aircraft offers airliner-class economies and much more cabin space than most business jets in the European charter market. The company has dubbed the aircraft the SpaceJet. 
The first two 328s for Club328 are white tails Dornier originally built for airline customers. One is a 15-seater and the other has 32 seats. The new aircraft, which are due to start arriving next month, will feature telephones, television and the Airshow 4000 entertainment system, as well as a convertible bed. They will offer seating configurations for between 12 and 19 passengers, as well as a shuttle layout for up to 32 people.
The first four 328s are registered under an Austrian aircraft operators certificate (AOC) held by charter company Jet Alliance. This is due to delays in getting the aircraft onto the register of the UK, where there are no other existing operators of the type. Club328 intends eventually to complete the approval process with British authorities and transfer the aircraft to its own AOC.
According to Seymour, Club328’s ad hoc charter business has grown by around 70 percent this year. He said that the first 328 has been in constant demand since its arrival in September. The company intends to base some aircraft at locations where charter demand is especially strong, such as in the south of France.
In October, Club328’s maintenance subsidiary, Jet Engineering Technical Support, received its Part 145 approval from the European Aviation Safety Agency. The Southampton-based operation will largely specialize in Hawkers.
In September, Seymour and other UK-based investors acquired the EuroManx regional airline. The company provides scheduled services from the Isle of Man to Dublin, Glasgow, Liverpool and London.

<h2>How Does Club Airways Work?</h2>
Club Airways is a members-only operation–partly to ensure the security and discretion of its customers, but also to avoid the company’s having to be licensed as a public-transport operation with published fares and schedules.
Three classes of annual membership are available. Individuals pay $1,800 (€1,500), small companies pay up to $9,000 (€7,500) to enroll up to 10 people and larger companies pay $18,000 (€15,000) for an unlimited number of employees. In addition, members pay a fare for each flight. Fares are now averaging around 25 percent higher than business-class tickets for scheduled airline services on the same routes. The large company membership fee includes four annual round-trip flights.
Each member is subject to thorough security vetting. Details of flight schedules and the reservation process can be accessed only by using secure passwords.
All flights operate out of FBOs rather than the main airport terminal. At Geneva, Club Airways uses the PrivatPort FBO, at Paris Le Bourget the PrivatAir base and at London City Airport the London Jet Centre.
Passengers can check in up to 10 minutes before a scheduled departure. Reservations are fully flexible, but members will be billed for the flight in the event of a no-show without any prior notification. 
If a flight is full, Club Airways can add a second aircraft, subject to availability. In the event of an AOG, the company will book passengers on the best alternative scheduled airline flights at its expense, providing limousine connections to other airports when necessary.
Club Airways can also provide its members with a range of other services at special rates, such as ground transportation and luxury hotels.

Club Airways hits financial roadblock

Club Airways, the members-only service offering business jet flights in Europe, has temporarily scaled back its operations as it scrambles to secure more f

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