“They have to make their own decisions, but I just hope I compete with them. I get to work while they get to stand in line at the airport. ”
Executive Jet Management's Ben Murray
When Benjamin Murray decided 11 years ago to enroll in a flight school and get his private pilot's license, he didn't give much thought to where that interest might lead him. By his own admission, he lacked the patience to continue flying and soon gave up his pilot-in-command time, but the business aspect of aviation still fascinated him. He decided to start at the bottom-refueling airplanes and learning the basics of airport management-and used the experience to launch a new career.
Six years ago, Murray became vice president of sales for Executive Jet Management, the management and charter arm of NetJets, the leading fractional operator. Four years later, NetJets promoted him to vice president for new business development within NetJets sales, and last August, he returned to EJM as CEO.
Murray shared with us what he conceded was his "very aggressive" vision for EJM. The plan includes doubling its fleet size to 200 aircraft over two years and launching a boutique flight department for its customers.
How does it feel to be back at EJM?
I miss being next to [NetJets chairman and CEO] Richard Santulli and having the opportunity to learn from him every day, but it's really nice to again be part of the EJM family. And it's an exciting time. We've had so much success.
What, specifically, did you learn from Richard Santulli?
Richard is really an amazing businessman, and he's always inspired me to reach for my goals. But the top things I learned from him are to deal with reality and get all the players to the table; talk to everybody-customers, employees and suppliers-and encourage subordinates to disclose their problems; be patient, because in Richard's mind, all good things take time; fine tune the business plan every week, not just once a year; research and analyze every aspect of the business; and be able to articulate everything that happens in our industry.
When you say you fine-tune the business plan each week, how do you go about doing that?
We look at our business, and we make sure everything is aligned. And it's not only recording historical data, it's looking at trends in the business cycle and being mobile enough to make weekly adjustments as opposed to just analyzing first-quarter results or year-end results to revise the business. We're constantly changing our business plan to meet the demands that our customers put on us.
Can you tell me about the success of the business over the past year?
In August, we had approximately 80 airplanes under our management. Today, we have 110. We also have eight airplanes that are transitioning into our management program. Those numbers indicate a growth of 27 percent, which will put us in the 150-aircraft range by the end of the year. We're probably a year ahead of our business plan.
On the charter side, EJM's revenue grew 20 percent in 2007 and we're prepared for significant growth in 2008. So far this year, our charter revenue has grown by 35
What steps did the company take to accomplish these goals?
When I took over the business in August, I looked over the entire infrastructure and all the assets that we had. At the time, we were staffed to manage approximately 120 airplanes, so we had significant bandwidth within the organization. And the pedigree of our people [contributed]. We have the same people now, just a different energy and enthusiasm level. We refocused everyone, and they have embraced the opportunity for growth.
How did you refocus your employees? What did you do to boost energy and enthusiasm?
EJM was very process-focused instead of customer-needs focused. We have a really stable strategy now, and every day I ask our employees, "What do our customers need?" So our entire company is refocused on the customer experience. I still say we have the best process in the industry, but I think we can offer much better in absolute precision and customization to our aircraft owners. Our employees come today, energetic to say, "What can we do to make this a great customer experience?" as opposed to always looking inward and looking at process improvements and ISO certifications. Those are very important things, but it's about creating an environment and people respond very well to that.
Where do you see the company in five years?
EJM is going to continue to grow our aircraft management services business, and we'll also continue to be the most successful retail charter operation in the U.S. We anticipate having a more diversified portfolio for our clients, which means we'll be expanding our retail maintenance operations. And we'll be fully engaged with our aircraft clients to provide more solutions for their aircraft acquisitions and disposal. And we're also hoping to manage our airplanes globally.
How do you plan to expand the business? Are there any plans to acquire other businesses?
With all the private equity acquisitions activity in our industry in the past year, EJM has been approached by several of the companies that have been acquired to see if we were interested. Strategically, we made the decision to reinvest all of our capital back into our own organization, to retain and motivate our employees and to fine-tune and innovate our technology. We spent a lot of time on innovation, things that make our operations more efficient and lower our cost so we can offer better prices and solutions for our customers. I don't anticipate any acquisitions.
How do you think the charter business will change over the next few years? Will options such as DayJet and LinearAir help to drive down prices for traditional charter on midsize jets?
Surprisingly, with all the buzz in our industry around the VLJs, very few customers and prospects have even had an interest in a VLJ. From a business perspective, the logistics of getting a bunch of people together to maximize the capacity of a cramped solution isn't something EJM would want to be involved with. I feel the benefit of flying on one's own schedule and having the flexibility and confidentiality of charter can only be obtained through a true private jet operator like EJM.
What models are you finding to be most and least in demand for charter these days?
The demand for all of the EJM airplanes are the highest they have ever been. Considering that we are known as a super-mid to large-cabin operator I'd say that our large-cabin requests for international flying seem to be the most requested right now in our program. In the first quarter we were averaging over 17 international charter flights per day.
What would you advise an aircraft owner to do to maximize the charter revenue you can get for him?
Our entire strategy for an aircraft owner is about revenue realization. We'd like to see our aircraft have the highest yield per hour in the industry. Combining the most competitive buy rates, our fuel surcharge reimbursements and our robust fleet purchasing network of services, along with a very strong charter supply chain from our retail business and our subcontract support, we can maximize as much charter as a customer needs. I think the misconception with a lot of aircraft owners is that hours is the most important thing. We look into the highest yield per hour, which doesn't always mean the most hours.
When you stepped into the position, you mentioned the creation of a boutique flight department for your customers. Have there been any developments in that area?
EJM has launched a corporate fleet that now has 15 airplanes. The boutique services help aircraft owners reach a new tier of high performance through an innovative balance of customer satisfaction, low cost and improved efficiencies.
Many people are concerned about recent reports of pilot shortages. What actions might you take to avoid a pilot shortage within the company?
The backlog of r?sum?s is definitely not what it was two or three years ago. EJM has made a significant investment in our human resources department to make sure we have the entire marketplace covered and have the bandwidth to stay in contact with all the pilots who ever had an interest in our company. But finding qualified pilots is certainly a challenge, so we have a continual hiring process.
Also, when pilots come into EJM, they know they have the opportunity for vertical integration within all of our companies, which include NetJets, NetJets International and NetJets Europe. We have 170 full-time pilots and another 150 that are employed by the airplane owners.
Is there any concern that problems in the economy will affect your business?
EJM is positioned well and our clients are diverse. We're confident that any downturn in one industry segment will not affect our growth plans. I also believe that if the economy gets tight, individuals and companies that own airplanes will look for opportunities to defray costs. With our economies of scale through savings on insurance, flight training and fuel, maintenance forecasting and planning, along with steady charter revenue, we can make significant contributions to that cause. Over the past year, there have been significant investments in private aviation. Therefore, the financial markets are banking that private aviation will become a profitable long-term investment.
What happens if the economy really plummets? Is there a Plan B for riding out a long-term recession?
We just completed the best first quarter in company history and our client satisfaction is very high. As I mentioned before, in a down economy I would expect that more and more aircraft owners will be looking for the best vehicles to defray cost of their ownership. EJM offers better economics than anyone in our industry.
Today, so many of our competitors are already faced with so many risks that a long-term recession is going to put them in a capital squeeze. At EJM we've done all of the belt-tightening strategies and we've made some very good automation decisions to enable us to run our business very lean. It is also comforting to know everyday when I wake up that EJM is a NetJets company and we have the backing and resources of Warren Buffett's Berkshire Hathaway company, which absolutely helps us mitigate some of the economic conditions that might adversely affect our business.
Are there any other threats to EJM's prosperity?
Fuel is an obvious threat. That's inevitable. But my biggest concern is that the industry's infrastructure isn't keeping pace with the number of airplanes being delivered. As I mentioned, there will be a shortage of qualified pilots and mechanics. Also, the airspace congestion is an everyday problem that we are experiencing today. There aren't any solutions to it. There aren't any new airports being built. So, infrastructure is my biggest concern.
Finally, if you couldn't have your current job, what other role would you like to have in the aviation business?
I'd probably be running a company on the OEM supply side. The suppliers that have the technical know-how and manufacturing capacity are the Achilles' heel of the OEMs. The suppliers now account for as much as one third of production costs on some of the new commercial aircraft being made today.
Résumé: Ben Murray
Position: CEO, Executive Jet Management
Past positions: Vice president of new business development for NetJets and vice president of sales for Executive Jet Management. Previously founded an aircraft management and charter business.
Education: Attended University of Wisconsin-La Crosse.
Personal: Earned gold medal as a centerfielder for U.S.A. Olympic Festival baseball team and was selected by Pittsburgh Pirates in 1990 Major League Baseball draft. Was also starting running back on 1992 NCAA Division III National championship football team at University of Wisconsin-La Crosse.
Personal: Age 35. Lives in Cincinnati with wife Christy and their three young children.