Executive AirShare faces recession turbulence with growth

Keith Plumb and Bob Taylor started Executive AirShare in Wichita with a couple of Beechcraft King Airs and themselves as the only employees.

“Bob and I would do the contracts, sales and scheduling,” recalled Plumb, AirShare’s chief executive since 2014, from his office at Atlantic Aviation, a fixed-base operator at Kansas City Downtown Airport. “Terri McKown, I call her employee No. 1, … was our first scheduler and today she is still based in Wichita and coordinates all of our demonstration flights.”

Fifteen years later, the company has 33 aircraft and bases in 17 cities in seven states and a Canadian province. It employs 198 people — including 26 at its facility at Wichita Eisenhower National Airport, which Plumb said is AirShare’s operational headquarters, including providing maintenance for its fleet.

By Plumb’s account, the privately held company has grown every year it has been in business.

“We’re trying to maintain double-digit growth, adding four to five planes a year,” he said. “We’ve been steady and profitable for many years now, and we don’t want to interrupt that.”

AirShare’s consistent growth and profitability come despite a tumultuous period in the fractional aircraft ownership industry that started before the recession in 2008 and, one industry expert said, continues today.

“The core fractional business, it’s been on a decline,” said Michael Riegel of Aviation IQ, a business aviation intelligence and consulting firm. He added that since 2002 the industry has been pared down by bankruptcy or acquisition to a handful of players that are led by Warren Buffett-backed NetJets and Flexjet, which was launched by Bombardier and later spun off.

The beginnings

Executive AirShare was launched in the fall of 2000 by the former Executive Aircraft Corp. in Wichita, of which Taylor was president. Executive AirShare was acquired in 2001 by an ownership group that today includes Taylor, Plumb and Wichita oilman and investor David Murfin.

The company started with offering fractional ownership shares in twin-engine turboprop King Airs and a twin piston-engine Beechcraft Baron.

Under AirShare’s fractional program, clients can own a 1/16th share up to a 1/4 share.

In a Beechcraft King Air 350i, for example, a 1/16th share would cost $471,750, while a 1/4th share of the airplane would cost $1.8 million. The greater the share of ownership of the aircraft, the more days of the year a share owner gets to use it.

Those costs are in addition to monthly shared expenses on the airplane as well as hourly rates.

In 2005, the company acquired its first business jet, a Beechjet, and moved its headquarters from Wichita to Kansas City.

Plumb said the move was done in part to see whether AirShare’s business in Wichita could be replicated in Kansas City. He said it probably took 1 1/2 to 2 years in Kansas City to match the number of share owners it had built up in Wichita.

AirShare currently has 234 clients. That number includes share owners and members who lease aircraft fractional shares through a program AirShare rolled out in 2012 called Launch.

Since 2005, AirShare has expanded to several cities in Texas, including through the 2008 acquisition of Fort Worth-based Flight Services, an aircraft management company that it renamed Executive Flight Services and that manages 16 aircraft. It also has expanded into cities in New York, northern Pennsylvania and southern Ontario, Canada. It also has bases and share owners in Nebraska and Oklahoma.

Cessna or Embraer?

At the same time that it was adding share owners and expanding its geographic territory, it was adding more aircraft to its fleet, predominately light business jets. The bulk of that fractional and lease fleet is Embraer Phenom 100 and 300 light business jets.

Plumb said that when AirShare began adding more business jets, which now comprise more than 80 percent of its fleet, Cessna was under as much consideration as its Brazilian competitor, Embraer.

The problem was, Plumb said, in 2006 and 2007 Cessna had a “multi-year backlog” of orders for Citation Mustangs and CJ1s, and AirShare couldn’t get jets quickly. But Embraer could deliver the jets AirShare wanted, he said, and it placed orders for what at the time was Embraer’s newest and smallest business jet, the Phenom 100.

“We could get the Phenom faster,” he said. Embraer also agreed to reimburse AirShare for warranty repairs on the Phenoms, which meant AirShare could turn around its airplanes more quickly instead of sending one off to a factory-authorized service center and waiting for repairs to be done there.

“It was really down to Cessna and Embraer, and I think a lot of people in corporate aviation underestimated Embraer,” Plumb said.

AirShare currently has 13 Phenom 100s and nine Phenom 300s in its fractional and lease fleet.

He was quick to note that AirShare has purchased four used Citation CJ2-Pluses, which he said fit between the Phenom 100 and 300 in terms of carrying six people at a longer range but at less cost to its share owners.

AirShare also has two Wichita-built Bombardier Learjet 45XRs in its fleet.

‘Different kind of animal’

Executive AirShare has grown at a time when other aircraft fractional ownership companies went bankrupt or were acquired by competitors, Riegel of Aviation IQ said.

He said that besides the normal growing pains associated with a relatively new industry, fractional ownership firms were hit hard by the recession.

What really turned away a lot of share owners from the business was aircraft valuations that plummeted during that period, along with the value of their aircraft shares. That scared a lot of fractional and would-be fractional owners away, especially those who had shares in large-cabin business jets and lost a lot of money from plummeting values that in some cases haven’t recovered, Riegel said.

“It’s a pretty ugly looking scene out there,” Riegel said. “But there is a core of people I think will stay.”

Many of the fractional operators that are still around today have begun leasing aircraft shares, like AirShare has done, as an addition to their business. Others have moved away from fractional and turned to a membership-based private aviation model in which customers pay an annual membership fee for the right to get quick access to a business jet or other aircraft, he said.

Plumb said AirShare has continued to grow its business because it has operated in regional pockets, rather than nationwide, and kept its fleet of jets on the smaller side.

“During the recession, we captured a lot of new customers that left more expensive national fractional programs for our cost-efficient, regionally based fractional program,” Plumb said. “It also helped that we offer light jets and turboprops, which are more economical than the midsized and large corporate jets.”

Plumb said the company also tries to personalize its service — AirShare’s cadre of 98 pilots know their customers’ names and preferences, such as Mountain Dew and Ding-Dongs for one unnamed customer — and Plumb and Taylor keep in close and regular contact with AirShare’s share owners.

AirShare is “a different kind of animal” because its use of light jets and King Airs allows it to keep its cost base lower, Riegel said.

“They’ve also grown organically,” he added. “They haven’t gone crazy trying to bring in anyone and everyone.”

Riegel said AirShare’s focus on regional operations should serve it well going forward, as well as maintaining its close relationships with share owners.

Plumb, for one, has no intention of making AirShare the next NetJets, or of expanding its geographic footprint.

“There’s plenty of potential in the markets where we exist,” he said.

This story was originally published March 23, 2016 at 4:59 PM with the headline "Executive AirShare faces recession turbulence with growth."