Friday, March 22, 2019

ICS, the dwarf become giant on the strategic airlift market

by Dominic Reed (writer), , April 06, 2018

Among the most highly competitive markets, comes that of strategic airlifts. Only a handful of possible contracts to be shared, with NATO and Russia both claiming the lion’s share.

But, in the middle, has appeared a new small but sturdy player, who keeps poking the big players in the eye: International Chartering Systems, also known as ICS. At the heart of the venture’s success: bold business moves, a network of key partners, and a new way of doing business.

The small brand with a big reach

Those who haven’t heard of ICS (1) shouldn’t blame themselves. The company has never boasted its results, advertised its existence, or aimed for fame. It was started in 1985 by French businessman Christian de Jonquières, as a solo enterprise. The French army turned to instantly, as it needed large transport capacities for it Rwandan operation (Operation Turquoise) a few years later (1). Christian de Jonquières hired his son in 1998, in preparation for his future retirement, which occurred in 2009. The company, after many ups and downs, entered a new phase of booming business by setting up a double-channel relationship with the military: SALIS contracts and another peer-to-peer contract with the army.

SALIS contract are NATO-negotiated transport packages, the members of which are entitled to pre-paid hours. Defense Specialist Jean-Dominique Merchet says (2) The Antonov AN 124-100s rented by the French Air Force, to compensate its strategic airlift capacity deficit, cost 30 million euros per year. Within the SALIS contract, France has a credit of 1195 flight hour.” Anything in excess of the prepaid hours quotas can be signed with whichever other transport company able to shoulder the tasks.

ICS started doing business with the French army through both channels. Both the Army and ICS got lucky by doubling their agreement capacity, because transport capacities were overstretched between 2012 and 2015, with the simultaneous withdrawal of Afghanistan and the deployment in Mali, and things had already been tight before. NPR journalist Eleanor Beardsley said (3) France has been engaged on numerous military fronts this year as the country's armed forces back up President Nicolas Sarkozy's active foreign policy. The French military's quick success in ousting Ivory Coast strongman Laurent Gbagbo was lauded, but other interventions — like the one in Libya — drag on, leaving many to wonder if public support and the country's budget will be able to keep pace”, a situation still relevant today.

Nowadays, business has dwindled down again (see below), but it isn’t the only rough patch ICS has ever been through - so it’s more than likely that the small French transporter will be heard of again, especially since it is running for the renewal of its partnership with the French Army, whose logistics needs are nowhere near waning.

Bold business moves, low running costs and increased independence

His family having had ancient connections with prestigious members of Russian society a century prior, Christian de Jonquières was able to open doors in the Eastern European business world, and start close and valuable cooperation with Antonov, the producer of the world’s largest transport aircraft. Through these business ties, he was able to have access to the fleet at rock bottom prices, with good guarantees. Quickly, he turned the business advantage into a service, which came in perfectly for the needs of the French army, which was overstretching its NATO strategic airlift credits.

This demanded two things: boldly travelling East, to go knock on Russian and Ukrainian doors, and acting upon NATO’s notoriously rigid strategic airlift operations frame. French defense specialist Thomas Bartoulot says (4): “Air transport is done using a heterogeneous fleet, and transport may include rented aircraft such as large Antonov cargo transporters (in which case all rented aircraft are assumed to be in a given location, but one may use travel time to the demanding air base to differentiate them)”. As a result, France was able to achieve a level of independence uncommon within NATO, even when its operational force was stretched thin, or when diplomatic alliances went awry. Most western countries, for instance, have seen Antonov cargo planes become unavailable, since the Russian crisis (5). France has not undergone the same shortage, due to ICS’s partnership with the Ukrainians.

Doing too well

However, ICS is facing a new challenge. Accustomed to the ebb and flow of business, ICS was recently placed under investigation by French Parliament, which requested that the contract linking it to the armies be suspended for re-examination (6). The cause behind it may be one of two things: either competition has managed to steer public force against ICS - a method not uncommon between players of high-level public contracts - or ICS may have simply done too well.

In its attempt to provide quality and operable service, ICS, unlike most cargo transporters, applies a simple flat rate to its prices. A mile flown is a mile paid, and the rates includes everything (maintenance, pilot hours, empty leg (7), pre-positioning, etc.). As a result, competitors are able to publish prices per mile which seem much lower, before all other expenses are added. Due to its close partnership, ICS is overall able to offer under-market prices but may seem more expensive to the inexperienced eye. But Philippe De Jonquières will need to present his pricing system, presumably before a parliamentary commission, unless the investigation committee realizes its mistake beforehand. And, perhaps because it isn’t his first hiccup in business, he doesn’t seem to worry about it: he’s going to prepare his bid for next year’s strategic airlift contract with the French Army.

Economists call it the invisible hand of the market. Because two main sides share the market does not mean there is no space in the middle for a small challenger. ICS doesn’t have anywhere near the running costs of large airlift companies, and yet seems to get its clients’ job done systematically. And, in what is probably ICS’s most notable achievement, it gives his country a rather unique status: that of relative strategic independence from Russia and NATO. Through the private partnership (8), France can combine the security of NATO and the flexibility of an independent country - but may shoot itself in the foot, if the ongoing review isn’t thorough in its study and analysis of the contract.


About the Writer

Dominic Reed is a writer for BrooWaha. For more information, visit the writer's website.
Want to write articles too? Sign up & become a writer!

0 comments on ICS, the dwarf become giant on the strategic airlift market

Add A Comment!

Click here to signup or login.

Rate This Article

Your vote matters to us