2nd Quarter 2007 Building a Better Mousetrap Best Practices for a Safer, More Profitable Business Aircraft Maintenance Technicians Demand High, Interest Low Also Inside PRESORT Standard U.S. Postage PAID • Generating New Revenue in Silver Spring, MD Permit No. 1400 a World of Shrinking Margins • In the Battle for Business, Fuel Price Isn’t Everything! • Life Cycles of an Aviation Service Business 23498_IAS_p3_avfuel.qxd:Layout 1 4/5/07 6:37 AM Page 1 Your business aviation solutions already in progress. Avfuel provides solutions for: FBO and Airports: Branding Programs, Refueling Equipment, Fuel Storage Systems and Marketing Support Fueling: Non-Scheduled Flights, Ad-hoc, Off-line Charter, Diversions, Sports and Passenger Charters, Freight and Cargo, Aircraft Ferrying Insurance: Comprehensive Programs for FBO’s, Corporate Flight Departments, Charter Operations, Maintenance Facilities & Avionics Shops ® 1.800.521.4106 • www.avfuel.com ExxonMobil Aviation’s #1 Business Objective: Helping You Meet Yours. At ExxonMobil Aviation, we offer line crew training, a credit card program, refueling trucks, quality products, and brand recognition. We’re proud of that. But in the aviation business, we know these are not so much luxuries as they are necessities nowadays. That’s why we go further to help partnered FBOs build their businesses. ExxonMobil Aviation FBOs enjoy: • Pilots+ Rewards, offering pilots and crew the chance to accumulate points to earn gift cards from Visa, Home Depot, Best Buy and others. • PremierCare training and certification that extends beyond the ramp all the way to the customer service desk. • PremierSpirit annual feedback, rewarding customers for indispensable FBO ratings across four categories. • Dealer Forum opportunities that maintain an open dialogue between FBOs and ExxonMobil Aviation. It’s these extras that help set ExxonMobil Aviation and their FBOs apart from the pack. Maybe that’s why ExxonMobil Aviation had the most award winning FBOs worldwide in the latest Professional Pilot PRASE Survey and has maintained the most FBOs in AIN’s Top 40, nine years running. If you're interested in joining the ExxonMobil Aviation family, we'd like to get together. Please contact Mark Dimitri at 703-846-4071 or [email protected] for more information. Esso-branded products available only outside the U.S. • CyanMagentaYellowBlack Aviation 2nd Quarter 2007 Business ISSUE 2 | VOLUME 5 Journal Official Publication of the National Air Transportation Association Chairman of the Board President Reed Pigman, Jr. James K. Coyne Best Practices for a Safer, More Profitable Business 17 Texas Jet, Inc. NATA By Dan Kidder Fort Worth, Texas Alexandria, Virginia Industry leaders at the NATA FBO Leadership Conference Vice Chairman Treasurer shared ideas, learned from one another, and heard experts Dennis Keith John Lotz in various fields discuss business policies that help ensure Jet Solutions LLC Monterey Bay Aviation better profitability and a safer workplace. Richardson, Texas Monterey, California Aircraft Maintenance Technicians: Demand High, Interest Low 23 Immediate Past Chairman Chairman Emeritus Bill Koch Greg Arnold By Paul Seidenman and David J. Spanovich SevenBar Enterprises TAC Air While there is a spirit of optimism in general aviation not Dallas, Texas Texarkana, Texas seen since before 9/11, many in the industry wonder if there will be skilled labor to repair and service the numbers of airplanes coming into the fleet. If the available statistics are Board of Directors any indication, the MRO industry faces a critical challenge. Bruce S. Van Allen Frank Millian Generating New Revenue in a World of Shrinking Margins 33 BBA Aviation Flight Support Jet Source, Inc. Orlando, Florida Carlsbad, California By Dan Kidder In a world of higher fuel prices, many FBOs are seeing Michael Grossmann Lanny Rider shrinking profit margins as they jockey to stay competitive. Castle Aviation Inc. Teterboro Airport For many of them, it is more important now than ever North Canton, Ohio Teterboro, New Jersey before to seek additional revenue streams to offset the losses Dick Holbert Kurt F. Sutterer they are feeling at the pump. Central Flying Service, Inc. Midcoast Aviation, Inc. Little Rock, Arkansas Cahokia, Illinois In the Battle for Business, Fuel Price Isn’t Everything! 39 By Dan Kidder Don’t you wish you could talk to owners and executives at the largest fractional and charter operations and figure out what they look for in choosing an FBO? Well Aviation Publisher Art Direction/Design Business Journal has done just that, and they told us that James K. Coyne Tim Wagner many of the things we think are important are little more than window dressing when it comes to selecting an FBO. Editor Advertising Manager David W. Almy Cheryl Stratos Life Cycles of an Aviation Service Business 42 Contributing Editors By Jeff A. Kohlman Michael Ancell FBOs are regularly challenged by a variety of issues in Linda Pylant today’s business operating climate. Many of these issues can be directly tied to various points upon different life cycles, including the business life cycle, political life cycle, and Advertising economic life cycle. For advertising information, call 703/212-4967 or e-mail [email protected]. 7 Produced by President’s Message | By James K. Coyne 11 103 Oronoco Street, Suite 200 • Alexandria, VA 22314 Inside Washington | By Eric R. Byer 703/212-4967 • www.ias-online.net 15 Safety Watch | By Russ Lawton 48 Safety News 51 New NATA Members 4226 King Street • Alexandria, VA 22302 800/808-6282 • Fax 703/845-8176 www.nata.aero 53 Advertiser Index Employee07.Aviation Business:Layout 1 3/15/07 4:14 PM Page 1 8.75" 8.5" 7.75" 3,500 PILOTS hawaycompany.NetJetsanddisaregisteredservicemark. 350 FLIGHT ATTENDANTS BerkshireHatMarquisJetCar 265 O70W0NMEARINSETREVNIACNESCEREPPRROEFSEESNSTIOATNIVAELSS d.NetJetsInc.isadtrademarks.The 70 SCHEDULERS ghtsreserveareregistere rint 8 METEOROLOGISTS Inc.Allnageme 120 AIRCRAFT DISPATCHERS 007NetJetsutiveJetMa ©2Exec 1,700 OTHER PROFESSIONALS ONLY NETJETS HAS OVER 5" 6,600 EXPERTS DEDICATED TO 10" 11" 11.2 YOUR SAFETY AND SERVICE. ONLY NETJETS: MOST EXPERIENCE | MARKET LEADER | WORLD’S LARGEST FLEET | MOST AIRCRAFT TYPES | HIGHEST SAFETY STANDARDS | SUPERIOR OWNERSHIP EXPERIENCE | GLOBAL OPERATIONS | A BERKSHIRE HATHAWAY COMPANY NETJETS FRACTIONAL JET OWNERSHIP PROGRAMS THE MARQUIS JET CARD EXECUTIVE JET MANAGEMENT NETJETS.COM 1.877.NETJETS PRESIDENT’S MESSAGE Charting Charter’s Course By James K. Coyne ATA has long been known as “the Voice Nof Aviation Business,” and usually that means we spend a lot of time promoting the interests of our members in Washing- ton—primarily to policy makers, regu- lators, and the press. But over the past year or so, I’ve been talking more and more with a different group of querulous aviation neophytes: those wizards on Wall Street who call themselves private aviation analysts; and the number-one thing on their mind is always the same: “Where’s private air charter headed?” It is no secret that Wall Street is placing a big bet enforcement is weak. They know that many people on private aviation, and why not? Profits across the who might want to charter don’t because of highly industry are at record levels, world-class products publicized charter accidents. They know that char- are coming out of aircraft factories, and economic ter prices, even with fuel surcharges, haven’t kept and demographic trends look very bullish. But in pace with inflation. addition to all these positive “fundamentals,” many They also know that the airlines have lowered new investors are convinced that demand for pri- their standards, especially in domestic first-class vate aviation is poised to explode, thanks to a new service. They know that airline security issues, de- era just around the corner with much greater public lays, and inconvenience have increased the appeal acceptance of and demand for private jet charter. of private charter. They know that some companies Niels Bohr famously remarked that “Prediction is have closed their flight departments and shifted to very difficult, especially if it’s about the future,” and charter because of Sarbanes-Oxley or other cor- even if it’s “just around the corner,” it can be rather porate governance concerns. They know that the tricky. Most of us, therefore, are pretty cautious fractional jet companies must charter thousands when we make forecasts and follow the example of flights to provide lift when their own planes are of our trusty local weatherman: we look for trends, overbooked. They know that start-up charter com- patterns, and actual conditions in the recent past or panies placed orders for whole fleets of VLJs. In nearby, make modest extrapolations, and then cal- short, all the experts know where charter is today— culate if sunny weather or storms are in the offing. but not where it’s going. But unless we have complete data and a view of the My crystal ball isn’t perfect, but isn’t it possible whole system, there’s always a chance that we’ll that many, if not most, of those current “charter re- miss the big one that’s on the way. alities” holding the industry back can change, even Private air charter has been around for decades, reverse course, in the years ahead? Why must the of course, and lots of folks just assume that they industry always be so fragmented, poorly marketed, know what it is and what it will always be. They undercapitalized, and financially fragile? Why must know that it’s a very fragmented industry. They “charter safety” be such a challenge? Why shouldn’t know that many charter operators depend on own- the public conclude that “charter” means “the saf- ers who need additional revenue to lower their cost est” and “the best?” of ownership. They know that most charter com- But some analysts keep coming back to the issue panies are small with limited marketing resources. of cost. “Charter is expensive,” they say, “and it will They know that most operators rely on, at most, a always have a very small market.” few dozen primary customers. They know that cus- Nonsense. Cost must be compared to two other tomers are price sensitive, and therefore margins variables: value and wealth. I submit that the cost/ are very thin. They know that federal regulations value relationship for charter has been steadily and dictate minimum standards, but they also know that Continued on page 8 Aviation Business Journal | 2nd Quarter 2007 7 President’s Message Continued from page 7 significantly improving over the past decade, and further improve- ment, due to new aircraft, better operational efficiencies, and en- hanced service is inevitable. Also, almost all economists agree that the expanding wealth around the world will dramatically increase the affordability of services and products like private jet charter. It may be expensive to some, but to many, the luxury of private char- ter is now almost a necessity. The saddest fact of all may be that right now we just don’t get good data from the government about the size and growth of pri- vate air charter. But that will soon change, thanks to a renewed com- mitment by NATA and Congress to develop accurate statistics on the charter fleet and its commercial operations. Thus, I’m hopeful that within a few years we’ll be able to track this industry’s growth on a month-by-month basis. One thing this information will show, I predict, is that charter is moving up and up, with an- nual growth rates of from 10 to 30 percent or more. The only big question is whether government and industry will work together to make this happen. With new headwinds from Washington and a risk of turbulence at the FAA, the forecast might not be as bright. Raise Your Voice, Get Involved As the Voice of Aviation Business, NATA’s focus is to protect the interests of aviation businesses through agressive and professional representa- tion. To get involved, call 800/808-6282 or visit www.nata.aero. 8 Aviation Business Journal | 2nd Quarter 2007 TM Pilots are exacting. Boy, that’s an understatement. They are driven to achieve perfection and they expect the same from everyone around them. But at least you always know exactly what they think.At Phillips 66® Aviation, we take great pride in working with our FBO’s to provide the best products and the best service for every pilot.Which just might explain why they’ve put their trust in us for nearly 80 years.And honestly, we can’t think of a better compliment. T H E M O S T T R U S T E D W I N G S I N A V I A T I O N. Phillips 66 and the Phillips 66 logo are trademarks of ConocoPhillips Company or one of its subsidiaries. ConocoPhillips 870-AV-M-TO2141 Ver. A Metal Phillips 66 Aviation Ad Page 4/C Bleed Bleed: 8-7/8" x 11-1/4" Trim: 8" x 10-3/4" Live: 7" x 10" Prepared by: Dailey & Associates INITIAL DATE INITIAL DATE INITIAL DATE COPYWRITER ASST. A.E. TRAFFIC ALG ART DIRECTOR A.E./A.S. CLIENT CREATIVE DIR. PRINTPROD. North Light Ltd. llf 1 34 Bases Airframe #1 Beechcraft dealer Customer / pilot amenities Engines Used aircraft sales Flight planning Avionics Aircraft management Line maintenance Interior / paint / refurb 31 aircraft for charter Airline services Mobile Service Teams Volume Charter Program FBO MRO AIRCRAFT SALES, CHARTER & MANAGEMENT One year. A lot of happy landings. Landmark Aviation combines the resources of Piedmont Hawthorne, Garrett Aviation and Associated Air Center. These three long-established companies have come together to offer business aviation services on a breadth and scale never known before. You can choose any number of options for meeting the needs of aircraft ownership. Landmark Aviation was created to give you the option of simply choosing one. Redefi ning business aviation services. www.landmarkaviation.com A12998_2a [ 101.4% of A12193_2b ] A12193x2B_300ucr.tif 300dpi Press PDFx1a la_pos_clr.eps 02.20.07 20:30 150 LS Ad# AVI6204A Bleed: 8.75” x 11.25” Murt FBO Ad “One year” Trim:8.5” x 11” Page 4/c bleed Safety: 7.125” x 10” PUB: Avaition Business Journal - April Issue Landmark Aviation Collaborate Communications