Ventiga, the new backer of Airpas, said on Tuesday it had merged the company with FuelPlus Group, which offers software for airlines to administer jet fuel usage — the largest cost center for most carriers. The private equity firm plans to support additional acquisitions. Its goal is to build a travel tech group focused on airline cost management via cloud-based software.
Sabre, a travel technology company based in Southlake, Texas, had acquired Airpas Aviation in April 2016 for $9 million. It touted the subsidiary’s skill at helping airlines manage route profitability and manage costs through software. It has run the subsidiary under its airline solutions business segment.
Sabre hadn’t made a public statement about the sale, and it didn’t mention it during recent financial filings. But a spokesperson confirmed the company has divested Airpas Aviation without revealing transaction details.
The acquisition of Airpas Aviation happened under the watch of Sabre’s previous CEO Tom Klein. Since then, Sabre appointed Sean Menke CEO, and Menke has led a streamlining of the company’s portfolio.
“Both companies [Airpas Aviation and FuelPlus Group] are profitable,” said Michael Charalambous, vice president of commercial operations at FuelPlus Group. “They’ve had very strong results over the last 18 months, even during Covid, mainly because most airlines are looking to control costs. For instance, FuelPlus brought in Spirit, Royal Brunei, and Hong Kong Express as customers in the past 12 months.”
Airpas Aviation offers cost management for airport, ground handling, and airport navigation charges. It claimed to help airlines manage $76 billion of flight charges last year.
Ventiga, a UK-based private equity firm, recently acquired FuelPlus, which had been independently owned for six years after being spun out from Lufthansa Group.
FuelPlus Group serves around 21 airline groups as customers, including British Airways and Lufthansa Group. It claimed to manage 28 percent of jet fuel consumption by commercial passenger airlines worldwide. FuelPlus CEO Klaus-Peter Warnk will lead the merged group.
The combined entity has its headquarters in Brunswick (Braunschweig), Germany.
Airline Cost Management Tech Rollup
Ventiga has invested in travel tech before. In 2017, it acquired Infare Solutions, which is a Danish-based provider of airfare data and analysis software.
At first glance, Ventiga’s purchase of FuelPlus and Airpas Aviation isn’t an obvious move. What do jet fuel and airport flight charges have in common?
“The thesis behind the merger is that airlines need to rationalize and digitize their costs in a more sophisticated way,” Charalambous said. “It’s crazy that an airline will pay $100 million-plus for an aircraft but might still have manual paper-based systems to collect invoices to manage costs for it. It’s just outrageous.”
Even airlines with digital processes often run them in hosted systems or data centers. FuelPlus and Airpas can help airlines move their tools to the cloud, where it’s easier to get a faster and more complete picture of business intelligence, the companies said.
That said, the technology part doesn’t appear that groundbreaking. Many software vendors have developed similar tools across all types of businesses.
The more significant potential is sharing best practices in aviation on cost management when the aviation sector is struggling to recover from the pandemic.
Airlines Have a Cost Management Opportunity
No one airline does everything perfectly in managing all of its operational costs. Competencies differ across airlines — and across departments within airlines. The opportunity for aggregators like FuelPass Group and Airpas is to bring the best practices together. Many carriers appear to need help finetuning their capabilities to identify where their costs are leaking and how to address them.
Ventiga appeared likely to acquire other businesses to bolt on to its new acquisitions. The typical airline needs a full-spectrum view of its flight data and its commercial invoice data and verify the data across each other and inform decisions. But right now, airlines commonly use separate systems to do this.
In short, there’s an opportunity for a unified cost management system used by an airline’s fuel team, its user charges team, its operations analysts, its procurement teams, and its C-suite executives. For example, an airline chief experience officer or chief commercial officer could have one view of cost trends and even break it down by route or flight.
FuelPass and Airpas overlap on only two customers out of 103. So cross-selling is a short-term opportunity once they’ve built a unified system within a year or so. A growth area for the merged business will be helping airlines report and comply with global emissions reporting to various governmental authorities worldwide.
“Aviation companies are very margin sensitive,” Charalambous said. “But they’re strangely behind in adopting tech to protect those margins.”
“Today, it would be crazy for a corporation of any type and any size not to have one cloud-based platform or one place to manage all of its costs and customers. Yet many airlines are behind the ball in adopting what other sectors used to call ERP [enterprise resource planning] or CRM [customer relationship management] software. We expect a big airline push to catch up in the next five years.”
Photo Credit: A Lufthansa Airbus A330-300 being deiced on the apron of Frnakfurt Airport. Lufthansa is a customer of FuelPlus, which has essentially acquired Airpas Aviation from Sabre, the travel technology company, thanks to Ventiga, a private equity firm. Oliver Roesler / Lufthansa Group