Executive AirShare has grown from a small regional Midwestern U.S. charter operator into a fractional-share provider serving the entire U.S. market.
The company began as part of a Wichita-based business aircraft sales and refurbishment company called Executive Aircraft. Bob Taylor got involved with Executive Aircraft in 1998 after a crash took the life of the company’s owner. “We were friends with the family,” he said, and they asked him to help run the company.
As Taylor learned about business aviation, the fractional-share and charter business captured his interest, and he and Keith Plumb, a pilot who had joined Executive Aircraft to help sell airplanes, secured a charter certificate and began flying charters. Taylor kept thinking that there should be a better way to run a fractional-share operation than the then typical model. “I believed there was a way to do fractional other than NetJets,” he said.
In March 2000, Executive Aircraft was sold to a new owner group, and Taylor and Plumb launched Executive AirShare (EAS), at the time still part of Executive Aircraft, and in October began selling fractional shares. Taylor, who has a strong background in finance, studied the market carefully and found that most business aviation trips are no more than 300 miles and typically include at most one overnight. “That was the basis of selection of the King C90 and 350,” he explained, and the launch of a regional fractional-share business. EAS began by buying pre-owned airplanes, 1995 models or newer.
The buyers of Executive Aircraft had installed their own CEO, who “wasn’t very effective,” Taylor said. At an August 2001 board meeting, one of the board members offered to sell the fractional-share operation in exchange for the debt on the airplanes. Taylor wanted to buy the operation and closed on the deal at a worrisome time, two months after the 9/11 attacks.
Meanwhile, Plumb had left Executive Aircraft and signed on with Piaggio’s U.S. operation in Wichita. EAS was completely separate by this time, and then Executive Aircraft went bankrupt. After Taylor completed the purchase of EAS, Plumb rejoined Taylor as executive v-p and COO of the fledgling operation. “I was always the stodgy old finance guy,” Taylor recalled. “Keith was the airplane guy.”
Like most fractional-share operations, EAS began by offering owners a certain number of hours per fraction, typically 100 hours per one-eighth share. In 2004, after a close look at airplane utilization, Taylor came up with a different approach: why not let the owners fly their airplanes a certain number of days per year instead of hours? In other words, an owner would be allowed to keep the airplane for an entire day, which meant that often a trip would be completed in the same airplane and with the same crew, vastly simplifying the logistics of moving airplanes and pilots around. “We figured we make money when they fly; why cap the hours?” said Plumb, who is now president and CEO. “It gives the owner flexibility.”
A one-eighth share in an EAS airplane entitles the owner to 40 days of flying per year, with no cap on the number of hours. The smallest share is one-sixteenth (20 days per year). The shareowner does have to pay an amount per hour and a monthly shared expense to cover fixed costs. Hourly rates vary, depending on whether the flight is round-trip or one-way, and EAS publishes detailed listings of all costs on its website. EAS doesn’t bill for fuel surcharges. “We have some profit there but we charge about half [the amounts charged by traditional fractional-share operations],” Plumb said.
EAS doesn’t sell its aircraft at a retail price to the shareowners and pay for the aircraft at wholesale prices. Whatever EAS pays, it splits that evenly into shares. “You pay us a fair price for the airplanes,” he said. EAS retains a portion of each airplane itself, which eliminates the need to own a core fleet to make sure customers can be flown in a timely manner. “Owners like that we have skin in the game,” he said. “We disclose 100 percent of pricing on our web page. There are no surprises, and it helps prequalify people. We’ve kept our program extremely simple.”
The company also still operates a separate charter division, which flies only with managed aircraft; the fractional fleet is not used for charters. “That’s a big selling point,” he said. “We’re not racking up hours on their airplanes.” Shareowners can always charter a larger airplane if necessary, but charter is a small part of EAS’s overall business, accounting for about 10 percent of total revenue.
EAS doesn’t offer a jet card but competes with those by selling leases on shares, in the Launch Lease program. For example, a buyer can lease a share for two years, which provides 25 days of use during that time period. Launch Lease owners pay a slightly higher hourly rate, in exchange for a smaller time commitment (two years versus a five-year share commitment). Lease customers also are good prospects for buying their share after their term is up. “They know us and know the service, and it’s cheaper to own the share,” Plumb explained.
Shareowners can exit the EAS program with 90 days’ written notice. EAS will buy the share back at fair market value, less a remarketing fee that declines according to how long the owner has owned the share. For example, for the first year, the remarketing fee is 12 percent, and that declines to 10 percent in the second year and 7 percent from years three to five. “This helps us pay for the holding costs while we’re remarketing the share,” he said.
Although EAS has gained a reputation as being a regional fractional-share operation, that hasn’t been the case for a while. “Sometimes that creates a little confusion,” Plumb admitted, “but that’s not us. Our customers are based in the regions [where EAS is located], but we fly all over the place.” EAS has major bases in the central U.S. (Kansas, Missouri, Oklahoma, Nebraska and Texas) and Great Lakes (Buffalo).
EAS recently added its ninth Phenom 300 and operates 14 Phenom 100s, four CJ2+s, two Learjet 45XRs, four King Air 350s and two C90s. The C90 owners are transitioning into the Phenom 100 or CJ2+. Trip costs for the Phenom 100 are actually lower for a longer leg than the C90 and about the same for a short trip, according to Plumb.
“The Phenoms have been game-changers for us,” he said. Embraer helped EAS become an Embraer service center, and it was thus able to do warranty work on its own airplanes. “It’s about dispatch reliability,” he added. “They stood behind the product. They made guarantees [for performance] and exceeded almost all of them. Embraer wanted our business.” EAS was the first operator to put a Phenom 100 into fractional-share service and the first to place both a Phenom 100 and 300 into charter. “After operating Phenoms for six months we were getting calls from other owners and Embraer,” he said. “We got to be known as operating experts.”
That ninth Phenom 300 is the 30th Phenom that EAS has purchased and the company’s final one made in Brazil, as Embraer is transitioning the Phenom assembly lines to its Melbourne, Fla. factory this year. The 30th Phenom is part of a firm order for five 300s placed last year, and this is the second jet delivered for that order. EAS holds options for five more Phenom 300s.
EAS will continue to expand, likely into new regions in the U.S. Plumb, who took on the CEO role two years ago, has since focused on scalability, to enable EAS to grow efficiently. This includes adding new accounting and operations software (BoldIQ’s Astro) and hiring Mike Bianchi, a former airline v-p of operations, to run the maintenance department.
“We’ve been profitable since the financial crisis,” Taylor concluded. “We’ve expanded every year. We continue to refine our recipe for success and make the business more scalable, and we’re in an excellent position.”