PlaneSense fractional takes off as niche market buys in

 - February 2, 2007, 10:10 AM

In a business world where a niche market may be the key to success, PlaneSense has apparently found both niche and success, operating a fractional ownership fleet composed solely of PC-12 turboprop singles and serving the U.S. Eastern Seaboard.

The Nashua, N.H.-based company was launched by George Antoniadis, its president and CEO, in 1996. To Antoniadis it was a natural evolution in the expansion of AlphaFlying, the company he had started four years earlier to provide a variety of aviation services, including sales and service of the big Swiss turboprop.

The idea of PlaneSense, explained Antoniadis, was to “address a need that wasn’t being served by the existing fractional industry at that time, with an airplane ideally suited to that purpose.”

The need, as he perceived it, was for a highly efficient form of business aviation travel for individuals and small- to medium-size businesses in the Northeast where the flight time between cities was rarely more than two hours.

And he wanted an airplane that would fit that mission profile, something fast, economical to operate and easy to maintain, and offering good short-field performance and a spacious cabin. The PC-12, with which AlphaFlying was familiar, seemed a logical choice.

The cabin, finished by Pilatus at its Stans facility, easily accommodates six passengers in an executive configuration that includes an enclosed lavatory and refreshment center for drinks and light meals. A 53-inch by 52-inch cargo door aft of the wing is a bonus. Share-owners have found it particularly useful for transporting large items, including, on one occasion, an upright piano.

The cabin is relatively spacious–16 feet, 11 inches long from the cockpit/cabin bulkhead to the aft pressure bulkhead, and five feet wide, with 4 feet 9 inches of headroom. It is 2 feet 5 inches longer and seven inches wider than the (similarly defined) cabin of Cessna’s CJ2+ and has the same amount of headroom.

“It has a bigger cabin than most small business jets, carries more and costs less to operate,” said Antoniadis. “And it will get you in and out of 2,500-foot runways at max weight.” In fact, he added, “The PC-12 owner has access to about 9,000 airports nationwide, compared with about 5,500 airports that are available to jet owners.

“It’s a rugged, durable airplane with an executive interior, and we regularly fly in and out of clients’ private grass strips,” he noted.

The airplane has a max range of slightly more than 2,200 nm and the pressurized cabin allows a certified ceiling of 30,000 feet.

The PC-12’s Pratt & Whitney PT6A-67B turboprop, producing 1,200 shp for takeoff, gives the airplane a max cruise speed of 270 knots. It isn’t going to knock your socks off on a high-speed run from New York to Miami, but it will get you there in a little more than four hours, and at about half the cost of making the trip in a light business jet. The PC-12 is only about 20 knots slower than the twin-turbine King Air 200. More to the point, said Antoniadis, the direct operating cost of a PC-12 is about half that of a King Air 200.

According to AlphaFlying v-p Pat Reed, fuel efficiency will make the PC-12 a more popular choice as fuel prices continue to rise. As an example, Reed said, the King Air B200 uses 42 gallons more fuel per hour than the PC-12, and based on a national average fuel price early last month of $2.89 a gallon, the annual savings at 90 flight hours would be nearly $11,000.

For PlaneSense Mission, PC-12 a Versatile Performer Antoniadis recalled that when he launched the company, he expected to develop a “typical” customer profile and
a “typical” mission profile, but since then, “We found out there was no ‘typical’ in this operation.”

The PC-12 has turned out to be a versatile performer, and as a result, flights may be as short as 20 minutes or as long as six hours. “On one flight, we did Taos, New Mexico, to Boston in about four hours and twenty minutes with a slight tailwind,” said Antoniadis. “I was on that flight.”

Nor is there any “typical” PC-12 fractional owner. PlaneSense share-owners include small corporations for whom the PC-12 share is its sole investment in business aviation travel, large corporations augmenting their jet fleet, investment firms and individuals for whom the airplane is primarily a convenience. “We did discover what [PlaneSense share-owners] are not, and they are not buying a PC-12 share because they can’t afford a Gulfstream.

“The only thing they all seem to have in common is that they’re cost-responsible.”
PlaneSense reported that about 60 percent of the missions are dedicated business flights and the remainder are for leisure or a business/leisure mix. At the summer peak, PlaneSense share-owners are racking up about 1,300 flights a month, and sometimes as many as 60 flights a day. The PlaneSense fleet is averaging about 800 hours per aircraft annually.

Reed said, “Flying in the Northeast, the time advantage of a jet tends to disappear because of IFR routing, whereas the PC-12 can go IFR or VFR at varying altitudes to find the most favorable winds.”

The most popular fraction at PlaneSense is the minimum one-eighth share, entitling the buyer to 90 occupied flight hours annually, for a buy-in price of $444,000. The monthly management fee for a one-eighth share is about $5,505 and the hourly occupied cost is $603. If 90 hours per year are not enough, share-owners can move up in segments of one-sixteenth shares.

PlaneSense share-owners who occasionally find themselves in need of something faster and/or bigger can take advantage of the new JetLift by PlaneSense program, operated by FSG PrivatAir. “We’ve built the PlaneSense cost structure around 75 percent of our customer needs,” said Antoniadis. “We address the other 25 percent of those needs with JetLift.”

The PlaneSense fleet now totals 12 PC-12s, and more are on order. Though Antoniadis declines to discuss actual order numbers, he did note that the company received a PC-12 last month.

The number of shareholders is “approaching 100,” but he cautions that the ratio of shares sold to shares in service–the number of shares divided by the total shares available–is a better indication of how much of a fleet is actually sold.
It is generally accepted as an industry standard that a sold-to-in-service number above 80 percent suggests that the operator does not have enough aircraft to serve its customers. Most fractional providers attempt to maintain a number in the 70-percent range. The PlaneSense sold-to-in-service ratio was 83 percent in November, suggesting that the demand is outstripping aircraft deliveries.

A source at PlaneSense said “strong demand” since last summer is responsible for such a high number. But he added that PlaneSense has a source of lease-back aircraft available to address this demand as well as peak travel periods. He also noted that it is better to be profitable and stressed by a high ratio than to have a low number and be unprofitable, which creates its own, and less desirable, form of stress.

The fractional-ownership industry places much emphasis on “turn ratio” numbers, the number of people who left the program expressed in shares, divided by the number of shares that came into the program. A number of .55 means the program is losing 55 shares for every 100 shares that are purchased. “Our ratio number is a little under .07,” said Antoniadis. “In other words, for every 100 shares that come in, we’re losing only seven shares.”

As for the aircraft, Antoniadis said the average age is about 2.7 years. Just as important, he added, PlaneSense moves airplanes out of the fleet after five years and has created a share buy-back program “that puts every owner in a new airplane every five years.” And he pointed out that PlaneSense has had no trouble selling the used PC-12s.

The PlaneSense fleet is not available for charter. “The utilization rate is so high that it wouldn’t make sense even if we wanted to charter the airplanes. And [non-availability] would only frustrate potential customers who might buy shares from us,” said Antoniadis.

The company has been “very satisfied” with the PC-12, in terms of suitability and reliability, but it has not been without the occasional bumpy air. Early on, PlaneSense found its aircraft experiencing an unusually high number of electrical component failures. After much investigation, it was discovered that the culprit was the ground cart. A lot of them, said Antoniadis, were older and not too reliable. They were delivering electricity, but they were also delivering electrical spikes. The addition of a voltage regulator on PlaneSense aircraft solved the problem.

Atlas Pilatus Center, in Manchester, N.H., an AlphaFlying affiliate, provides maintenance for the fleet.

Since PlaneSense took delivery of its first PC-12 in 1996, the company has added TCAS and ground proximity warning systems to its aircraft, and is now modifying the fleet to meet RVSM requirements.

Honeywell (formerly Allied-Signal) provides virtually the entire avionics suite for PlaneSense PC-12s–RDS 81/VP (vertical profile) weather radar, KX 165 dual navcom, digital ADF and RMI, FES 40/50 EFIS and KFC 250 autopilot. An engine instrumentation system includes its own digital display for such information as propeller rpm and fuel flow.

PlaneSense recently received FAA approval to operate under the new FAA Part 91K rules, which, among other requirements, demands the presence of two pilots, even if the aircraft is certified for single-pilot operations. Although the PlaneSense PC-12 fleet is approved for single-pilot operation, company policy has always required two pilots, “which positioned us well in terms of complying with Part 91K.” PlaneSense received approval for Part 91K operation on February 16, a day before the rule officially became the standard for fractional-ownership providers.

Pilot training at PlaneSense is divided between in-house ground school and cockpit work, and through SimCom at its training facilities in Orlando, Fla., and Scottsdale, Ariz. Initial copilot hires go through a one-week in-house training program and initial operating experience training before they are integrated into the system. At that time, PlaneSense might offer the top performers a captain slot. The pilot pool totals about 60, and crew rotation is six days on and four off.

Antoniadis said 9/11 had an immediate negative effect on PlaneSense activity, just as it did on most of the business aviation industry. But he noted that the  inconveniences of airline travel and subsequent schedule cutbacks and cancellation of routes by the airlines resulted in a boost to business aviation, and to PlaneSense. “In 2002 and 2003, we saw positive rates of growth and we’re now the fifth largest fractional ownership [in terms of numbers of airplanes] in the U.S.”

Antoniadis said the company experienced a growth rate of 20 percent last year, and expects “more of the same this year–easily 20 percent.”

PlaneSense Owners Speak Up

PlaneSense, the Nashua, N.H. fractional-ownership operator with nearly 100 share-owners in its fleet of 12 Pilatus PC-12s, claims it is losing only seven shares for every 100 purchased. According to founder, president and CEO George Antoniadis, this level of owner retention is a clear indication of the company’s success in a relatively small niche market.

Dave Guay is v-p of operational services with Iron Mountain, an information storage and management company based in Boston, with facilities across the eastern U.S. The company started with a one-eighth share in a PlaneSense PC-12, based on the experience of a board member who already had a PC-12 share. Iron Mountain has since moved to a three-sixteenths share, and according to Guay, will probably upgrade to a quarter share sometime in the next year, with good reason. “We ran out of time last year when we totaled 137 hours.”

To say that Iron Mountain is busy might be a slight understatement. “There are times we’ll have two aircraft in the air at the same time, and to do that sort of flying, we really need a quarter share,” Guay explained.

Before buying a share in a PC-12, the company had been doing the job with a Beechjet share through Flight Options, but discovered that there was “a huge number of airports we couldn’t get into with the jet.” Iron Mountain executives, said Guay, also appreciate the cabin, “which is much larger than the cabin in our Beechjet.” Guay said the company will probably not renew its share with Flight Options, opting instead for on-demand charter when it needs something larger, faster and rangier than the PC-12.

Most flights originate from the company’s headquarters in Boston and average about 90 minutes in duration. Longer flights range over much of the eastern U.S., as far south as Florida and into Canada as far as St. John’s, Newfoundland. Guay said airline travel to St. John’s was an overnight trip. “With the PC-12, we have them out in the morning and home in the afternoon.”

To make more efficient use of the PC-12, Guay said, company executives will sometimes use scheduled airline service or the Beechjet to fly to a major city, where the company’s PC-12 will be waiting to take them out to cities not served by the airlines and to airports too small for the Beechjet to use.

Alex Seaver, director, cofounder and managing director of Stadium Capital, bought his three-eighths share in a PlaneSense PC-12 two years ago for personal use, to
travel between the Boston-based company and his second home on Nantucket Island, trading a three- or four-hour drive for a 20-minute flight.

“I was so pleased with the program and with the airplane that we began using it for business and it turned out to be an extraordinarily efficient use of our time,” said Seaver.

He did a lot of research before committing to fractional ownership and felt the company’s business model made sense–“a fleet made up exclusively of same-type aircraft, flown by pilots who fly only one airplane type, and a parts and maintenance commonality. It was a lot like the Southwest Airlines model.”

Seaver said he had some initial misgivings based on the fact that the PC-12 is a single-engine airplane. “But I’m in the research business, and I did a lot of research on this airplane–safety statistics, glide ratio and engine reliability–and I’m thrilled with this airplane. It’s not only fast and comfortable, but I’ve never had a minute’s delay.”

Like Guay, Seaver often uses a scheduled carrier to a larger city where the PC-12 is waiting. Most recently, he used scheduled airline service to get to Atlanta, where he boarded the PC-12 for a 20-minute flight to Columbus, Ga., saving himself about four hours driving time between the two cities.

At the New Boston Fund in Boston, Jim Rappaport personally owns a quarter share in a PC-12 but finds he uses it about 60 percent of the time for business and the remainder for personal trips.

He originally purchased the share in 1998 for personal use. However, Rappaport said, “When you start rolling up in your SUV and loading all your junk aboard, you realize how tremendously convenient it is, and then you begin to realize that it would be just as convenient for business.”

Rappaport said he had used on-demand jet charter, and speculated that if the need for longer flights in support of the business continues to grow, a fractional share in a jet might also be in the future.