Looking Beyond the Midwest

Andy Priester, 35, is his father's son. There's the pragmatism of a Midwesterner; the confidence of a family business with a history. There's also an air of tomorrow. Says Priester, "I'd like to think that the infusion of my newer ideas, things that are perhaps a bit less conservative than what we've done in the past, has been good for the company. We're considering things today that we might not in the past; as a result, we've expanded past Chicago to Dallas and Oklahoma and Minnesota - and out to China. Before, I think we really looked at ourselves as a very regional, Chicagoland company." In essence, opening the door to Asia has presented a new future, says Priester.

Andy is the son of Charlie Priester, current chairman and CEO who directed the company for years, following in the footsteps of his father George, who founded the company. In fact, George Priester purchased the Palwaukee Airport here in 1953 and grew the airport and his fixed base operation into the leading corporate aviation facility in the Chicago area for years. Today, the Priester Aviation FBO is a Signature Flight Support, of which Priester is a sub-tenant, occupying three hangar bays on a four-bay corporate facility (which the original Priester Aviation built in the 1980s).

Today, the company has taken two of its historic strengths - charter/management and aircraft sales - into its core business, and has been broadening its scope by contracting with aircraft in new markets. Those include Janesville, WI; Dallas; Tulsa; and Minneapolis.

However, in the midst of its aggressive expansion into the U.S. market outside of the Chicago market, the company discovered the Asian market, and Andy Priester sees a good deal of potential there.

"Right now, business aviation over there is a drop of yellow in a sea of green," says Priester. "As more and more [corporate] airplanes are delivered in China and more companies and individuals wind up buying airplanes, there are going to be more companies doing this."

That said, Priester acknowledges that more bizjets in the Asian/China market equates into more aircraft management opportunities for companies like Priester Aviation. The company currently has some 34 bizjets on contract, which includes a contract for seven aircraft in the Minneapolis market. The company owns no airplanes. Explains Priester, "Our operating philosophy is, as a company we don't want to own any of the airplanes. We just want to do a good job managing them for those people who do own them. It"s worked well."

Asia Comes to Chicago

In June, Priester Aviation announced that it had entered into an agreement to form a partnership with BAA Jet Management Limited, a Hong Kong liability company, to offer aircraft management and charter services throughout Asia.

Per the agreement, Priester will provide flight crews, operations, and maintenance under FAR Part 135, while BAA will provide the customers. According to Andy Priester, it was an opportunity that came to him. It was the company's new approach to growth that made it possible, he says.

The opportunity began, recalls Priester, when Global Wings, a charter company based in Japan, approached Priester Aviation about working together.

"They really wanted to work with us," says Priester, "primarily because Japan in Asia is undergoing a similar evolution that the United States did back in the 1940s-70s. What they liked about our company is that we literally lived through the same type of transition. They wanted to work with us on a consultative and an experience basis.

"They currently have three Learjet 45s that they run around China and Japan. They've really developed the market on their own."

In time, says Priester, that led to the introduction to BAA [Business Aviation Asia] Jet Management, which operates three G-200s but which is aggressively pursuing more management contracts.

Explains Priester, "They're really growing the business by gaining contracts with other airplanes throughout the region. They wanted to work with a Western company to establish U.S. and Western standards to their operation in Asia. Because of our association with Global Wings, they referred BAA to us."

For his company, says Priester, this brought an opportunity to reach a new market with the key elements in place. "That's part of the beauty of the relationship. BAA has already established the relationship with local governments, with the Chinese Civil Aviation Authority. They're the experts at obtaining the permits, doing the flight plans, all the regulatory things.

"They really quarterback that side of the arrangement, and they quarterback a lot of the marketing. Our responsibility winds up being the legal, operational control and operation of the airplanes. We do the flight crews; operate the aircraft to Part 135 standards; make sure they're properly maintained. The companies together have a very strong set of skills to offer the Asian marketplace."

For its part, Priester Aviation had FAA involved all along the way, says Priester. "We visited on multiple occasions with the FAA," explains Priester, "to make sure they were comfortable with what we were doing. We asked for their input in terms of setting up our operation, and what they would like to see. They felt comfortable with the operational control measure that we have in place. We did a lot of due diligence."

The Details; the Opportunity

For an aircraft management firm, crewing offshore brings new challenges. It may be the greatest single challenge, says Andy Priester. His company asks for a three-year commitment from crews who serve overseas, offering competitive salaries and paid-for housing, according to Priester. However, the agreements can vary.

"Our crews are currently ones that we hired here and have moved over to Asia. We hired them; sent them through school (FlightSafety).

"We ask for a three-year commitment. It's not a contract, but a verbal agreement. We have signed training agreements for one year, since we pay for the type ratings for these guys. Some crews have requested signing contracts, which is fine with us. Some crews have requested not to sign agreements. We've agreed to that as well.

"Crews have three big incentives: a good, international salary that's competitive; several tax breaks by being an ex-patriot employee; and, we pay for the housing over there."

Regarding short-term growth, Priester says that besides the three G-200s currently under contract, BAA has contracts for two "long-range" airplanes, both expected in service over the next 18 months, and are in negotiations for three additional Asian-based aircraft.

Says Priester, "We are just stepping into this right now, but we think there's tremendous potential, both on the management side and the charter side. It's going to snowball; as people become more familiar with the product, as aircraft wind up being available, as the Asian culture becomes aware of the benefits of corporate aviation, it's just going to fuel itself."

Loading