Monday, November 14, 2016

Meet the Private Aviation Company That Serves the Bruins and Other Pro Sports Teams

When you think about private jets, you might envision CEOs hopping on their Gulfstream G650s, Kanye and Kim, or possibly the multitude of stories on jet charter brokers peddling their booking apps as being Uber of the airways, even if the comparison isn’t really correct. One category that doesn’t necessarily get much media attention is large aircraft charter, which is loosely defined as planes with over 16 seats.

Uses for these aircraft are fairly wide ranging, including company meetings and incentives, family celebrations, live entertainment tours, pro sports and NCAA Division I teams traveling to away games, corporate shuttles, and political campaigns.

The aircraft used typically range from Boeing 737s and Airbus A320s to 747s, however, unlike those interior shots you’ve seen of similar planes owned by billionaires and sheiks, for the most part you won’t find private bedrooms, showers, offices, gold trim and grand pianos. At the same time, a 737-800 that American Airlines operates with 160 seats might have 64 seats for these charters.



The actual seats are closer to what you find on a domestic airline flight in first class, with an extra foot of legroom and nicer finishes. With the extra space from having less seats, there might be sets of club chairs facing each other with a table to play cards or do some work. In some cases, curtained off beds might be installed for members of a rock group who need to catch up on sleep.

Whereas you can charter a light private jet that seats seven for about $6,000 per hour or even a Bombardier Global Express that seats 14 for $15,000 per hour, the cost of these large planes is generally $35,000 or more per hour. When divided across 50 or 75 seats, these planes can be more cost effective than several smaller jets or even flying groups commercially in first or business class.

Among the players in this niche is New Hampshire-based Private Jet Services Group, the product of 45-year old entrepreneur Greg Raiff, who by his senior year at Middlebury College had a $7 million business that was moving 50,000 students for Spring Break. It also provided him an early glimpse into the ins and outs of chartering big planes.

As you might imagine, the PJS business is different than most private jet charter activity in a multitude of ways. Unlike 25-hour jet cards or one-off charters, many PJS clients are long term, some with contracts that span 10 years. This means while PJS doesn’t own any planes, it can lease aircraft on an extended basis and spend money customizing them to what each client needs.

“We’ll install seats, beds, whatever the client wants,” says Raiff. “We like to custom design (the interiors),” he says, which includes having fast WiFi. It can take six months and more than $1 million to get a plane ready.

Having long-term clients such as sports teams also means that when the team isn’t using the plane or between seasons, PJS can use them for one-off charters, such as a birthday party in The Bahamas or whisking winners of a company incentive to Las Vegas or London. At any one time, PJS has several dozen planes under contract.

While private aviation was hammered during the recession, Raiff says PJS had growth during even the darkest days. He quotes a former baseball executive as saying, “No matter what’s happening in the stock market, the Yankees are not going to fly commercially.” It’s a similar story for touring bands. Even during a recession, most consumers see a night out at a concert as a relatively inexpensive way to splurge. For PJS, it means insulation as the games and concerts continue no matter what the economy is doing. Raif says revenues this year will be just south of $100 million.

Naturally, he’s mum about who his clients are, and in most cases PJS has to sign non-disclosures. He cites the NHL’s Boston Bruins as one of his first customers, and notes, they are still with him. He does give PJS has flown the winners of 10 World Series, 13 Stanley Cups and 37 NCAA titles. Election filings show PJS operated the charters for Vice President-elect Mike Pence. The CEO says campaigns are tough work with sometimes four or five stops a day and itineraries that change constantly, sometimes at the last minute meaning his team constantly has to be ready. By contrast, sports teams, concerts, corporate shuttles have set schedules or in the case of incentives, are planned months in advance.

Another important segment for PJS that remains stable regardless of the economy is corporate shuttles. One program that connected Morristown, New Jersey with Columbus, Ohio on a daily basis was meant to last for 90 days after two companies with headquarters in those places merged. Raiff says it ran three years. For workers, it meant saving at least two hours driving to and from another airport, hotel nights when commercial flights were canceled or delayed, and it was helpful in retaining employees during the transition. On routes where there is infrequent or no nonstop airline service, Raiff says, shuttles can cost less than flying employees commercially when you factor in the time wasted.

Even during the recession, there were certain industries that needed private aviation solutions beyond flying around top executives. Raiff says a large energy concern needed a shuttle to fly workers and managers to and from remote locations it was laying pipeline. Another client contracts PJS to fly back astronauts and their gear back to the U.S. when they return to a remote location in Kazahstan after their tours of duty on the International Space Station.

Among the various segments, there is a similar purpose. “They think about their utilization differently, but they’re all using private aviation to commute to and from work. Each flight is mission critical. All have to be there on time.” He says, “An NBA player makes 80 flights a season. If half of them are late just 30 minutes, that’s 20 hours of their life they could have been spending working, working out, sleeping, with their families, or whatever they wanted to do.” Raiff says, PJS spends about 10 hours of planning for every flight it operates, which includes contingencies. “We always have Plan B and Plan C,” he says.

Yet each client is different. For catering pro sports teams, the CEO notes, one team is gluten free. Other teams want the exact same food on every flight. For others, the menu is dependent on performance. A winning streak may mean serving the same dish until the team loses. Some players have specific foods they eat either because of nutritional programs or superstition. One NHL team wants shark soup when they fly into play the San Jose Sharks. “It’s a constant tug of war with nutritionists who want healthy food, while the players want chicken fingers and tacos,” says Raiff. Some entertainers want meals from top local restaurants because during their stopovers, they never get outside their hotel or arena. Whatever the preferences, the key Raiff says, is to never run out of food.

One of the PJS propositions is dedicated crew, something you generally don’t get via charter or even fractional ownership. While from time to time a customer might ask for a change, and Raiff says, it’s always accommodated, more common is customers wanting the same pilots and flight attendants from the previous year or tour.

PJS does not own any of the planes it operates, although Raiff did when he started. Seeing Boeing and GE launch the Boeing Business Jet, essentially a 737 converted for executive use selling for $50 million, Raiff picked up used 727s for $6 million each, spent about $2 million refurbishing them and thought he had hit a home run. Three years later when he went to refinance the planes, his bank told him despite being into each jet for $8 million, they were only worth $250,000. His lesson, he says, is “buying a piece of metal that sits outside and rusts is a very bad idea. Take it from me. Leasing makes more sense.”

Despite its business moving around rock groups and sports teams, PJS doesn’t book hotels for clients, although it will handle ground transportation requests. At the same time, PJS is expanding beyond its niche with jet cards and on-demand charter on executive jets, which now represents 30 percent of revenue. With his longstanding relationships with teams, corporate travel managers, tour managers and so on, Raiff says PJS has an inside track to fulfill the private aviation needs of individual athletes and band members, even when they don’t need a 737 or 747.



(Doug Gollan - Lifestyle)

No comments: