Strong year-round business drives new Scottsdale FBO

 - May 16, 2008, 10:34 AM

On a typical midday Wednesday recently, more than 50 business jets and turboprops graced the ramp at the Scottsdale (Ariz.) Airport (SDL) just northeast of Phoenix. According to Richard Jantzen, operations manager at Corporate Jets, one of two SDL FBOs catering to corporate aviation, a decade ago March would have signaled the end of the business jet season, but due to Phoenix’s population and business growth the FBO now sees steady business nearly year-round.

“There’s still a bit of a drop-off in the summer months,” Jantzen said. “Although the corporate traffic is growing, Phoenix is still a resort destination and winter home for some. Our customer mix is approximately 50 percent private individuals, 40 percent executives flying on business and 10 percent non-executive business-related charter.”

Though Jantzen said he has seen a steady increase in corporate aviation at Scottsdale, the growth has been exponential since September 11 as private individuals and corporate executives look for more efficient ways to reach their destinations without wasting time flying the airlines.

“We’re getting a lot of calls for charter from people who don’t usually charter,” Jantzen said. “This is directly in response to the long lines at the airports and the uneasiness that some people still feel when boarding commercial aircraft. We’ve experienced a 50-percent increase in charter inquiries and aircraft sales since September 11, and in February we enjoyed our most successful month ever in terms of fuel sales.”

Even before September 11, Corporate Jets had banked on the growth of Scottsdale’s thriving corporate aviation market, embarking on an expansion program that includes the construction of 10 condominium hangars for large business jets, a 7,000-sq-ft tall-ceiling addition to its existing maintenance shop and a 20,000-sq-ft service center and transient aircraft storage hangar with room for three to four Gulfstreams. Seven of the 10 condo hangars are already sold, and construction on the entire project is scheduled to start later this month. To meet the surge in charter demand, Corporate Jets also recently added a Challenger 604 to its mix of managed aircraft.

The Other FBO at SDL

Executive Aircraft Services (EAS), the other corporate aviation FBO on the field, has several business jets in its charter fleet, including Hawkers, Learjets and Gulfstreams based at both Scottsdale and Phoenix Deer Valley (DVT) Airports. Responding to the shift in demand for larger corporate aircraft, EAS removed turboprops from its charter inventory two years ago, but it is now bringing them back to meet the new post-September 11 demand.

“Though we had been brokering turboprop flights out to other companies, we have added a King Air 200 to our certificate,” said Tim Spahr, EAS director of marketing. “We’ve been getting many inquiries from companies that have to move eight to 12 people at a time. The King Air and the small jets are great stepping-stones to introduce companies to the benefits of corporate aircraft, especially if they still have the perception that charter is prohibitively expensive.”

Room for More

Even with the two FBOs on the airport, the city of Scottsdale, which runs SDL, had decided well before September 11 that there was enough business for yet another FBO. According to the city’s aviation director, Scott Gray, SDL has slowly transitioned from a training base to a corporate center due in part to the adjoining Scottsdale Airpark, where many offices have hangars and taxiway access to the airport. Approximately 80 of the airport’s 447 based aircraft are hangared in the airpark.

“The four-square-mile area centered on SDL, and including the Scottsdale Airpark, is the second-largest employment center in the state, following downtown Phoenix,” Gray said. “Training activity has really dropped off in the past couple of years. The smaller guys just aren’t here anymore, and corporate aircraft are taking their place. The piston owners say that we are driving them out, but we haven’t done anything to encourage the big guys to come here.”

Early last year the city put out a request for proposals (RFPs) for a third FBO, one that could handle the additional corporate aviation needs but also cater to other general aviation traffic. New Mexico native Herb Marchman, who owns Santa Fe Jet Center, won the bid and began construction on the new Scottsdale Air Center last month.

“We’ve looked at the Scottsdale market for a long time,” Marchman said in an interview in his temporary office, an unused rental car counter in the recently remodeled Scottsdale Airport terminal. “Scottsdale has the same customer base as Santa Fe, only the seasons are reversed. Scottsdale is a winter destination, and Santa Fe is a summer destination. Many of our clientele have homes in both locations.”

The new FBO will be located on the northeast side of the field, across the single runway from Corporate Jets. In the RFP process, the city stipulated that the incoming FBO invest a minimum of $5 million in capital improvements, including 20,000 sq ft of hangar space, 8,000 sq ft of office and terminal space and six acres of ramp area. Proposing improvements far beyond the RFP requirements, Marchman said the final tally will top $10 million after the first phase of construction is completed.

“Our initial phase will consist of 25,000 square feet of office and terminal space, 75,000 square feet of hangar space and 300,000 square feet of concrete ramp space for aircraft parking,” he said. “We are nearly sold out on the office and hangar spaces. We also have access to a second seven-acre parcel that we are looking at developing, perhaps for more rental hangars.”

Although Scottsdale Air Center is required by agreement to serve “the entire flying public,” Marchman sees corporate aviation as his primary market. “We anticipate having a strong charter business here. We’ll be operating charter aircraft under our Colorado Springs certificate, probably turboprops and smaller jets, and we plan to hire 10 to 15 pilots.” Marchman also said sales of used business aircraft will be part of the Air Center’s mix.

Scottsdale Air Center will be an ExxonMobil Avitat center, competing with Corporate Jets’ Avfuel dealership. Marchman is currently talking to several OEMs regarding service certifications on various aircraft, engines and avionics. The target date for the Air Center’s grand opening is mid-November, with the hangars, terminal, aircraft sales and charter to open at that time. Maintenance capability should follow about a month later.

Competing Airports

Though Scottsdale is well known as the primary corporate aviation airport in metro Phoenix, other airports are benefiting from the surge in corporate aviation growth as well. Cutter Aviation, based at Phoenix Sky Harbor International Airport (PHX), recently added aircraft to its charter operations in response to the increased demand.

“We’ve definitely seen growth in charter operations since September 11, but we had been seeing good growth over the past few years,” said Terry Maxton, flight operations manager at Cutter. The company, which charters a Citation Excel in addition to its mostly King Air air-taxi fleet, recently acquired a Mitsubishi Diamond and is planning on adding more King Airs to replace piston aircraft that are being retired.

“We have a Baron that is going away due to insurance rates that prevent the aircraft from being economically feasible,” said Maxton. “Although all of the aircraft insurance rates have gone up since September 11, the insurance industry is certainly taking a different viewpoint with respect to piston-powered versus turbine aircraft.”

Unlike Scottsdale’s clientele, who are nearly evenly split between business and pleasure charters, Maxton said the majority of his customers are corporate. “We’re getting a lot of repeat customers who are just now realizing the advantages of corporate aviation after trying charter,” he said. “These people are generally not concerned about the pleasure side of the trip, although they like the niceties of corporate travel. But they are finding that they can save time, getting in closer to their destinations and often accomplishing in a day what it might take two or even three days to do when flying on the airlines.”

Even Williams Gateway Airport (IWA) in Mesa, about 25 mi from downtown Phoenix, has seen some growth in corporate aviation. According to Brian Sexton, former operations manager now on the airport’s communications staff, Ohio-based Executive Jet Management began operating a regional jet out of Williams Gateway nine months ago, and may be looking at bringing on a second aircraft.

“Corporate aviation isn’t a big part of our business, but it is growing,” said Sexton. “We’ve been talking with a private developer who wants to build hangars for business jets, and Native Air Ambulance has expanded its fleet, adding helicopters to its fixed-wing fleet in the past two years.” He added that the airport is also currently in negotiations with a “major business jet OEM” to build a maintenance station similar to the Bombardier facility in Tucson.