Jet Aviation has own charter op with purchase of K Services

 - January 27, 2010, 7:40 AM

Jet Aviation has launched its own charter company after purchasing sole-proprietor charter operator K Services and naming the new charter division Jet Aviation Flight Services.

Jet Aviation has long planned to open its own charter division, but the FAA rebuffed earlier efforts for unexplained reasons. Jet Aviation met all Department of Transportation rules governing the percentage of an air carrier that can be owned and managed by a foreign company. “We had initially made an attempt to build a certificate from the ground up with a partner and with us being the minority shareholder,” said Robert Seidel, general manager of Jet Aviation Business Jets. “We ran into a buzz saw of convergence of a lot of problems with the FAA.” This included fresh scrutiny of charter operational control following the Platinum Jet accident at Teterboro and the FAA’s shutdown of AMI Jet Charter over alleged foreign control issues. “We folded the tent on that initial project,” he said.

To continue to serve management customers, Jet Aviation signed an agreement in 2008 to broker charter flights to Priester Aviation in Chicago. Jet Aviation previously worked with New World Jet. Under the agreement, Jet Aviation management clients who wanted to earn charter revenue placed their aircraft on the Priester Part 135 certificate, and Priester retained operational control of those flights. When General Dynamics bought Jet Aviation in November 2008, the foreign-ownership rules no longer applied, making it easier for Jet Aviation to launch its own charter certificate-holding division.

Jet Aviation isn’t new to the aircraft management business and manages more than 70 aircraft in the U.S. It holds charter certificates outside the U.S. “We’ve been at this game for 42 years,” said Seidel. “Our goal is to take the burden off the shoulders of the individual or corporation that owns the aircraft. They know somebody else is operating their aircraft safely and efficiently. We’ve grown tremendously in the management business in the last two years despite the huge downturn.”

Jet Aviation has added 16 new management clients during the past two years, and Seidel attributes this to owners’ quest for stable management partners given problems such as operational control issues and the financial meltdown of JetDirect Aviation. “People of means and corporations with resources have invested tremendous amounts of money in these assets,” he said, “and they want to make sure their assets are properly stewarded by a company that’s going to be there tomorrow and doesn’t give lip service to safety and security. Having our own air carrier certificate should accelerate that and takes away the concern about having a third-party relationship. Now we don’t have to explain that part of it anymore.”

He added that with its long history in management, operation, maintenance, staffing and completions, “Jet Aviation has been one of the first companies heavily integrated into the [aircraft] lifecycle.” Jet Aviation also owns 16 FBOs worldwide. “The only piece we don’t have is a fractional component,” he said.

Slow Growth Planned

Even though Jet Aviation is owned by General Dynamics, Seidel explained, “There’s no intention to create some kind of integrated program with Gulfstream or a fractional service program. We’re agnostic as to the OEM. We don’t want to be overly affiliated with one at the expense of the other.”

Seidel’s plan is to expand Jet Aviation Flight Services at a measured pace. “We’re not looking to go big too fast and incur problems that have plagued our competitors. It’s much more prudent to grow in a controlled fashion.”

In selecting a Part 135 operation to buy, Seidel and Gary Dempsey, Jet Aviation president Flight Services Americas, sorted through hundreds of operations then narrowed that to dozens before selecting six to examine closely. K Services was ideal because it had one Gulfstream IV on its Part 135 certificate with international and 10-or-more-seat operations already approved. It was much easier to buy and merge a small operation with the necessary approvals than a larger operation with many employees and other complexities, Seidel explained.

Jet Aviation completed the purchase of K Services in the third quarter of last year and since then, Seidel said, “We’ve been quietly working on all the nuts and bolts to put together what we consider to be the beginning of a world-class certificate.”
More recently, the FAA approved moving the certificate to an FAA FSDO closer to Jet Aviation’s U.S. headquarters, in Teterboro, N.J. Jet Aviation has also added two more GIVs and a G200 to the certificate and received a Platinum rating by ARG/US as well as achieving IS-BAO registration.

Jet Aviation isn’t moving all the 21 customer aircraft that were on the Priester certificate instantly to Jet Aviation Flight Services. “The plan is to transition the airplanes that we now are managing that are on the Priester certificate in a measured approach,” Seidel said. “We’re not going to do an en masse move.” In fact, Jet Aviation extended its agreement with Priester through 2011. “Our relationship with Priester remains solid,” he said. “We think it’s been mutually beneficial. Long term, we’re committed to working together and hope we’ll continue to mutually support one another.”