At a quarter to noon on a slow Friday in November, Aslam Khan is in a hurry. As he leaves his third floor corner office, he punches buttons on his BlackBerry. “I’ll be there in a flash,” he says in a deep baritone voice that doesn’t appear to fit his body.
Khan is the chairman and co-founder of Aviation Leasing Services (ALS) Ltd, an aircraft rental company based in Nairobi. He knows that when it comes to flying, time is of the essence, and he runs downstairs to the hangar where Captain Nahashon Mutea is waiting for him in a chopper.
The journey to Kisumu, a city 500 kilometres west of Nairobi on the shores of Lake Victoria, lends a rare chance to interview the aviation entrepreneur where he makes his money—up in the air. Khan, a renowned rally driver, has a tough race the following day, but right now that is the least of his worries as the helicopter rattles through headwinds.
“Kenya is such a beautiful country,” he says, peering down at the green tea estates hemmed in by forests that dot the Great Rift Valley.
Flying a chopper on a hot and humid day is a study in the business of running an aviation company. Everywhere you look there are risks—turbulence, fog and the deadly possibility of mechanical failure. As co-founder of ALS Ltd 20 years ago, Khan, along with his late brother Ashraf, has piloted the company from a scrappy outfit, with a single Cessna 150 aircraft, to a thriving company with 25 planes and three subsidiaries.
“The aviation business is not for the faint-hearted,” says Khan, who turned 60 in December. “It’s a very sensitive business.”
It is so sensitive that the recent volatility in the Kenyan shilling forced the company to charge Kenyan clients in dollars to avoid exchange rate losses. Even a small rise in interest rates can ground business, he says, given that regular piles of cash are needed to finance operations.
ALS Ltd leases aircraft to humanitarian organizations like the Red Cross and World Food Program as well as oil companies; it also operates charter flights for businesses. The firm has shareholdings in local airlines Safarilink and Severin Air Safaris and runs Heliservices, a wholly owned helicopter division.
Khan is a former Kenya Airways (KQ) pilot with experience in the Kenyan Air Force. He joined the Air Force in 1970, where he completed his training as a pilot. Six years later, he joined East African Airways, which was later absorbed by Kenya Airways when it was carved from the regional carrier in 1977. He says that if it were not for the Air Force, he would probably be doing something different today as his father could not afford fees for a commercial flying school.
“When I was growing up, I always wanted to be a pilot,” he said back at his office at Wilson Airport, near Nairobi, “but I also dreamed of owning a professionally run business. I had achieved my pilot dream; now it was time to chase the business aspiration.”
While at Kenya Airways, Khan says he started saving up and together with his brother, Ashraf, they bought a small Cessna 150 aircraft worth $7,000 so Ashraf could learn to fly. That was a fortune in an era when flying, let alone owning a plane, was a luxury for government officials and rich businessmen.
“We leased the plane to a flying school and discovered that it was an interesting business,” says Khan.
The lease gave them the business name, Aviation Leasing Services, too. As ALS’s fleet of aircraft rose, so did Khan’s position; he became the Airbus captain for Kenya Airways in 1991.
At the time, Somalia was slipping into anarchy as President Siad Barre was overthrown. Sudan was at war. Humanitarian organizations started trooping into the countries to assist the innocent civilians caught in civil war. This presented an opportunity in the relief business which Khan and his brother seized. Most aircraft serving the countries were foreign, mainly from South Africa.
“We got into relief and grew the business over the years,” he says.
Expansion was a problem—in the 1990s, financing was hard to come by, especially for African-owned businesses.
“We had to depend on leasing aircraft from outside because there was some kind of stigma about Africans. We had to negotiate through leasing until we started owning our own airplanes.”
ALS outgrew the stigma and eventually won the confidence of banks to expand its fleet. Khan had to quit his captain’s job in 1992 to take charge of the business and in the same year, his brother and co-director died in a plane crash. Every opportunity in aviation came with competition and as he discovered to his chagrin, pilots were not only rare and sought after, they were also fickle and open to the highest bidder.
“We do a lot of pilot training, but many move on to other airlines. It’s a reality we have to live with. Retention of pilots is a major problem because people tend to move to better conditions and bigger airplanes. We try to have retention schemes and more opportunities for pilots to grow, but it’s hard to stop it.”
With ALS and three other aviation companies, Khan is still dreaming big. Last year, he relinquished the CEO post to Cornwell Muleya, a professional airlines manager from Zambia, partly as a succession plan and to bring in new ideas. Going forward, ALS plans to work with Kenya School of Flying, which is run by captain Martin Ririani, his former colleague at Kenya Airways, who quit to start training pilots.
“We want to set up an academy for flying,” says Khan. “Kenyans are hard-working and there’s huge potential for pilots, even in the region. The only way to overcome supply and demand is to have enough pilots. We’ve got infrastructure to train and the opportunities. Many people leave Kenya to go to South Africa and the US to train as pilots. Local facilities are inadequate, so we are in negotiation with schools in Europe and South Africa to see if we can partner and set up a high-standard flying academy.”
The larger plan is to make ALS a one-stop shop for aviation services and solutions—from leasing aircraft and training pilots to operating scheduled flights. This is a highly capital-intensive business and the founder is scouting for a management buyout to bring in investors.
The idea of a management buyout is more of a succession plan. The business is very much a family culture, he says, and he is looking to change that by turning it into a corporate business. “This is very important,” says Khan, who was voted the best rally driver for 2011 by the Kenya Motorsports Association.
“To achieve success companies have to be run professionally. Family can be involved in the business, but successful companies are the ones that follow corporate governance.”
He says family-owned companies lose out on the contribution given by professional managers, though they enjoy the virtue of trust—critical for business and hard work. But trust can be extended to employees if you find the right ones. Khan says that in a competitive market, even family members find it hard to resist the allure of better opportunities outside. “My niece started with us as a pilot; now she has joined Kenya Airways.”
Reputation is critical and so the company’s operations constantly undergo audits carried out by its customers and industry regulators. The company invested millions of dollars in meeting security and safety benchmarks, including IATA Operational Safety Audit (IOSA) certification for meeting international aviation safety standards in June 2011. It is the second after KQ in Kenya to get such a certification. In September of the same year, the firm was admitted to the International Air Transport Association (IATA), joining KQ and Precision Air in East Africa.
Khan says this has positioned ALS to partner with major airlines and global aviation firms to expand its market. It can now lease its aircraft to leading airlines and is in talks with national carrier Kenya Airways. It already leases to RwandAir, Southern Star Airlines in South Sudan and an airline in Sierra Leone.
To serve bigger carriers it needs medium-sized planes in the 70 passenger capacity. But that needs more cash, he says, with a single unit going for $10-25 million. “We are looking at Dash 8 models. But then this means we need cash to buy enough parts and staff like crew and engineers etc., and unless it is backed up with a contract, it’s difficult and risky to invest.”
ALS has found itself with idle planes like other airlines—unable to stay afloat due to cash flow problems which ground operations, such as the Southern Star of Juba and an airline based in Sierra Leone, which stopped operations last year.
Piloting and rallying experience has given Khan some of the most important management traits: focus and attention to detail. “Rallying has been very much in the family and when on the rough and at times muddy roads you must focus, just as with managing any business.”
Rallying is an expensive hobby and he has to invest both time and money into it. His best career moment, he says, was when he qualified as a pilot in the Air Force. So does that mean good pilots make good managers?
“Good pilots are not necessarily good managers and good managers are not necessarily good pilots. I’m lucky I got both,” he says philosophically.