When CitationAir founder and CEO Steve O’Neill left the company at the beginning of November, the transition in leadership was expected to be nearly seamless, especially since the man who was promoted to succeed him had been with the fractional provider as long as O’Neill himself.
William (Bill) Schultz, previously the company’s executive vice president, was named to the top position in September, two months before O’Neill’s departure.
“My specialty for the last 11 years was as chief operating officer, focusing on the operations side of the house,” Schultz told AIN. “This included the operations of the aircraft, maintenance, the flight standards, the crewmembers, the training, the hiring, as well as customer service, so I had a broad view of the business.” In additon, O’Neill had discussed his departure “for quite some time,” Schultz said. “So, the changing of the guard was really a smooth transition.”
Service Option Changes
The new CEO’s broad view has seen changes over the past few years. “The industry continues to struggle since the downturn in the economy in 2008,” he noted. “We’ve all been forced to reexamine our businesses, reexamine our business models, and really focus on the customer.”
Calling itself a business aviation solutions provider offering fractional ownership, jet cards, charter, and aircraft management, the company began in 2000 as CitationShares, initially an equally owned joint venture between Cessna and TAG Aviation. Over the years the airframer gradually increased its ownership percentage so that now the wholly owned Cessna subsidiary operates a fleet of more than 80 business jets.
The aircraft are split between its fractional ownership and managed jets, ranging from the small-cabin Citation CJ3 to its newest addition, the super-midsize Citation X, whose range has allowed CitationAir to add Hawaii to its list of destinations served, based on customer demand.
“It’s a product that is more attractive to West Coast customers than East Coast customers,” said Schultz, “but it has been received well and we expect that over time it will become a bigger part of the business.”
One part of the business that has done well, according to Schultz, is the company’s Jet Access program, where customers commit to a set block of hourly usage for the year. The program recently celebrated its one-year anniversary.
“It’s the most popular product that we have today,” he said. “We recognized as aircraft values plummeted that there were potential customers that had a low tolerance for risk as it related to residual values.” In response, the company created the new product which it says provides all the financial benefits of fractional ownership without the capital cost.
Schultz noted that the markets his company serves are still there, although the ways in which customers wish to access their transportation options have changed and his company continually seeks to provide them with a variety of options. “We have customers who own whole airplanes, but if they have a one-way trip, they use their jet card or their Jet Access program, ” he said. “If they have a round trip, they use their corporate airplane, so it’s through a combination of these products and services that a smart flight department today can really drive efficiency by using each of the products wisely.”
CitationAir currently employs a roster of nearly 350 active pilots and approximately 200 support staff. In May, the company recalled the last of the 85 pilots that it furloughed in 2009 at the height of the recession. As he transitions fully into overall leadership of the company, one of the major issues to demand Schultz’s attention will be labor negotiations. The company’s pilots voted in July to unionize, making CitationAir the third of the four major jet fractional providers with a unionized workforce.
The company has since begun discussions toward a collective bargaining agreement with the pilots. “Depending on how aggressive the two parties are in negotiating will determine how long it will take. There really is no way to predict what that is at this point in time,” Schultz said
Looking ahead, he believes the key to continued success rests with the clients. “The biggest challenge in the industry is paying attention to the customer, and it’s a balancing act because you have the needs of the customer, the needs of the business and you’ve got to maintain very high standards.”
Cost factors such as equipment purchasing and maintenance, staffing, flight training and maintaining safety standards all serve to drive up overhead. “Balancing that against what the market will bear in terms of pricing is always the challenge,” he added.