Plane Conversations

Part 1

I read a lot and try to keep up with what is going on in our industry, trends, innovations, economic forecasts for aviation and the economy on a macro level, what and how the airlines are doing, and so forth.

However, my best perspective about Business and General Aviation still comes from where I sit working in the middle of a business that charters, manages, sells, maintains, fuels and stores aircraft. We also partner on two flight schools that do primary and advanced flight training. I am surrounded by and involved with just about every aspect of general aviation.

2010 was a year that started out with no clear understanding of whether it would be the year of recovery or a repeat of 2009.

The first 8 months of the year were up and down on monthly revenue in charter. Some months looked great and some looked like 2009. It is hard to run a business without predictability in revenue and activity. How do you staff for that and plan cash flow? We managed to hang on.

We have been very fortunate to have a maintenance division of the company that never slowed down during the recession due to the type of maintenance we specialize in. We perform work on and refurbish small regional airline aircraft and the demand for these aircraft worldwide didn’t change much during the recession. Small airlines around the world and the communities they serve need aircraft. Aviation in many countries is not so much a luxury but more of a necessity of travel with poor road infrastructure. The weakness in the small regional airline market seemed to be more the lack of financing than lack of demand.

Our FBO’s showed steady improvement this year over last year. Fuel sales volume was still not at 2007 levels but it got closer. I like upward trends more than downward trends.

The good news really happened in the last 4 months of this year. The phones started ringing more and our charter flights picked up tremendously. As I reviewed it yesterday, and compared to the last 4 months of 2009, I almost couldn’t believe the numbers. Our revenue in charter was up 65% over last year from September through December.

What happened to cause this increase?

A few things on our end helped, including an increase in the size of the charter fleet with 8 new aircraft additions over the past 12 months. Included in that mix was a 30-seat turboprop that met a void in the market. Without too much marketing effort this aircraft started flying immediately when it went into service at midyear.

Looking at the external factors, the airlines and the system they operate in continued to add frustration and inefficiency to air travel. More TSA hassles, more delays and cancellations added to the misery factor. Reduced seats and increased demand created profit for the airlines but caused trouble for the business traveler. Full flights don’t allow much flexibility when cancellations happen due to weather or maintenance. It is not so easy anymore to rebook on the flight leaving two hours later. Sometimes that turns into “we will get you there tomorrow”.

Demand for travel has come back but the friction in the system has gotten worse.

That is good for those of us who are in the business of offering alternatives to scheduled airline travel.

So my guess is that we also benefited from the economy and the airline system. I will take the gift the airlines are handing us and smile.

The snowstorm in the Northeast this week generated a lot of year-end flight activity for us. Stranded vacationers were willing to charter flights to get where they needed to go.

So this year ended up a whole lot better than it started, and I am encouraged that the opportunities for our company and for our industry are going to improve in 2011.

Even in a shaky and uncertain economy people still need to travel. Businesses have proven their resilience to keep doing business and make things work even when the forecasts from some are doom and gloom. Face to face business has yet to be replaced totally by the videoconference. I still can’t share a meal with you through the video screen.

I believe we have amazing opportunities as an industry to improve the efficiency of businesses by saving time and stress on their most valuable asset – their people.

From my perspective I will take 2010 as a year of learning to adapt and innovate and treading water without sinking.

In the next posting I will throw out some ideas and thoughts about what 2011 and forward could look like.

Happy New Year

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As I write this I am returning from a two day trip to the Caribbean.

Our company works with small airlines leasing aircraft, providing maintenance support services, parts support and training. We do much of our business outside of the US.  

I had the opportunity to catch a ride on one of our leased aircraft going to Tortola, BVI to swap out for another aircraft coming back to Tennessee for scheduled maintenance.

The aircraft we flew down and back were Jetstream 32 – 19 passenger turboprops, one type in a group of regional airline aircraft that will continue to work for small airlines around the world for years to come.  

BVI Airways  started a few months ago providing point to point service between Tortola  and St. Maarten and Antigua. They also do charter flights to the other islands. The airline was started by three US pilots who have worked in the regional airline and air charter industry for most of their aviation careers. They saw an opportunity to fill an unmet demand for travel between Islands and took the leap of faith to start a small airline far from home. If you are going to start an airline it may as well be in a nice place like Tortola.

BVI Airways has an excellent business plan that allows them to be flexible with their routes as travel needs change with seasonality and times of the year when the islands have special events like carnival and homecomings.

After a short 14 hour visit to Tortola we flew up to San Juan PR and met with a startup airline, Lebar Air, that will be providing both scheduled and on demand charter service out of San Juan to the Dominican Republic and other islands within a 250 mile radius of San Juan. They share a similar business plan as BVI Airways but serve a different niche market of travelers.  

As I think about these two operations and other operators we have gotten to know in the Caribbean, including operators in the Dominican Republic and Haiti, I see a group of small airlines that are meeting demand for point to point intra-island and inter- island travel which the major airlines and their commuter feeders don’t meet.These airlines are a cross between a scheduled airline and on demand charter operator with a nimble flexibility the big airlines cannot match. When you ride on these small airlines, the feel is much more like a charter flight where the pilots are talking to you and helping you with your luggage before you board. Islanders are used to this type of service and take small aircraft flights as a routine way of life.   

 From the perspective of the operators we work with, the economic outlook for Puerto Rico and the British Virgin Islands is good. Like the US, they have waded through the recession, but the allure of the islands continues to spur development of new hotels and resorts and all the support businesses that go with it. With new resort development and tourism growth come jobs and economic growth for the entire region. As more travelers come to the Caribbean from Europe, North America and South America the demand for inter-island air travel will grow.

These small airlines that meet the market demand are poised to prosper as they provide a very critical transportation component to the regions economic development.

I am a little jealous of these operators because they have a captive audience of travelers. You can’t just get in your car and drive from Tortola to Antigua like you could from Nashville to Atlanta.

The only complaint about the trip south was the lack of time to enjoy the white beaches and blue water. I think I could easily get used to the speed of island living.

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This week, our company completed validation flights with the FAA to add a 30-seat Jetstream J41 to our fleet of charter aircraft. We have been working on adding this aircraft type to our fleet for over a year now.

Typically, it does not take us that long to add an aircraft; but, this one was different. When you operate aircraft with over 19 passenger seats, the FAA requires that you have flight attendants and all of their programs, including flight attendant training manuals and flight attendant operations manuals that describe how we will operate this aircraft with a third crew member. What seemed to be a simple process, in reality, turned out to be pretty in-depth and complicated process.

On Tuesday, I got to ride along as a passenger on a day’s worth of flights where we proved to the FAA that we can safely and effectively operate a three crew aircraft.

All day long, on every flight leg there were simulated emergencies, sometimes multiple issues at a time, which tested our people on how we would handle it if it really happened.

We had simulated in-flight fires, babies who stopped breathing, unruly passengers who tried to light up a smoke in the lav, and a brake failure that resulted in running off the runway and into a body of water.  With the exception of the unruly passengers, I expect and hope the rest of the simulations never happen in real life; but, it is good to know that we rehearse and have a procedure for each of these events.

When the US Air flight went into the Hudson River, the pilots and flight attendants handled it professionally and efficiently and everyone on board survived it. Had they not trained on these type scenarios, the outcome could have been totally different.

I have a new found respect for what goes on behind the scenes with training flight attendants for the emergencies that most of us will never see. Day in and day out, flight attendants for the airlines and charter companies perform cabin service and give the passenger briefings that too many people ignore. What we will never see as regular passengers is the training done to prepare the crew for all types of emergencies.

We try consciously to avoid making Plane Conversations an advertising site for our company in the spirit of promoting our industry; however, in this case, I will brag on our group of pilots and new group of flight attendants who performed in an excellent manner. They had a group of FAA inspectors looking over their shoulders for several days, and in some cases also playing the part of the “unruly passengers.” The pressure was applied to our people and they handled it and passed the test.

Reaching this level of operations for a charter company is a major accomplishment and I am proud of our people. I have said it before – I am privileged to work with the best pilots, dispatch group, maintenance personnel, management team and now flight attendants that anyone could ask for.

In our business the people make it happen. All the nice shiny aircraft are great; but, without the best people the machines don’t fly safely and efficiently.    

The aircraft we will be flying is a 30-seat British Aerospace Jetstream J41. It cruises at close to 300 knots and operates much more efficiently than regional jets. With this aircraft we will be able to service clients who need to move groups of people between cities where airline service can’t do it in a timely manner.

With the cost effectiveness of the aircraft we can, in many cases, beat the fares of the airlines and still offer the convenience of charter.

As the airlines consolidate, I predict you will see more and more operators around the country offering charter service to groups of people moving between city pairs that don’t have good service.

The 30-seat turboprop is ideally positioned to meet this unmet demand. It is alive and well!

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