Avantair shrugs off effects of recession
Even as other well-established and larger fractional ownership operations are quietly laying off employees and reducing aircraft delivery rates in response to the economic crisis, Avantair is hiring and adding to its fleet of 53 Avanti twin turboprops as quickly as Italian manufacturer Piaggio can deliver them.
The fractional company was created in 2002 when Steven Santo’s law firm, along with three partners, decided to buy two Cessna CJ2s and operate them under a fractional partnership agreement. Instead, Piaggio got wind of the deal and persuaded Santo and others to take a flight on an Avanti. “We got on it, and that was it,” said Santo, who is now CEO of the fractional company. Today, Avantair is the only fractional operator with a fleet made up exclusively of the Avanti, an airplane with a midsize cabin but about one-third the fuel burn of a light jet.
In fact, what’s selling Avanti shares today is economy–primarily economy of cost in a twin turboprop that flies as high and as fast as some entry-level jets.
“Economic conditions are kind of forcing people to look for better alternatives in private aircraft travel and they’re finding us,” Santo said. About 80 percent of those expressing interest in the Avantair program were coming from other fractional programs that are flying jets he said. He sees two major factors prompting the exodus–residual share values that are sinking under the 50-percent level among other fractionals, and lower buy-in and lower operating costs at Avantair. According to Avantair’s figures, annual operating costs for a one-sixteenth share are $130,513, $61,878 less than the closest competitor flying a Hawker 400XP and $107,381 less than the competitor with the highest annual operating costs flying a Learjet 40XR.
To service what it flies, Avantair does all its own aircraft maintenance at its Clearwater, Fla. headquarters facilities, where it also keeps a supply of “several million parts.” Dispatch reliability, said Santo, “is in the high 90s and fleet availability is well over 80 percent.”
All interior refurbishment–reconditioning of leather goods, replacement of carpet, refinishing of cabinetry–is also done in Clearwater. To reduce aircraft down time, refurbishment work is usually scheduled at the same time as an A or C check.
Santo said in a recent investor statement that total year-over-year revenue for the first quarter ending March 31 is up 15.7 percent, and that Avantair Edge Card sales showed a year-over-year increase of 81 percent. “We’re seeing almost 100-percent renewal among our card customers,” said Santo.
Meanwhile, the company has launched its new Axis Club Membership, which it says bridges the higher cost of the initial fractional share commitment and the higher hourly Edge Card membership cost. For a one-sixteenth share, the Axis Club member pays a one-time fee of $75,000 for 40 flight hours that can be used in two blocks of 25 hours, an immediate 35-percent savings.
Launched in the Northeast, Avantair has grown steadily and expanded naturally in response to the market. Today, the primary service area includes the 48 contiguous states, the Bahamas, the Virgin Islands, and Mexico’s west coast “Riviera” from La Paz down to Puerto Vallarta. There has been talk of expanding further abroad, but Santo prefers to respond to demand rather than to go out and create it.