Michael Scheeringa, CEO of Flight Options, one of the largest for-hire jet companies in the country, has dozens of planes at his
disposal. So you might be surprised to learn that when he travels for business, “eight to nine times” out of 10, he says, he flies commercial. “It shows discipline.” Left unsaid, but understood, is that such restraint hasn’t always been exercised at the Raytheon subsidiary.
With the TSA-challenged CEO at the helm, the 10-year-old fractional jet–ownership firm has been on a tear recently, closing in on the first profit in its history. Since 2004, its operating revenue per aircraft has increased 50 percent, to $3.1 million, even as the size of the overall fleet has declined. With 1,400 clients and $600 million in revenues last year, Flight Options
is now second only to NetJets in number of shares owned in the North American market (Flexjet is third).
Flight Options’ headquarters is a converted aircraft hangar at Cuyahoga County Airport in Cleveland, where, seated in
an amphitheater-size control center, NASA-like rows of controllers monitor planes in real time on a giant screen. During peak periods, company aircraft travel between 275 and 300
legs a day, 165 to 180 of which are revenue-generating flights.
Can’t Please Everyone
Such robustness is a far cry from three years ago, when Scheeringa inherited a fleet of aging aircraft and a company in a serious tailspin. For the organization to survive, it would need a reboot — starting with upper management. “When we arrived, most of management that was here had been promoted from a local FBO,” says Scheeringa, who had previously served as vice president of US Airways Express. “The entire leadership team has been replaced and upgraded. There’s not one direct report to the CEO today who was a direct report when I joined the company.”
With the same efficiency, the company also lowered the average age of its planes and pared the choices of planes it offered and the variety of customers it was willing to serve. Today, Flight Options flies only four types of aircraft, all under five-years-old: the Hawker 400XP and 850XP, Citation X and Embraer Legacy 600. Any client who couldn’t afford
to upgrade to a Hawker from, say, a King Air ended up being left out entirely. The same happened to customers who didn’t fit in with the company’s newly pragmatic approach to geographical reach. Before, if someone in Wilmington, North Carolina needed to get to Tallahassee, Florida, Flight Options might foot the bill for an expensive repositioning from Charlotte or Atlanta. Now, it’s more likely that person will be riding US Air or Delta through Hartsfield.
Seizing the Day
The next part of the equation was expanding Flight Options services beyond fractional ownership (in which you own a piece of a specific airplane) to jet cards (a pass to fly on whatever aircraft is available) and other segments of the flight rental and management business. It was a bold move for a company in cost-cutting mode, but one Scheeringa needed to make if he had any hope of bolstering the bottom line. While the private-aviation market as a whole is booming (latest estimates put its growth rate at double the GDP’s), Flight Options’ traditional base, the fractional sector, is stagnant, nudging up just 2 percent a year since 2005. The real growth is at the upper-upper end of the market, and among the newbies.
To tap into the burgeoning jet-card crowd, Flight Options introduced JetPASS Ultimate Travel, a card program that offers access to three different cabin types on the same account and hourly rates based on day and time of travel. To give its existing customers more flexibility, Flight Options created Fractional First, a program offering distance-based pricing and transparent fuel costs. To make inroads with the most elite travelers (these days, even people who own their jets outright seem increasingly interested in monetizing their investment) Flight Options started a management program similar to those described in “The New Flying Cash Cow” (see page 124), that puts idle planes into charter service. As of this quarter, the company is even branching into the potentially lucrative one-off charter business.
But Scheeringa is the first to admit a lot of work remains. “We’re very much about the long term and creating a sustainable business model,” he says. “We get the Avis award: We try harder.” In other words, he’ll make no prediction yet as to when he might grant himself that jet card.
