Executive Jet Management reports brisk charter activity

 - March 29, 2007, 12:37 PM

Executive Jet Management, the aircraft management and charter arm of NetJets, saw its revenue charter business rise by a healthy 36 percent last year, to 4,100 segments. All told, the 100-plus aircraft that the company manages flew some 28,000 segments last year, 2,000 of them international.

EJM president and CEO Al Pod told AIN that he attributes the growth at least in part to the opening of a charter sales office at New Jersey’s Teterboro Airport. Previously, all charter sales had been conducted from facilities in Cincinnati and Columbus, Ohio.

By the end of last year EJM had 42 people employed in charter sales. In addition to the former Jet Aviation employees who moved along the ramp at Teterboro to staff the new office (located in First Aviation Services’ building), EJM added field reps on the West Coast and in Chicago and Florida, and late this winter the company opened a charter services office in San Jose, Calif.

EJM added 34 aircraft to its managed fleet last year, taking the total past 100, based in 50 locations–up by more than a dozen from 2002’s tally. Of EJM’s 600 employees, about 140 are involved in maintenance, 26 are dispatchers and 262 are pilots.
Of the remaining 200 or so, 42 are in charter sales and the other 160 work in accounts, finance, marketing, client relations and owner services.

Pod noted that “larger-cabin aircraft compose a greater segment of our charter flights than they do at most charter companies. Among them are four BBJs that joined our charter fleet this year, to complement the GVs and GIVs, Falcon 2000s and Global Expresses we already manage.” Seven years ago, recalled Pod, “about 5 percent of the managed fleet was large aircraft; now they account for approximately 50 percent.”

EJM does not own any of the aircraft it offers for charter, “and has no plans to do so,” said Pod. “You can’t make money by buying aircraft to offer for charter.” EJM counts NetJets among its users, providing the fractional-ownership program with supplemental lift when necessary. (The 4,100 revenue segments flown last year do not include NetJets fractional usage, which is part of the remaining 24,000 or so segments flown last year.)

Owners’ appetites for allowing their aircraft to be used for charter vary widely. “Some owners are happy with 100 hours a year, and the high figure can be as much as 450 to 500 hours a year,” said Pod. Regardless of charter bookings, EJM assures owners that they will always have access to their aircraft whenever they desire.

Last September EJM earned ISO 9001:2000 certification after two years of work implementing a company-wide business operating system that focused on quality and process improvement. All EJM employees have been trained on the system, and more than 1,000 business processes were mapped and documented.

“Considering the tremendous growth we have experienced over the past two years, including doubling the size of our managed fleet and hiring more than 200 new employees,” noted Pod, “implementing ISO 9000 has allowed us to manage our growth wisely.”

“ISO 9001:2000 provides a playbook to define roles, so people are aware of where their role fits into the process as a whole,” Pod told AIN. It also provides a framework for analyzing every aspect of the company’s operations and performance, including what Pod euphemistically calls “quality escapes”–screw-ups, in workaday parlance–and ways of “benevolently correcting” them. All told, EJM spent about 14,000 manhours on devising the system and training the employees for ISO certification.

“Being a Berkshire Hathaway company has meant a great deal to us. There have been some casualties in this business, and Berkshire Hathaway ownership has certainly helped our credibility,” said Pod. And, as v-p of marketing Ginnell Schiller added, “it has allowed us to invest in the business.”

EJM has what Pod calls “a multitude of preferred FBO chains,” and “we’re always talking with them about improving their service to match our own standards.” Along with EJM’s backroom people, the company’s pilots participate in the FBO quality-assessment process, he said.

Out of the mainstream is a corporate shuttle operation that EJM runs on the West Coast for an undisclosed customer. Using seven jets owned by the customer, the operation carries 160,000 passengers a year on trips that vary from 800 nm to as little as 30 minutes. The pilots, mechanics and dispatchers are all EJM employees.

EJM uses Air Routing as its handler of choice for international flights, and both companies are working on point-of-sale invoicing to stem the flow of bills that roll in late–sometimes as much as 12 months after the charge was incurred. The contract with Air Routing also gives EJM’s clients the buying power of the handling company for hotels and so on.

For this year, EJM expects its charter revenues to increase by another 24 percent, following last year’s 36 percent and 14 percent in 2002.