From High Tech to Mom and Pop

MESA, AZ — In an era when many in the fixed base operation business are trying to disassociate their companies with the ‘mom and pop’ image of old, the husband and wife team of Thomas and Samantha Hertzler are trying a different approach — not unusual when you consider their backgrounds. They’ve already had successful careers in the high-tech business of computer games and have turned to aviation as their chosen investment of the future. After a couple of false starts, the Hertzlers have decided that the formula for success is to focus almost exclusively on line services — with a family atmosphere — while bringing in subtenants who can round out a plate of full services.

Their unusual background includes the fact that both are immigrants to the U.S. — Samantha a native of England; Thomas a German. They met in the tech industry in London and their journey would include stops in Chicago, Austin (TX), and Marathon (FL). Samantha had worked for some ten years helping firms to market their computer games; Thomas had founded his own computer game business. That business, he says, was headquartered in Germany and had grown from nothing to some 120 employees with offices in three countries.

While in Austin, Thomas decided to sell the business and follow a lifelong passion to learn to fly. That took them to Marathon, where he and several flight instructors opened Tango One Flight Academy.

It wasn’t long before they decided that it was the aviation service business that offered the best potential. That direction, however, would soon be adjusted to one focused on pilot and customer services, while leaving the other businesses of an FBO to those who can specialize.

Explains Thomas Hertzler, “At Marathon it was a situation of several instructors wanted to do their own thing and I was basically the moneyman. I was really too young to retire, and the laid back life of the Florida Keys was not what I wanted to be doing.

“That was when we started looking to buy a full-service FBO, which led to us buying Royal Aviation at Falcon Field.”

What they bought, he says, was a tired facility with a fuel concession, equipment, the building — which they own — and what was left of a 30-year lease. He says the lease will need to be renegotiated in 2007, at which time he expects to see rent increases of 200 percent or more. “Right now we have a pretty good deal,” he explains.

The Hertzlers relate that fuel volumes at Falcon Field have remained fairly static for the past seven years, at some one million gallons total. According to Samantha, Tango One Aviation currently accounts for 20-25 percent of that total volume.

Both see future growth coming in the form of new corporate and charter traffic, which they expect to come from users frustrated with delays at nearby Scottsdale and Phoenix Sky Harbor airports and from new customers that are expected to come with business growth in Phoenix’s East Valley.

Explains Samantha, “I believe we can attract some business from Scottsdale and Sky Harbor purely because of congestion, which is a big problem. Forty-five minute delays into Scottsdale can be quite typical. We’re seeing more traffic from both, definitely.

“Now that we have Highway 202 coming to Mesa, it gives us a direct line into downtown Phoenix in ten minutes. So, you can spend 20 minutes circling the other airports waiting for a slot, or you can be on the ground headed to your destination.

“There’s a whole boom going on to the east of Phoenix right now. We’re seeing builders come in with their corporate jets, large companies coming in because they’re looking to develop here.”

A New Business Model

The dream of being a full-service FBO, they relate, quickly turned sour when they came to the realization that the maintenance and avionics departments were draining profits from their line operations.

“As a full-service operation it was pretty much a bottomless hole,” says Thomas. “I figured that to survive we had to eliminate the maintenance; mostly the issue is too much moonlighting going on here at the airport. We decided to focus on fuel only and related services. We were always good at providing fueling and delivering service, but I think that perhaps we were losing points with customers by working them through the maintenance side of the business.

“Continuing the maintenance business after the purchase was probably my biggest mistake. We’ll see this fall if our strategy is paying off.” With autumn, of course, comes the high travel season following the long, hot Phoenix summer.

Consolidating the Leasehold

The Hertzlers concede that the FBO they purchased needed significant investment, with much of the upgrade now complete. Tango is an Avfuel Premier Center, and assets include a 22,000-gallon fuel farm (10,000 jet-A; 12,000 avgas) and a total of four acres, including the ramp. Solidifying and expanding the property leasehold is Thomas’s priority as he heads into renegotiations with the airport.

“We’re trying to consolidate the property lines; they’re all over the place right now,” explains Thomas. “The potential exists to get the property lines straightened out so down the road we can add one or two more corporate hangars. With the lay of the land it’s possible; there is unused property here.

“There’s an absolute shortage of hangar space at Falcon Field; it’s severe here. A private developer just finished a large corporate hangar with three bays and shouldn’t have any problem filling them. But we need much more.

“That’s what it comes down to: corporate hangar space. T-hangars are the responsibility of the airport here.”