Talking business with East African aviation company boss
Yugoslavia-born pilot Zivota Boskovic started Boskovic Air Charters with a single Cessna 182. The Kenya-based air charter company has since expanded to a fleet of 16 aircraft.
Boskovic Air Charters is one of East Africa’s largest air taxi service providers. In 1963, Yugoslavia-born pilot Zivota Boskovic started the business with a single Cessna 182. The Kenya-based air charter company has since expanded to a fleet of 16 aircraft, three of which are based in South Sudan flying for an international medical NGO.
Boskovic Air specialises in air taxi services for tourists. The firm also handles freight, photographic flights, aerial surveys, and provide aid, emergency and relief flying services.
According to Boskovic Air managing director TAD Watts, the business has focused on a niche market as opposed to operating schedule services, for strategic reasons.
“The cost of acquiring and expanding an aircraft fleet are considerable and aviation is a marginal business. You can be very busy one day and then the next bookings go slow. It is one of those sensitive businesses.”
Boskovic Air’s most expensive aircraft, a Beechcraft King Air, cost US$6m.
Watts described the air charter business in East Africa as a “tight market”, citing increased competition. Other than tourists, air taxis in the region also target humanitarian agencies, business travellers and politicians, especially during election campaigns.
“There is an increasing amount of competition and we have to offer an increasingly higher level of service to convince people that we are the best,” he said. “We are the oldest company existing at [Nairobi's] Wilson Airport. Many companies have come and gone and been bought and sold. We have built a reputation with our client base. The reputation is obviously safety but it’s also reliability and better capacity.”
Watts joined the company in 1975 as a junior pilot and worked his way up to become managing director in 1980.
“I still fly. I still train other pilots and test flights. I am very actively involved in the company.”
He noted that while Boskovic Air has faced numerous challenges in the past five decades, giving up on the business has never been an option.
“We employ close to 70 people and it would be a great shame if we just gave up the challenge and went into an easier industry. Flying is in my blood and I am not ready to give it up,” said Watts. “It is a fun industry to be in. As a pilot you are flying to different places. It is exciting. It is challenging. It is interesting. The routine of [working for a large airline], living in a hotel half of your life, I think the novelty for me would wear off.”
Challenges to business
He cited the rising cost of fuel and increased taxation as some of the major challenges Boskovic Air has faced.
“In the late 70s there was a period when an aviation fuel factory caught fire. There was a shortage of Avgas for three months and that nearly grounded us,” said Watts. Incidents of insecurity, such as the 1997 Likoni clashes, the 2008 post election violence, kidnapping of tourists at the Kenyan coast and recent terrorist attacks have also affected the business.
“Our bookings took a serious downturn after the 1998 US Embassy bombing in Nairobi. Tourism did not stop but it took a nosedive,” he said. “Such incidents lead to nervousness and if a travel advisory goes out it has an impact on travel insurance: either costs become prohibitive to cover yourself or they won’t insure.”
He added that there is increasing competition from Tanzania which has made “great strides” in its tourism industry.
“They tend to take some of the tourism away from us, particularly if Kenya is perceived to have security concerns. It takes people a lot of convincing especially if they have got their family and they see these horrendous pictures on the news. Even if it is an isolated incident, the perception is always different.”
Aviation safety
While there have been several accidents involving light aircraft in Kenya in recent years, Watts downplayed its effect on business.
“I feel much safer in the air than on the roads,” he said. “Flying is definitely safer than our roads and matatus (public transport vehicles). Kenya generally has a good safety record but maybe there is possibly a few fringe operators and private pilots that aren’t very experienced and may have a problem from time to time.”
He noted that there are increased efforts to improve safety, maintenance and training in the aviation industry in Africa. However, West African countries still lag behind in good oversight, he said.
“People look at Africa almost as a country and that is not accurate. Regionally Africa has a bad reputation in terms of worldwide levels of safety, but if you put that into context, [the accidents] are still very few. Some of the poor countries or less developed regions, because of the competition, operate very cheap, old Russian or European aircraft,” he said. “Aircraft that perhaps wouldn’t still be flying in the West, are still flying in Africa.”
Good business sense
Watts advised businesspeople to look at investing in the aviation industry but “with caution” and a long-term approach.
“You should not do it on a shoestring; buy a cheap second hand aircraft that you can’t maintain properly,” said Watts. “Unfortunately, aviation has a kind of thing where if you have one plane people assume you must have a lot of money. You would probably make more money opening a shop or bar somewhere. It’s a long-term industry.
“You should be very conservative. Do not borrow too much money and ensure that everybody is properly trained. In aviation there are no shortcuts. You have to wait until a pilot is properly trained. Our lives are constantly focused on maintaining a level of safety and security.”
In recognition of the increasing demand for air charter services and the growth of the industry, Watts said Boskovic Air is gradually expanding its business and acquiring new aircraft.
He advised other business leaders and entrepreneurs to have a good understanding of their business, employ qualified people and have a long-term strategy.
“When starting a business, look at the long-term gains, not what you can make in one year. Reinvest any surplus you get and prepare for rainy days; they do come.”