Touching Bases: How does a major OEM find success in line service?

 - October 9, 2007, 4:44 AM

An award-winning bowler in his spare time, Gus Stovall, flight support manager at Dassault Falcon Jet’s Wilmington, Del. (DFJW) base has some sage advice on making a seven-10 split. He said, “Throw the ball as hard as you can, and close your eyes.” Recently promoted to his position at DFJW, the 38-year company veteran has been on a roll to increase market share–but has most definitely been keeping his eyes wide open.

Line service isn’t the first business segment of DFJW that comes to mind. The facility is best known for its maintenance and completions services, and on July 10 the company broke ground for a new 40,000-sq-ft paint hangar as part of a $30 million expansion and refurbishment initiative. A new FBO lobby/terminal adjacent to the former Atlantic Aviation executive office building is part of the plan.

Stovall has seen his way through multiple management changes at DFJW, starting with du Pont-family-owned Atlantic Aviation. After graduating from high school, he became enthralled with aviation, got his private certificate and went to work at the airport. He’s been there ever since. Through the early years, the Wilmington base was Atlantic Aviation’s flagship location, with its concentration on aircraft maintenance, refurbishment and avionics.

The past decade has brought about a transition from du Pont family ownership to a period of control by investment group Legg Mason and finally to the acquisition by Dassault Falcon Jet in October 2000. “Everyone here and throughout the industry knew the facility was for sale over those years,” said v-p of sales and marketing John Rahilly, “so it went through several years of limbo before Dassault stepped in and acquired it. Now there is a sense of stability and consistency.”

When Dassault bought the base three years ago, many in the industry understood the attraction of the maintenance and completions capability, but expressed skepticism that an OEM would want to stay in the line-service business. Stovall said, “Initially, Dassault wasn’t really into the FBO, but when management saw that it was a consistent profit center, they decided to hold onto it.” Stovall said profits from fuel sales, though lower, have been more consistent month-to-month compared with maintenance and completions revenue. Price wars from competitors FBO Avcenter and Aero Taxi have reduced DFJW’s market share, but a new marketing initiative started last June has reversed the trend, said Stovall. “We’ve improved to about a 39-percent overall market share since then,” he said, “and it’s been getting better every day.”

Part of the push has involved reducing fuel prices, but a lot of the increased business has come as a result of calling and e-mailing prospective customers. The company has also invested in pilot incentives, such as coupons for meals and golf shirts. While he has sacrificed some profit margin by cutting his fuel prices, Stovall hopes to achieve 50-percent market share on the airport by the end of the year. “But I won’t sacrifice any more on margin to do it,” he said. Rather, he hopes to make up the difference in service level and hustle. And Stovall leads his line crew by example. When AIN arrived on the ramp, he was there at the aircraft door after engine shutdown, personally, to shake hands and welcome a new customer– even one arriving in a piston single.

Every airport market and FBO clientele is different, and Delaware plays a role in shaping the character of DFJW’s business. Rahilly said, “Because of its tax structure, Delaware is home to tens of thousands of incorporated companies. The airport here sees a lot of corporate activity. Hang around here for 30 days, and you’ll see everybody. And we do a lot of NetJets business.”

While far from palatial, the current line- service lobby and offices do offer conference rooms for corporate meetings right at the airport. Also, a lot of aircraft brokerage deals are consummated in the state, leading to a lot of ink flowing onto contracts behind the conference-room door at DFJW. It’s not uncommon, said Rahilly, to host half-a-dozen aircraft closings in a week, with selling prices written in eight figures. “It’s good business for us to court brokers,” he said. “When they and their customers become familiar with our facility, it brings in fuel business, as well as maintenance and refurbishment work. It helps picking up repair and refurb work when a pre-buy inspection takes place right at our facility.”

Among the other assets enjoyed by DFJW is its ease of access by road. While the other two FBOs are embedded deep within the airport property, DFJW is right on the well traveled du Pont Highway. “All we have to say is, ‘Across from the Chevy dealership,’ and they can find us easily,” said Rahilly.

Both streetside and airside access to the FBO portion of DFJW will improve significantly by year-end, when a new passenger lobby is constructed adjacent to the so-called “glass building,” the former Atlantic Aviation administration complex. DFJW recently acquired the building, which is adjacent to a large auto parking lot on one side and an expanse of aircraft ramp area on another. Currently, pilots need to be directed to the transient parking and fueling area amid DFJW’s group of maintenance hangars off Taxiway A4. A large “FUEL” sign on Taxiway A is the best clue. The new facility off A3 will be easily visible (beyond the du Pont hangar) upon turning the corner from the departure end of Runway 9.

In the near future, DFJW expects to acquire one or two 22,000-sq-ft storage hangars on the opposite side of Taxiway A that were built on spec by the Delaware River and Bay Authority, which operates ILG. The new hangars are earmarked for tenant storage. DFJW currently has three tenant aircraft (all Falcons) and expects to add two more by this month.

DFJW addresses the issue of ramp fees with what it considers a reasoned, structured approach based on the expenses it pays to be at the airport. For example, there is a $250 charge for midsize jets that don’t uplift a predetermined amount of fuel. That has generated some ill will among some pilots, but Stovall reflects on one anecdote to support the ramp-fee policy. He described one business jet crew who dropped off a passenger at the FBO, then taxied to the public ramp to park to avoid the fee. Stovall said, “When the boss got back ahead of schedule, he looked around and said, ‘Where’s the airplane?’ When we told him, he said to call up to the terminal and tell the crew to get back to the FBO and never to do that again. We later learned that the pilots almost lost their jobs trying to save $250.”

Rahilly followed up on the story by citing the secure environment surrounding the FBO and the convenience of arriving at the terminal and having the aircraft waiting. For most customers, that’s worth the cost.

Allowing customers’ vehicles on the ramp is a tough issue for FBOs as time goes on. After 9/11, many airports banned the practice. For his part, Rahilly said he hopes to be able to reinstate the convenience of allowing limos to drive right up to the aircraft, but he also sees the downside from the security angle. “We’ve beefed up our security across the board, just like everyone else. To allow cars on the ramp we’d have to have prior notification and confirm the arrangements before opening the gate. Still, we’d like to be able to do it. Sometimes it’s difficult to balance customer service with security.”