1st Quarter 2010

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Front: Prajeet Pareparambil - Royal Jet (AUH), David Mills - Business Jet Center (OAK), Back: Bill Hudgens - Montgomery Aviation (MGM), Donnie Zachary - Louisiana Aircraft (BTR), Bert Marks - Central Aviation Services (YWG), John Langevin - Jet Aviation (TEB, BED, Alain Champponois - Skyservice (YYZ, YUL, YYC), Rhonda Hughes - Avitat Boca Raton (BCT), PBI, DAL), Tim Ward - Alliance Aviation (AFW) Wally Seipp – Avitat Westchester (HPN), Andreas Becker - Frankfurt Aviation Service (FRA)

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If you think your operation has the potential to become part of the network of FBOs that’s one of the best in the industry, please contact Maryann Bowman, Avitat Development Manager at 281.360.1058 or [email protected]. 1sstt QQuarteruarter 20102010 Aviation IISSUESSUE 1 | VOLUMEVOLUME 8 Business Journal Offi cial Publication of the National Air Transportation Association

Chairman of the Board President Kurt F. Sutterer James K. Coyne Midcoast Aviation, Inc. NATA Cahokia, Illinois Alexandria, Virginia

Vice Chairman Treasurer James Miller Bruce Van Allen Flight Options BBA Aviation Flight Support Cleveland, Ohio Orlando, Florida Immediate Past Chairman Dennis Keith Jet Solutions LLC Richardson, Texas TAC Air: From Flight Department Convenience to Major Chain Board of Directors By Paul Seidenman and David J. Spanovich 15 Charles Cox Chairman Emeritus Not every FBO operator gets into the business by design. In fact, TAC Northern Air Inc. Reed Pigman Air, one of the most successful FBO chains in the U.S., was started Grand Rapids, Michigan Texas Jet, Inc. because the fl ight department of a large corporation needed better Fort Worth, Texas service at its Texarkana Regional Airport home base. Today, TAC Air Todd Duncan operates at 13 locations and employs 300 employees. Duncan Aviation Ann Pollard Lincoln, Marshfi eld, Massachusetts Four Air Charter Veterans Look Down the Road Immediate Past Treasurer By David W. Almy 27 John Lotz Mark Willey By most accounts, activity in the charter market is down about a Monterey Bay Aviation Bridgeford Flying Service third over last year’s levels, with some reporting—or whispering Monterey, California Napa, California about—even greater reductions in an industry that has long been Frank Milian cyclical, with good times and bad. So what will the charter industry ACM Aviation look like at the end of the recession? Aviation Business Journal looks San Jose, California for answers. FBO Leaders Offer Perspectives on Down Economy Publisher Contributing Editors By Colin Bane 31 James K. Coyne Michael Ancell With sales volumes down throughout the industry corresponding to Amy Hornaday national economic trends, Aviation Business Journal asked aviation Editor Linda Pylant business leaders for their perspective on how FBOs are responding to Shannon Chambers the downturn and anticipating its rebound. Turn to page 31 to learn Art Direction/Design more. Editorial Director Tim Wagner Eric R. Byer Advertising Sales Cheryl Stratos President’s Message | By James K. Coyne 7 Victoria Geis Advertising Inside Washington | By Eric R. Byer 9 For advertising information, call 703/212-4967 or e-mail [email protected]. ACSF News | By Jacqueline Rosser 11 Produced by The 2009 NATA Aviation Business Roundtable 23

103 Oronoco Street, Suite 200 • Alexandria, VA 22314 Establishing a Wellness Program | By Lindsey McFarren 35 703/212-4967 • www.ias-online.net Cashing Out Hidden Business Assets | By Rhona Sacks 38 Advertiser Index 40

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Do You Know What You Don’t Know? By James K. Coyne

y youngest child fi nally fi nished his have an FBO in education in May (or at least the part California, but that I pay for), and now he’s march- you’d be sur- ing off into the real world with all the prised what you confi dence and preparation that 27 can learn from years of parenting and schooling can someone with provide.M After his fi rst week on the job, he called a similar busi- to share his excitement, but also to admit that he’s ness in Texas or amazed by how much he doesn’t know. It’s been 40 North Carolina. years since I fi nished my formal education, but a Of course, there day never goes by that I don’t reach the same con- are also formal clusion. To do our jobs well, not to mention to fulfi ll audit fi rms that our other responsibilities to friends and family, work directly takes a commitment to lifelong learning that none with NATA or of us can ever escape. with the Air As we enter this century’s second decade, our Charter Safety need for new knowledge and expertise is more criti- Foundation who cal than ever. The government seems committed to can advise you changing everything it can touch, the marketplace on everything from safety management systems to is transforming itself every day, fi nancial and legal fi nancial software, but no one will understand your institutions are modifying most of their traditional business as intimately as someone who actually procedures, the internet is reinventing the way runs a similar operation. If you’d like to fi nd a fel- we communicate, politics is redrawing the lines low NATA member to contact about a possible audit between business and the bureaucracy, and the (or even a reciprocal audit), give me a call, and I’ll recession is making it impossible to predict where connect you with a few candidates. To my mind, the economy is headed. If ever there was a time for this kind of “education” is better than anything they admitting that you have a lot of new things to learn, teach at the fi nest business school. this is it! Second, take advantage of the internet. NATA So how’s a busy aviation business executive best recently launched a series of webinars, free or able to “school” himself or herself in these hectic low-cost online seminars covering specifi c topics times without dropping the ball at the offi ce or like minimum standards or ramp safety that ap- breaking the bank? Each of us, of course, have ply directly to your business. If you have ideas for different opportunities and techniques for staying other webinar topics that you’d like us to produce, ahead of the pack, but whatever you do, consider send me your suggestions. NATA’s website offers how NATA’s resources and members can be part of other resources that can round out your business your ongoing education. education, with downloadable publications, reports, First, ask yourself if an audit of your business and links to FAA documents that can help you fi nd would be useful. For years, scores of NATA mem- quick answers to queries that might even stump bers have subjected themselves and their busi- your FSDO. nesses to audits carried out by friendly (though Third, enroll in NATA educational and train- sometimes brutally frank) colleagues they’ve come ing programs at our various meetings around the to know and trust at NATA meetings. You might Continued on page 8

Aviation Business Journal | 1st Quarter 2010 7 President’s Message Continued from page 7

country throughout the year. Our FBO Leadership cal cases in those classes, there’s nothing more in- Conference in San Antonio, Tex., the Air Charter teresting than real-life questions from NATA mem- Summit in Washington, D.C., and the Spring Train- bers about their businesses and how the myriad ing Week in Las Vegas, Nev., all provide courses, rules and regulations that we confront here on the seminars, and Q&A sessions for you and your staff Potomac actually affect your operation and your to learn from industry experts, consultants, govern- bottom line. ment offi cials, and technical specialists. But I must NATA is more than just our staff, our website, our also admit that a lot of industry-specifi c and mar- meetings, our seminars, our publications, and our ket-related education takes place at these meetings database of information. It is, most of all, a huge in informal, unplanned sessions that can be the network of men and women working in hundreds very foundation of your personal business educa- of companies who know that the business of avia- tion. tion never stands still. NATA is a way to connect And if you need to refresh your brain cells about all those people, their ideas, their imagination, and how politics in Washington is going to affect your their curiosity in ways that create new opportuni- business, there’s no better graduate-level course ties for every individual NATA business. In these than NATA’s annual Day on the Hill in late April. times of recession and economic contraction, this is As oxymoronic as “understanding Congress” might the most important lesson that each of us can possi- sound, this is the best place to at least attempt to bly learn: There are new ways to do what you do so fi nd those answers (and usually uncover even more your business can get growing again! The answers questions). are out there; it’s up to each of us to fi nd them. Finally, use NATA’s staff as your own tutorial team. That’s what we’re here for. I spent many years teaching at the Wharton School of Business, but as much as I enjoyed the historical and theoreti-

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8 Aviation Business Journal | 1st Quarter 2010 INSIDE WASHINGTON

With a New Decade Comes New Opportunities By Eric R. Byer

s we enter 2010, we are tion aircraft, 2010 is the time to provided a clean slate of speak even more loudly and clear- sorts to demonstrate the ly that general aviation is here to importance of general stay, for now and the future. aviation to the public, As in years past, the association the media, and the invites all members of the general Agovernment. The idea of advocat- aviation industry to participate ing general aviation’s major role in NATA’s Day on the Hill. This in our national economy and to well-attended grassroots event the public at large is certainly provides our community with nothing new. But as our national the opportunity to educate con- air transportation system evolves gressional offi cials on just how from antiquated hub-and-spoke important our industry is to the commercial air service to point- public and the economy. This is to-point service, general aviation an opportunity for our commu- continues to enhance its footprint nity to come together to voice our in the skies. Customers want to concerns and tell those on Capitol get from point A to point C with- Hill how general aviation is the out having to go through point B. backbone of the aviation industry, They want to get to their desti- comprising small businesses from we don’t all start making a greater nation as quickly and safely as Washington, D.C., to Washington push to educate the media, we possible. Customers don’t want to state. Mark your calendar now will continue to fi ght an uphill have to deal with the continuing for Wednesday, April 21, so your battle both on and off Capitol Hill. security checkpoint and volume voice can be heard! Finally, become active in your delays at many major commercial Now is also the time to meet local Chamber of Commerce. The airports. with local newspapers and media sole purpose of these groups is to Enter our opportunity. Over the outlets to highlight the economic promote the value of small busi- next ten years, general aviation value of general aviation. We must nesses and defend their interests. will play an ever-larger role in stop fearing the press and start While we certainly want all of moving the traveling public within educating them about how im- our members to continue playing our own borders and throughout portant general aviation, and the an active role in NATA advocacy the world. Whether it is a Part small businesses that play such a efforts, joining a local Chamber 135, 91k, or 91 operation, general large role in general aviation, are of Commerce is an outstanding aviation provides a more effi cient to the American economy and complementary activity that will means to travel with infi nitely bet- to the thousands of small towns bolster the importance of your ter customer service and a stellar across this country that rely on business to the community. safety record. Businesses large small airports for access to the We have heard the old Tip O’Neill adage many, many times and small that have used general national and global air transporta- over the years because it is so aviation know the true benefi ts in tion system. Invite local members very true. All politics are local, so timesavings and increased work of the media to your business at a get a leg up by becoming active in productivity. And while in 2009 local airport to give them a hands- your local community. These op- some in the media and on Capitol on look at the folks you employ portunities are ripe for the picking Hill tried to paint a black mark on and the value general aviation as we enter the next decade, so businesses utilizing general avia- provides to the local economy. If don’t miss out!

Aviation Business Journal | 1st Quarter 2010 9 10 Aviation Business Journal | 1st Quarter 2010 ACSF in 2009: The Year in Review By Jacqueline Rosser

his past year was a very busy one for the The review revealed some very interesting facts, Air Charter Safety Foundation (ACSF) as but unfortunately we still lack one key piece of data we continue to grow and expand our ef- that would make it possible for us to draw meaning- forts to improve the safety and security of ful conclusions about safety risks and to develop the air charter and shared aircraft owner- targeted interventions: We simply don’t know how ship industry. many hours are fl own in the various aircraft types T One of our organizational goals is to improve data (helicopters, pistons, and jets) and for what mis- collection and analysis for the industry. As a fi rst sions (cargo, passenger, air ambulance, etc.). Until step, ACSF commissioned a detailed review of Part we can capture and break out fl ight-hour data, we 135 certifi cate holder accidents over a fi ve-year are limited in our ability to understand and address period. The Part 135 Accident/Incident Review is a existing and emerging safety trends. Expect more comprehensive look at the factors involved in char- from ACSF in this area. We are actively developing ter accidents. our strategy for fi lling this data void. A copy of the The researchers reviewed every Part 135 on- safety review is being sent to every ACSF member, demand event reported in the National Transporta- and copies are available for $25 by calling ACSF at tion Safety Board (NTSB) database and identifi ed (888) 723-3135. non-revenue fl ights fl own under Part 91 that were Another key ACSF initiative is the Industry Audit under the control of a certifi cate holder. The Part Standard (IAS). Since its offi cial launch in the fi rst 91 events included maintenance, ferry, positioning, quarter of 2009, ACSF and our authorized audit and instructional fl ights among others. Events on fi rms have completed the on-site portion of the au- Part 91 fl ights under the operational control of an dit at 24 operators. Five companies have achieved aircraft owner were not included. Continued on page 12

Aviation Business Journal | 1st Quarter 2010 11 ACSF in 2009 Continued from page 11

Registered Operator status, and many others have System and later completed the ACSF IAS. Early completed the on-site portion of the IAS and are registration rates are available. Learn more at www. continuing to work through the remaining steps acsf.aero/symposium. required to achieve listing on the ACSF IAS Registry In other news, industry use of ACSF’s free safety (www.acsf.aero/registry). event and tracking software, AVSiS, continues to Those operators making the effort to become IAS grow. We now have more than 50 operators using registered are committed not only to regulatory the program. AVSiS, the Aviation Safety Informa- compliance, but to continuous safety improvement. tion System, allows the submission of safety events Interested in learning more or scheduling your for tracking and follow-up and can integrate well audit? Visit www.acsf.aero/audit. into any operator’s existing safety program. AVSiS The annual Air Charter Safety Symposium is just is available at no charge to any Part 135 operator around the corner, and the ACSF members and staff or Part 91K program manager, and membership are working hard to produce another quality event. in ACSF is not required. A separate version of the The symposium is March 2-3 at the Marriott West- program is available for purchase by any operator fi elds Conference Center, near Washington Dulles ineligible for the free version. Airport. Presentations include an examination of These are just a few of the activities undertaken the NTSB’s increased focus on Part 135, the fi nan- by ACSF in the last year. The foundation continues cial benefi ts of safety programs, a discussion of the to grow, and our ability to have a positive impact potential legal pitfalls of voluntary safety programs, within the industry increases with every new ac- and details on how to implement automated opera- complishment and, most importantly, with every tional risk assessment. new member. I encourage you to join the many Symposium attendees will also hear from a mid- operators, suppliers, manufacturers, and others that size charter operator about the challenges they have made the commitment to safety and security confronted as they developed a Safety Management by becoming a member of the ACSF.

Congratulations to the following operators who have successfully completed the ACSF IAS and been awarded the status of Registered

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ot every FBO operator gets into the busi- local support facility that met our needs, we con- ness by design. In fact, TAC Air, one of cluded we would have to buy the FBO.” the most successful FBO chains in the Under its new ownership, the FBO remained U.S., was started because the fl ight de- open to the public and was re-branded under the partment of the Truman Arnold Compa- Road Runner Aviation name. “Frankly, we went nies needed better service at its Texar- into the business thinking that the FBO would not Nkana Regional Airport home base. be a great money maker,” Arnold said. “But much Greg Arnold, president and CEO of the Texas- to our surprise, we found that by offering good based company, explained that the Truman Arnold service it turned out to be more profi table than we Companies, one of the nation’s largest indepen- thought.” dently owned petroleum products marketers and By 1989 the Truman Arnold Companies decided terminal operators, in 1986 owned a chain of 125 to sell off its convenience store operation and convenience stores in eight states under the Road concentrate on building up the FBO and its fuel Runner name. “In order to cover that territory, we marketing distribution and terminal businesses. In were operating a Beech King Air 90 turboprop and 1991, the FBO operation was renamed TAC Air and a Sabreliner Sabre 60 jet based at a Texarkana FBO, put on an expansionary path. for which the hours of operation were not always Today, TAC Air, voted Best FBO Chain by Profes- compatible with our fl ight department’s schedul- sional Pilot’s annual PRASE survey in 2006, operates ing,” he said. “The result was that in order to have a Continued on page 16

Aviation Business Journal | 1st Quarter 2010 15 TAC Air Continued from page 15

at 13 locations and employs 300 employees. The the keel up. newest facility, which opened in January 2009, “We prefer to acquire an existing facility, totally was formerly owned by Jet Direct at Spirit of St. renovate it, and/or expand the terminal and offi ce Louis Airport, a general aviation airport serving St. space, whichever is needed,” he said. “One of the Louis, Mo. The other FBOs are located at Amarillo, reasons we do this is because, if the FBO is well Tex.; Denver (Centennial), Colo.; Hartford, Conn.; run, the existing customers will tend to remain, Chattanooga and Knoxville, Tenn.; Fort Smith, Ark.; even after the acquisition. Also, it’s normally a very Greenville (Downtown Airport), S.C.; Lexington, challenging task to build an FBO new in today’s Ky.; Omaha, Nebr.; Raleigh-Durham, N.C.; and market. Frankly, at many airports there are simply Shreveport, La., in addition to the original one at too many FBOs.” Texarkana, Ark. The corporate fl ight department, which provided the incentive to get into the FBO More Room for Consolidation business, now operates two jets, a Bombardier Chal- Arnold said that when the company acquired its lenger 605 and a Cessna Citation VII, along with a fi rst FBO in 1986, there were about 5,000 FBOs light Cessna 172 single-engine piston. throughout the U.S. “With approximately 3,000 Arnold, who served as chairman of NATA’s Board today, there is still a lot of room for consolidation in of Directors in 2003-2004 and was inducted by the this business,” he said. “At some airports you might Arkansas Aviation Historical Society into the Arkan- see fi ve to seven FBOs, even though there’s really sas Aviation Hall of Fame in November 2009, re- only enough business for three. If the market for ported that TAC Air contributes 35 to 40 percent to FBO services stays where it is, there will have to be the bottom line of the Truman Arnold Companies, some additional consolidation.” even though it accounts for less than 5 percent of In fact, at seven of its locations, TAC Air is the total company revenues. Those annual revenues, sole FBO on the fi eld, and the company holds an 80 which have been as high as $3 billion, are projected to 85 percent market share where there is competi- to be about $1.7 to $1.8 billion in 2009, given the tion, Arnold said. huge falloff in the price of crude. “That has been achieved through careful analysis “Some 95 percent of our total revenue comes of current general aviation traffi c at each of the 13 from TAC Energy, which is our fuel distribution airports,” he said. “The way the FBO business is business,” Arnold said. “In terms of actual product today, most of the competition (for fuel sales) takes sold, we expect that to remain relatively stable at place at the point where the airplane originates its about 2 billion gallons.” fl ying for that day. This is because today’s aircraft are much more fuel effi cient, and when they transit an airport many are not likely to take on fuel. So we Challenging Economy track every departure from airports where we have Opens Opportunities an FBO as well as what our market share is at those With the opening of the St. Louis facility in early airports. That information helps us to market our 2009, TAC Air once again returned to a growth services.” mode. Previously, it had not opened a new location Arnold said that when evaluating a facility for since October 2007 when it took over Southern Jet’s possible acquisition, the company not only checks FBO in Raleigh-Durham. to see if there are multiple operators on the fi eld, “While the economy has been very challenging but also what the market share is of the facility for TAC Air, it did open some opportunities,” Arnold being considered. “Then we evaluate the business said. “That’s because, prior to the recession, there climate in the community the airport serves; is it was a lot of private equity money in the mergers growing or is it declining?” and acquisitions market, making it very diffi cult for TAC Air prefers to focus on midsize markets, TAC Air to [acquire FBOs] and build its business. We which he defi ned as metropolitan areas with popu- couldn’t compete with the buy-out fi rms and the lations of 500,000 to one million. “Based on that, we kind of money they were bidding for the facilities, like to project what the business climate is likely to so we decided to grow internally by adding more be over the next fi ve to ten years,” he said. “For ex- hangar space where we were.” ample, if you look at some of the midwestern cities But given the current economy, there are emerg- that have been hit very hard by the cutbacks in the ing opportunities to grow TAC Air through acquisi- automobile industry, there will probably not be a tions, Arnold explained. He noted that TAC Air, by large amount of growth in those areas over the next business philosophy, has never built an FBO from fi ve to ten years.”

16 Aviation Business Journal | 1st Quarter 2010 The evaluation process also looks at a potential Currently, 11 TAC Air locations sell fuel under acquisition’s employment infrastructure, which the ConocoPhillips brand, while the ones at Hart- includes management, line, and customer service ford and Raleigh-Durham are respectively branded staff. “We try to determine if the present staff is Chevron Texaco and AvFuel dealers. All of the adequate or if we will have to hire new people or company’s FBOs are NATA Safety 1st line service- transfer some of our current employees from other certifi ed, with Jet A and low-lead 100 avgas avail- sites,” he said. able at each. Because TAC Air’s primary business focus and Along with fueling general aviation aircraft, TAC core competencies have been on line service and Air has into-plane fueling contracts for commercial FBO property development, the company evaluates airline customers at Amarillo, Chattanooga, Fort the FBO’s current infrastructure, its line service Smith, Lexington, Omaha, Shreveport, Texarkana, quality, the availability of a competitively priced and Knoxville. fuel supply, and the opportunity to negotiate a While the recession has battered general aviation long-term lease with the airport authority. TAC Air’s and its suppliers, Arnold reported that TAC Air has average lease term is 22 to 23 years, Arnold said. kept its head above water. “We have been very for- “Once we acquire an FBO, the fi rst thing we do is tunate in that every operation in the chain has been make sure the current customers of that FBO are profi table and returns have been good,” he said. taken care of,” he said. “We have a very disciplined “Unfortunately, with general aviation fl ying down, business model, especially when it comes to track- we are down by about 60 to 70 people compared ing data and effi ciency optimization. But we also to our staffi ng levels in 2008. But while we did give our general managers quite a bit of latitude to have a few layoffs, most of our job cuts came about make sure the job gets done onsite.” through normal attrition.” Continued on page 18 Developing a Core Focus Nearly all of the TAC Air FBOs are exclusively in the business of fueling and line service. The excep- tions are those at Fort Smith and Raleigh-Durham, which still offer more extensive maintenance. At Raleigh-Durham, TAC Air is an OEM-certifi ed main- tenance provider for Cirrus Design. Fort Smith is capable of Phase I through Phase V inspections on Cessna Citations. “We will continue to offer maintenance at those two locations, but it is not our core focus,” Arnold said. “When we were full service, we found that maintenance was a very complex kind of business. That’s why if we decide at some point to revisit maintenance, we will probably do that by aligning ourselves with a company for which that’s a special- ty and that is already located on an airport where we have an FBO.” TAC Air’s decision to phase out the full-service FBO model was initiated about a decade ago. In addition to maintenance, the company was also in- volved with avionics sales and held a Part 135 char- ter certifi cate. It also offered fl ight instruction at three facilities: Texarkana, Fort Smith, and Omaha. In Arnold’s view, the full service FBO model may no longer be viable. “Today’s aircraft are more fuel effi cient and fl y longer distances before fueling,” he said. “Plus [the FBO industry] is a more competitive marketplace, and smaller, regional locations sim- ply do not have the economies of scale to offer full service.”

Aviation Business Journal | 1st Quarter 2010 17 TAC Air Continued from page 17

Arnold attributed the chain’s profi tability to what he called “a very aggressive internal analysis” that looks at ways to contain costs. “Our management team is scrutinizing every item and penny to the smallest degree and has concentrated on opportu- nities to grow our existing business, which means selling more to existing customers,” he said. “We have done this through more competitive pricing and have worked a lot harder to do this, not only with our tenant customers but also corporate fl ight departments, including those that have indicated that they want to expand.” Arnold said that the company has also worked with on-demand charter operators and all fractional ownership companies. Ten TAC Air locations are preferred FBOs for all the major fractional owner- ship operations. With property development and hangar leasing a large part of TAC Air’s business, the company’s 13 FBOs account for about 1.2 million square feet of hangar space and about 750 tenant aircraft. System- wide, TAC Air has projected about 5,000 departures per month through the end of 2009, down 20 to 25 percent from 2008 levels due to the economy.

Expanding the Lexington Facility But even with the strong economic headwinds, TAC Air is pursuing its development philosophy at a cur- rent location, with a recently announced expansion at Lexington Blue Grass Airport. “The Lexington FBO is one of our busiest locations in terms of traf- the basis of a new and expanded facility.” fi c, so we are building a new FBO that will replace The Lexington area is the center of Kentucky’s the existing terminal building and expand the exist- thoroughbred horse industry, which Arnold said ing hangar space we have,” Arnold said. draws a lot of business aircraft. The new terminal The project began with an August 2009 ground- building will include an art gallery with a racehorse breaking and will include a new 12,000-square-foot theme. It will also have a workout facility, movie executive terminal to replace the 5,000 square feet theater, fl ight planning area, gift shop, quiet room, of terminal space currently occupied at Lexington. and an expanded pilot lounge, all of which will be Hangar space will increase from 91,000 to 116,000 open to the tenant customers at the FBO as well as square feet, of which 40,000 square feet will be new those on transiting aircraft. construction. Offi ce space will be expanded from Under current planning, the new FBO’s comple- 8,100 to 14,600 square feet. Total offi ce space will tion date is slated for May or June, in time to ac- exceed 20,000 square feet because the project will commodate attendees of the 2010 World Equestrian incorporate space to be absorbed from Air51, an Games in Lexington. TAC Air has taken over Air FBO that TAC Air is acquiring at Lexington as part 51’s “preferred FBO” status of that event, Arnold of the project. said. “We decided to pursue this because our lease was TAC Air’s FBOs are mostly situated in the south- about to expire. In order to stay at the airport, we eastern , with the exception of those in responded to an RFP put out by the airport author- Omaha, Denver, and Hartford. Asked if that region- ity,” Arnold said. “Under the terms of the RFP, the al focus is likely to continue, Arnold said that the leaseholder had to agree to a redevelopment plan company is open to expanding anywhere, although for the existing facility. So after a three-year period the focus will continue to be on the domestic U.S. of negotiation, we were able to renew the lease on market.

18 Aviation Business Journal | 1st Quarter 2010 Maintaining Customer Service Still, Arnold stressed that one thing that won’t be compromised is TAC Air’s well-known level of cus- tomer service. “Our feeling is that people will stay with an FBO where they get good service, which is why you need to give the highest level of service to everyone,” he said. “We don’t have a preferred clientele; we value everyone, from the recreational pilot of a single-engine piston to the professional pi- lots of high-end executive jets. In our view, today’s Cessna 172 pilot could fl y in here tomorrow with a Gulfstream V.” He said that TAC Air’s service-oriented philoso- phy extends to all of its employees. “Everyone here is very passionate about the business,” he said. “We have a team of people who are very professional and love what they do. When you treat your people well, they are going to deliver a high level of ser- vice.” With the continuing trend toward consolidation in the FBO business, Arnold stressed that TAC Air is going to remain independent for the long haul even though it has been “approached by all of the major players in the FBO industry” with acquisition proposals. “Although I have learned never to say never, we have no plans to divest ourselves of any part of the chain. That’s because we’re bullish on the business,” he said. “We’ve spent the last 20 years developing the intellectual expertise to run the business, and we have positioned ourselves to grow “We are truly opportunistic in that regard,” he it rather than divest and sell it.” said. “But while we would defi nitely look at oppor- In that regard, Arnold said that he is preparing tunities on the West Coast or Florida, we really like to tackle all the challenges facing the FBO indus- any location to be within about a two-and-a-half- try, even in a post-recession era. “Going forward, it hour fl ight from our Texarkana headquarters.” will really come down to offering the highest level Arnold predicted that there will continue to be of service in a safe environment,” he said. “This is greater cost consciousness among operators, which where the NATA Safety 1st program has been very he said can mean only that the FBO business will helpful. We also have to look at how we can better be far more competitive than it was even three or manage ourselves within the current regulatory four years ago. “That means that greater effi cien- framework, which is another area where NATA has cies and cost controls will have to be identifi ed, but also done a very good job assisting the members. TAC Air is well along in that respect,” he said. They have done an excellent job of keeping all of Citing one example, Arnold said that the compa- the members up to speed about the ongoing devel- ny has purchased nearly all of its previously leased ground support equipment, including 40 tanker opments in the regulatory environment.” trucks from fuel suppliers and leasing fi rms. “We As TAC Air goes into 2010, the company is predi- determined that it was actually more economical cating its planning on the state of the economy to own, rather than lease, that equipment,” he said. today. “Frankly, we see no signifi cant recovery for “We are looking at all of the line items in our profi t- at least the next 24 months,” Arnold said. “There and-loss statement to see where we can make those might be some uptick or down-tick of 1 to 2 per- items more cost effi cient. We’re also doing a bet- cent in fl ying, but I think it will be at least another ter job tracking costs related to running the FBOs, two years before we’ll see increases in fl ying in the including maintenance, staff, and utilities.” range of 20 to 25 percent.”

Aviation Business Journal | 1st Quarter 2010 19

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he National Air Transportation Associa- achieve this recognition, saying, “I have worked tion (NATA) held its 2009 NATA Aviation with the greatest people over the last 25 years.” Business Roundtable November 9-10, Coyne summed up the event by saying, “With the meeting with some of Washington, D.C.’s number of questions we still have regarding user most infl uential policy makers. More than fees, budget defi cits proposed by the new Congress, 65 aviation business leaders met with key and the future prospects for aviation business, political,T policy, and fi nancial experts to discuss NATA’s 2009 Aviation Business Roundtable provided a number of critical issues affecting the aviation an important forum for business leaders to interact community, including the economy, taxes, safety, with well-connected speakers to understand what security, and the 2010 mid-term elections. their options are as they make their plans for 2010.” Roundtable speakers included FAA Administra- tor J. Randall Babbitt, Transportation Secretary Ray LaHood, West Virginia Governor Joe Man- chin, and political comedian and musician Mark Russell. During the roundtable, former NetJets CEO Richard T. Santulli became the fi rst recipi- ent of the NATA President’s Award. Babbitt addressed NATA’s concerns with the FAA’s lack of standardization of regulatory in- terpretations. He was candid about the agency’s challenge with inconsistent interpretation of regulations between its regional offi ces and said that while the problem is vast, the agency will work through it. Babbitt and LaHood both said that FAA reau- thorization legislation is an Obama administra- tion priority but that health care reform has taken precedence in Congress. Babbitt confi rmed that the Next Generation Air Traffi c Control NATA President James K. Coyne presents Secretary of Transportation Ray LaHood with an System (NextGen) will be rolled out in layers Avfuel “Aviation Matters” T-shirt. such as the implementation of the En Route Automation Modernization (ERAM). The ERAM system will replace the core system air traffi c Incoming NATA Chairman Jim Miller listens intently to FAA Administrator Randy Babbitt controllers use at high altitudes to track aircraft, highlight the latest developments on fl ight and rest requirements for Part 121 and Part increasing capacity and improving effi ciency in 135 operators. the national airspace system. NATA President James K. Coyne introduced Governor Manchin as an enthusiastic pilot who understands the value of aviation to his state and to the national economy. Manchin said, “In the words of General Chuck Yeager, it is time to push it as an industry, not back off.” In response to negative publicity on aviation, Manchin made a plea for aviation business leaders to “tell your story before other people tell your story for you.” He is doing so by expressing how deregulation hurt West Virginia and how business aviation came to its rescue. Santulli earned the NATA President’s Award for his work as a pioneer in fractional aviation as the founder and former president of NetJets. In accepting the award, Santulli thanked many of the people in the room for helping him to

Aviation Business Journal | 1st Quarter 2010 23 Xavier de Souza Briggs, from the Offi ce of Management and Budget, discusses aviation user fees and FY 2011 budget. Brian Delauter and John P. Sammon of the Transportation Security Administration deliver a security policy briefi ng over breakfast.

NATA members come to the roundtable each year to learn more about how various federal policies and programs affect their businesses.

Above and below, the roundtable is an ideal time for NATA members from all across the country to talk shop, compare notes, and learn from those who face similar daily challenges with their businesses. Westchester Aviation Association President Jeff Lee, NATA President James K. Coyne, and NBAA President Edward M. Bolen serve on a corporate fl ight department panel.

24 Aviation Business Journal | 1st Quarter 2010 NATA President Coyne presents the fi rst-ever NATA President’s Award to Richard Santulli (right), a pioneer in fractional aviation as the founder West Virginia Governor Joe Manchin (left), with NATA President and former president of NetJets, as John Burns, former general counsel of Coyne, told the aviation audience that it is time “to tell your story NetJets, looks on. before other people tell your story for you.”

Right and below right, NATA members listen intently to key federal and congressional offi cials to gain perspective on the regulatory and business landscape.

UBS Investment Research Executive Director David Strauss provides insights on the aviation market.

Aviation Business Journal | 1st Quarter 2010 25 ©2010 NetJets Inc. All rights reserved.Jet NetJets are Inc. registered is trademarks. a The Berkshire Marquiscompany Jet Hathaway not company. Card affiliated NetJets is with and a NetJets Executive registered and service through mark. its *Marquis exclusive Jet U.S. alliance is sells an the independent Marquis Jet Card.

A Berkshire Hathaway company. STABILITY

as defined by NetJets.

As a wholly owned subsidiary of Berkshire Hathaway and the largest private aviation company in the world, we have the resources and commitment to ensure the highest safety standards and provide the most reliable private aviation service to our Owners, giving them true peace of mind. After all, your investment is only as good as the company that stands behind it. There are certain things Only NetJets can do.

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By David W. Almy

y most accounts, activity in the charter a small company—and most charter operators are market is down about a third over last very small companies. So that’s pretty tough and year’s levels, with some reporting—or that means you have to adapt and adapt quickly.” whispering about—even greater reduc- Keith’s assessment is not unique. As vice chair- tions in an industry that has long been man of Solairus, a charter and aircraft management cyclical, with good times and bad. fi rm in Petaluma, Calif., Jake Cartwright has seen B So what will the charter industry look like at the his share of ups and downs over many decades. end of the recession? “This past summer was really very slow,” he said. “Just when is the end of the recession in avia- “There has been improvement in charter quotes tion?” replied Dennis Keith, president of Business and volume this fall, so that’s a good sign. But Jet Solutions in Dallas, Tex., the certifi cate holder with what’s happened with the economy, banking, for Flexjet’s fl eet. “Remember, aviation is the fi rst and the fi nancial worlds, it might not be a robust one down and the last one back. It’s been down for recovery any time soon. The market’s defi nitely well over a year. If the economy comes back in a down, anywhere from 30 to 50 percent. The fl ying couple of years, maybe aviation comes back a year is pretty good with the bigger airplanes, but the after that. We’re talking about a four- or fi ve-year smaller airplanes are totally charter dependent and down cycle here.” I think a lot of them have been sold, and the com- “The downturn in the late 1980s and early 1990s panies owning them that were depending on a lot probably was a three- to fi ve-year cycle, depending of charter have gone out of business.” on who you talk to,” he added. “So while the avia- Bill Koch, CEO of Wayfarer Aviation in White tion economy has been down that long before, I Plains, N.Y., is seeing the same trends. “I’ve been don’t know if it’s been down this far for that long hearing numbers that the charter market fell off before. In past recessions, the industry didn’t fall 70 percent year over year,” Koch said, “but I think off the edge, hit the bottom, and not bounce back. those were the ones that were selling charter to When you stay at the bottom as we have, and new entrants or to conspicuous consumers who maybe you drift down for a while, that’s a totally were chartering to go to weekend jaunts, and that different kind of impact on the fi nancial ability of Continued on page 28

Aviation Business Journal | 1st Quarter 2010 27 The Air Charter Market Continued from page 27

just evaporated. My take is that overall the charter and all come out with more than we have now?’” business is down 30 to 50 percent.” All see price as a major concern. Charlie Priester, chairman of Priester Aviation “We all saw this thing fall off the cliff at the end in Palwaukee, Ill., sees an even more challenging of 2007,” Priester said, “but it was kind of starting dynamic. “In my opinion what we have is a double- before then, depending on who and where you are. edged sword,” he said. “We have a changing market But at that point, as an industry we were beginning that is substantially smaller than it was in mid-2007. to move the pricing of our product to the level that I think the underlying need is still there, but we’re it should be so that there was a reasonable return. seeing now a market reduced by 30 to 50 percent “What has happened now, which I think has set depending on the type of equipment that you oper- the industry back, is that operators who are strug- ate. Now you couple that with the new regulatory gling are now getting into some deep discount- requirements that are here or inbound and your ing. And they’re almost resetting the pricing bar, cost side continues to go up. That’s the other side of particularly for the buyer that’s not a sophisticated the sword.” buyer. “And they can’t sustain it, and it refl ects on all Finding Ways out of the Wilderness of us,” Priester continued. “When your sales peo- ple come in and say, ‘Gosh, we lost this trip, we So what’s a charter operator to do? There are some couldn’t fl y it, and price is where we lost it,’ well, I ways out of the wilderness, these experts say. One say we’ve got to deliver the product and carry our is to cut costs. margins and weather this storm. We can’t get into “On the good side, the business is organized pri- this price discounting. The heavy discounters, quite marily where the charter operator has little or no asset costs on the books,” Keith said. “You don’t own frankly, are dealing on cash fl ow, saying, ‘I’m going the airplanes [and shoulder their capital expense], to lose money on this deal, but I get my money in and that’s a very good thing or you’d be seeing a lot advance and I can make payroll this week.’” more doors closing a lot quicker. Charter operators “Right now charter is a bargain,” Koch said. “The have to adjust personnel because that’s our major retail price of charter is below the true ownership cost. In a small operation, you can downsize people cost of most airplanes in the market today. I mean pretty quickly. If you’re a 135 operator, you just if you go charter a Gulfstream today, you can char- have to have the three key positions to maintain ter it on a per-hour basis for less than the true cost your certifi cate. So, in theory, you could get down to three people and still have a 135 certifi cate, and if you have one airplane, you can probably go along that way until things turn around.” But individual company situations can require a unique response. “Some companies offering charter also have an FBO,” Keith added. “Some may have a maintenance facility. Often, the charter business is a marginal business on the side with their heart and soul being the FBO or the maintenance.” “Because it is going to be a slow, protracted recov- ery, the smaller operators are going to wonder what kind of margins they are going to be able to make and for how long,” Keith said. “And, is there some way to reduce their costs further?” “When you think about charter operators, every one of them is their own individual factory,” Keith said. “They all produce the same thing. They all market and they all sell. They all have their chief of maintenance, their chief pilot, their director of operations, their manuals, and their own infrastruc- tures. Maybe, if this is going to be a slow, protracted recovery, we may start to see consolidations where a bunch of regional guys say, ‘Is there a business model here where all fi ve of us can come together

28 Aviation Business Journal | 1st Quarter 2010 of ownership of that airplane. It’s being subsidized brokers. That would be on average. You are going to by the owner. But he has some tax advantages, and have some guys at totally different extremes, where there are some other contributing factors, such as they have the business model to totally be support- cash fl ow to offset other costs. So today charter is a ed by brokers, and you’re going to have some that relative bargain, but for those charter providers in don’t deal with brokers at all. But you’ve got to get survivor mode right now, that’s not sustainable.” out there in some way.” “The challenge, I think, in the industry is to Competition, of course, also plays a role in the operate a quality-oriented organization with high charter market, with other aircraft-resourcing op- standards of safety and service,” Koch added. “That tions clearly at play, among them fractional owner- requires a substantial infrastructure that the market ship, the growth of which seems to have leveled off. needs to pay for. This has been a dilemma for me in “It certainly has plateaued,” said Keith, who as my 20-plus years in this industry.” a former president of FlexJet should know. “But Aside from cutting costs and maintaining mar- remember, historically fractional has been tied to gins, one other solution is to increase marketing the economy. We will know whether the fractional and sales. industry has matured ten years from now once we “You can increase your customer base by identify- get out of this and we have fi ve years of normal ing what the customer wants,” Priester said, “and if times. We’ll see whether it grows again.” you can come up and offer a product or a type of transportation, if you will, or a service that the cus- Hard Times Fuel Innovation tomer wants, you can then increase your customer “I think another important thing is that, histori- base because you’re the only guy offering it.” cally, every time the aviation industry has had Those customers can come from many sources. a downturn, had diffi cult times, it’s re-invented “Most smaller charter operators go out and cultivate itself,” Keith continued. “I mean, you can go back their own clientele and they have a loyal following historically and look at those. Back in the 1960s, of charter users,” Keith said. “If I was going to guess it was the introduction of the business jet. There how much comes from the outside world, I would were managed aircraft in the 1970s when we had say it certainly doesn’t exceed 15 to 20 percent. I downturns—instead of everybody having their own would say that at least 80 percent is business they individual fl ight department, they went to aircraft generate on a local basis, maybe 20 percent from management companies. You saw that evolve. In the downturns in the 1990s, you saw fractional ownership come out of that. I know there are a lot of people working on different ideas out there. I’m anxious to see what the outcome will be, what the next invention will be. I think aviation is a pretty inventive industry, and the goal will always be how to make the product more accessible and more af- fordable as the world changes. I’m sure you’re going to see variations on different ideas to make that happen.” Jet cards have been one of those successful inventions in recent years, which has altered the charter market once again. “People who a year ago would have gone with fractional now want the fl exibility or don’t want the capital commitment and the fi ve-year contract and the risk of residual value,” Koch said. “Those are the people who today are buying jet cards. A year or two ago, the people who were buying jet cards were new entrants who were frequent charter customers. I think they’re still selling; they’re just selling to a different audience than they were selling to a year ago.” At the high end of the market, Cartwright sees Continued on page 30

Aviation Business Journal | 1st Quarter 2010 29 you factor in a smaller market, pricing pressures, and regulatory escalation, resetting the pricing bar to be profi table is going to take time.” Koch also sees the charter world changing. “It’s changing, and it needs to change. The old model does not work. The old model at today’s pricing does not work,” he said. Koch sees many charter providers with one or two airplanes, typically light jets or King Airs, who can make an airplane available for charter at rela- The Air Charter Market tively low cost as they have one chief pilot who’s Continued from page 29 also the director of maintenance and director of ops without additional infrastructure. But he worries the charter market from a different perspective. about safety and service from those providers. “I don’t think the market is going to look terribly “I really see the market divided into the very top different on the large cabin airplanes,” he said. “I tier, which tend to be larger category, late model mean they’ll be around and they’ll come back and airplanes that are operated by one of the handful of people will still own them, but those owners of the large, sophisticated, fi rst-class operations with those kinds of airplane typically don’t want a ton international capabilities. Then there is the large of charter. If they get 100 to 150 hours of charter a quantity of small operators, and the market seems year, they’re happy. They can afford the airplanes to be divided that way.” they have and they want them and they use them. And that’s probably the case with the Hawker and the Falcon 50 and certainly the Citation 10 level, A “Win-Win” Model but when you get down to the older, smaller air- The model that does seem to work is to manage planes, maybe it’s really the price of the airplane an owner’s airplane and charter it out some of the instead of the size; some of that lift has gone away. time, particularly with fl eets that number in the What’s going to replace it, I’m not sure.” dozens, a strategy followed by Keith, Priester, Koch, Priester remains concerned, however, with the and Cartwright. increasing regulatory burden emanating from the “Indeed, and that’s a win-win,” Koch said. “I think FAA and what it will mean for the success of the there will continue to be a demand, a growing charter industry. demand from where we are today, for high-quality “The philosophy of the FAA of one standard of business aviation transportation. The are safety for everyone, implementing safety manage- making life more miserable every day, and busi- ment systems, and all the things that you and I ness needs will continue to require people to be in know—that’s a cost—it costs money to do that. So hard-to-reach destinations where they just can’t get you end up with increasing costs because of regu- any other way than through business aviation. The latory changes, and that’s not to say they’re bad best way to access business aviation is via charter, changes, but you couple that with reduced income and right now there are plenty of charter airplanes because of the market situation that we have and available, and as long as there is a wide variety of you’ve got a real double-edged sword, the perfect good quality airplanes in the market people are go- storm which leads you to the conclusion that as a ing to continue to charter because they don’t have small operator, and I don’t care how good the small to make big capital commitments. Charter will be operator is, you’re going to throw off so many dol- the fi rst part of our overall market to bounce back. lars per airplane to cover your fi xed overhead. Now “I think that the market will gravitate towards fi rst- we end up with less dollars, maybe the same per class operators who can demonstrate a real value hour, but less total hours that are being thrown off proposition in providing a higher standard of safety to cover an ever-increasing expense spiral. It’s going and service quality, multiple locations and world- to be diffi cult for the small operator to both com- wide authority, and have systems and procedures ply with all the regulatory requirements and come in place that add value for the client,” Koch said. up with a profi table venture, a profi table business. That’s an operator with 25 or more aircraft, in Koch’s Under the same business model, if that small opera- vision. “There is a clientele who will want and who tor can come up with a better mousetrap, a better will appreciate that highly personalized service that’s business model, they could do very well. But when delivered with quality and consistency.”

30 Aviation Business Journal | 1st Quarter 2010 FFBOBO LeadersLeaders OfferOffer PPerspectiveserspectives oonn DDownown EconomyEconomy

By Colin Bane

ith sales volumes down through- happened yet in Orlando, where tourism dollars out the industry corresponding to reign supreme and business is down across the national economic trends, Avia- board. tion Business Journal asked aviation “I’m praying that things have bottomed out, business leaders for their perspec- but I’m certainly not seeing a turnaround yet,” tive on how FBOs are responding Showalter said. “If I get through this month with toW the downturn and anticipating its rebound. about the same number of gallons pumped as is Some NATA members report that marketing, in the projected right now, I will have experienced three traditional sense, has moved down the priority list, months that are virtually the same. And they are while others fi nd it vital to maintain their market- three months that historically should be about the ing presence. We also found that NATA members same for us. Now, mind you, the volumes are down are placing increased emphasis on safety, customer 50 percent or better, but if I can get these three service, and business fundamentals and, where months to come in at the same relative volumes, possible, making investments in the industry and in I’m going to start to think that things have bottomed the future to prepare for economic recovery. out for us. We haven’t dared to start acting as if it’s a First established in Orlando, Fla., in 1945, Show- turnaround.” alter Flying Service is now the oldest and largest Having already asked her hourly employees to family-owned fi xed base operation in Florida and is scale back their hours and her salaried employees the principal general aviation operator in Orlando. to sacrifi ce some of their pay, Showalter has ad- Still, the recession has hit them as hard as anyone. justed her priorities. When asked about how her company is prepar- “When things do come back, I have a plan. I’ll be ing in anticipation of a business recovery from a restoring people back to 40 hours; I’ll be restoring marketing point of view, Showalter Flying Service salaried people back to full pay,” she said. “But I President and Chief Operating Offi cer Kim Showal- think people get in trouble anticipating that things ter fi rst laughed, then turned gravely serious. are going to come back and then starting to spend “I’m not sure that the question really leads to as though they have. Things are actually going to answers that will give you an adequate feeling of have to come back, and they’re going to have to the severity of things out here,” she said. “I’m not stabilize somewhat at those higher numbers before picking and choosing where to spend money so we do anything. My people have worked way too much as doing what I have to in order to survive. hard to cut back and economize and sacrifi ce for I’d love it if I had the option of saying ‘Well, I’ve got me to do something that isn’t fi nancially prudent, this much money; I’m going to put it here, or there, pre-spending before we have money in hand. When or someplace else.’ But that’s just not the case.” there is a turnaround, one of the fi rst things we’re Showalter said she is thinking carefully and cre- going to do is build back cash reserves. We still have atively about “pre-spending” options like marketing. cash, and we’re extremely blessed to have it, but we “We’ve got a new website, and we are involved in will be building up cash reserves before we go on to some of the networking sites—Twitter, Facebook, much else in terms of spending.” those kinds of things,” she said. She is targeting her Showalter said the history of Showalter Flying marketing efforts more specifi cally now and work- Service has shaped her perspective. Her in-laws, ing to develop new marketing partnerships. Howard and Sandy Showalter, began building the Though there are signs that the recession is slow- company in 1945 after World War II and established ing and in some FBO markets on the rise, it hasn’t Continued on page 32

Aviation Business Journal | 1st Quarter 2010 31 The FBO Market Continued from page 31

the fi rst FBO at Orlando Municipal Airport in 1951. Plains facility, and we just put approximately $1 Kim and her husband, Bob, took over the family million into our Dulles facility, so even though business after Howard’s death, and they’ve since things are tough we’re still doing the things we survived more than one economic crisis. believe in, long term, to take care of our customers “I’ve been doing this long enough that this is not and our business. Our approach is very conserva- the fi rst time we’ve been through a downturn,” tive. It appears that the deterioration has ceased Showalter said. “No two of them are ever the same, for a while, but we have not seen a big pickup, so but my husband and I bought this business right we’re just being very prudent in where we do spend before the Arab oil embargo in the 1970s, and we’ve money and how we expand the business. Clearly been through the issues in the early ’80s. There are we’re still looking at acquisitions, we’re still looking some things that, if you’re smart, you learn from. at opportunities to do things, but we’re being very, Showalter Flying Service has been here in Orlando very selective in what we do.” for 64 years. I’m planning on being here a long time Bucaro has scaled back his marketing budget. “It’s yet, but I’m planning on being real careful, too.” very diffi cult out there, and everyone’s fi ghting for every gallon of fuel that’s sold today, so we’re very Still Investing in the Industry proactive at every level to try to get customers to use the network that we operate,” he said. “While With 35 FBOs in the U.S. and six others in Eu- we believe it’s important to advertise—and we still rope and Canada, Houston, Tex.,-based Landmark do some, so our name is still out there—we also be- Aviation is experiencing the economic woes on a lieve that what’s really important to our customers different scale and has had a different response. is consistency in both customer service and safety. President and CEO Dan Bucaro said sales volumes We’re spending a lot more time inside our own are off by as much as 25 percent but that Landmark buildings, making sure our customer service level is is still investing in the industry and moving forward where it should be and what our customers expect. with acquisitions and capital improvement projects And we’ve put more of our dollars into our sales to maintain position and prepare for an economic department, to contact new customers and show turnaround. them the advantages of using our network. It’s a “Like everyone else, we’ve been hit pretty hard,” combination of both approaches. We’re seeking out Bucaro said. “We’re right about with the rest of the new customers like anyone else, but we’re also do- industry, about 25 percent off of volumes. I would ing everything we can to take care of the customer say we’ve seen it stabilize the last three or four base that we have today.” months and we’re not seeing any more decreases, Landmark Aviation has been in the business for but we’ve not seen it coming back yet either. We’ve more than 60 years, and Bucaro said it’s important had to lay off people, we’ve frozen wage increases to keep perspective and hold a longer view when it and bonuses, we’ve frozen the match on the 401k, comes to the economy, particularly because a down and we’ve taken a lot of different steps to reduce economy offers unique opportunities for invest- the cost structure.” ing in the future. “It’s just tough out there, and I Where other companies are freezing expenditures don’t want to downplay that,” he said. “It’s tough, across the board, however, Bucaro said Landmark no doubt about it. But we’re a big believer in the Aviation is taking the opportunity to carefully grow industry, and we think that it’s a sound investment, and expand the business. The company has con- as much now as ever. Again, we’re going to be very tinued with major capital improvement projects prudent about it, but we’re going to continue to to several of its facilities this year, and Bucaro is invest in this industry.” optimistic about the economy’s future and the role of aviation in that future. “Our capital expenditures are substantially less Taking the Hit in Stride than we planned for, but we have not eliminated Brett Greenberg, executive vice president of Galaxy them because we just believe in the industry and Aviation, said that the current economy reminds we believe that long term this is a good industry to him of the age-old lesson from Aesop’s fable about be in,” Bucaro said. the ant and the grasshopper and its moral about Landmark added four aircraft to its fl eet in April preparing for days of necessity. (Hawker 900XP, Hawker 400XP, Beechjet 400, and “We’ve been hit—everyone’s been hit—but we Gulfstream G550) and has been improving its facili- haven’t been hit that badly,” Greenberg said. “We’re ties. “We recently put $5.5 million into our White still doing the same stuff that we’ve always done

32 Aviation Business Journal | 1st Quarter 2010 from a marketing standpoint and a business stand- “When you see some decrease in business in the point. We’re a long-term business, we’ve been in it marketplace, you want to make sure that you’re in for a long time, and we’re in it for the long haul. I a good position,” he said. “We have defi nitely cut know a lot of people maybe didn’t save for a rainy back on some marketing and other expenses. Espe- day and might be having trouble now that there’s a cially in a down economy, you don’t want to pass little slippage in the business, but from our perspec- those kinds of expenses on to your customers when tive this is no big deal.” the market can’t support those efforts. So you cut Galaxy Aviation has gone ahead with some major back where you can, and marketing is an area that projects despite the downturn, including construc- we have cut back to some extent. We aren’t trying tion of a new hangar and terminal at its facility in a lot of new ideas there right now, just focusing on West Palm Beach, Fla., and the purchase of a new our standard marketing and working to streamline FBO servicing Steamboat Springs, from Hayden, the business and provide the best service we can. Colo., at Yampa Valley Regional Airport (HDN). The We fi gure that aviation is a small enough communi- acquisition adds a sixth luxury location to Galaxy ty that people will know and will notice those kinds Aviation’s portfolio. of efforts.” “We’re still full on, conducting business in the Greenberg said Galaxy Aviation has been fortu- way we always have, developing our facilities, and nate because the luxury resort locations its FBOs streamlining our business,” Greenberg said. “Wheth- serve are experiencing growth even in the current er it’s a good market or a bad market, we always recession, allowing him to focus on the future. “I’m look to make our organization a better organization sure there’s a lot of people that are hurting badly, and to improve for our customers. It’s not so much but again, it’s a reminder that you’ve got to plan for positioning ourselves to take advantage of the good your rainy days,” he said. “Fortunately this rainy times when the economy comes back as it is just day hasn’t been as rainy for us as it might have looking at it as a long-term business. Whether it’s been.” an up cycle or a down cycle, we have to continue to improve and work to be bet- ter for our customers and for ourselves.” That view has helped Galaxy Aviation grow slowly but surely. The company now operates 24-hour, full-service FBOs in Florida at West Palm Beach, Boca Raton, Stuart, Orlando, and St. Augus- tine as well as the new facil- ity at Steamboat-Hayden. Greenberg is more than optimistic about the future and said he’s bracing for more than just economic recovery. He expects the avia- tion business will exceed all expectation in the coming years. “We’ve been in this business for a long time, and what’s going on right now is just a cycle in the cycle of business,” Greenberg said. “Who knows? It’s down now, but three years from now, fi ve years from now, it’s going to be bigger and better than anyone ever could have imagined, and we’ll be ready for that, too.” Still, Greenberg concedes that his company has scaled back some in the down economy. And like some of his colleagues in the industry, he said his marketing budget has absorbed some of the hit.

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By Lindsey McFarren

ost aviation-related through promotion of healthy liv- wellness program can see a return businesses are ing and preventative services. on investment of $3 to $15 on looking for creative every dollar invested, with savings ways to save money Potential Benefi ts realized within 12 to 18 months of program implementation. and slash spending The estimates of fi nancial sav- in these diffi cult ings from wellness programs vary Meconomic times. Some companies from one company to another. Program Targets have reluctantly cut or reduced Admittedly, many of the benefi ts Not surprisingly, many wellness employee benefi ts. These cuts are “soft” and diffi cult to quantify. programs focus on eliminat- have come in the form of de- However, most companies with ing obesity, smoking cessation, creased employer contributions to wellness programs report the fol- and stress management. The health insurance premiums, less- lowing benefi ts: American Heart Association says robust insurance programs with • Reduction in sick leave/absen- obesity-related diseases account higher co-pays and coinsurance teeism for almost 10 percent of all medi- rates, and other health program • Reduction in health care claims cal spending in the United States. reductions. But with a little work, (more than one-third of emer- That means as a nation we spend your company can actually in- gency room visits may be un- about $147 billion a year on obesi- crease the overall health and well- necessary, according to a report ty-related diseases. Three chronic being of your employees while by the American Heart Associa- conditions caused or worsened spending less money! Read on to tion) by obesity—asthma, diabetes, and learn more about workplace well- • Reduction in worker’s compen- hypertension—create 164 million ness programs and discover how sation and disability claims lost work days per year. The heart one National Air Transportation Tim Sullivan, COO and director association believes these lost Association member company is of operations for Chantilly Air, an work days cost employers $30 bil- implementing a wellness program aviation services company provid- lion or more per year. for its employees. ing aircraft maintenance, charter, management, sales, storage, and Program Menu fueling in Manassas, Va., makes Goal: The distance a company goes to another important observation: implement a wellness program Preventative Maintenance “Individuals in the aviation indus- varies widely from one business to Let’s look at a wellness program in try, including pilots, salespersons, terms we all understand: aviation mechanics, and other employees, another. There’s no fi xed defi ni- lingo. Establishing a wellness pro- have fairly specialized knowledge. tion of “wellness program” where gram at your company is like of- Most aviation companies are you can look at aspects of a well- fering each employee free or sub- small businesses. One special- ness program like a menu—one of sidized preventative maintenance ized employee calling off sick the healthiest menus you’ll ever (health screening and weight has a much bigger impact on my see! Here are just a few items on a loss measures) in order to avoid organization—and probably most wellness program menu, ranging a premature engine overhaul or aviation businesses—than a single from very simple and inexpensive other expensive maintenance sick employee at a larger or less- activities to items requiring a little procedure (heart bypass surgery specialized company. Decreasing more commitment: or adult onset diabetes). Wellness absenteeism is one benefi t we • Draft and distribute a newsletter programs vary from one company hope to see as our program ma- with health-related tips, details to another, but they share the tures.” on available fi tness activities, same ultimate goal: to lower the If you prefer hard fi gures, the and low-calorie or low-fat reci- incidence (and therefore costs) same American Heart Association pes. There’s no need to recreate of signifi cant healthcare services report claims companies with a Continued on page 36

Aviation Business Journal | 1st Quarter 2010 35 Wellness Programs Continued from page 35 the wheel; you can fi nd good Program Case Study members. Chantilly Air’s policy resources at the Wellness Coun- is to pay for 50 percent of the NATA member Chantilly Air cil of America (www.welcoa. employee’s health care premium; began implementing a wellness org) or similar websites with however, employees who partici- program in early 2009. The organi- free content. Personalize these pate in the screenings receive an zation started by researching other newsletters with success stories additional incentive of the com- wellness programs and surveying from your own company! pany paying 75 percent of their employees. Chantilly Air found • Clear the vending machine of health care premium. “By offering employees shared two main con- all but a few “bad-for-you” items. this incentive we achieved a 95 cerns: privacy of personal health percent participation rate in the Instead offer 100-calorie pack information and fears of being told health screenings,” Sullivan said.” snacks, low-fat cereal bars, and how to live their lives. Sullivan Chantilly Air will conduct the other reasonable snack options. continues to work to allay these screenings again in 2010 and ask (I don’t recommend touching fears by communicating with each employee to choose one the soda machine. Although employees and educating them on unhealthy parameter or “wellness most people won’t complain health-related issues. objective” and develop a plan to about missing a Snickers bar, Chantilly Air has implemented you will almost certainly have a the following aspects of a wellness correct or improve the condition. mutiny if you remove all soda.) program in the past year: The company will use a third- • Consider a smoke-free work- • Distributed medical desk refer- party healthcare provider to help place, including all or most ences to all employees to help employees develop individual- outdoor areas. Take a look at them and their families deter- ized plans to improve and track the demographics of your or- mine when medical assistance their progress. Chantilly Air will ganization. Do you have more is needed. (An estimated 60 not know which employees chose non-smokers than smokers? percent of all primary care visits to lower their weight versus quit This step can be very easy or may be inappropriate, as indi- smoking, but it will know how quite painful depending on the viduals seek medical assistance many employees are working on makeup of your organization. for minor illnesses that would each parameter and how they are • Organize on-site fi tness classes. resolve themselves quickly with- progressing. Not only is this useful Look for a personal trainer, out medical intervention.) for developing and tracking met- yoga instructor, or other fi tness • Started a monthly health news- rics related to their wellness pro- expert and set up a class in your letter. gram, but it can help Chantilly Air lunchroom, storage room, han- • Provided confi dential health tailor its program to its employ- gar, or wherever you have space. screenings of basic informa- ees. If a considerable number of • Sponsor an on-site weight loss tion like blood pressure, weight, individuals are focusing on weight program. Weight Watchers (my blood sugar, bone density, and loss, the company could consider healthy-living promotion orga- cholesterol levels. a Weight Watchers at Work pro- gram or a weight-loss challenge. If nization of choice) has a Weight Sullivan offered this advice: smoking cessation is the focus of Watchers at Work program, “The key to a successful wellness most employees, it could consider where a company rep visits program is to provide incentives subsidizing prescription smoking- your location once a week to to employees who choose to par- cessation medications or other hold a regular meeting for your ticipate, not penalize those who smoking-cessation aids. employees. choose not to.” In fact, employ- • Subsidize gym memberships ment laws may even prohibit or recognized weight-loss penalizing employees who choose Ten Steps to Establishing programs. The Gold’s Gym not to participate in a wellness a Wellness Program Corporate Wellness Program is program as it can be viewed as a The Wellness Councils of America a customizable wellness solu- form of discrimination based on (WELCOA), at www.welcoa.org, tion. Gold’s offers a range of health status. outlines ten steps small busi- options, including company full Instead, Chantilly Air rewards nesses should take to implement a payment of employee member- employees who participate in the wellness program. However, WEL- ships, payroll deductions, or confi dential screenings, which the COA is quick to point out that a group rate plans. Other gyms company pays for annually for one-size-fi ts-all wellness program have similar programs. employees and household family does not fi t all businesses. You

36 Aviation Business Journal | 1st Quarter 2010 should customize these steps to fi t have just one individual to fi ll moving. Organize physical activity your own organization. these roles. I suggest fi nding an challenges for your company, and individual that is already passion- I’m not talking about a once-a-year Step One: ate about health and wellness. Do “corporate cup” event. I’m suggest- Top Management Buy-In you have an employee who has ing regular, frequent competitions. If you are the president or chief found success in quitting smoking For large companies, pass out executive offi cer of your company or signifi cant weight loss? How inexpensive pedometers and pit and you agree with what you have about a runner who has recently one department against another read in the article, congratula- achieved a new distance goal—a for a “most steps in a month” tions! This step is easy. Write a 10K, half marathon, full marathon, contest. For smaller companies, letter to your staff introducing the or just around the block? Find establish individual competitions wellness program concept, an- someone who is excited about like number of days at the gym in nounce that your organization will healthy living and ask him or her a month or perfect attendance at be pursuing such a program, and to lead the charge. I can tell you on-site fi tness classes. Have small demonstrate your commitment from personal experience—that but meaningful prizes for each to the company’s program as well type of excitement is infectious! winner, such as sporting goods as your personal commitment to store gift cards, company water Step Three: health and wellness. bottles, or T-shirts. But what if you aren’t in a Assessing Employee Interest Step Six: management position and your WELCOA suggests conducting leadership thinks a wellness an employee survey early in the Hold “Lunch and Learns” program is a feel-good, warm-and- implementation process. Even WELCOA says hosting an employ- fuzzy concept that there just isn’t as adults, we all dislike being ee seminar with a healthy lunch time or resources to implement? told what to do, especially with prepared before their eyes by a something as personal as our own WELCOA prescribes several strate- local chef is a guaranteed home health and lifestyle. Asking your gies for dealing with reluctant run! Look for local resources for employees to share their con- management, including making your lunch and learns: running or cerns with a wellness program or a business case for a wellness biking club representatives, fi tness general health topics can help you center employees, or dieticians. program, getting your leadership address their fears early on and My former employer held a lunch together with other managers who also give your wellness program program with a local biking club have implemented programs, or direction. asking employees to share their representative who described safe own health-related success stories. Step Four: road-sharing guidelines, passed In fact, WELCOA has found em- Health Screening out local bike route maps, and pro- ployee testimonials to be one of Next in the ten-step process is vided tips for biking to work. the most powerful arguments for a offering employees free health Step Seven: wellness program. screening. This will help the in- Establish an In-House Health Library dividuals realize their own health Step Two: status while helping you develop Chantilly Air took this step liter- Establish a Wellness Team the details of your wellness pro- ally by providing each employee Every company needs a wellness gram. Chantilly Air offers free with a healthcare desk reference leader, an individual or group of health screenings not only to their manual. Your company might opt individuals to be cheerleaders, employees, but also to employ- for a bookshelf in your facility researchers, writers, and more. ees’ spouses or family members. dedicated to healthcare resources, Here’s where customization You don’t need ultra-sophisticated healthy recipe books, fi tness comes in. A large company might (read: expensive) screening for DVDs, and more. Consider allow- have an entire wellness team of this step to be productive. WEL- ing employees to check out these several individuals, assigning a COA says basic screening can cost resources to use at home. Do you few to the health newsletter, some as little as $25 per individual. have a company website or intra- to organizing company fi tness net for your operations manuals, events, and others to tracking em- Step Five: human resources policies, and so ployee progress in the program. Physical Activity Campaign on? Include health, nutrition, and A small company (the majority of We all know that to get or stay fi tness resources on your website NATA member companies) might healthy, we need to get or stay Continued on page 40

Aviation Business Journal | 1st Quarter 2010 37 Cashing Out Your Hidden Business Assets By Rhona Sacks our successful aviation service company is plans, and estate liquidity and equalization policies. more than just your most valuable capital Traditionally considered infl exible assets with little asset; it represents the realization of your liquidity, these policies have long been viewed as dream. During the start-up and growth necessary yet unrecoverable expenses. stages, enhancing your fi rm’s productivity When a company is up for sale, some of these life was your primary goal. Now that you’ve contracts may become obsolete because the reasons Ydecided to sell your company and retire, your for their purchase are no longer relevant. And after primary goal is to extract maximum value from a company is sold, additional business life policies the business you’ve worked hard to build. Unfortu- may outlive their usefulness. nately, too many exiting entrepreneurs (as well as Historically, exiting entrepreneurs faced limited their legal, fi nancial, and business advisors) leave disposition options when their changing needs too much cash behind because they fail to recog- rendered their business life policies unnecessary: nize the enormous value hidden within one of their allowing the policy to lapse, thereby forfeiting the most overlooked and underutilized business assets. value of all premiums paid or surrendering the policy to the original insurance carrier for its cash “No gain is so certain as that which proceeds from surrender value, an amount that doesn’t refl ect its the economical use of what you already have.” true value. —Latin Proverb There is another option. You can use an in- novative asset optimization technique—a life Increasing Competition to Sell settlement—to convert the hidden value in quali- Due to the aging of the baby boomers, we are at fi ed business life insurance contracts to signifi cant the precipice of the largest business transition in immediate cash, providing a much higher return on history, with millions of entrepreneurs seeking your investment. to monetize business equity. Deloitte & Touche recently reported that, “71 percent of small and What is a Life Settlement? mid-sized enterprise owners plan to exit their busi- A life settlement is the sale of a life insurance pol- nesses within the next ten years.” Because only 30 icy to an institutional investor for a cash payment percent of family businesses survive to the second that is greater than the policy’s cash surrender generation and just 15 percent survive to the third value. The platform for the life settlement industry (according to the Small Business Administration), was created in 1911 by virtue of Grigsby v. Russell. In most companies are sold, and if a sale isn’t pos- this seminal case, the U.S. Supreme Court declared sible, closed. With so many companies up for sale insurance policies to be personal property and at the same time, the increasing competition to sell freely assignable, thereby granting a policyholder demands innovative asset leveraging strategies to the right to transfer ownership to others. capture optimum value as well as create more cash With a life settlement, when your no-longer- with which to expedite a sale. needed term or cash value business life policies are sold for the highest quality institutional offer, you Your Hidden Business Assets receive a lump-sum cash payment that can be used Throughout the business cycle, companies pur- for any purpose, including facilitating the sale of chase numerous business life insurance policies for your company for the desired price and on favor- risk management, employee benefi t, and invest- able terms. ment purposes. Examples include policies funding buy/sell agreements, key-person policies, split- An Entrepreneurial Tale dollar policies, policies securing business loans, Three business partners, ages 66, 68, and 70, were policies funding retirement and employee benefi t the principals of a successful company. To fund a

38 Aviation Business Journal | 1st Quarter 2010 cross-purchase buy/sell agreement, each partner portfolios into alternative investments. owned two $3 million term policies (no cash sur- render value) on the lives of the other partners. End of a Monopsony Seeking to sell their fi rm, these entrepreneurs Imagine a world where you were only permitted to received no offers that they felt were adequate for sell your house back to the builder, your automo- achieving their retirement and legacy goals. Unfor- bile back to the dealer, and your stocks back to the tunately, their legal, fi nancial, and business advi- issuing corporation. This is what a world without sors were unaware of the enormous value hidden secondary markets would look like, and this is the within these business term policies, believing that world that life insurance policyholders have tradi- they were worthless due to having cash redemption tionally encountered. value. Before the emergence of the secondary life Instead of lapsing the policies and receiving no insurance market in the late 1990s, the originat- return on the premiums they had paid for many ing insurer was the only potential purchaser for years, these three wise men sold their policies to your expendable business life insurance contracts, institutional investors in the secondary life insur- thereby restricting your policy disposition options ance market and received cash windfalls of approxi- to receiving an artifi cially low cash redemption mately $600,000 each. value. Because the insurance companies set the re- By coordinating the sale of their company with purchase price, policyholders traditionally received the sale of their obsolete buy/sell policies, the little economic value from their superfl uous life owners were able to sell their company quickly at contracts, on average just 4 percent of the policy’s a reduced all-cash price because the life settlement face value (according to the Journal of Accountancy). proceeds provided the money they needed to fi ll Fortunately, the life settlement industry has the gap between their original selling price and the replaced this monopsony (an anti-competitive offers from buyers. market situation in which a seller is only permitted to sell to one buyer) with a free market alternative Life Settlement Basics wherein companies competitively bid to acquire Although life settlement viability is determined on the rights and obligations in your dispensable busi- a case-by-case basis, with all transactions subject to ness life policies. This vibrant marketplace enables relevant legal requirements and underwriting au- you to retrieve the fair market value from these thorization, the general purchasing parameters are: otherwise illiquid business assets. With the aver- • The insured is 65 or older, age life settlement payout being 20 percent of the • The policy’s death benefi t is $250,000 or more, face value (according to Maple Life Financial), a and life settlement can be an effective tool for liberating • The policy has been in force at least 2 years. substantial liquidity hidden within a dormant busi- ness asset. Unlike applying for life insurance, no medical exams or extensive interviews are required. The un- Caveats derwriting process involves only paperwork, such Although selling your unnecessary business life as your life insurance policy and in-force ledger as policies in the secondary life insurance market can well as your medical records, which are necessary be profi table, navigating the labyrinthine life settle- to verify the specifi cs of your insurance and health. ment marketplace can be challenging. The nascent Furthermore, there are no appraisal, application, or life settlement industry, in general, lacks ample processing fees. due diligence and transparency as well as knowl- Large portfolios of life policies are purchased by edge of and services responsive to the unique needs institutional investors seeking predictable non- of retiring entrepreneurs in the process of selling market correlated returns based on the future their companies. value of policy proceeds. In 2006, corporate money Analyzing the expendability of your business life managers invested $10-15 billion in life settlements policies, coordinating the sale of your obsolete poli- (according to the A.M. Best Company, Inc.)—more cies with the sale of your company, safeguarding money than in the previous seven years com- your privacy, and securing the highest quality in- bined—because they are increasingly interested in stitutional offer demand specialized advisory skills purchasing pools of life policies to diversify their Continued on page 40

Aviation Business Journal | 1st Quarter 2010 39 Wellness Programs Continued from page 37

so off-site employees can benefi t this step. As aviation businesses, employees to participate by form- from your library. we are typically drug and alcohol- ing training teams for races or car- free already. But consider other pools for health fairs or seminars. Step Eight: health-promoting policies such as A wellness program doesn’t Publish a Quarterly Health Newsletter required seat belt use in company have to be complicated to be We’ve discussed this step a bit vehicles (or company-rented effective. Look for creative but above, but WELCOA adds that vehicles), taxi or shuttle service inexpensive incentives for healthy including a short quiz about the home from company social events living among your employees. information in each newsletter where alcohol is served, and In this economy, maintaining a can help ensure absorption of the winter-weather hours if you live healthy workforce is a very effec- details. WELCOA suggests collect- in a harsh climate. tive way to reduce costs. Wellness ing quiz results and awarding a programs make good fi scal sense prize to a randomly selected em- Step Ten: through good physical health! ployee with correct answers. Promote Community Health Efforts Have your wellness team keep Step Nine: Lindsey McFarren is the president of an eye out for community health McFarren Aviation Consulting. You Implement Health-Promoting Policies events, such as races, health fairs, can reach her at WELCOA includes non-smoking and more. Include a listing of local [email protected]. policies, drug and alcohol-free events in your newsletters or on workplace, and other mandates in your company website. Encourage

Cashing Out Continued from page 39 Advertiser Index Air BP Aviation Services Back cover in exit planning, business life insurance, and life settlements. Working with an independent advisor Avfuel Corporation Inside front cover who has expertise in these disciplines is the key to Chevron Global Aviation Inside back cover a successful, effi cient transaction. ExxonMobil Aviation 4 Get Your Deal Done Fltplan.com 6 Every day, retiring business owners frustrated by Horizon Business Concepts 33 inadequate purchasing offers for their fi rms un- KaiserAir 17 knowingly discard valuable capital assets by cash surrendering and lapsing their no-longer-needed McBreen & Kopco 8 business life policies. Selling these hidden business Midcoast Aviation 34 assets can be the answer to easily getting your deal done. NATA Sustaining Members 42 NetJets 26 Rhona Sacks, an attorney and business coach, is the founder and president of Legal Life Settlements, a Phillips 66 Aviation 22 mergers and acquisitions advisory company specializ- R. Dixon Speas Associates 12 ing in helping retiring business owners extract maxi- Sabre Flight Explorer 13 mum value from their hidden business assets. More information is available at (650) 226-3324 or www. Signature Flight Support 3 legallifesettlements.com. Universal Weather & Aviation 14 USAIG 10 Velcon Filters 41

40 Aviation Business Journal | 1st Quarter 2010 IRS-based Debt Collection: A New Twist on an Old Problem By Ben Ricci ost businesses that sell on credit have, collection letter should be sent that describes the at one point or another, run into a IRS rule on uncollectible debts. The letter should problem collecting an overdue ac- tell the debtor that unless payment is received im- count. Collecting accounts can be mediately, you will be obligated to write the debt expensive and time consuming. But off and report the amount of the debt to the IRS as thanks to a powerful IRS rule regard- income for the debtor. Ming so-called “uncollectible debt,” businesses can The IRS is the most feared collection agency improve collection results and lower collection imaginable. When all else has failed to get a debtor costs. to pay, use the power behind the IRS rules to get The natural progression of the collection process dramatic results for your company’s collection ef- for a business has usually been something like forts. this: send a “routine” reminder bill, followed by a “routine” phone call, then an “aggressive” reminder Ben Ricci develops strategies for businesses to improve bill, followed by the “aggressive” collection letter credit and collection operations. He is founder and stating the account has been (or will be) referred to CEO of Stevens & Ricci, Inc. and personally developed a professional collection agency. “The IRS Advantage,” a turnkey program designed to However, each of these efforts are backed only by easily use IRS Reg. S1.61-12 to help business owners the will of the creditor-business; that is, the debtor resurrect “uncollectible debts” and get the overdue client knows that some businesses, especially small busi- to pay. To learn more, visit www.stevensricci.com. nesses, will eventually give up and drop the threat of collection as time wears on. After all, the seller isn’t in the collection business and its efforts need SOLVE YOUR FUELING PUZZLES WITH VELCON to be directed to growing the business and not chas- ing down one or two bad accounts. That anticipation can cause a debtor to ignore customary collection efforts. Non-payment can also result from a debtor’s “just doesn’t care” attitude for the possible ramifi cations of non-payment. What- ever the reason, today’s debtors are savvy and very good at stalling or avoiding payment. The response, then, is to implement a more comprehensive ap- proach to combat delinquencies and get the debtor to care about the ramifi cations of non-payment. Enter IRS Reg. S1.61-12 regarding the discharge of indebtedness. Regulation S1.61-12 states that a debt that is not repaid can be reported as a loss by the creditor, thereby making it taxable income for the Discover our array of solutions for all debtor. Turning a debt into taxable income means the IRS gets interested in both the delinquent bill your fueling problems & puzzles: and the debtor. ♦ FDPM® Flow Differential Pressure Module for corrected differential pressure readings Reminding debtors that they can be reported to ♦ VCA® Velcon Contaminant Analyzer for fuel quality, patented the IRS for failing to pay the debt usually gets their ♦ SRS Sump Recovery System for fuel savings - patent pending attention. Even the most delinquent debtors can Velcon - more than just fi lters! develop second thoughts about avoiding the debt when there is the possibility that the IRS will take a Velcon Filters, LLC closer look at their tax return. Alerting the debtor to Colorado Springs, CO USA the IRS consequences of not paying the debt can be 1-800-531-0180 • 719-531-5855 • Fax 719-531-5690 done in a variety of ways. [email protected] • www.velcon.com Generally, once an account becomes overdue, a

Aviation Business Journal | 1st Quarter 2010 41 Air BP Aviation Services Avfuel Corporation Chevron Global Aviation ExxonMobil Aviation FltPlan.com Midcoast Aviation NetJets Phillips 66 Aviation Sabre Flight Explorer Signature Flight Support Universal Weather and Aviation, Inc. USAIG NEWS

NATA Adds New FBO Operational Best Practices ATA’s Safety & Security Committee added together many years of aviation experience and three new operational best practices knowledge. The recommendations provide guid- (OBPs) on cell phone/media device ance to help FBOs develop procedures applicable to usage in work areas, motorized mobile their own operations and associated risks. equipment, and adverse weather moni- NATA’s OBPs provide an introduction that guides toring. These will provide additional users through the process of tailoring the OBPs to Nguidance to the original OBPs on safety commit- the operation, a record of revisions, and the best tees, safety management systems, 50/10 stoppage practices. The Safety & Security Committee en- procedures, proper propeller handling, safe secur- courages all FBOs to evaluate their practices with ing of aircraft, foreign object damage prevention, NATA’s OBPs to ensure safety on their ramps. and the safe towing of aircraft. NATA members can access the OBPs from the The OBPs were developed by industry experts Safety & Security Committee page under Important on NATA’s Safety & Security Committee who bring Links.

Continued on page 44

Aviation Business Journal | 1st Quarter 2010 43 Safety 1st News Continued from page 43 NATA’s Safety 1st Ramp Communications Video Is Available Online ne key way to help improve the accident learned due to this training. Do you know them all, and incident rate on ramps is through or better yet, does your line staff consistently and a sustained campaign of education and professionally communicate using these standard- training. NATA Safety 1st, in cooperation ized signals and best practices? with the Federal Aviation Administration (FAA), created a ramp safety DVD to fos- terO safety awareness and communication between pilots and line personnel. NATA has taken this one step further and is making the video available, free to the industry, on the Safety 1st page of NATA’s website. Pilots and line service personnel can learn nearly 25 hand signals that foster better understanding and encourage everyone to work together to protect aircraft on the ramp. Many veteran pilots and line personnel have previewed this material and found that they were unfamiliar with a number of impor- tant and highly useful hand signals, but now have

What’s New with PLST Online?

ATA’s Safety 1st Profes- must be passed with an 80 percent complete. The goal of this train- sional Line Service or better score to move on to the ing is to quickly and effectively Training Program (PLST next module for certifi cation. provide line service personnel Online) celebrates its Following several requests with the knowledge to facilitate second anniversary this for online training for customer a safe turnaround of aircraft on year, which means it is service representatives at an FBO, the ramp and to provide specifi c Ntime for recurrent training for our we will offer an online training information that is often given initial participants. The recurrent module called Customer Service, only to maintenance personnel price will be less than the initial Safety & Security. This module or fl ight crews. This information price, as approved by our advisory covers in-depth customer service includes details regarding fueling board, and based on a percentage skills as well as ramp safety and procedures, capacities, and spe- of the initial purchase price. We security practices at an FBO. It’s cifi c towing requirements made have made changes and additions an excellent way to cross-train available in the aircraft manu- to the training since its initial all personnel at a facility and to facturer’s maintenance or fl ight rollout to ensure all participating foster a deeper understanding of manuals. We continue to reach out companies will benefi t. Additional- the intricate tasks performed at an to the aircraft manufacturers for ly, recurrent training has different FBO. We are planning additional specifi c handling information per business rules that allow a student module offerings later in the year, their recommended guidance. To to go through the training as need- including de-icing and OSHA date, Airbus and Bombardier have ed. (If you remember, initial train- training. provided detailed information ing required all training screens We rolled out phase two of the that will be uploaded to the AGSO. to be completely viewed.) The PLST Online, the Aircraft Ground NATA and Safety 1st appreciate exams, which are always different Service Online (AGSO), at the end the cooperation and information because they are randomized and of September. This project is ongo- provided by the aircraft manufac- drawn from a bank of questions, ing, but much of the initial work is turers.

44 Aviation Business Journal | 1st Quarter 2010 NEW NATA MEMBERS

• Aeroshear Aviation Services Inc. • Burrows Aviation, LLC • Flight Services & Systems Inc. Christine Paschal Ron Burrows Robert Weitzel 16150 Stagg St. N6284 Resource Drive 6100 Riverside Woods Blvd., Ste. 355 Van Nuys, CA 91406 Sheboygan Falls, WI 53085 Cleveland, OH 44131 (818) 779-1650 (920) 467-0370 (216) 328-0090 Fax: (818) 779-1309 Fax: (920) 467-0434 Fax: (216) 328-0091 www.aeroshearaviation.com www.burrowsaviation.com [email protected] [email protected] [email protected] • French Valley Aviation, Inc. • Air Bear Aviation Inc. • Capital Aviation, Inc. Joseph Diorio Thomas Bear Bill Boettger 37680 Sky Canyon Dr. 100 Old Chester Road 5500 Phillip J Rhoades Murrieta, CA 92563 Derry, NH 03038 Bethany, OK 73008 (951) 677-2756 (603) 216-2752 (405) 495-1141 [email protected] www.myairbear.com [email protected] • Greenville-Spartanburg International Airport [email protected] • City of Tavares Kristie Weatherly • AirShares Elite John Rumble 2000 GSP Drive David Lee 201 East Main Street Greer, SC 29651 1954 Airport Rd., Ste. 270 Tavares, FL 32778 (864) 848-6274 Atlanta, GA 30341-4949 (352) 742-6131 Fax: (864) 848-6225 (678) 581-5962 Fax: (352) 742-6351 [email protected] • Alaska’s Enchanted Lake Lodge www.tavares.org • Harco Aviation, LLC Daren Erickson [email protected] Thomas Merriwether P.O. Box 111249 • , LLC - West Miffl in 7930 Airport Blvd. Anchorage, AK 99511-1249 Mike Vargo Houston, TX 77061 (907) 694-6447 Allegheney County Airport (713) 641-1869 Fax: (907) 694-6448 Hangar #15 [email protected] [email protected] West Miffl in, PA 15122 • Integrated Airline Services Inc. • Alpine Air Express, Inc. (412) 469-6800 Scott King Lewis Tippets Fax: (412) 469-0877 3980 Quebec Street, Suite 111 1177 Alpine Air Way [email protected] Denver, CO 80207 Provo, UT 84601 • Diamond Air Charters Inc. (303) 398-2416 (801) 374-1508 Anthony Debany Fax: (303) 394-3816 Fax: (801) 377-3781 49 Miry Brook Rd. [email protected] www.alpine-air.com Danbury, CT 06810-7408 • Mettus-Aerospace LLC [email protected] (203) 730-9955 Sridhar Mettu • American Flyers Fax: (203) 730-9966 11616 Summit Street Jill Cole [email protected] Kansas City, MO 64114 16151 Addison Road • Executive Flight Center Inc. (913) 568-9323 Addison, TX 75001 Donna Meyer www.mettus-aerospace.com (800) 433-0808 358 Bolling Road [email protected] www.americanfl yers.net Meridianville, AL 35759 • Millington Regional Jetport [email protected] (256) 828-1403 Tracy Williams • Aviation Sales, Inc. Fax: (256) 828-9913 8182 Hornet Ave. Louis Domenico, Jr. donna@executivefl ightcenter.com Millington, TN 38053-2515 12260 E Control Tower Rd. • Field Management Services (901) 873-5792 Englewood, CO 80112-4502 James O’Brien [email protected] (303) 799-9999 400 Skokie Blvd., Suite 860 • State University [email protected] Northbrook, IL 60062 Amiy Varma • Barrier Island Aviation (847) 509-2252 Department of Civil Engineering Jerod Rosman Fax: (847) 509-0285 NDSU Dept 2470 407 Airport Road jim.obrien@fi eldholdings.com Fargo, ND 58108 Manteo, NC 27954 • Fjord Flying Service LLC (701) 231-7041 (252) 473-4247 Charles Schroth Fax: (701) 231-6185 Fax: (252) 473-4246 P.O. Box 48 [email protected] www.barrierislandaviation.com Gustavus, AK 99826 [email protected] (907) 697-2377 Fax: (907) 796-2471 fjordfl [email protected] Continued on page 46

Aviation Business Journal | 1st Quarter 2010 45 New NATA Members Continued from page 45

• One Mile Up • Sky Harbor Air Service, Inc. • ST Aerospace San Antonio, L.P. Gene Velazquez Paul Martin Brad Morton 7011 Evergreen Ct. 3913 Evans Ave. 9800 John Saunders Rd. Annandale, VA 22003-3227 Cheyenne, WY 82001 San Antonio, TX 78216-4202 (703) 642-1177 (307) 634-4417 (210) 293-7166 [email protected] [email protected] Fax: (210) 293-7177 • Paradigm Aerospace Corporation • Sky Research [email protected] Dayna Cortazzo Kyle Hopkins • TouchStar 226 Airport Road 445 Dead Indian Memorial Rd. Brett Williams Mount Pleasant, PA 15666 Ashland, OR 97520 5147 S. Garnett Rd., Suite D (724) 887-4413 (541) 552-5100 Tulsa, OK 74146 Fax: (724) 887-4447 [email protected] (918) 307-7100 www.paradigm-aero.com • SLJ Aviation Consulting, Inc. [email protected] [email protected] Stephen Jones • Transair • Peterson Air LLC/Pete Bridge, LLC 1100 New Highway, Suite 402 Teimour Riahi Tim Peace Farmingdale, NY 11735-1550 P.O. Box 29239 1179 Standiford Ct. (516) 322-5716 Honolulu, HI 96820 Louisville, KY 40213-2059 Fax: (516) 977-1258 (808) 833-5557 (812) 620-0834 [email protected] Fax: (808) 833-5288 [email protected] • Solberg Aviation Co., Inc. www.ifl yinterisland.com • Raptor Group Holdings Thor Solberg [email protected] John Race P.O. Box 15 • Vaisala Inc. 50 Rowes Warf, 6th Floor Readington, NJ 08870-0015 Nancy Thomsen Boston, MA 02110 (908) 534-4000 194 South Taylor Ave. (203) 262-9493 Fax: (908) 534-4887 Louisville, CO 80027 Fax: (203) 262-9462 [email protected] (303) 402-4715 www.raptorgroup.com • South Lafourche Leonard Miller Airport Fax: (303) 499-1767 [email protected] Jeffery Hunter [email protected] • Reliance Aerotech Services Inc. P.O. Box 490 • Vortex Generations, Inc. Pamela Carroll Galliano, LA 70354 Gary Babcock 1161 Murfreesboro Pike, Ste. 410 (985) 475-6701 14824 N Prichard Rd. Nashville, TN 37217 Fax: (985) 475-5050 Lewistown, IL 61542 (615) 627-0738 [email protected] (309) 649-1961 Fax: (615) 627-0743 • Southern Avionics & Communication Inc. Fax: (309) 649-1928 www.relianceaerotech.com/services Thomas Greer www.vortexgenerations.com [email protected] 2495 Michigan Ave. [email protected] • S.M.A.R.T., Inc. Mobile, AL 36615-1126 • Zone 4 International, LLC Brian Peterson (251) 433-9980 Kaires Odom 509 Live Oak St. [email protected] 5879 Hayes Lane Edgewater, FL 32132 • SpiritJets, LLC Rex, GA 30273 (800) 842-0891 Doug McCollum (770) 349-9460 Fax: (800) 779-0299 16666 Old Chesterfi eld Road [email protected] www.smart-inc.com Chesterfi eld, MO 63017 [email protected] (636) 735-2222 • Saint Martin Jet Center [email protected] Marvel Paines Route de l’esperance Grand Case Airport Saint Martin, Grand Case 97150 Guadeloupe (305) 407-8777 [email protected] Raise Your Voice, Get Involved • Skill Aviation Skip Goss 2346 W Beach Rd. As the Voice of Aviation Business, NATA’s Waukegan, IL 60087-1541 (847) 599-9955 focus is to protect the interests of aviation Fax: (847) 599-9966 [email protected] businesses through aggressive and professional representation. To get involved, call (800) 808-6282 or visit www.nata.aero. 46 Aviation Business Journal | 1st Quarter 2010 Our vast FBO network. Hundreds of locations. One below you. When you’re on the spot to deliver standout customer service for your clients, you need an FBO network that’s ready to do the same for you. We have over 600 FBOs in the U.S., Caribbean and Canada with the experience and resources to help you manage challenging logistics while providing your clients the creature comforts of a fi rst-class operation. We offer quality fuel, products and services at competitive prices, and the convenience of our Alliance Card and FlyBuys™ rewards program. Want more info? You’ll fi nd us at www.cgaFBOlocator.com. And just about everywhere you want to go.

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