The flexibility Long speaks of comes into play for GSE in a number of ways:
- Quick Turnarounds: Ground handlers are noted for quickly turning around an aircraft at the gate, but their businesses also have to quickly set up new stations. “Sometimes they only have 60 days to have their operation running,” Long adds. “If they need a particular type of loader or tractor, depending on the time of the year, the OEM may not be able to deliver in time. We try to maintain an inventory of loaders and tractors to meet any equipment need the ground handlers may have.”
- Here Today: … gone tomorrow. Ground handlers need expensive equipment for business with airlines that offer little guarantees for such major capital expenditures. “Today, a company may be pushing an A380, but doesn’t know if it will keep that same flight three or four years from now,” Long says. “We try to provide our clients with lease or rental alternatives that provides them with the flexibility they need to maximize profitability.”
- Seasonal Needs: Maybe a cargo carrier needs loaders during the holiday season. That’s not long enough to write a big check. Somerset can provide a short-term rental from three to 12 months to meet that demand.
- New Improvements: New aircraft made with composites and the continued trend to reduce emissions can make even “new” equipment obsolete much quicker.
For these reasons, Somerset’s synergistic services help move relationships forward. Let’s take a look at how some of these services work together to address full life cycle needs.
- Rent: Short-term need? Tentative business opportunity? Somerset’s rental program makes perfect sense. But as Long points out, the rental program also serves as a hedge for times when customers know what equipment they want, but can’t get it delivered in time from the OEM. “The majority of the equipment in our rental fleet is new,” says Long. “All our equipment is available for rent, lease or purchase. If any of our rental equipment either gets converted to a lease or purchase we re-purchase new equipment and replenish our rental fleet. This way we will always maintain a variety of new equipment in our rental fleet to meet client needs.”
- Lease: Somerset’s lease business is the sister business to its rental program. Rental customers can convert their short-term rental to a longer term lease to reduce monthly costs or use the lease product as a hedge when working with a firm term contract. Clients lease for a variety of reasons but most common reasons are for economic, meet budgetary goals or match the lease term to a fixed contract term. Somerset can structure a lease term from 12 to 84 months.
- Trade-In: Somerset can offer to take a client’s equipment back in trade for new equipment. The client's lease cost is based on the net difference in cost between the new equipment and the trade-in value. Long described a recent lease deal for four new deicers. “One of our clients had a need to add a fourth deicer to its GSE fleet to address an increase in flights,” he adds. “We sat down with them and listened to their needs both in terms of equipment and budget guidelines. We came back with a proposal where Somerset would take back three older deicers, apply the trade-in value to the cost of the new deicers and the client’s lease payment would be based on the net cost. By utilizing our trade-in program the client was able to add the fourth unit and at the same time upgrade three older deicers. The client was very happy with our proposal. It’s a win-win for everybody. The vendor makes a sale for four new deicers, the client is happy because he gets four new deicers and at the same time he is able to lower his maintenance footprint by replacing three older deicers with new deicers and we put three deicers in our inventory for either rent, lease or purchase.”
- Buy/Sell: Somerset can simply offer to buy a client’s excess GSE.
- Refurbishment: Here’s the key to making all these financial services work. “The refurbishment side of the business came along when we started thinking about providing trade-in’s,” Long explains. “The ability to do that is predicated on our ability to remarket the equipment, either by rent, lease or sale.” Some of the equipment might be resalable “as is.” But some of it might require a paint job or a major overhaul. To handle refurbishment, Somerset formed a strategic partnership with a company based in New Jersey that has been providing remanufacturing services to commercial and military GSE since 1949. “This place does amazing work,” Crump says. “And their facilities are the best. We spent six months visiting other companies and when one of our OEMs introduced us, we knew this was the right company to provide our refurbishment needs. They also manage the logistical side of our rental fleet so they serve a dual purpose.”
Deal further expands Somerset’s capabilities to service its clients with short-term rentals of new and used GSE
March 2004 With the current state of the aviation industry, companies are coming up with creative answers to help their customers, writes Alicia Hammond. In the perfect aviation world...