Silverjet: Lawrence Hunt

Stationery cutbacks aside, however, the price that Hunt is offering is still outrageously competitive considering the number of extras he has thrown in. Fuelled by dissatisfaction with existing business class standards, which he felt weren’t offering value for money, he talked to customers at airports during the planning stages. “We didn’t say, ‘were you: highly satisfied, satisfied, quite satisfied or dissatisfied’. We just said, ‘tell us about your perfect airline experience’.”

Using this market research, he and his management team were able to come up with a list of 20 key differentiators to work on, which now feature as part of the Silverjet package. These include ladies-only toilets, no overhead lights waking people up on night flights and no food trolleys that bang into seats.

“We have much more freedom to make these changes because we don’t have unions strangling our business in the way that most other airlines do. This is why airlines like ours have a huge advantage.”

BEATING THE COMPETITION

Understandably then, his competitors, namely Maxjet and Eos, which also fly the London-New York route, have been getting twitchy. Around 4.2 million people make the Atlantic traverse each year, making it three times bigger than any other route in the world. However, although it appears the journey is crowded enough already, Hunt is certain there is room for another player. He also feels confident that most others will struggle to match him on price, since this route is such an important producer of profits for other airlines.

According to Hunt, one rival airline felt so threatened by the new boy’s potential to poach its customers that it petitioned to block Silverjet’s licence applications in the US three times. Needless to say, the attempt failed.

Not only were the airline’s licences approved, but the silver-tongued entrepreneur also managed to negotiate private facilities at both Newark and Luton, to achieve his target of a thirty-minute check-in. He pursued these airports because he was impressed with the efficiency at both. “There’s a reason why two thirds of private jet owners come to Luton. They tend to be quite discerning about where they fly to.”

Such primed negotiating skills have also landed him a contract with advertising giant M&C Saatchi, which launched its above-the-line campaign in January featuring a billboard on the M4 route to Heathrow, reading ‘You’re going to the wrong airport’.

“Now how can a small start-up like us afford a massive advertising agency like M&C Saatchi?” asks Hunt, pre-empting the question. The answer, he explains, is down to the approach. There is a knack to getting suppliers on board, he insists, and it involves investing the time in going to see them in person.

“We went to see M&C Saatchi and got them very excited about the proposition, and we ended up with a very attractive deal. They’re not charging us vast amounts of money during our start-up period, but if we’re successful they’ll do really well as well.”

LISTING ON AIM

It doesn’t come as a complete surprise that someone who can launch an airline so quickly is a deft negotiator. The company was set up when it fl oated on AIM on May 12 2006, and the first flight took off eight months later, on January 25 2007.

In 2005, Silverjet’s founder went into the City and set about rounding up investors, with “a very comprehensive business plan, a very strong management team and a number of deals on the table.”

However, Hunt concedes that convincing investors to stump up the cash was one of the most diffi cult aspects of the start-up process. “You don’t have to be a rocket-scientist to raise money, but you’ve got to have real persistence and really believe in your idea.”

Among the many lessons learned during the fundraising process was, “always raise twice as much as you think you need, because it’s never enough”.

He also maintains that it’s vital to strike while the iron’s hot when it comes to securing investment. Silverjet floated on the day the markets started going south last summer, according to Hunt. In fact, he reveals the IPO date was brought forward because the team was nervous about market turbulence.

“The markets can turn in a day. You can have a conversation with an investor on a Monday and he says yeah, tomorrow I’ll give you the money, but then he wakes up on Tuesday and all the screens are red and he says, no, actually, I’ve got cold feet now.”

He modestly insists that his management team was what sold the idea to investors, helping him to raise £26m in equity. The handpicked team, including former head of in-flight services for BA, Martin Bridger, has been involved with 18 start-up airlines.

However, Hunt’s long-standing career as a successful entrepreneur must also have been somewhat reassuring to investors. The serial entrepreneur has been involved in six start-ups, and his fi rst solo project, a technology firm called Rapid, developed the first internet booking engine for travel.

STRATEGIC ACQUISITIONS

With investment secured, Silverjet made three prompt acquisitions, of sister companies Flyjet, Skylease and Skypeople, costing between £4m and £5.5m, depending on how the business performs over three years.

The acquisition of Flyjet, a charter airline, gave Silverjet a full set of airline licences, which typically take between 18 months and two years to build from scratch, so this was vital for ensuring the quick launch. “Basically, Flyjet was an airline in a box.”

Skylease offered Silverjet its fi rst Boeing 767, at an attractive lease rate that will save the airline $12m over the life of the loan. Skypeople offered Hunt a talented set of people to help fly Silverjet.

Opportunities for expansion are almost endless, says Hunt, who is looking to offer routes to places like Dubai, India and South Africa. What he offers business travellers, he says, is value for money. “Most small businesses can’t afford £4,000 for a fl ight, but they also need a flat bed and fast check-in.”

The company is 250% ahead of forecasts for bookings, and expects to be profitable within 18 to 20 months of launch.

With two more planes being delivered in 2007, and a further two for a new route in March 2008, the future looks bright for Silverjet. Opportunities for expanding out of Luton are being explored, and 30 possible routes have been identified. “So, if you then think about the whole network around the world, excuse the pun but the sky’s the limit.”