|The Maryland Business Journal|
Flying High In The Corporate Skies
Jan 01, 2012
By Mark R. Smith, Editor-in-Chief
Economic development officials often trumpet the importance of a city's major commercial airport to its bottom line.
There's not much to argue with them about on that front, especially in Maryland, where BWI Thurgood Marshall Airport seems to be setting passengers records [practically] every month. It's now kicking off its latest expansion, with this investment reaching the $100 million mark.
While the business community and the public are often well aware of such news, the less heralded corporate [or general aviation] sector of the industry also pumps up that bottom line, with that sector accounting for a substantial amount of business.
For instance, a 2005 study from the National Business Aviation Association (NBAA) that was conducted in sync with the General Aviation Manufacturers Association indicated that general aviation annually supports more than 1 million jobs and generates about $150 billion in economic activity.
While the general public has an image of well-heeled corporate types exercising their privilege by jet setting around the globe to meetings or [more likely] a weekend of leisure in some exotic locale, industry sources stress that rich folks aren't the most consistent users of private aircraft.
It's true that the usual passengers on general aviation flights aren't those high-falutin' flyers. "Most flights," said Patrick Sniffen, vice president of marketing for Orlando-based Signature Flight Support, "move teams of middle managers."
So what services, exactly, do Signature [a fixed-base operator, or FBO] and similar companies provide for their clientele?
They fuel, hanger and, at some locations, maintain aircraft; as well as serve as a concierge for passengers and crew. That means booking hotel rooms and providing catering and ground transportation services, worldwide. For instance, Signature "works with Hertz on a national basis and even has a proprietary booking system," said Sniffen.
To illustrate, at Signature's base at BWI Marshall, General Manager Dawn Gallina's staff of 32 workers provides ground operations for the aircraft from the time it arrives until it departs. Also on site at BWI Marshall is Aircraft Service International Group (ASIG), a sister company which often works with the larger groups (like sports charters) or for the big commercial carriers like Delta and Southwest.
The requests that the related companies get from clients range from critical to almost inconsequential.
"We get airlift demands and move sick patients," said Gallina, "and we've also taken customers to dental appointments or to pick up their drycleaning."
Signature operates globally from 107 locations, so the company is able to, as Sniffen said, "connect the dots. So if a plane flies from Baltimore to San Francisco, we can handle the customer's needs in both cities. That's what usually happens."
While there are numerous other major players on the corporate side of the aviation business that have larger network footprints, Signature is the largest international player, and also operates from 59 sites in the U.S. That's still significant, considering that there are more than 2,000 FBOs in U.S.
That may sound like a huge amount, but Sniffen said that it really isn't.
"Consider how many smaller general aviation airports there are in this country," he said. "They may not be served by the large commercial airlines and these smaller airfields bring business to smaller communities.
"Without general aviation and its support services," including FBOs like Signature, "the country, as a whole, would suffer," he said, deeming general aviation "an economic generator that isn't promoted to its full potential.
"Someone with a King Air aircraft, for example, can take a few key staff into virtually any community with a general aviation airport (which often ranges between $7,000 to $12,000, round-trip)," he said, "and create jobs in an area that may be suffering from a lack of economic development or offshoring."
Sniffen pointed to the failures of the textile and manufacturing industries to support his point.
"Many of the jobs in those industries jobs were offshored," he said, "but now, a company can go back into those communities and develop new business. And look at the Honda and BMW plants in Greenville, S.C.," he said. "Planes have connected a [basically] rural community to create a number of fairly high-wage jobs."
Doing It All
One locally-based corporation that stands as proof of general aviation's impact is Annapolis-based ARINC. Its ARINC Direct division supports about 2,700 aircraft in business aviation and employs 40 FAA-certified dispatchers.
Like Sniffen, Bob Richard, senior director of ARINC Direct, stressed that "Many corporations use corporate aviation to transport mid-level executives. Some even operate their own daily shuttles, including a dozen that we deal with."
What ARINC Direct and similar entities do is act as an airline dispatch office. "We're their IT [information technology]department and their flight operations center," he said. "A major Fortune 500 [company] doesn't operate its own airlines. They contract with a company like ours for those services."
"Those services" can encompass just about anything, including weather briefings, flight plans, safety management services, risk analysis and mitigation, and providing a source for a credit facility. That last service is crucial, since most fuel providers won't take a regular American Express or Visa card for [up to] a $40,000 fill-up for a large aircraft.
Then there's the matter of foreign travel. "When you fly over other counties' airspace, like Russia or Cuba, you need to pay for permits,"
Then there are the services ARINC Direct provides that are among those "that the public associates with ARINC, like communications services for the cabin and the flight deck, data services for the systems onboard the aircraft, weight and balance computations, and runway analysis. Then comes the paperwork, which is sent in a package that the client picks up upon arrival at the airport.
ARINC Direct operates worldwide, with its busiest airports being White Plains, N.Y., and Teterboro in N.J., "because that's where all of the corporate traffic gets to New York City," Richard said.
Interestingly, it's somewhat unusual that the corporate flights go into the local commercial airport, as is the case at BWI Marshall. "And we have no closer relationship with BWI Marshall than any other airport," he said.
Up in the Air
Dan Hubbard serves as the senior vice president of communications for the NBAA, which represents 8,600 companies "that rely on a small aviation airplane to do business."
Hubbard said the NBAA commissioned two studies more recently (in 2009 and last year, both of which were conducted by Nexa Advisors) that indicate that "many companies that do not use business aviation perhaps should."
So the association implemented an advocacy campaign, "No Plane, No Gain," which is aimed toward assisting Washington's policymakers "in understanding the many ways that business aviation is essential in America. The studies have also helped us inform people in the business world of how the aviation business can support their objectives," Hubbard said.
That message is crucial to industry growth, especially as the economy continues crawling toward recovery, said Eric Byer, vice president of government and industry affairs for the National Air Transportation Association in Alexandria, Va.
"We've had a rough last three or four years between the economy lagging and President Obama criticizing our industry," Byer said. "He has made proposals to add user fees to general aviation operations and to tax the use of corporate aircraft, without realizing the trickle down effect on different components of the industry.
However, Byer also noted a recent uptick. "We're now seeing everything from corporate users to charter operators to casual weekend flyers slowly getting back in the swing of things," he said.
The two best indicators, he said, are the 5% to 10% increases in operational activity and fuel sales [respectively] in the Northeast and in Florida last year from 2010 figures.
So, Byer sees a brightening horizon.
"I'm confident that we'll see at 10% increase in usage and fuel sales this year," he said, "and I think 2012 will be rebound year for the corporate air industry."