This year has seen a major consolidation of European business jet operation and management companies, first with the merger of Gama/Hangar8 and then the acquisition this month of ExecuJet by Luxaviation to become the world’s second-largest business jet operator.

Luxaviation Group now operates a combined fleet of more than 250 business aircraft, with a goal of 500 by 2019, and Gama has 150 aircraft worldwide.

The reasons for the consolidation are many, depending upon who is talking, and it is difficult to get an unbiased view of the situation. But all agree that business jet operation and management is a fragmented market ripe for consolidation.

Richard Koe, managing director of WingX, an air data and business intelligence company, says, “Some consolidation would be helpful in Europe because a lot of the ills and inefficiencies of this industry reflect an almost hyper-fragmented supply side, with an average of one or two tails per operator.

“Business aviation is a hybrid business because there is a big difference between an aircraft management business which is really generating fees from the owner, and an air taxi company which owns or leases and fully controls its aircraft.

“The latter business model, which probably comprises only 15% of the market, is an obvious consolidation player because you need scale to make it work. And now it’s gradually happening, with the result that the European industry and particularly the charter industry will get healthier.”

Adam Twidell, founder and CEO of online business aviation booking company PrivateFly says, “Merger and acquisition activity in Europe will probably continue as it’s such a fragmented market. The cost of operating aircraft and cost of administration is increasing all the time. It’s just become harder for smaller players to be profitable.”

Some smaller operators must inevitably be finding it difficult to keep pace with the unending increased level of regulation and either have to work longer hours or hire extra support, all at extra cost which either has to be absorbed or passed onto clients.

Some are skeptical that these consolidated groupings can negotiate cheaper fuel, insurance, training/simulator time and handling fees, but Patrick Margetson-Rushmore, CEO of London Executive Aviation which has had Luxaviation as its majority shareholder for nearly a year, says, “We’re seeing substantial savings on fuel and also on our insurances, which have gone down by 15% for our aircraft owners. Similarly, on airport fees we’re saving maybe 4%-8%, not only for us but also for the owners.” He adds that a large group could better utilize its charter aircraft and call upon other operators within the group to fulfill a flight nearer the client.

Koe also makes the point that some aircraft owners like dealing with smaller companies that might manage four or five aircraft as they get a more personal service. It’s also noticeable that the big players with upwards of 70-80 managed aircraft in their worldwide fleets are very aware of this, and regularly say that their focus is on keeping that personal touch with owners.

On the other hand, many aircraft owners feel happier dealing with the one-stop-shop of a large organization. “They get the same service wherever they are, it’s reputable because it’s big and can’t fail, and also has very high standards,” says Koe.