Two if By Seaplane: Kenmore Air serves Pacific Northwest via two locations

BUSINESS PROFILE

By Jodi Prill, Associate Editor

Two if by seaplane

Kenmore Air serves Pacific
Northwest via two locations

KENMORE, WA - This northern suburb of Seattle is home to seaplane operator Kenmore Air. Established more than 50 years ago by three friends, the company has two seabases which serve the region with scheduled air service and charter flights for business and pleasure. Despite economic, regulatory, and local challenges, Todd Banks, general manager, and Tim Brooks, VP of flight operations, are optimistic. "There's always been a demand for our kind of service," Brooks says.

In 1946 Banks's grandfather, Robert Munro, teamed up with two friends and purchased five acres of land on Lake Washington and established Kenmore Air. Not long after, one of the partners passed away and the other sold his share to Munro, making him the sole owner. Banks says the business built itself over the years as Munro, who had a background in aircraft maintenance, was driven to meet customer demands.

The company is still very much a family business, Banks says. His uncle is president and one of the pilots. Kenmore Air employs some 165 people, including full- and part-time workers.

"My grandpa learned to fly right here," Banks says. "He crashed his first solo upside down in the lake."

BUILDING A BUSINESS
In the 1950s, Kenmore Air's charter business began to expand and additional revenue was garnered through contracts with the Department of Defense. Through the years Munro has landed on glaciers in Alaska and on top of Mount Olympus, delivering supplies to scientists. In the 1970s the company transported unarmed torpedoes strapped to the floats of the plane to a test facility in Canada.

Services were expanded over the years to include maintenance, avionics, upholstery, engine overhaul, sales, and rebuilding seaplanes. Kenmore Air has rebuilt more than 125 Haviland Beavers (production was ceased in 1967) and developed several STCs designed to improve the performance of the plane. Banks says that in the 1990s the Beaver "became the rich man's toy." Kenmore sold one to actor Harrison Ford, musician Kenny G, and department store Nordstrom's.

Kenmore Air is a certified Cessna dealer and authorized service station, and sells some 350,000 gallons of fuel annually.

In 1992 the company purchased a local competitor on Lake Union - located in downtown Seattle. The acquisition allows Kenmore to offer customers additional options with more available aircraft and two convenient locations. The Lake Union location is 12,000 square feet and includes a terminal building and a dock for the aircraft.

Five years ago Kenmore Air purchased the EDO float company, which Banks says again adds to the diversity of the company. Banks estimates EDO has some 75 percent of the market share in terms of float manufacturing and it fits well within Kenmore's parts department. "We were already an EDO dealer and we already had the product knowledge. It just made sense to get involved in it."

A paint shop was part of the fold at one time as well, but was closed two years ago due to environmental pressures, Banks explains.

The seaplane base operates year-round, while many others close down in the winter months, according to Banks. In an average summer, Banks says the company flies some ten charters per day. Charters and scheduled flights combined, the carrier can see 600 passengers in one day. Roughly 25 percent of customers depart from the Lake Washington base.

Kenmore Air currently has 21 aircraft: two Super Cubs; two Cessna 180s; eight piston Beavers; two turbine Beavers; six Otters; and one Caravan.

Kenmore Air operates scheduled flights daily to the San Juan Islands, Victoria, British Columbia, and more, along with charter flights. Banks says air service accounts for about 70 percent of the company's $10 million annual revenues.

CHALLENGES
Insurance costs have definitely taken a bite out of Kenmore's earnings, Banks says. From 2002 to 2003 the company's rates doubled to $700,000. He explains it was partly due to the end of a five-year agreement that the company had been in with the insurance company, and to the events of 9/11. "We're doing things differently to adjust to the increase," Banks says.

Kenmore is looking at getting into more leaseback agreements, and possibly aircraft management as ways to keep costs down.

The seasonality of the business has been a strain on the company and is another reason leaseback agreements look attractive. Brooks says, "We have an inventory size right now that almost meets our peak demand in July and August, but is well in excess of what we need in the winter months. Our goal is to find uses for those aircraft." Kenmore operates scenic flights in San Francisco in the winter, as well as a couple of aircraft in the Bahamas.

Like at many airports, noise is a standing issue for the seaplane base. To combat noise complaints, Kenmore Air has self-imposed operating hours. Banks says they have also invested a fair amount of money modifying airplanes to be quieter, as well as training pilots to be sensitive to the issue.

The company has invested funds to retrofit much of its piston fleet to turbine. Turbine aircraft have less noise impact, says Brooks. "We'll take several noise complaint calls each week in the busy season," he says. "We spend a lot of time working with the community to mitigate these problems. We go out into the neighborhoods and visit these people so we can hear what they're hearing and do what's possible within the existing flight pattern to mitigate the noise."

While Kenmore Air has beefed up its security since 9/11, it is not subject to TSA regulations, which apparently was news to TSA. "I just got a letter from the TSA stating that we were subject to all the aviation infrastructure and passenger security fees," Brooks says.

"I've cleared it up with them, but we're not subject to those fees, and they didn't realize that." He explains that since the airline doesn't enplane passengers in a sterile area (facilities are dock-side), passengers do not have to pay that fee. "Without organizations like NATA (National Air Transporta-tion Association), these are things that could easily slip through."

One fee the airline doesn't get away from paying is the passenger excise fee of 10 percent per ticket. "We pay those taxes like any airline would, yet our passengers get no benefits," Brooks says. "We don't receive any federal aid to improve our facility. This is just another example of how a small airline like ours pays into the system yet receives very little back from it."