From Creamer Media in Johannesburg, this is the Real Economy Report.

Global business jet operator VistaJet regards Africa as one of the regions of the world in which there are great growth opportunities for its business. Keith Campbell reports.

Keith Campbell:
VistaJet describes itself as “the world’s luxury aviation company” and has three categories of customers – major corporations, governments and high net worth individuals. Company founder and chairperson Thomas Flohr explains his concept of the business.

VistaJet founder and chairperson Thomas Flohr:
VistaJet has 35 identical aircraft, identical to the aircraft that we are on here today; they are silver metallic with a red stripe and interior scheme. We have, for the first time, brought a business model to the business aviation market which allows people to just buy hours on an aircraft rather than buying the entire aircraft or having to buy fractions of an aircraft. Typically, the market is segmented into people who fly between zero and 50 hours per year – they will typically call a charter company for their local needs – or, if they fly more than 500 hours per year, they will probably buy their own aircraft. We’re addressing, at VistaJet, the market between 100 hours and 500 hours of needs of flying around the globe.

The aircraft we have are all long-range aircraft. We’re connecting people from point-to-point. Mostly from the more remotest places to either major hubs of from remote to remote. The world trade today – and South Africa is one of the countries where there’s a lot of mining industries, etc., etc., and Africa in general is a very resource rich continent, there is the need for flights into other remote locations. And it’s exactly what VistaJet is doing, day in, day out. In 2012 alone, we performed more than 10 000 single international flights, transporting 25 000 passengers.

About three years ago, one of our clients, London-based but Nigerian, he asked me and said, “Thomas, come down to Nigeria. You will see what potential there is for the quality of services you provide.” I went with him to Nigeria and I saw the opportunity and within the last three years, starting from zero, 2012 alone, we had more than 900 take-offs, per year, in that country. And that shows you the kind of potential we’re having in the different regions in Africa. Now that success on the west coast of Africa has made me to believe to study the rest of Africa. And what I saw is that, throughout the continent of Africa, we see a lot of old aircraft – 15, 20, 25, 30-year old aircraft. Very little transparency on maintenance track records and pilots and so on and so forth. What I decided at VistaJet  is that we are going to bring brand new aircraft to the African continent because we believe  that this represents of this [inaudible] one of the best opportunities on Earth. And it was really the leadership of the Nigerian operation and actually the Nigerian government, who welcomed us so much into the country and bringing brand new aircraft, which encouraged me to gorw and branch out into the other countries and that brings us today here, after Congo and Angola over the last two or three days, that brings us today to South Africa.

Shannon de Ryhove:
Other news making headlines this week: Nersa grants Eskom 8% yearly increases between 2013 and 2018; Afrox says it will enter into an arbitration process with Mittal; and Grindrod’s headline earnings were up 22% in 2012.

The National Energy Regulator of South Africa has announced that Eskom will be allowed to increase electricity tariffs at an average yearly rate of 8% between 2013 and 2018 – an increase that was half the 16% sought by the utility in its application for the third multiyear price determination period.

Nersa chairperson Cecilia Khuzwayo

Gas provider Afrox will enter into an arbitration process with steel producer ArcelorMittal South Africa over nonpayment of take-or-pay agreements for the provision of oxygen, nitrogen and argon by Afrox to the steel manufacturer.

Afrox financial director Nick Thompson

JSE-listed bulk handling and shipping group Grindrod boasted good growth in the majority of its business divisions for the year ended December 31, 2012, with attributable income up 61% to R853.3-million and headline earnings climbing 22%.

Grindrod CEO Alan Olivier

That’s Creamer Media’s Real Economy Report. Join us again next week for more news and insight into South Africa’s real economy.