Making a Chain

MAKING A CHAIN

Florida firm continues growth via acquisition with ASI Orlando FBO

by John F. Infanger

STUART, FL - In January, officials who own the mini-chain of fixed base operations, Boca Aviation and Galaxy Aviation, announced the acquisition of the Aircraft Service International FBO at Orlando International Airport. The move is the next step in what they say is development of a small chain of "strategic fit" companies that eventually will have them looking outside the state of Florida, to the Northeast.

Explains chief operating officer Mark Wantshouse, who is based at Boca Raton, "We're headed in a growth acquisition direction, but we tend to look for a certain profile.

"Our four FBO profiles are the high rent, corporate-type of market, and they're very strong locations. We've passed on other locations that just did not meet the profile.

"We are definitely looking for a fifth, sixth, and more FBOs, and our goal is to grow into a significant operation. Geographically, we're not limiting ourselves to the state of Florida, it just happens that that's where our concentration has been and where the operations have been available."

Wantshouse says that, because of its primary customer base, he sees the company as a north-south corridor chain, and a natural expansion target is the Northeast U.S.

The COO has been involved in the recent acquisitions and says the downturn in the economy is beginning to have an effect on the FBO acquisition market, which in the latter 1990s was not only vibrant but also saw many outside investors enter the game. "We're now starting to see it turn more toward a buyer's market; it's not there yet, but it has gone that direction in the past nine months," explains Wantshouse.

"Prior to that, it was definitely a seller's market, and there were a lot of people looking to expand, a lot of dollars being put out there and high prices being paid for FBOs. We see the changing market as something that will help us on our fifth acquisition."

OWNERSHIP

David Smith & Mark Wantshouse David Smith, left, and Mark Wantshouse

From the outside, having two different names for FBOs seems odd, if not confusing. This is particularly so for a company which prides itself on its marketing capabilities. However, it has to do with ownership.

Primary investor Martin Green-berg is a tax attorney, certified public accountant, and holder of properties across the U.S. He entered the FBO arena 22 years ago with the acquisition of Boca Aviation, transforming an "underdeveloped" FBO into a modern complex on a state-owned airport. The minority owner at Boca is Miami Beach attorney Paul Steinberg who, unlike Greenberg, had no interest in further FBO acquisitions.

Wantshouse, meanwhile, started at Boca Aviation in 1984 as a line technician during high school, and by 1987 had been promoted to president to run the operation. He is also a minority owner in Galaxy Aviation.

FOUR LOCATIONS

The purchase of the ASI Orlando FBO puts Galaxy Aviation on its second air carrier service airport. It purchased the FBO from Signature Flight Support, with which it will compete for both general aviation and airline servicing business.

Its other commercial service location is at West Palm Beach, where it competes with Signature and Jet Aviation and already has air carrier contracts. It acquired that facility from Signature as well, and has been housed in the former Butler Aviation-Signature FBO. However, it was expected to move into a new terminal in February. Signature is now located in the former International Aviation-Bizjet FBO.

Explains Wantshouse, "Both Signature purchases were the results of mandates from the Department of Justice for Signature to divest" as a result of the super-chain's acquisitions of other facilities. "Our Palm Beach acquisition took a lot of time but went very smoothly; the Orlando acquisition has gone well."

The other fixed base operation is at Stuart, some 40 miles north of West Palm Beach and where interviews for this article were conducted. It competes with the Stuart Jet Center at the general aviation airport, and began operations out of a trailer after the acquisition of a small FBO in 1995.

"At Stuart," says Wantshouse, "it pumped 1,800 gallons of fuel a year when we purchased it. Presently, we are at just over 40 percent of the market share - about a million gallons."

David Smith, who started at the Boca location as the company's chief financial officer, relocated to Stuart in 1998 to become its president/GM. He attributes much of the growth at Stuart to marketing to the upscale community that surrounds the airport, including nearby Jupiter Island, and to infrastructure investments in the airport that have included a new control tower, runway, and roadway.

Says Smith, "One of the things we've worked on, instead of trying to take all the business away from the competitor, is to bring new business to the airport. It was a matter of educating people that there is a choice, and that there's less traffic and it's an easier drive to the Stuart airport."

The company also offers broker services for charter under the Stargate Charter Services banner, which has one dedicated full-time person operating out of Boca. And, it offers maintenance through Boca Aviation Maintenance, a division of Boca Aviation. According to Wantshouse, total annual for all related companies is just over $30 million.

Brad Kost Plane - Galaxy Aviation Brad Kost, president/GM of the Galaxy Aviation at West Palm Beach International, is heading up a remaking of the former Signature/Butler FBO. Construction plans include a new 11,000-sq.ft. terminal; two 24,000-sq.ft. hangars with office space; and, a 30,000-sq.ft. hangar complex. The terminal, pictured as it looked in January and constructed to accommodate a second level, was set to open in February. Chevron At Stuart, FL, Galaxy Aviation has constructed two 12,000-sq.ft. hangars and 50,000 sq.ft. of ramp space. A third hangar is planned.

COMMUNITY RELATIONS

A common denominator of the Stuart, Boca, and West Palm Beach locations is that each is an upscale community, made up of a strong user base but also with citizens interested in controlling growth.

At Stuart, says Smith, anti-noise initiatives have been calmed by bringing activist groups, both for and against airport growth, around the same table on a regular basis. "This has always been a slow-growth county for development of any kind," says Smith. "It goes back to the geography of the area, with a lot of waterways and a concern for the environment."

At Boca, the 212-acre airport sits smack in the middle of the community, and anti-noise groups follow closely actions taken at the Naples, FL, airport.

Explains Wantshouse, "The last Part 150 study submitted to FAA came back with quite a few no's, in terms of curfews, restrictions, flight patterns. The airport authority now has to respond back to FAA, which is currently in process."

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