“I have an obligation to get you to your destination. You have an obligation to pay. What else is there? We don't need 24 pages of legalese.”
Today's Business Airplane: Tool or Toy?
To many people, the words "private jet" conjure up images of wealthy socialites sipping champagne from crystal flutes while reposed in supple leather seats. The reality, however, is usually far from this romanticized ideal, as legions of workaday business jet travelers can attest.
Asked how his direct-mail firm benefits from its Cessna Citation CJ3 (a business twinjet that carries nine passengers only if you count the belted seat in the lavatory), North American Communications chairman Mike Herman said simply, "After 42 years in business, my customers are everywhere the airlines don't go." Added Herman, who is based in Duncansville, Pa., "We wouldn't be in business today if our company didn't have an airplane."
Many business aircraft operators undoubtedly share Herman's sentiments. Quite a few, however, hesitate to say so publicly in the wake of the negative PR storm that began last fall after the heads of the Big Three automakers flew their jets to Washington, D.C., to testify before Congress about their financial woes. An already financially tense public went ballistic. Corporate jets became synonymous with the evils of Wall Street and are now widely viewed as mere perks for the wealthy.
Corporate flight departments tell a different story, however, and so does data from the National Business Aviation Association, which indicates that companies much smaller than the Big Three use the vast majority of corporate aircraft, with many operated by businesses with fewer than 50 employees. An NBAA survey also showed that nearly three quarters of passengers on business airplanes are non-executive employees, squelching the idea that the only one on board is Mr. Big, as many people believe.
Barry LaBov can attest to the value of business aircraft for small companies. He owns LaBov and Beyond Marketing Communications, a 55-employee firm with satellite offices in Chicago; Washington, D.C.; and Auburn Hills, Mich. The company is based in Fort Wayne, Ind., which LaBov said has inadequate airline service. "As our business grew," he said, "we realized [using the airlines] would mean a six- or seven-hour trip plus an overnight stay to get almost anywhere.
"Ninety percent of flights aboard our Citation CJ1 occur without me," LaBov added. "We never travel with fewer than three people on board, either."
Home for Dinner
LaBov's company first became involved in business aviation by chartering and eventually purchasing a Piper Cheyenne turboprop that delivered five years of service before the Citation replaced it. "Having the CJ1 lets us make two or three trips per week, often first to one location to drop off a team and then on to somewhere else with a second group," he said. "At the end of the day, we pick them all up and have everyone home for dinner."
Herman also said that having an airplane allows for more efficient operations. He opened North American Communications on Long Island in the 1960s and flew from LaGuardia to service customers as well as deliver needed parts when printing and mailing machinery broke down. Then things began to change for the company. "We realized in 1978 that the kind of employees we needed were outside of New York proper," he recalled.
As Herman began scouting new locations, it became clear how difficult it would be to move around without an airplane. And when North American settled in central Pennsylvania, he started using business aviation. Today, the company flies its jet 250 to 300 hours each year.
Like North American, Manitoba Corporation relies on corporate aviation to survive. The western New York metal-recycling company was founded in 1916 by Solomon Shine, who began operations with a pushcart, then moved up to a horse and wagon. His grandson Dick Shine, who now runs the company, came on board in 1970 after a stint as a U.S. Air Force pilot.
Covering Long Distances
Because he was a pilot, he understood that being able to travel long distances quickly meant Manitoba could grow. The company's first airplane was a four-seat, propeller-driven Beech Debonair. As Manitoba began to reap the rewards of being in more places in one day, Shine replaced the Beech with a faster six-seat Piper Aztec and then with even faster, pressurized twin-turbine-engine aircraft. "Early on, we simply used the airplane to travel to new locations, looking for fresh sources of products," Shine said. "It became clear that we could cover tremendous distance in one day."
Today, Manitoba operates a Mitsubishi MU-2 Solitaire, a 300-knot turboprop capable of nonstop trips as long as 1,200 nautical miles. The company parks the airplane in its own hangar at the Buffalo, N.Y. airport. "I truly believe this airplane is why our company survived, certainly far more than my own business expertise," said Shine, who flies the aircraft himself.
"We got rid of our airplanes during the recession of the early 80s," he added. "It didn't take long to realize that was a huge mistake. Rather than flying less to save money, we should have been flying more to dig up fresh leads."
Because many of Manitoba's customers are public utilities scattered around the country, Shine frequently uses the airplane. He said customers are impressed when they expect him to arrive on an airline and learn he's flying the company aircraft into a location that's closer by. "The airplane really helps open the door, especially since none of our competitors operate one," Shine noted.
Like Shine, Barry LaBov sees his company's Citation as an investment in the business. Because of the jet, he said, "We can act like a local company to clients all over the country. We have the opportunity to leave on a moment's notice. This helps us better utilize our employee talent and increases our reach. Now the big companies don't have the great advantage over us they used to."
LaBov understands the responsibility that comes with operating an airplane in the current economic and political environment. "We have clear internal guidelines to make sure we don't fly with just one passenger. How irresponsible it was for the auto executives to fly those big airplanes with only one or two passengers on board. It looked like a huge waste to many people.
"If you work the math and are responsible, though, a business airplane will pay off," LaBov continued. "When you look closely at the value, it really is a smart business tool. I can't foresee a day when our company would not operate a business airplane."