SPECIAL ADVERTISING SECTION // BUSINESS AVIATION THE BEST-KEPT SECRET OF SUCCESSFUL COMPANIES Despite a vacillating U.S. economy, the need for a company plane appears to be stronger than ever. What’s driving it? “When business in general takes a downturn, that’s the time when you’ve got to get out and see people more frequently. We’re doing that, we’re growing, and our business aircraft are a big part of that,” says Edmund O. Schweitzer III, President of Pullman, Wash.-based Schweitzer Engineering Laboratories. WRITTEN AND PRODUCED BY MARK PATIKY With necessary cost cutting, slim management ranks and a lot more territory to cover, time is the currency of the new economy. This has not gone unnoticed by the more than 15,000 companies, entrepreneurs and individuals in the U.S.—mostly small and midsize fi rms—that operate more than 23,000 business aircraft. These aircraft are essential tools in today’s global economy. FLIGHT LOGS // REAL-LIFE BUSINESS AVIATION SUCCESS STORIES DR. TIRON PECHET MIKE LEEDS KURT CROSBY DANNY LAVY BURKE JONES Radiologist Former CEO, CMP Media CEO, Crosby Tugs LLC CEO, Elite Group Inc. Independent Real Estate Investor PAGE 3 PAGE 4 PAGE 6 PAGE 8 PAGE 10 ADVERTISEMENT 2 // THE ENLIGHTENED BUSINESS TRAVELER Your How-To Guide to a New World of Travel The Enlightened Business Traveler is your boarding pass to this new world of travel. It examines business aircraft types, details the diverse access options, and illustrates how businesses and entrepreneurs with varied travel requirements are strategically employing business aircraft to meet existing challenges and create new opportunities. But, most important, it discusses the ease with which you too can literally create time in your busy schedule. Time Flies—Shouldn’t You? Far from being the excessive indulgence mass media makes them out to be, business jets help a growing number of today’s savvy business leaders build strong bonds with customers and clients. “Our planes are critical to our growth,” reports Danny Lavy, President of Montreal-based Elite Group Inc. “In this age of technology, a lot of people take personal relationships for granted. I think they’re making a big mistake,” says Arthur Allen, President of Naples, Fl.-based ASG Software Solutions. “Our airplane allows us to bring our people together with clients, conduct real business and resolve issues face-to-face. It is an unbelievably efficient use of our time,” he says. “You have to be out there with your customers and find out what’s really going on; it’s amazing what that really does.” In addition to those that own their own airplanes, another 8,000 or more have chosen fractional ownership and prepaid cards, and thousands more companies and individuals enjoy the freedom of on-demand charter during any given week. And these planes are not just essential tools for senior executives: According to a Louis Harris poll, over 70% of passengers aboard business aircraft are from mid-level ranks—salespeople, engineers, researchers and technicians. The trend is paying big dividends in time and opportunity. New access options such as jet cards and fractional ownership have opened the skies to businesses of all sizes, while new aircraft and technologies are making the fleet more flexible, affordable and capable than ever. Moving at the Speed of Business Business aircraft enable busy executives to visit multiple cities in a day; to compress long, wasted hours of commercial air travel into short, intensely productive periods of time; and to bring key prospects to a facility. With the ability to land at 5,000 local airports across the country, these business aircraft provide unfettered direct access to virtually any community. And, given the dividends, they’re surprisingly affordable. You certainly won’t get there easily via airlines, which serve barely 10% of these non-hub locations. It’s not only busy schedules that are driving the growth of business aviation—it’s bottom-line results. A study of the S&P 500 companies by Virginia-based consulting firm NEXA Advisors LLC found that over a five-year period, companies that used business aircraft had twice the total shareholder return of companies that did not. “You have the freedom to operate on your own schedule,” says Lars Thrane, founder of Denmark-based global satellite communications company Thrane & Thrane. “That’s a necessary part of our business. That efficiency and flexibility is an essential factor in our success.” In addition, Thrane points out, today’s business aircraft are often better equipped than many offices, featuring phone, fax, TV and wireless Internet. So you don’t just get there faster, you get there ready. The best part is you don’t even have to own an aircraft to gain all the valuable benefits. New access options such as jet cards and fractional ownership have opened the skies to businesses of all sizes, while new aircraft and technologies are making the fleet more flexible, affordable and capable than ever. “Our airplane allows us to bring our people together with clients, conduct real business and resolve issues face-to-face. It is an unbelievably efficient use of our time.” —Arthur Allen, President, ASG THE ENLIGHTENED BUSINESS TRAVELER // ADVERTISEMENT 3 The Ultimate Productivity Tool Companies around the globe with their own business aircraf t are traveling when and where they want to with speed, safety and security. There is a vast range of aircraft choices, and each manufacturer and each model presents unique advantages. While many companies acquire their own plane and operate it in-house, others outsource the operational responsibilities to management firms that take care of every detail. That means access to your plane and the rest of the world is only a phone call away. In addition, when your plane is idle, the management company can charter it. That’s been a bonus for Mike Leeds, the former CEO of CMP Media, who owns a Falcon 50. With limited flight requirements, he offers his jet for charter when he’s not using it. The charter revenue offsets some of the fixed ownership cost. “Companies today are trying to do more with less, and that means making the most productive use of their most precious assets: people and time.” —Ed Bolen, President and CEO, NBAA FLIGHT LOG DR. TIRON PECHET Business: Radiologist I n addition to being a formidable business tool, Embraer’s Phenom 100 is also an affordable and effective choice for those who, like Boston-based radiologist Dr. Tiron Pechet and his two partners, own and fly the small jet. All three have equally hectic work lives, and, like many whose work infringes on quality personal time, an airplane is just the ticket. “It is a great way to get around and take full advantage of precious and often-fleeting opportunities to be with my family,” says Pechet. For Pechet, using the jet for a weekend away with his wife and two young boys means he gains two or three days of enjoyment without losing half of it to commercial travel schedules or tiresome road trips. “We can drive an hour away from Boston and not even reach Cape Cod, or we can take a onehour flight in the Phenom and be in Washington, D.C., or visit family in Pittsburgh. It’s great when you don’t have a lot of time. Now the enjoyment starts the moment we get to the airport.” Pechet has been flying jets for several years, but he was drawn to the Phenom 100 because of its level of sophistication, self-diagnosing systems engineering and automation. “It turned out to be an incredible airplane,” he says. If there is any maintenance issue or concern, he can send the computerized data direct from the plane to technicians in Brazil. “By the time you pick up the phone, they’ve analyzed the problem and can talk about solutions.” The spacious cabin is another important advantage for Pechet. “The passengers have a lot of space and a lot of light. They just love it back there,” he says, adding that the fully enclosed lavatory, which can be converted to an additional passenger seat, is a big plus when traveling with family. The Phenom has been an all-around winner for Pechet: “It is by far the most economical jet in this category, and it is 15% to 20% less expensive to operate than the turboprop we previously owned.” Pechet is also delighted with the Embraer Executive Care and Pratt-Whitney Engine Plan, through which—as with a bumper-to-bumper warranty—maintenance becomes a predictable budget item. There are no surprises, he points out. If the Phenom works this well for an individual, imagine what it can do for a company. “From a business perspective it’s efficiency, affordability and practicality combined,” he says. ADVERTISEMENT 4 // THE ENLIGHTENED BUSINESS TRAVELER FLIGHT LOG MIKE LEEDS Business: Former CEO of CMP Media M ike Leeds took over his family’s small publishing business in 1988, boosted sales by a factor of five, doubled the number of employees, and took the company— which evolved into the publishing giant CMP Media—public, and sold it for $940 million. Much of that growth and success, Fractional Ownership and Jet Cards Fractional ownership has enabled thousands of companies and individuals—many of whom never imagined it possible—to gain all the benefits of a business aircraft plus many unique advantages whole aircraft owners don’t have. The idea is simple: Why buy an entire aircraft when you need one only part of the time? For a fraction of the whole aircraft price, buyers gain full business aircraft advantages. Every management and operational detail is taken care of. Your plane is guaranteed, ready when you are, anywhere across the nation. In addition to the capital investment, owners pay a monthly management fee plus a fixed per-flight-hour charge, but only for the time spent aboard. Unlike charter, fractional ownership does not incur any repositioning or return flight charges. Owners also gain access to an entire fleet, with the freedom to substitute a larger or smaller aircraft depending on specific trip requirements. says Leeds, had to do with the ability to meet frequently with clients. There’s no doubt that a business aircraft played a vital role in Leeds’ success. “You can see more customers, you can motivate more employees, and you can make the company stronger in so many ways by being more places in a short amount of time. We could take people who would be valuable in these meetings because we had the seats, and we could get them back very quickly. It was efficient and effective. The key is time savings, productivity and the actual business opportunities that are created as a result of going,” he explains. When he was planning the IPO, his business jet was equally essential: “You could never see as many potential investors and institutions as we did in a couple of weeks without a business aircraft.” After leaving CMP, Leeds bought a Dassault Falcon 50 for his independent business interests. Leeds uses his plane about 150 hours per year and charters it for as many as 600 hours annually. With its three engines and enhanced low-speed aerodynamics, the Falcon 50 is unique because of its ability to land or depart from challenging airports while maintaining demanding safety margins. “We can operate without compromise at high-altitude airports like Vail or Eagle Creek, Colo., or from small local airport runways like the one in Princeton, N.J., that even smaller jets can’t negotiate.” For Leeds, it’s the perfect charter aircraft. Jet Cards, typically sold in 25-hour increments, make fractional ownership benefits even easier to acquire. There is no major investment or asset-value concern. Buyers prepay for usage based on fixed hourly rates and, unlike with charter, there are no positioning or empty return-leg costs. When hours expire, you simply walk away without further obligation. NetJets More than a quarter century ago, Berkshire Hathaway’s NetJets® Inc. pioneered the idea of fractional ownership. It remains the global leader, with 7,500 fractional and jet card owners that fly to more than 170 countries annually. It also has the largest and most diversified business aircraft fleet, with more than 700 aircraft worldwide comprising 13 aircraft types. NetJets also offers the broadest range of business aircraft services, from fractional ownership to the 25-hour Marquis Jet Card to charter and wholly owned aircraft management through its subsidiary, Executive Jet Management. In addition, NetJets, which is the only provider with operations in Europe, recently announced plans for NetJets China. ADVERTISEMENT 6 // THE ENLIGHTENED BUSINESS TRAVELER Owners in any global area gain flight privileges in any other; so, for example, a U.S. owner could fly commercially to Hong Kong or Beijing and pick up his NetJets aircraft, or he could fly direct from any U.S. city in one of NetJets’ large-cabin intercontinental-range jets. While the economy remains in a multiyear holding pattern, NetJets owners are on the move, reports NetJets North America Sales, Marketing and Services President Adam Johnson. Sales are growing, flight hours are increasing and global travel is on a sharp rise, he notes. To accommodate strong demand for large-cabin, long-range aircraft on international routes—particularly to and from China— NetJets recently purchased 50 ultra-long-range Bombardier Global 5000, 6000, 7000 and 8000 aircraft, the first of which will be delivered this year. The Bombardier Global aircraft, capable of nonstop flights between New York and China or Indonesia, underscores the intense focus on Asian business relationships. The Bombardier purchase follows an earlier order for 50 Embraer Phenom 300 Platinum Edition aircraft, which will begin entering the NetJets fleet in April 2013. Like the Bombardier jets, the Phenom 300s will have interiors custom designed exclusively for NetJets owners. “The small-cabin jet looks and feels like a much larger one,” says Johnson. “It offers exceptional speed, range, reliability and economy unmatched in its class.” “Having a plane when and where we need it has definitely paid off. It’s convenience, safety and peace of mind knowing we can respond effectively.” —Kurt Crosby, CEO, Crosby Tugs LLC NetJets is forecasting clear skies ahead for business aviation. The company recently signed yet another deal worth $9.6 billion—the largest in private aviation history—for 275 Bombardier Challenger 300 and 605 aircraft and 150 of Cessna’s newest midsize jet, the Latitude. FLIGHT LOG KURT CROSBY Business: Crosby Tugs LLC Y ou might not expect a company operating a fleet of lumbering tugboats and barges to need Mach speed, but Kurt Crosby, CEO of Crosby Tugs LLC, would beg to differ. “This is a very competitive business, and we definitely have to react quickly,” says Crosby, who never knows if his next opportunity will be around the corner or across an ocean. Of course, when you’re headquartered in a place like Galliano, La., time is not always on your side. The nearest commercial flight from New Orleans demands an onerous drive and nearly a half day is lost before the wheels have even left the runway. So when those deep-sea drilling rigs need to move, Crosby can’t afford to wait for an airline flight. With the local airport just ten minutes away, however, Crosby and his team—key managers from several departments who collectively fly about 350 hours a year—take off on their own schedule, shave hours off trip times and get back quickly to tackle the next big call. Normally, they’re dealing with multiple projects simultaneously, says Crosby. “A typical trip requires them to get up and go immediately. I can arrive just minutes before takeoff, and we do our day’s work and normally come back that evening.” For years, Crosby flew with NetJets exclusively, but as his travel demands increased, his company purchased its own midsize business jet, which flies more than 300 hours a year. His Marquis Jet Card, which he uses about 50 hours a year in a NetJets Dassault Falcon 2000, remains the perfect supplement. Crosby likes the flexibility: “Instead of just one type of jet, we have a fleet to choose from depending on where we’re going and how many are flying. That is a big advantage to us,” says Crosby. Although many small business owners think business jet access is beyond their budget, Crosby is quick to point out that dollar amounts do not tell the whole story. It’s not about the cost of travel, it’s about the cost of doing business, he explains, and the ability to be there for his clients when it counts is priceless. “Having a plane when and where we need it has definitely paid off. It’s convenience, safety and peace of mind knowing we can respond effectively,” he says. “We can take care of business and serve our customers better. We’ve grown tremendously as a result.” ADVERTISEMENT 8 // THE ENLIGHTENED BUSINESS TRAVELER Flight Options Well known for its innovative fractional ownership offerings, Flight Options is creating new opportunities that give customers a whole lot more for a whole lot less, says President Mike Silvestro. Whether it’s a large-cabin, 13-passenger jet like the Embraer Legacy 600, which comes with the price tag of a midsize jet; or the small-cabin, best-in-class performer like the Embraer Phenom 300 with unparalleled speed, performance and range; or a totally remanufactured Nextant 400, Silvestro is standing by the company’s core principle of providing added value. For example, Flight Options’ older Hawker 400s are being replaced with the completely manufactured Nextant 400XT, which features a 30% lower operating cost, a thousand-mile range increase, latest-technology digital cockpit, all-new interiors and new fuel-efficient Williams engines. In addition, the ever-popular Flight Options Citation Xs are undergoing a total makeover inside and out featuring winglets for greater fuel economy and improved performance at a lower cost. It was Flight Options’ alluring combination of products and programs that ultimately led to a 53% increase in new fractional owners during 2011 over the previous year. The company scored again with Jet Club Membership for the Phenom 300. This latest program combines jet card benefits with perhour pricing that rivals fractional ownership rates. Similar to a prepaid lease, Jet Club Membership eliminates major capital investment and asset-value risk. After a one-time fee, members can purchase up to three 25- or 50-hour time blocks over 36 months. Growth in the Phenom 300 membership program has been exponential. For those with more modest flight-time needs, Flight Options also offers 25-hour JetPASS Jet Cards for the Hawker 400XP, Hawker 800 XP, Citation X and Legacy 600. “You have to be very innovative. I think, opportunity-wise, this is actually a better time to get out in the market and grow your business.” — Danny Lavy, CEO, Elite Group Inc. Flight Log Danny Lavy Business: Elite Group Inc. W hen Walmart, Lowes, Target, Kohl’s or Costco calls for a meeting, you don’t wait for the next airline flight. “You go now,” says Danny Lavy, CEO of Montreal-based Elite Group Inc., one of North America’s largest distributors of electric home appliances. Ten years ago, Lavy realized that providing his sales and product development teams with fast access to big-name U.S. and international retailers was vital. As a result, Elite Group took off with fractional shares in Flight Options’ Hawker 400, Hawker 800 and Cessna Citation X. Profits and utilization—as much as 500 hours annually—soared. Today, Elite maintains multiple Flight Options shares accounting for about 200 annual flight hours, but Lavy added a wholly owned Dassault Falcon 2000LX, which flies more than 350 hours per year on the increasing number of international flights to Europe and beyond. Many flights make more sense commercially, but if his team can see more customers and create more opportunities, it uses the Flight Options aircraft, which can pick up and drop off anywhere. “We’re able to use the plane that’s best suited for the flight depending on the number of passengers and distance,” he says. When a large group is flying, it will use the Embraer Legacy 600 with its 50-foot-long cabin and spacious comfort for up to 12. “It gives us tremendous flexibility.” Lavy recently returned from a three-week European sales tour using his Falcon 2000. The Falcon’s ability to fly long distances and negotiate shorter runways was a huge advantage, enabling him to use smaller, local airfields versus the heavily trafficked major airports. Aloft, Lavy remarks, it’s business as usual: Travel time is productive time and never wasted. Wireless Internet keeps everyone in constant contact, and he can hold confidential business discussions with ease. At a time when companies are cutting costs to remain profitable, Lavy is focused on revenue. He is generating new products and product lines to appeal to evolving markets. “You have to be very innovative. I think, opportunity-wise, this is actually a better time to get out in the market and grow your business. With a business aircraft, you look forward to traveling,” he says. “If you’re not going to go on that trip, you don’t even know what you’ve lost. Even if it cost me a million dollars a year, you’re talking about one great order that will cover that.” ADVERTISEMENT 10 // THE ENLIGHTENED BUSINESS TRAVELER Avantair Probably the most unique of the fractional ownership companies is Avantair, which exclusively offers shares in the Piaggio Avanti. The twin-turboprop with the incredibly quiet stand-up cabin is a huge performer. It can attain cruise speeds of 460 mph—faster than many light jets—and it boasts exceptional short-field capability that opens access to hundreds of additional airfields. Add to that the ability to climb quickly to 41,000 feet, well above weather and airline traffic, miserly fuel consumption that’s a 40% improvement over that of light jets, plus ample range to fly halfway across the country, and you have unmatched performance and value. Avantair also offers the industry’s lowest entry costs to business aviation, making fractional ownership, leasing and time cards practical and affordable. This has caught the attention of a lot of small and midsize businesses. “Usage is up, companies are flying more hours, they are putting more people on the airplane, and they are covering more destinations in one day to be more efficient,” says Avantair CEO Steve Santo. Santo knows a good aircraft is only part of Avantair’s success formula. His focus on safety and exemplary service draws high praise from owners, and so does the consistent, set-priced monthly (or annual) billing plan, which Avantair pioneered. It combines management fees, flight-hour costs and fuel surcharges into one predictable monthly bill. In an economy where concern over long-term commitment, market risk and financial uncertainty has constrained many buyers, innovative programs like Avantair’s popular Edge Card make it easier and less costly than ever to gain business aircraft benefits. For a single, all-inclusive payment, the Edge Card provides Avanti airtime in 15-, 25- or 50-hour increments. Axis Lease, which can be structured from two to five years, takes economy and practicality a step farther. This popular lease option eliminates the major capital investment, fractional ownership flight-hour costs apply, and there is no residual value risk. FLIGHT LOG BURKE JONES Business: Independent Real Estate Investor B ased in Sun Valley, Idaho, independent real estate investor Burke Jones needed to travel frequently throughout the Western states, but with two titanium knees, he faced a major speed bump at TSA security checks. Five years ago, Jones purchased an Avantair fractional share and immediately saw his mobility and his investment portfolio take off. This newfound agility opened up a world of opportunity for him: “Avantair affordability, reliability and service allowed me to do more business in less time and get to places that I couldn’t go to commercially,” says Jones. Though he considered other aircraft options, at 6 foot 4, Jones found the spacious Piaggio Avanti cabin to be the most appealing. “I considered the speed, comfort and size of the Avanti, and it beat any other light-jet options.” Recently, Burke switched from Avantair fractional ownership to Avantair’s Axis Lease. Now he’s gaining all the fractional ownership advantages without the large financial commitment. “It frees up capital for property investment, and you have exactly the same benefits as an owner. I can add hours and I have the flexibility to go whenever I need to. If the plane is leaving at 3:00, I can leave home at a quarter to, be on the plane, get up in the air and arrive relaxed and on time.” Jones’ business primarily takes him to remote locations of Oregon, Washington, California, Nevada and Arizona. “I can get into smaller airports that many jets can’t and fly as fast as a light jet, and the Avanti will use about half the fuel.” He also emphasizes that travel time is never “lost” time: “I love the fact that I can spread out all my information and computers on the large table and that there’s a phone and Wi-Fi on the plane. It is absolutely perfect.” ADVERTISEMENT 12 // THE ENLIGHTENED BUSINESS TRAVELER Shaping the Future of Business Travel Honda, well known for quality engineering, efficiency and affordability on the roadways, is the latest entry in the technologically advanced, highly efficient small-jet marketplace. Impeccably timed for takeoff in 2013—as the economy hopefully begins an upward climb—the all-new small, fuel-efficient HondaJet is poised to open the skies to companies and individuals who previously could only dream of ownership. “It will empower small and midsize companies to explore new and existing markets with frequency, economy and ease, and enable entrepreneurs and small business owners to be their own corporate pilots,” says Byron Severson, Honda Aircraft Vice President of Sales. “We think the HondaJet will define a new category,” says Fujino, “and I want to call this the ‘Advanced Light Jet.’” Fujino is fulfilling his promise. The new HondaJet brings a new level of personal mobility to the skies combined with a new standard for performance, comfort and quality. Prepare for Takeoff In any period of financial turbulence, opportunities emerge. That’s when companies with vision, foresight and agility can change their fortunes dramatically for the better. That’s where business aviation comes in. From industry giants to independent firms, companies and individuals are realizing that the true cost of a business aircraft is in not having one at all. “Clients don’t want to hear that you can’t be there,” says Stuart Piltch, managing director of the Philadelphia, Pa.-based consulting firm Cambridge Advisory Group. “A lot of our competitors are larger than we are and have more resources, and to compete effectively we need to outwork, outthink and outprice them.” His business aircraft makes that possible. Clear Skies Ahead Manufactured in Greensboro, N.C., by Honda Aircraft Company, the new HondaJet takes an unconventional leap forward in aircraft design. By placing the engines on top of the wings, engineers were able to give this otherwise small jet a generously sized cabin as well as a fully enclosed lavatory—features that are completely uncharacteristic of this aircraft category. “Applying lessons from automotive development, HondaJet engineers focused on ergonomic design that would maximize pilot and passenger comfort and functionality, and then built a unique, incredibly aerodynamic airplane around that,” says Michimasa Fujino, Honda Aircraft President and CEO. The lightweight, all-composite fuselage and newly designed GE Honda turbo-fan engines and low-drag airfoil add up to impressive performance and operating economy 15% to 20% better than that of similar-size business jets, he says. The new jet will be able to fly nonstop from New York to Miami; reach speeds of 480 mph; take off from short, 3,200-foot runways; and offer the ability to cruise at 43,000 feet, well above weather and traffic. The trends driving the growth of business aviation are unlikely to wane. The need to be highly efficient, to take control of time and to have the ability to travel anywhere at any time is not going away. At the same time, new technologies, new aircraft and new access options are driving down costs while increasing capabilities, reliability and safety. “Companies today are trying to do more with less, and that means making the most productive use of their most precious assets: people and time,” says President and Chief Executive Officer of the National Business Aviation Association (NBAA) Ed Bolen. The real value of business aviation is in creating opportunity, generating productivity, building efficiency and saving time. What’s the cost? You can’t calculate that in terms of airplane tickets and hotel stays. According to Barry LaBov, President and CEO of Fort Wayne, Ind., marketing communications company LaBov & Beyond, “You have to look at a business aircraft as an investment for growth: not as a cost-cutting move or an efficiency measure, but as a growth opportunity. You are able to utilize your best people with your best clients on a moment’s notice.” When you consider it that way, then the calculation is meaningful. Then the future becomes clear, because the sky is no longer the limit. For more insight on the benefits of business aviation and to join our online conversation, visit forbes.com/business-aviation Written and produced by: Mark Patiky ([email protected]) Principal Photography: Paul Bowen
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