““[Bill Gates] has been historically one of my best supporters…One of my favorite e-mails he ever sent me…I proposed this crazy project. And he sent back this two-line response: ‘This has got to be the craziest thing you’ve ever suggested. Please proceed.’” ”
Air Partner’s Philip Mathews
Phil Mathews wanted to be a pilot since childhood, but bad eyesight precluded that dream. Instead, after graduating from England's University of Buckingham in 1989, he began a job as a check-in agent at London's Gatwick Airport. He was hired just for summer vacation, but he wound up being promoted to flight dispatcher and manager of general operations and spending four years there. Then, in 1997, he became vice president of U.S. air-charter broker FlightTime, for which he opened a London subsidiary.
In 2002, Mathews moved to London-based Air Partner as senior vice president. The company, which began in 1961 as a school for military pilots converting to civilian flying, changed its focus to aircraft brokering in 1983. It now has $324 million in annual sales and 20 offices worldwide. It neither owns nor operates aircraft; instead, it works with more than 700 charter operators. It is the world's only publicly traded air-charter broker (listed on the London Stock Exchange) and the only firm to hold a royal warrant as supplier of aircraft charter to Her Majesty Queen Elizabeth II.
Mathews, who has played an important role in the company's growth, became president of its U.S. operation in 2003. We talked with him in New York recently about that operation and about Air Partner's global plans.
You are looking at how Air Partner can apply its skills in markets such as China, India and South America. How do those markets differ from your current ones, and what do you need to do to apply your skills?
They all have different challenges in terms of regulation, bureaucracy and ways of doing business. In China, there's a shortage of aircraft and the airspace is regulated by the military, so that's a very different environment. We need to understand what those differences are and how we can leverage our core competencies to be successful in those markets.
You have said that there's a lot more you can do in the U.S. Can you elaborate?
The United States is the largest market for private jets in the world and we still have–by comparison to the size of the market–a relatively small business. I think there is significant opportunity to grow our footprints in the U.S. We just started a freight business here that is proving highly successful, and there's a huge opportunity for us to grow that part of the business.
How are you investing in your products to keep up with innovation?
We have just launched a freight product called Time Critical. Essentially, it means that you can ship anything–a part as small as a Blackberry–from door to door via air. Somebody will knock on your door, pick it up and it will be delivered on its own aircraft to wherever it needs to go; and you can track the entire process online. Unlike FedEx, this is a highly personalized bespoke service for high-value shipments and is updated manually, not by barcodes. You are sent SMS messages at every step of the way; that has particular application to the automotive industry, for instance, where small parts need to be moved as a matter of urgency. We're continuing to look at how we can improve technology and how we can apply innovation to the services we offer.
What's unique about Air Partner's jet card?
You can use it in any of our service areas–North America, Europe or the Middle East. And it is fully inclusive, so the price you see is the price you will pay. In most if not all of the competitor programs, you receive invoices months after your trip for overnights, landing fees, permits and catering. And our program isn't based upon scale. Competitor programs have thousands of card members. We tailor ours to deliver concierge-level service. An account manager will look after a finite number of card members and will know their needs intimately.
You created Rapid Air Support in 2000 and a year later changed its name to Emergency Planning. What is this service and what does it do?
It's an insurance policy that organizations can have [for] expatriate workers in sensitive parts of the world. They will contract with us and we will draw up a contingency plan should the need arise for them to evacuate their people at short notice. We will have already checked the local airfields and ascertained where the aircraft are. Our clients make one call and in a matter of hours, if not minutes, plans are activated.
You've flown 269 tons of relief aid and rescue equipment to Japan [ater the earthquake and evacuated almost 800 people from the country. What was that experience like?
It wasn't easy. But the fact that we were doing something humanitarian rather than purely commercial made it all the more satisfying. The airport was open but there was great demand. As we were trying to get in, people were trying to get out. You're also up against significant time pressure, and only very limited aircraft were available to conduct the mission with a lot of governments jockeying to control those. We were very fortunate because we had strong relationships in the region so we had the first choice of available aircraft.
Why do you think some business travelers are moving to private jets from first-class airline travel?
I think first class is predominantly something airlines keep for their frequent flyers. A colleague flew to Fort Lauderdale this week and out of 12 first-class seats, 11 were frequent flyers on upgrades. If you want a true first-class experience–arriving at a small FBO, walking straight through, hopping onboard your aircraft and having catering to your specification in comfort–flying privately is the best option.
It looks from your financials as if the downturn in the economy and in the business jet field hit Air Partner pretty hard.
I would dispute that. Prior to the downturn, we bought a management company at Biggin Hill, a small business airfield in London. We had some Lear 45s under management, so we acquired that business in 2007, and when the downturn came, that business was hit relatively hard. Last year, we divested ourselves of the Biggin Hill business. We refocused our efforts on our brokering activities and our results are back on track.
You're saying your financial troubles were all due to Biggin Hill?
Why have you opted to offer everything from business jets to commercial jets to freight aircraft rather than specializing?
Because we see ourselves as an aviation solutions provider, as opposed to a private jet broker. We want to be able to provide an aviation solution, whether it be a helicopter or a 747 freighter. We want to be able to deliver the same quality of service, no matter what the nature of the payload or the passenger, wherever they might be in the world.
It sounds as if you're going after a pretty wide market. How does that jibe with what you said earlier about aiming your jet cards at a select audience?
We want to be able to offer quality aviation solutions to a quality client base, and yes, we want a broad client base, but we are involved in a lot of segments. If you take the private jet segment, for example, no, we aren't particularly interested in six guys who want to get to Vegas as cheaply as they can for a bachelor party weekend, but we would be interested in taking six senior executives to Palm Beach to play golf. So there is quality in all the segments we are representing, be it the government or the high-net-worth or the corporate.
Do you expect pricing to go up or down in the charter market?
A lot of demand went out of the market post-2008 and pricing fell. It has not yet recovered to where it was, but it has increased. Obviously fuel is a significant component, and a lot depends on if fuel has spiked and where fuel goes in the future. I think it will be a long time before the market becomes as heated as it was pre-2008. Customers are looking for value, and they're savvy as to the options available to them and in how to procure charter. So I don't think prices will be able to significantly increase, certainly in the medium term, the way that things were moving pre-crash.
What do you think of the fractional-share business?
I think the true cost of fractional ownership is now becoming apparent and perhaps some of the shortcomings, too. The origin of the guaranteed-availability, guaranteed-pricing model was in a different economic climate from the one that we are in now, one where people were prepared to pay a premium to receive guaranteed access. Demand and supply have adjusted now so that's not so much an issue. However, one constant through all of this is charter, and I think that will continue. Access to information will improve the competitiveness of the market, but I still think charter will remain.
Why should a private jet traveler use a broker rather than go directly to an operator?
If a private jet traveler is flying the same trip from his own local airport consistently, that individual would have less use for a broker. He would be able to develop a relationship with his supplier, leverage his buying power and consistently use that aircraft. However, very few people in my experience fly the same trip from the same airport consistently.
A broker like Air Partner offers you professional, impartial, comprehensive advice. On top of that, a broker should be able to give you some peace of mind. All of our vendors in the U.S. are either Wyvern approved or ARGUS Gold or better.
We work with our customers to ensure that the operators understand their requirements. Very often, we'll be at the airport to make sure the catering is prepared, all the arrangements are in place and everything runs smoothly.
Does Air Partner offer deadhead flights at a discount?
We do, but it's very difficult because a deadhead by definition is going to rely on either an outbound or an inbound trip, and one of the advantages of chartering your own aircraft is flexibility. It's quite likely that a trip would get delayed by an hour or two, and if somebody's then buying the deadhead leg, what happens there? It's more difficult than it sounds.
Resume: Philip Mathews
Position: President, Air Partner, Inc. (U.S. subsidiary of Air Partner, plc) since 2003
Previous Positions: Commercial manager, Aircraft Chartering Services; vice president, FlightTime (U.S. charter broker). Joined Air Partner as senior vice president in 2002.
Education: B.A., Politics, Economics and Law, 1989, University of Buckingham, UK
Personal: Age 43. Married with two children. Lives in Naples, Fla. In his little free time, he plays with his kids, watches cricket and rugby, plays golf and watches American politics on TV.