There's Change in the Wind

Landmark is expected to leverage its financial backing by The Carlyle Group to facilitate more acquisitions.

ORLANDO — This is not your father’s business aviation industry. The successful outreach by fractionals in the 1990s to the business community will soon be extended with the advent of the microjets, or very light jets (VLJs), to a wider market. The impact on airports and fixed base operations is today difficult to predict; but the VLJs will have an impact. Meanwhile, outside financing of FBOs continues to grow.

Such were the highlights of the experience known as the annual convention of the National Business Aviation Association, which reports a final total of 28,796 attendees. A record 1,142 exhibiting companies participated; the Static Display of aircraft at Orlando Executive Airport hosted 110 business aircraft. The show had to be relocated to Orlando after Hurricane Katrina struck New Orleans, the scheduled site. Despite the relocation, activity remained brisk, though perhaps with less of an edge.

In the Spotlight: Very Light Jets
Of the array of light and very light jets being proposed, Eclipse Aviation, Adam Aircraft, and Cessna Aircraft Company were most notable at this year’s NBAA event. Eclipse reports it took orders of some 80 Eclipse 500 VLJs, including a 50-unit order from Linear Air of Lexington, MA. Linear, which currently operates scheduled Part 135 service in the Northeast using Caravans, plans to use the 500s in a nationwide air taxi network.

Eclipse reports orders for the Eclipse 500 at some 1,592 firm orders and some 765 options.

Adam Aircraft reports that Pogo, the start-up air taxi network being proposed by former American Airlines CEO Robert Crandall, among others, has reaffirmed its order for 75 of Adam’s A700 twin-engine jet VLJs.

Embraer, which is coming offline with a new series of commercial airliners, announced its entry into the light and very light jet markets.

Regarding the potential impact of the VLJs on FBOs and airports, Roger Woolsey, president/CEO of the Million Air FBO franchise network, says, “We’re excited about it. Will there be change as when the fractional idea took off? Certainly. Were there a lot of scared people protecting their turf with fractionals? Absolutely. But those same people are the ones who may be benefitting the most.

“What fractionals have done is shaken the trees and new apples are falling out. My opinion is that the VLJs are probably going to have the same effect. If anyone should be afraid it’s the Part 121 carriers. If the DayJet and Pogo models pan out, there’s a new way to transport around the country. At the end of the day, America is strengthened by it.”

Comments Signature Flight Support’s president and CEO Bruce Van Allen, “I think overall they’ll do OK, whether or not the hype is realized.”

A New FBO Financial Structure
More and more, the influx of non-traditional sources of financing for the FBO business continues. Investment firms now own major portions of the FBO sector, while Signature parent BBA is a publicly traded company. Among other notables: AlliedCapital, which now owns the Mercury chain; Macquarie Infrasctructure Company, which owns the Atlantic Aviation/FBO Avcenter chain; and The Carlyle Group, which owns the Garrett/Piedmont Hawthone/Associated (now called Landmark Aviation) chain of FBOs and maintenance centers.

Dean Harton, vice chairman of Landmark and former president of Piedmont Hawthorne, says the new outside business investment in the FBO sector brings with it a level of financial professionalism that will serve as a positive. He sees new technologies being introduced more rapidly as a result.

It would seem that with outside money comes a greater focus on diversification. While all the major FBO players today say they have an interest in growing via acquisition, both Signature and Million Air report they are looking at other services as well.

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