Corporate Jet Management and Charter Service : Pilot Tries to Get Aircraft Business Off Ground

Ronald Coalson wears his captain’s stripes in the cockpit but dons a business suit and a tie when it’s time to conduct business other than flying.

Although Coalson is a pilot--he flew Navy planes for 13 years and spent 11 years piloting commercial airliners for Trans World Airlines--he has learned that business comes first for owners of corporate aircraft.

“A corporate airplane is an expensive asset and it needs to be treated as an expensive asset if a company is going to get the kind of payback it expects,” said Coalson, who recently helped create Alliance Air, a San Diego company that manages corporate aircraft and provides air charter services. “If a company goes out and buys an aircraft, it has a right to have it properly taken care of.”

Corporations are realizing that proper mechanical care and heavier use of their aircraft can generate a better return on their aircraft investments, said Coalson, who traded his cockpit seat for a desk job outside the aviation industry when rough economic weather forced pilot layoffs at TWA in the early 1970s.

Coalson said that business experience helped him learn to deal with corporate executives on a “one business person-to-another basis. I understand things like accounting and cash flow. I’ll talk to (a business person) in his own language.”

Although corporate aircraft management firms have emerged in most of the nation’s larger aviation centers, Coalson’s firm, which manages three airplanes, is reportedly the first in San Diego.

“San Diego’s been a sleepy little town,” observed a spokesman for Avjet, a Burbank-based corporate aircraft management firm. “For starters, Lindbergh Field is closed at night, when a lot of corporate people want to fly, and although there’s a bunch of (corporate) planes down there, (San Diego) hasn’t really lent itself to this kind of operation.”

Coalson, however, said there are 80 corporate aircraft in San Diego County that are owned by businesses, doctors and lawyers. Part of Coalson’s job will be persuading those owners that corporate-aircraft management makes sense.

Coalson has also identified more than 120 companies in San Diego with offices elsewhere in the country. Coalson hopes to cater to that group’s air charter needs.

Corporations using management companies no longer need worry about attracting and keeping good pilots, said Coalson, who added, “Most corporations have been burned by pilots who have used them simply to get enough flying hours to qualify for a commercial (pilot) job.”

Management companies also arrange for Federal Aviation Administration-required maintenance, said Coalson, who tells prospects that his pilots enjoy lower insurance rates because they return to pilot’s school every six months.

Alliance Air’s air charter service generates about half of the company’s revenue, Coalson said.

The company offers 24-hour service, seven days a week, and will fly anywhere in the United States, Canada and Mexico, Coalson said. The company will arrange limousine service to and from airports and will serve snacks and beverages in flight.

In the air charter business, Coalson acknowledged that Alliance Air will be competing against more than 4,000 companies spread across the country. Recently, Net Air, a Denver-based charter company, announced that it had established operating agreements with six other air charter companies around the United States.

Those arrangements will help Net Air become “America’s first jet taxi service,” reported co-founder and vice president Stephen Straight. “We intend to establish a network of flight centers around the country . . . (that offers) uniformly high standards of safety and service.”

Air charter companies that have joined Net Air “give us their product on a wholesale basis and we sell it on a retail basis,” Straight said.

Advertising for Net Air, which deals almost exclusively with jets, argues that charter air service, even though it is expensive, could benefit companies that use their corporate aircraft for less than 40 hours each week.

Straight suggested that aircraft owners calculate “the true cost” of owning a plane. That figure includes financing charges, salaries for pilots, maintenance fees, and the cost of insurance and fuel.

Straight linked the continued rapid growth of the corporate air charter industry to airline deregulation, increased corporate decentralization and the computer revolution. “Business information is moving much faster than in the past,” Straight said. “We don’t consider ourselves as being in the aviation business (as much as in) the productivity multiplier industry.”

Coalson said Alliance Air can help corporate aircraft owners share in that air charter boom by transforming their private aircraft into profit centers. Alliance Air will do that by using the aircraft as part of Alliance Air’s air charter service fleet.

Although the Federal Aviation Administration generally prohibits corporations from using their planes to generate revenue, the agency does grant permits that allow private planes to carry paying passengers.

Alliance Air, which holds such a permit, has been using the two turboprop and one jet aircraft that it manages in its charter service. Two of those airplanes are owned by local companies. The third, a twin-engine turboprop, is owned by Alliance Properties, the San Diego-based military property management company that owns Alliance Air.

In addition to Coalson there are three other pilots, including John E. Wagner, the chief pilot and director of operations for Alliance Air.

Coalson said that many corporate planes, the cost of which runs from several hundred thousand dollars to several million dollars, needlessly sit idle at airports until an executive requires transportation--often from one out-of-the-way place to another. Those corporations can better use their aircraft by turning them over to a management company, Coalson said.

In addition to remaining eligible for existing tax credits and depreciation schedules, a “managed” plane can generate cash, Coalson said.

Although Alliance Air intends to make a profit on its charter service, Coalson said his company will be able to return “cold, hard cash” to the owners of the corporate aircraft that are managed under a lease-contract arrangement.