““When I made the film The Invention of Lying, they gave me a private jet for getting back and forth between New York and London. I thought, ‘I will never use it’ but I ended up using it every weekend. You turn up, right, and the airport is completely empty. I mean, there’s just someone at the desk and then the pilot, who says, ‘Are you ready to go?’ and you say, ‘Don’t you want to see my passport?’ and he goes, ‘Oh yeah, I suppose I’d better.’” ”
PlaneSense CEO George Antoniadis
You don’t have to spend much time with George Antoniadis to figure out why he has achieved success with PlaneSense, the fractional-aircraft-share company he founded in 1996. Granted, he was probably in the right place at the right time with the right airplane, the economical Pilatus PC-12 single-engine turboprop. But he’d clearly paid attention during his years at Harvard Business School, where he earned an M.B.A.; McKinsey and Company, where he worked as a management consultant; and Alpha Flying, the aircraft management firm he founded prior to starting PlaneSense. From all of these experiences–and, he said, from his entrepreneurial father–he learned perseverance, the value of teamwork and other management approaches that have served him well.
One such approach is exemplified by a story he told when editorial director Jennifer Leach English and I visited him at his Portsmouth, N.H. headquarters. He said that he’d originally planned for many of the offices there to have windows that opened onto the large hangar where PlaneSense’s mechanics work. Someone told him, however, that the mechanics don’t like being watched and would object.
So Antoniadis called a meeting and asked the mechanics for their opinions. “Do what you want,” one of them said. “It’s your company and your hangar.”
“I have to disagree,” replied the soft-spoken CEO. “It may be my company but you’re the ones who work in the hangar and you should decide.” So the mechanics spoke up and Antoniadis wound up scrapping plans for the windows–except, he told me with a twinkle in his eye, for one small one in his own office.
That neatly organized, high-ceilinged office, incidentally, says a lot about its occupant. Everything in the ultra-modern room–which boasts a floor-to-ceiling glass wall that looks out on the airfield–seems to be there for a reason. Antoniadis bought his desk chair, for example, because he’d long admired its striking design. And the clock on his shelf isn’t just any clock–it’s part of his collection of unusual timepieces and is powered by temperature changes: a variation of just one degree per day is enough to keep it accurate.
What powers Antoniadis himself? Read on.
What were you thinking of doing after you got your master’s in electrical engineering?
I really never intended to be an electrical engineer. I designed some microcircuits, which was my specialty, but I went back to Greece and joined the navy because there’s a draft in Greece. So I did my involuntary servitude. Then I worked in Greece for a little over a year. And then I came to Harvard Business School to launch into what I thought would be more interesting.
Which was what?
I always was an entrepreneurial spirit. [I was thinking of starting a company but] I didn’t know what it was.
And then you worked for McKinsey and Company?
Yes, for a little over two years. That was a very interesting finishing school. It’s a very rigorous consulting company and it taught me a lot about how the United States works. Remember, I came to the U.S. only for business school; I’d never functioned in the U.S. before. I’d been a tourist here.
Did you go directly from McKinsey to the launch of Alpha Flying?
Yes. I’d always been interested in aviation, so I thought that it would be a good challenge to start an entity in the field that would generate value and make a mark and make a difference.
What was the original concept for Alpha Flying?
It was a plain-vanilla aircraft management company for light aircraft, which didn’t exist, at least around here. People paid us a fixed fee to manage their aircraft and then if the owners were accepting of it, we could also rent the plane out to other pilots. To me, it was an opportunity to understand how aviation works in New England.
Was it immediately successful?
It was not something you could go to NASDAQ with, but it was a success. And I learned a huge amount about management in aviation.
What lessons did you learn?
Perseverance. And it confirmed my belief that customer service is a huge dfferentiator. And that you need to be focused.
Did you have investors?
No, it was me. It didn’t require a lot of startup capital and that’s why I did it. The requirement for startup capital materialized in late 1994 when we decided to launch PlaneSense. Another investor joined with a small minority holding and that’s how it remains today.
What led you to launch PlaneSense?
At that time, Flexjet was just starting and NetJets was really coming into its own. Fractional ownership had started becoming a concept that people were talking about and I was very intrigued by it.
Why did you base the company in New Hampshire?
Well, our first office was in Norwood, Mass. And then it became apparent that New Hampshire has no sales tax on aircraft. And New Hampshire is a very welcoming place for business. So we started moving our company here.
How would you describe your niche within the fractional field?
I tried to create a differentiable and defendable niche, because as I’ve said, you can’t compete against FedEx with one truck. So getting a small fleet of light or medium-sized jets wouldn’t go anywhere.
The beginning [concept] was that we would offer a high-end turboprop aircraft as compared to the jets that the other people in the space operate. That has morphed into a larger set of characteristics. We have an aircraft that is very economical and environmentally friendly. We want to differentiate ourselves by providing the best service. And we can go into much smaller runways than anybody else, minimizing the last drive to your destination. So while our aircraft might not be as fast as a jet, we might beat the jet on the ground.
How has your business model changed since you started?
The fundamentals have not changed. We feel that they continue to provide a competitive advantage for us. What we have focused on more since the 2008 recession is the value proposition.
You’ve said that you still believe the fractional model makes sense. Some people believe it’s dying or at least needs tweaking.
Do we look dead to you? [laughs]
You seem well positioned with your relatively inexpensive aircraft, but fractional is still more expensive than charter...
Yes, and I believe that there’s enough space for all these models. If a customer is interested in occasional transportation, then chartering is the way to go. On the other hand, if a client sees this as an extension of his immediate tools, then I think fractional is more interesting. It’s the surrogate of ownership. They deal with one entity. They can audit, evaluate, get comfortable with that one entity.
And then there’s tax depreciation.
Yes, undoubtedly you can depreciate your asset. But apart from the depreciation and some other financial aspects, a key part of the fractional model is that you know who you’re dealing with and you have guaranteed access. No other model offers that for people who want to be in a modern aircraft and be fully comfortable with how it has been maintained.
You are in control. That’s what the FAA says: under [Federal Aviation Regulations Part] 91K, the owner is in control of the flight. When I try to explain to laypeople the difference between commercial and private operations, I say that if in a private operation you stand up in flight and say you want to go to Cleveland or Chicago, that’s fine. If you do that in a commercial operation, you’re a hijacker.
Any plans to take the company public?
Our strategy is for development of long-term value. If along that path we find a synergy either through an investment in the company or some other liquidity event, we will do it, but only if it’s consistent with our strategy.
Your website mentions your record of owner retention. Can you tell me your renewal rate?
I’d have to check what it is this past year. A lot of turbulence occurred throughout our industry after 2008. Before ’08, our retention rate was closer to 98 percent. It is still in the very high numbers but it’s not in the high 90s anymore.
Do you plan to expand to other parts of the country or other aircraft types?
As you know, we were the launch customer for the Grob SPn. The Grob never came to be. We are evaluating other platforms very actively. And as far as other geographic opportunities, we are also evaluating those.
I believe you’re the only major fractional company that hasn’t yet diversified into charter, jet cards or aircraft management. Is there a reason for that or a plan to change that?
Well, a year ago we commenced operations under charter rules under the name of Cobalt. That is an affiliate company of ours that has a charter certificate. So opportunistically Cobalt will fly charter flights on PC-12s but it is by no means a core offering and it is priced in a way that share participants benefit from a better value.
We believe that there is enough value to be created for our company in offering an extremely well-run fractional program and in a small parallel way the Cobalt offering. That’s enough for us to focus on. We have been opposed to the idea of jet cards. We think that jet cards can deteriorate the level of service of the core program. Or said better, on a relative scale, they can present an unfair value proposition compared to somebody who’s laying out the capital to buy a share. And we do not forget who our core customer is.
Résumé: George A. Antoniadis
BORN: Aug. 25, 1961, in Greece
POSITION: Founder, president and CEO of PlaneSense, a Portsmouth, N.H.-based fractional-share provider
PREVIOUS POSITION: Management consultant, McKinsey & Company, Inc.
EDUCATION: Master’s in electrical engineering from Federal Institute of Technology, Zurich. M.B.A. from Harvard Business School.
TRANSPORTATION: Commercial instrument-rated pilot. Flies PlaneSense’s PC-12s as well as an Allison-powered Beechcraft Bonanza turboprop. Usually commutes to work by air.
RESIDENCE: Belmont, Mass., outside Boston
FAMILY: Married. One 14-year-old daughter.
AVOCATIONS: “Aviation is a passion.” Also, classical music, opera, modern art, travel and collecting watches and clocks.
CHANGES AT PLANESENSE
PlaneSense recently announced several changes to its fractional program. Among them:
• Shareholders may now renew five-year contracts without additional capital investment.
• At the end of year five, seven or 10, the company will assist owners in remarketing their shares. If a share doesn’t sell within a specified period for a specified residual value, PlaneSense will repurchase it.
• The company, which had offered 90 flight hours per year for a one-eighth share, now provides a choice between 100 hours with no minimum hourly deduction per flight and 140 hours with a 1.4-hour minimum per flight.
• PlaneSense has lowered its hourly occupied rate from $751 to $725. This rate now includes standard catering, as well as landing fees (except those at designated “high-cost airports”). As before, a 30-minute minimum apples and additional time is charged in six-minute increments.