Tulpar: high flight of big business
Four years ago the TAIF Group of Companies had an addition – aviation. The holding 'flapped its wings' in 2011 when it purchased a block of shares of Tulpar Air and Tulpar Technic from the Tulpar GC with total turnover about 1,5bn rubles per year. Today's issue of the TAIF-25 special project tells how to diversify a business correctly, calculate the economy of the enterprise wisely and create an aviation cluster.
The owner, the pilot and the flight assistant
It was the spring of 1993. A Yak-40 with some foreign participants of a petrol exhibition on board is approaching Kazan. Azat Khakim, the pilot, before going back to the wheel picks up dirty plates to the trolley. At the beginning, Tulpar, a private airline of Tatarstan, didn't have flight attendants, this is why a well-known today businessman had to undertake such functions.
Azat Khakim: 'Now I don't try to combine business with flights. I came to the conclusion that being a pilot allows me to be a middling entrepreneur only, not a good one'
In the early 90s test pilot Azat Khakim, offered Sokol, the main constructor A.S. Yakovlev Design Bureau JSC, to take on lease the Yak-40 in 'deluxe' version and become a carrier. During the Perestroika, small design bureaus had difficult times due to the cease of public finance. Consequently, there were no insuperable obstacles for the initiative. So the first in our region Business Aviation Company was created. 'We visited out potential clients and offered them our services. At that time, goods were delivered in cargo planes. I still remember how the first flight was performed from Kyzyl (a Russian city situated in the geographical centre of Asia), we brought mink pelts. It couldn't be even called business, just attempts to earn some money using the plane. When we just started, we had no money, no knowledge and no team. We had to master new professions,' Khakim remembers. The aviation enthusiasts worked in the nation economy, performing business and passenger carriers, repaired motors and designed interiors – everything related to the aviation. In the end, there was created a GC, each of them worked in the segment of business aviation.
During some period of time, Tulpar tried to combine passenger carriers and business aviation. The only thing is that passenger carriers need a large scale, and it's not serious to supply one region, and don't let others interfere. Business aviation is profitable because of no risks. The plane won't fly if a customer doesn't pay. Dealing with passenger carriers, it is difficult to predict the number of people who wish to fly. And taking into account the sizes of our country, there is no doubt of the perspectives of business aviation. The result of the right decision is that revenue of Tulpar Air increased several times due to the remission of passenger carriers. The total last year's turnover of Group was 1,5bn rubles, and Tulpar Air got 500m rubles.
Diversifying his business and working with new market sectors during 24 years, Azat Khakim doesn't deal with unprofitable activities. 'I never had access to the budget funds, I didn't try even to have them. I got used to earn myself. If I notice a business is getting unprofitable, I reorient or close it. All activities I deal with, perhaps, aren't high-yielding but efficient owing to cost reduction and workforce productivity. Nowadays every enterprise has its own balance and development programme. They are all on their own in substance: if it exists, it means that it succeeded. To day, only Tulpar-Aviaremont didn't survive. It existed during about 10 years dedicating to helicopter engine repair.'
To any part of the world
One of the most profitable businesses of the GC is Tulpar Interior Group that specializes in exclusive interior furnishing. Business-class cabins are created here. One cabin might cost from $200,000 to $3,5m depending on plane and customer's desire. Whatever can be placed in the cabin, even a shower. The company has many patented elaborations. At the same time the active VIP cabins are repaired in this place. Last year, for instance, the order volume amounted to 120m rubles.
Tulpar Technic, a modern enterprise of high technical culture certified according to the Russian and the European Aviation Regulations, executes technical maintenance of both Russian and foreign planes and helicopters. The operation of the special-purpose vehicles of the niche of Tulpar Service: self-propelled cranes, bulldozers, dumper trucks and tugs. The company provides on-demand construction and repair works that can be ordered by enterprises or natural persons. This company was created by a situation. In 2003, Kazan airport rose its prices for services of special-purpose vehicles for plane maintenance. So, the company built up its own fleet for the special-purpose vehicles. Tulpar Helicopters deals with helicopters operation and technical maintenance.
Tulpar Air was the first operator of such an ultra-modern aircraft in Russia as Challenger 300. The fleet of that company owns 6 planes. In general, the Group of Companies has at its disposal a considerable fleet for 20 aircraft: planes Yak-40 in 'deluxe' version, Yak-42 in different configurations, Cessna Citation JET 525, helicopters like Eurocopter EC135, Mi-8MTV, Mi-2, Mi-8T and AgustaWestland 139.
Heads of large companies have to buy aircraft in order to simply run their business. The order of a private plane in a tight schedule of business trips, meetings and negotiations is the only way to remain mobile and get rid of planning flights according to the timetable, waitings and transfers. Moreover, the business aviation has an impact on the image of a company. When a head of a company arrives for negotiations by plane, it unwillingly makes an impression.
The TAIF Group of Companies is a regular customer of Tulpar Air owing to the business specifics that stably generates demands on air carriage.
Point of contact
Four years ago, in April 2011, TAIF became a co-owner of Tulpar Air and bought a controlling stock of shares up equal to 51%. One month later the holding purchased 51% of the shares of Tulpar Technic, technical maintenance and repair centre. Nowadays the balance of the holding owns 27% of the shares of Tulpar Technic.
Generally speaking, we've been collaborating with TAIF since the end of the 90s. We started with ordinary charter flights first, later switched to contractual basis. Heads of TAIF always had the aviation in their plans, aviation development of Tatarstan, by and large. So Tatneftaero was created for a serious task – to develop passenger carriage from Kazan. The TAIF Group purchased two Tu-154 and Tu-134 for Tatneftaero to solve that problems. Together with Albert Shigbutdinov we studied the problems of joint efforts for development of passenger carriages from Kazan, but for different reasons our planes weren't fulfilled,' says Azat Khakim.
Azat Khakim: 'TAIF needed a hangar for aircraft storage. And we needed a modern construction to maintain vehicles'
Our interests on merger coincided in 2011. For a developing multisectoral holding, it became more efficient to participate in the aviation business. Firstly, for control and storage of expanding aircraft fleet, which is important for flight safety, secondly, for reduction of administrative expenses.
Azat Khakim continued his story saying that, 'TAIF needed a hangar for aircraft storage. And we needed a modern construction to maintain vehicles because all foreign planes must be maintained only in adapted indoor spaces, according to the regulations. But its construction was impossible for us. When TAIF decided to participate in this business, a new hangar with a capacity of 5,000 square metres equipped with all necessary details for technical maintenance was built. TAIF invested 250m rubles in the construction of one the most modern hangars of Russia. And now we are renting it.' What is more, the holding accounts for 75% of the total order volume. Efficiency is one the key principles of the economic strategy of the 'TAIF' Group. Today Tulpar Air and Tulpar Technic are one of the most profitable and stable enterprises in aviation complex of Tatarstan, which has a hard time.
Ready aviation cluster
The Group of Companies has approximately 500 workers altogether. Having predicted the situation of the deficit of engineers in the country, Azat Khakim started to collaborate with the Kazan Aviation Institute (KNRTU-KAI) 15 years ago. 'We took from 5 to 15 third-year students for the practical training every year. They worked here during 2 years, got salary and at the same time completed their studies. And then we let stay the students who had a good head on their shoulders. This is why our specialists' middle age is 25 years, while in Russia it is 50. This is a big difference. It's necessary to mention that 30% of the engineers speak English. It is a very serious indicator,' the businessman says not without pride.
The qualified staff of the Tulpar GC ensures the safety of flights, a fundamental principle in aviation. 'It's possible to invest millions in business continuously. And what if a catastrophe occurs? Who are you then?' asks Khakim, challengingly. 'You're unprofessional. All aircraft maintained in our company don't have any complaints; there are no prerequisites for aviation incidents. Just that very case explains the big result that we achieved, and we perform our work beautifully. We have a beautiful office, beautiful hangar, we design beautiful interiors and fly in a beautiful aircraft. It is such a romance!'
The company plans to build two hangars more, one of them will be designed for big planes. 'Kazan is a ready aviation cluster, just opportunities of the city aren't used correctly. Here we have everything. But the most important is the aviation institute and technical college, alma mater, helicopter and aviation factories and the active airport. Moreover, Kazan has a favourable geographical location: it's close to Moscow, it takes only one hour to get Kazan,' says Azat Khakim. He is sure that Kazan is able to create an enterprise with a world-class technical maintenance.
Photo: Roman Khasaev, russianhelicopters.aero