FBO Chain Profile: Landmark Aviation
With 34 FBOs in the U.S. and Canada, Landmark Aviation has grown to be one of the larger FBO chains. The company was formed through the merger of Piedmont Hawthorne, Garrett Aviation and Associated Air Center, all of which trace their roots to the 1930s and 1940s. These aviation service companies started coming together in 2001, when Piedmont Hawthorne bought Associated. In 2004, private equity firm The Carlyle Group, which joined the FBO sector in 1998 with the purchase of Piedmont Hawthorne, bought Garrett Aviation and combined the two companies. The company operated under the unwieldy name Garrett/Piedmont Hawthorne/Associated until October 2005, when it adopted the name Landmark Aviation.
Landmark’s stable of FBOs, most of which used to be Piedmont Hawthornes, covers a broad spectrum of the aviation marketplace. The FBOs serve large airports, such as Dulles and Los Angeles International, and smaller ones such as Leesburg Airport in Virginia and North Palm Beach County in Florida. Then there is Rhode Island, where the company has a large share of the FBOs in a state with a small number of airports and has facilities at airports with minimal jet traffic. Landmark operates two FBOs at San Antonio International Airport. The chain’s only non-U.S. FBOs are in Canada at Calgary, Toronto and Vancouver.
Given the active buying and selling that occurs in the private-equity industry, one of the questions that inevitably arises is how long The Carlyle Group will keep the company in its stable. Private-equity firms don’t make money for their investors unless they buy, improve and sell their holdings.
Another question is whether Carlyle will further combine some of its aerospace holdings. The private equity firm also owns turbine engine overhauler Standard Aero, which could be a good fit with Landmark’s engine business (the former Garrett Aviations have a long history overhauling the TFE731 and TPE331 engines). The answer to this question, so far, has been that Carlyle has no plans to combine Standard Aero and Landmark.
As for the question about how long Carlyle will own Landmark, Dean Harton, Landmark Aviation vice chairman and former owner of Hawthorne Aviation, has had a long relationship with The Carlyle Group. When Carlyle bought Piedmont Hawthorne in 1998, the FBO part of the company generated $20 million in annual revenues. Now Landmark is nearing the $1 billion mark. “Private equity firms are not like vulture firms,” he said. “They buy a company to put money into it. There will ultimately be an exit at some point.”
Overall, private equity is helping the FBO business, which has always been fragmented, Harton explained. “Any fragmented business to the financial community represents an opportunity to consolidate and realize economies of scale and network advantages. Costs can be controlled better using centralized administration, information technology services and management.
“I’ve been in this business since 1968,” he said, “when almost everybody who owned an FBO owned it because they started out working on airplanes or flying them. The financial community came without an interest in flying,” although they were familiar with general aviation, having been long-time users of FBOs. Harton added, “the financial industry brought a lot of discipline that the industry didn’t have before. It’s good all the way around.”
Like most chains, Landmark is always seeking new FBO and service business opportunities. “There are some extremely good single FBO operators, [and] I’m not saying a single-operation FBO by nature is bad,” he said. “But a large FBO chain has the resources to bring best practices, uniform training across a network and structures so we can go to a single customer and provide network-wide service offerings and pricing, which is for the benefit of the customer.”
Harton doesn’t believe there are limits to the size of a chain such as Landmark. “I don’t think any of us in this industry knows what those limits are,” he said. As the chain gets bigger, however, “parameters for acquisitions become a lot more narrow. We don’t just arbitrarily acquire anything that comes on the market.”
Company Standards Meet Individual Operations
When it comes to making the Landmark chain tick, Jim Hopkins, vice president of FBO operations, is responsible, he said, for “making sure whatever FBOs that our senior leadership should decide to purchase, we will bring into the Landmark brand, standardize them and make them one of the Landmark family.”
Landmark is currently developing new standardized line service and customer service training, but FBO managers have leeway to take care of customers as they see fit, Hopkins said. The customer service training will be done using a program developed with Service Elements, a Scottsdale, Ariz. company that specializes in service-delivery systems. Line service training begins with NATA’s Safety 1st program. Large FBOs have their own full-time trainer on staff.
A goal of the training is to prepare employees to offer customers the full spectrum of Landmark Aviation services, including fuel, maintenance, charter and aircraft sales. “One of the goals,” Hopkins said, “is [for customers] not to think of us as an FBO in one place and a maintenance company in the other, but to look at us as a fully integrated company.”
One way customers benefit from working with Landmark is through fuel discounts the company offers for purchasing maintenance services. Landmark takes this even further and uses the discounts to attract business to a specific FBO. For example, if a customer received a $500 fuel card for buying maintenance, Landmark might say that if that customer used the White Plains, N.Y. FBO, he can enjoy a free executive sedan and crew courtesy car for the day.
James Wilson, general manager of Landmark’s Dulles FBO, said, “Even though we’re a chain,” he said, “the general manager has autonomy to run the FBO on a day-to-day basis. We’re fully responsible for our own location. I have to follow policies and procedures, but I’m not going to get second-guessed.”
With his background working with customers, Wilson likes to spend time on the ramp greeting arrivals or in the hangar talking to tenants. “Nothing beats the human interaction,” he said.
Landmark recently began using Megadata’s Passur online flight-tracking system and has it installed in 26 FBOs. “It is a marvelous tool,” said Hopkins. “It helps us stay one step ahead of the customer in trying to anticipate their needs.” For customers who want to see a snapshot of incoming traffic, local weather and news, Landmark has begun installing JetSet Media’s free large LCD tvs in FBO lobbies.
Landmark’s strategy is to continue growing by offering integrated services to business aviation customers, according to president Shawn Vick. “We can touch 70 to 90 percent of the average flight department’s daily operating needs between the MRO [maintenance] and FBO business. Based on our success to date and how bright our future is, I see no reason why we would make any fundamental changes to our current strategy. It’s working and it’s [benefiting] owners and operators who
are customers. We’re not limiting our investment criteria to North America. We are as active internationally as perhaps anybody in analyzing opportunities.”