Aviation Biz 101

Carving a space in the aviation industry

September 1, 2001

A person with an idea can go a long way — but success happens to those who know where they need help and who to ask for that help. Case in point: Central Maine Flying Service. A fixed base operator offering standard fuel, maintenance, and charter services, CMFS recently used one such business tool to expand into the float business — and with an order for a set of Caravan floats from a client in Germany, CMFS went from local operations to international trade.

The tool that CMFS utilized was the Small Business Administration (SBA). The SBA touts itself as "America's small-business resource," and there is a wealth of information available for anyone to access. The SBA was formed partially as a response to the Great Depression, with philosophical roots in the 1932 Hoover administration. The entity as it is known today was founded with the 1953 Small Business Act, its charter to "aid, counsel, assist, and protect, insofar as is possible, the interests of small-business concerns." The SBA is just one tool aviation businesses can implement to start up and stay healthy in this competitive industry.

The struggle to survive

The mistake most commonly made by those starting an aviation business is to think of themselves as pilots, and not as business people. The fact is, it doesn't take a pilot to run a successful FBO or charter operation. Some come up through the operations ranks, or from other backgrounds altogether.

A second concern for would-be business owners is that they believe they have the drive and common sense to make a business succeed, but they're not sure where to begin. Patrick McGowan, former New England regional director of the SBA and a private pilot, knows where they can find the tools. The SBA "needs to get the word out, because there are a lot of aviation-related small businesses that could use [the SBA's] products."

McGowan notes that the same barriers to entry exist for aviation businesses that confront any business, but there are unique challenges as well, "insurance problems being number one." Additionally, when FBOs need to close their doors because of rising costs in insurance "it shrinks the pool," and others lose because of the decreasing numbers of insured businesses (see " Surviving an Industry Nightmare," March Pilot).

There are also people who get thrown off by the financing required to make a business start-up succeed. Financing, even with the assistance of an organization like the SBA, can be a difficult process. But it's often easier than acquiring funding from a local bank, unless a good relationship with a banker is already established.

The same key elements hold true in this industry as in any other: Know where to start, and know where to get help.

Getting it together

To start a business off right, you can explore a number of sources. The Internet is a great place to begin, as sites to help business owners abound. The SBA hosts one of the best, and it includes online versions of many tools that you can also find at regional SBA offices.

More recently, under leadership such as that of McGowan (a small-business owner himself), the SBA has had significant success in assisting small businesses. Among its tools for would-be business owners: focused classes, the Web site with various business-plan templates, and the support of regional offices. For those with a healthy skepticism of government involvement — and the fear of mountainous paperwork that must surely accompany such involvement — keep this in mind: In the past several years, the 25-page application for a standard SBA loan has been reduced, in roughly 40 percent of all cases, to a two-page document with a three-day turnaround. McGowan acknowledges the way that people's expectations have been affected by technology. "The new generation of our customers, they expect it. They do transactions in seconds over the Internet, so they wouldn't tolerate an agency that wouldn't process their applications in a timely manner."

Of course, a strong economy helped the SBA's success rate in fiscal year 2000. The New England region alone approved more than 4,800 loans last year, and $5 billion in loans since 1993. The question remains — what will happen in the face of the recent economic slowdown? McGowan allows, "[There were] record amounts of capital. And it may not always be that way."

Exploiting a niche

Another sound business practice includes providing a service that hasn't been available, but that you've determined your customers desperately need. Millie Becker is president of Westchester Air, based at Westchester County Airport in White Plains, New York. The FBO and charter operation began a shuttle to Nantucket last summer, a direct result of customer demand.

As for the niche, "It found us. It's a big market for us. People were constantly calling us" for flights to Nantucket, says Becker, so the company took the opportunity one step further. Westchester Air had to obtain permission from the county department of transportation, and the letter came on May 31, 2000, the day it was to begin service. On-demand charter is another Westchester Air specialty. "The customers we have require reliable, safe regional transportation — just in time," notes Becker.

Becker is an example of a business owner who came from the operations side of the table. For Becker, working at different airports helped her to "learn what it takes to get an airplane off the ground," not from a pilot's perspective but from one of ground support. She capitalized upon this very experience, knowing that it isn't necessary to know how to fly an airplane to provide solid customer service to pilots and clients.

Becker describes what it takes to run a successful small business. "You have to know this is a 24/7, 365-days-a-year job." And she enjoys the business, regardless of its nonstop nature, because every day is different: "There is no cookie-cutter day." At one point, in 1985, she left the industry for six months to pursue other interests — and soon came running back to aviation.

SBA loans have helped Westchester Air in two instances — when the company borrowed $125,000 to finance its first Piper Navajo, and again in 1994, when it borrowed $500,000 to purchase a Beech King Air. "SBA has grown up with us," she says, referring to the changes in the way the SBA does business now as opposed to in the past.

This year, the company opened a 15,000-square-foot hangar at Westchester County Airport. Becker emphasizes that Hangar M didn't happen overnight. "It didn't happen in a month, a year, or five years. It took 14 years." Becker's persistence has helped her win recognition for her leadership; she was recently named to the National Women's Business Council and featured in the May 2000 issue of Latina, a popular Hispanic women's magazine.

She offers this advice to anyone starting out in the aviation industry: "Listen to your customers — they'll tell you what they want."

Carving your own space

Just because there's already an established business hogging your potential market doesn't mean you can't succeed by doing the job better. If you want proof, ask Laura Benson Putney, owner of Cardinal Wings, a flight school based at Bowman Field in Louisville, Kentucky. Putney launched Cardinal Wings at a field where there were already three operating flight schools. Now her company is the largest flight school in Kentucky, with 35 employees, 22 airplanes, and an estimated 250 active students.

Getting in wasn't easy. From the business side, Putney notes, "I didn't realize the obstacles. Getting a guaranty [a way to secure a business loan, such as one provided by the SBA] was a difficult process." Even with an SBA guaranty, perseverance and opportunity play a role: Putney canvassed banks with little luck until meeting a banker at a friend's party who called her the following Monday morning. She had a loan for a new Cessna 172 (on which she had already placed a $10,000 down payment) by noon that day.

Putney found her space in a tight market by looking to what she perceived as untapped sources: women and children. "We need to grow those customers," Putney decided. The company reaches kids through a well-known Experimental Aircraft Association program. Putney says the Cardinal Wings staff flew about 1,000 Young Eagles last year, and the school donates aircraft time for these flights. Also, the staff are regular volunteers at the local science museum. Flight instructors set up shop on Saturdays, making paper airplanes and giving away intro flights.

As for prior experience, Putney in some ways credits her naiveté with her ability to move forward with her business plan. "If I would have known more, I wouldn't have tried." She stacked the deck in her favor by starting small. She leased a Piper Cherokee for $38 an hour wet in 1992 from another owner, slowly adding aircraft as finances allowed. Initial problems included getting permission from the airport commission to start a business on the airport. The board's first response: "We already have three."

With creative marketing in place, that turned out to be only a minor problem. By steering her focus away from a typical customer, Putney found new ones. "Our main competitor is the Harley-Davidson dealer — [a] 35-year-old white male has a lot to choose from."

In fact, the SBA's McGowan was one of those who were lured away from motorcycles into the realm of aviation — by his need for speed. He was working nights at a gas station to save up money for a motorcycle, "a BSA Lightning." At Owl's Head, in central Maine, a pilot named Ken heard about his desire for speed, and he asked McGowan why he didn't think about flying. The older pilot then took him for a flight in a Cessna 185 — according to McGowan, "the nicest airplane ever made." McGowan remembers, "Ken said, 'See, I have to slow this down to 70 [knots] to land it.' We cruised at about 160 knots, and he said, 'Is that fast enough for you?' And I said, "Yeah.' Immediately, I was sold on flying. [I] took all the money that I had for the motorcycle and put it into flying lessons. And I've been flying ever since."

By focusing its marketing strategies beyond the Pat McGowans of the world, Cardinal Wings has posted quite a successful record. The SBA nominated the flight school for Business of the Year in Kentucky in 1998.

It's who you know

Alton Bouchard of Central Maine Flying Service, based at DeWitt Field in Old Town, Maine, is carrying on a longstanding tradition: CMFS is the oldest FBO in the nation, as far as Bouchard knows, still operating in the same location under the same name. He took over the helm in 1989 from the original owner, 90-year-old Ken DeWitt, after whom the airport is named. His key to success? Keeping it going during the rough times. "Many people can start a business, but not many can keep it running through hard times."

One way Bouchard has survived is through "a multiplicity of services." CMFS specializes in seaplanes, which keeps the shop busy during the summer months. The company has expanded on this niche by offering training and parts support. Currently, the shop is rebuilding a 1997 Cessna 172 on PK Floats pontoons (Bouchard purchased PK Floats with SBA assistance in May 2000), and he expects certification of the mod to happen this summer.

A little star power doesn't hurt either: The 1952 de Havilland Beaver in the 1992 film Hoffa is Bouchard's, and he flew it in the movie as well, gaining some local notoriety.

Bouchard points out one common finding among FBOs that offer both flight training and other aircraft services: "[There's] no money in teaching [itself], but people have to learn how to fly" before they become airplane owners. "Those are your future customers." He's also a believer in keeping up contacts. "I'm a person of detail," he notes, and when he makes a business connection with someone, he tries to nurture that relationship. As proof, he offers that he's still serving CMFS customers who have been on the books for 30 years.

A final word from the trenches: This is no place for the lazy. "Being self-employed is the hardest job I've ever had." But, he adds, he wouldn't have it any other way.

E-mail the author at [email protected].

Building a Business

Though AOPA is primarily geared toward private aircraft owners and pilots, it offers a number of services that members can use to acquire knowledge and financial help for founding an aviation-related business. Specifically, AOPA loan programs sponsored by MBNA America Bank can be applied toward aircraft ownership — of any kind.

This strategy worked for Mike and Maria Myshatyn, owners of Majestic Aviation LLC, an aircraft leasing company based in Fort Collins, Colorado. The Myshatyns started with a Piper Archer in 1996, financed through a local Fort Collins bank. "Business was good with the Archer...it was a good solid airplane that flew a lot and more than paid for itself in just a few years," says Mike. In 1997, they decided to buy another airplane and ended up with a Beech V35 Bonanza. At this point, they "were in the leaseback business, even though we didn't have a formal company," adds Maria.

The years that the Myshatyns owned both the Archer and the Bonanza were profitable because they worked with a good flight school and had "two solid planes and a good maintenance relationship with the mechanics," according to Maria.

After taking a breather to have a family, the Myshatyns are back in business with Majestic Aviation, which "presents us as a serious aviation company," says Maria. The two Cessna 172s that Majestic currently owns were financed through MBNA loans. The Myshatyns also diversified their business, generating income with the sales of Mike's book, IFR Review — Rules of the Road. The book is currently in its third edition and available through Sporty's Pilot Shop ( www.sportys.com).