Tag Aviation sees record year for its U.S. operations
Tag Aviation president and CEO Jake Cartwright has projected another record year for U.S. operations in 2006. Since January 1, 25 fully managed aircraft have been added to the fleet, raising the total to 100 aircraft at more than 60 U.S. locations.
Cartwright also announced that a TAG business development office will open on November 1 at Castle & Cooke Aviation at Van Nuys, Calif., bringing 100,000 sq ft of hangar, a fuel farm and 37,000 sq ft of office space to TAG capabilities. The companies had discussed an alliance for years but the deal was expedited when a new Gulfstream V client based its aircraft at Van Nuys.
Cartwright presented a host of gains for TAG in the past year, with an indirect jab at numbers released by competitors by stressing that new TAG clients are fully managed versus charter, and that pilots are employees on the TAG payroll. About one third of the new TAG clients were recently fractional share owners who outgrew that formula, and another third switched from competing management companies. TAG calculated that its clients have flown 45 million miles year-to-date.
Nearly all new clients will own a whole aircraft for the first time. Roughly half of TAG clients earn third-party Part 135 charter revenue via the TAG affiliate AMI Jet Charter. A fifth of such clients enjoy at least $1 million in annual revenue from charter.
Cartwright said that TAG has seen a clear trend in more charter revenue from end users and less from wholesale business, since fractional owners are less willing to subcontract their client flights and instead use their own managed fleets. The shift was clear enough to convince Cartwright to add a business development office in Florida earlier this year to capture more retail customers in the Southeast.
As for deliveries of at least 10 Eclipse VLJs by 2008, Cartwright, like others, is less sure. “We just think there’s a market out there, somewhere, for the VLJ. No one can pinpoint where that is.”
Cartwright noted that as a general industry rule, the smaller the airplane, the smaller the potential profit margin, and the $1.5 million purchase price for a complete VLJ is lower than many fractional shares. TAG will only fly the Eclipse VLJ with two pilots.
TAG has hired Matt Sheble as its VLJ program manager to hone the formula. Sheble plans for the first aircraft to base in San Francisco to serve as a demonstrator and proof-of-concept vehicle for TAG.
TAG will focus on full days of owner use for the VLJ rather than annual flight hours. Its approach is likened to a flying club, and in fact, “VLJ Flying Club” remains the internal working name until Cartwright and TAG can coin a sexier one.