Flightcraft reflects its proud history of service in the northwest

 - January 31, 2007, 5:59 AM

Flightcraft began operations in 1948, the year after the introduction of the Bonanza, and was one of the early stars in the Beechcraft dealer constellation. At one time there were as many as five Flightcraft locations, all with solid markets for the entire line of Beech products. In the 1980s, Flightcraft was owned by a partnership that included David Hinson, who would later go on to become FAA Administrator.

Current Flightcraft president Phil Botana said, “About 16 years ago, the partnership decided to get out of the business, and sold Flightcraft to Beech Holdings, which kept the company for a year or less. It’s likely the company management wanted to be in control of who ultimately took over the dealership.”

As it turned out, Flightcraft was acquired by The Papé Group, a business specializing in capital equipment distributorships. Botana said, “It’s a family-owned business that is very big in this region of the country. It controls distribution of such heavy equipment manufacturers as John Deere, Hyster, Ditchwitch and Bobcat.

The Papé Group had been a Flightcraft customer, said Botana, and bought into the business as another capital equipment distributor with a reputation for strong aftermarket support. “What Papé found,” said Botana, “was that this is a similar business, but with a very different client base. Through Flightcraft, Papé management was able to build relationships with other aircraft-operator customers–good relationships that have helped the parent company prosper.”
Botana, who joined Flightcraft in May 2002, said, “We have four main lines of business: what I call technical support, which includes maintenance, overhaul and refurbishment of airframes, engines, avionics and components; line service, which I consider fuel sales and hangar storage customers; aircraft sales and brokerage; and charter/management. I feel fortunate that Flightcraft’s owners take a long-term view of the company finances. I can tell them, ‘I’d like to do this in this year, but we won’t see a payoff for about three years,’ and they will trust my judgment.”

Botana credits his predecessor, Ernie Sturm, with building Flightcraft’s business into what it is today. He said Papé hired Sturm when it acquired the company, and he led the business through some difficult times. There has been a lot written about Beech’s mid-1980s decision to radically change its business relationship with its dealers. Under the old scenario, Botana said, most of a dealer’s profits were generated through aircraft sales. Maintenance and other support functions were not considered as profit centers, and they existed at the dealer level primarily to support the sales department.

Beech’s new sales structure, said Botana, completely rewrote the business model. He said, “The arrangement led to underdevelopment of the support market. Then when the 600-pound gorilla takes away the sales profits, it’s tough to revamp and turn around the business model.” For example, dealers’ shop rates tended to be established not to generate profit, but to make aircraft buyers happy so they would buy another airplane. When it became necessary to raise maintenance rates to generate profit, customers found it hard to swallow.

Sturm navigated the treacherous waters, though Flightcraft scaled back from its high of as many as six locations to its current two-facility status, with operations in Portland (PDX) and Eugene (EUG), Ore. Along the way, Sturm secured Cessna Citation service center status, which has been a boon for the operations. Botana said revenues from the four main lines of business roughly break out as 35 percent for tech support; 30 percent for line service; 20 percent for sales and brokerage activity; and the remaining 15 percent from charter and aircraft management income. “On the tech support side,” he said, “over the years, we have developed distributor-like relationships with 30 to 40 different parts manufacturers, so our prices are comparable with those of, say, Aviall. That allows us to maintain a pretty extensive domestic and international wholesale parts client base.”

In terms of capital improvement, Flightcraft has not been especially active during the recession. The main terminal at PDX was built in 1991, but Botana said people often note that it seems much newer. A 65,000-sq-ft hangar/shop was completed in January 2002. Flightcraft has about 60 based aircraft, 24 of them turbine-powered.
Asked to predict the next 12 to 60 months for Flightcraft, Botana chuckled, and said he is optimistic. “The Northwest has really struggled,” he said. “We have the highest unemployment rate in the country. But our business has shown some solidly positive signs in the shops, sales prospects and line service.” He said Flightcraft saw a strong finish to 2002, but, “come January, it was as if someone turned off the spigot. Then in April, someone turned it back on again. The second half of the year saw a marked improvement.”

Botana said he doesn’t expect a repeat of the sudden drop in business this year. It has to be better than last year, he said, and went on to note that not only Flightcraft, but all the Papé Group companies had seen progressively more demand over the past two quarters. He said, “I think the new bonus depreciation act has made a big difference in companies’ spending. It’s helped our business tremendously. I guess I’ve been around long enough to recognize how the cycles run. At the first of the year, sometimes businesses hold back on activity so as to avoid overtaxing annual budgets too soon. But this is different. What we’re hearing is that people are more optimistic and trying to position themselves for the recovery.”