THE $1-MILLION office-cum-hangar of Royal Star Aviation Inc. (RSAI) at Manila’s Nichols Air Base is abuzz with activity. In one table, Capt. Manuel Rivero, RSAI chief pilot and general manager, and two Koreans are negotiating the price of chartering two helicopters for an advertisement the Koreans are shooting in the Philippines. In another table, a Caucasian-looking model is being made up, her hair still in curlers as she is given some instructions through an interpreter. Not far from her, standing in one corner, are more Korean nationals, preparing their cameras and other equipment for the advertising shoot. At the hangar, people are just as busy—pilots are exchanging notes, scheduling who is flying which aircraft next, while mechanics are busy tinkering with engines of the flying machines parked inside.

This is, actually, a normal day for RSAI, one of the biggest charter companies in the Philippines currently experiencing a business boom as more and more companies are starting to see the value of hiring private aircraft—helicopters and private jets—for various business purposes.

“Our biggest clients are mostly from foreign companies operating in the Philippines,” Rivero says. “The market for local consumers isn’t that big yet, so we’re currently dealing more with multinational corporations, which are well aware of the advantages of using a helicopter over than land transportation in going to their areas of operation.”

He says not only are helicopters “securer options,” the people using them are also able to “maximize their time.” Citing an example, he elaborates: “Imagine the time you’ll spend going to Mauban, Quezon (where RSAI has a mining company client). Practically two-thirds of the day would be consumed if you go by land transport, but if you use a helicopter, you’d be there in 30 minutes, (allowing you to) be very productive the whole day.”

Aside from transporting people, RSAI’s aircraft also ferry equipment. In fact, one key reason RSAI is doing so well is the fact that it is the only charter company in the Philippines today that offers “sling operations.” This is a service where equipment, construction materials and other bulk cargo, are attached by a sling to the belly of a helicopter for transport to distant—and usually difficult to reach—places. The aircraft charter company of the JAKA Group used to offer this service before it closed down.

“We have carried the (communication tower) antennas of Globe Telecoms, for example,” says Capt. Pablo Honrade, a senior RSAI pilot.

In addition to transporting people—specifically, in Honrade’s words, “VIPs or the power people”—and cargo, RSAI’s aircraft are also chartered for rescue missions, or for carrying patients from remote areas to hospitals with more modern facilities; for entertainment industry requirements, such as the Koreans’ advertisement shoot; for tourism purposes (the Department of Tourism has a promotional package for couples who want to get married while on the air—though the program has yet to take off); and for identifying potential mining sites.

It is with the last item that Rivero expects RSAI to “hit it big,” particularly with the entry of mining companies in the country to tap its rich mineral sources following the decision of the Supreme Court upholding the constitutionality of the Philippine Mining Act of 1995.

Simple Beginnings

“We’ve definitely come a long way since we started in 1995,” Rivero says of RSAI, which began as the aviation department of DM Consunji Inc. (DMCI), one of the biggest and oldest construction companies in the country. “Since we weren’t maximizing the use of the equipment that we had—and for which the company spent a lot to purchase—we started chartering out our aircraft. Eventually, the directors decided to spin us out as an independent company.”

DMCI, however, remains one of RSAI’s biggest clients today. “But whenever they need us, they have to hire our services,” Rivero says.

Starting with one helicopter, RSAI now has three (two Agusta 109s that can carry up to five passengers, and one AS350 for three passengers), plus a small plane (a Jetstream for 19 passengers).

“Our reached our peak early last year when we had five helicopters—three twin-engine and two single-engine helicopters,” Rivero says. “But as the year progressed, business turned a bit slow, so we had to downgrade and reduce the number of helicopters (by selling them).” The earnings from the sale enabled the company to buy the Jetstream. And with business picking up, RSAI is already looking at acquiring a nine-seater Jetstream by yearend.

“Our intention is to be No. 1 in the charter industry—without sacrificing safety,” Rivero says. “And we’re headed that way.”

The biggest problem for RSAI—and the whole charter industry for that matter—is the high cost of chartering. “We base our rates in US dollar, simply because most of our costs are in dollars,” Rivero explains. “Our spare parts, for example, are acquired abroad, and we pay (for them) in dollars. As for our fuel, the price is not only also based in dollars, it’s also constantly fluctuating. So what we did was peg our price in US dollar, although we accept payments in pesos—following the prevailing exchange rate—in order for us to cope with the fluctuating costs.”

The other major expense items for RSAI are the regular trainings for the pilots (annually) and mechanics (every two years), as well as the insurance coverage it gets every time one of its aircraft flies.

Chartering the Agusta 109 costs $1,000 per hour, the Agusta 350, $830, and the Jetstream, $1,400. The rates go higher for night flights, as well as when “other factors are instrumentated, like the weather condition,” Honrade says.

RSAI requires all the fees to be paid in advance. However, Rivero points out that “since our passengers are often VIPs, they deserve the best, and we offer that. Besides, even if you compare our prices with the rental rates for the same helicopter models in the US, we’re still about 50% lower because US firms pay their pilots more, so our rates are more affordable.”

RSAI also sells secondhand aircraft, with an Agusta helicopter costing from $850,000 upwards, and a Jetstream from $3.5 million and above. “We have a lot of buyers, usually from overseas,” Honrade notes. Locally, meanwhile, the company does steady business from “hangarage” where private helicopter owners use RSAI’s hangar as the “garage” for their aircraft for a fixed fee of P35,000 per month.

Safety First

The viability of the charter industry in the Philippines is growing, notes Rivero, who counts, among others, the Ayala Group of Companies and Subic Air among their major competitors. “But there are also some corporate owners who, once in a while, charter out their equipment for very low rates, if only to offset their costs, although this practice is not approved by the Air Transportation Office,” he says. “They actually manage to grab legitimate clients of ours.”

He adds: “These are the operators that normally can afford to bring down their rates because their licensing procedures aren’t the same as those of chartering operators, and their compliance with maintenance standards isn’t that strict.”

However, Rivero stresses that availing of these operators’ services may put the client company at great risk. “We’re warning our customers to be wary of some operators who are not licensed to charter, but advertise themselves for the service,” he says. “First of all, their insurance coverage is only for corporate usage, and not for revenue-generating flights, which means, in the event of an accident, the insurers may refuse to give them any coverage because they operated their helicopters beyond what is approved for them.”

It, therefore, makes “better business sense to avail of charter services where the insurance coverage is guaranteed,” Rivero notes.

In the case of RSAI, not everybody can board the company’s aircraft—including some customers who can pay in full in advance. “We also screen our prospective charters, we examine how legitimate they are because we are very strict on what we carry onboard, and for what purpose the flight will be,” Rivero says. “When in doubt, we don’t offer our services to them.”

Currently, RSAI’s priority is to buy newer equipment. “We are starting our re-tooling process, getting later models of helicopters and other aircraft,” Rivero says. “Fleets may be over 10 years old, but if you comply with all the maintenance, checks, and directives, there is no reason why the older models couldn’t be at par with newer models. But, of course, there is also that impact on end-users who, if they were to make a choice, would naturally opt to ride a 2006 model helicopter than, say, a 1995 model. So, we are working towards that re-fleeting.”

Back at the RSAI hangar, the Koreans start to load their filming equipment in an AS350 helicopter, as the model boards an Agusta 109. Before long, both helicopters are airborne, and the filming begins. But even before they are finished, Rivero already receives new bookings for the same aircraft. “Business,” he beams, “is picking up. And we hope it stays that way.”