Global sales propel aviation firm
Photo/Courtesy Maine Aviation Corp.
One of Maine Aviation Corp.'s CRJ200GLS jetliners at the Portland International Jetport
Photo/Courtesy Maine Aviation Corp.
Swanky seats: Employees at Flying Colors in Ontario stitch leather seats by hand for Maine Aviation's luxury business jets
Photo/Courtesy Maine Aviation Corp.
The posh interior of a retrofitted CRJ200GLS jetliner from Maine Aviation
About a year and a half ago, Allyn Caruso, president of Maine Aviation Corp., started cultivating a network of international sales reps to expand sales of his company’s jets and other aircraft in its Portland facility. Simultaneously, he refined a process to convert a conventional regional jet, the 50-seat CRJ200, into a private luxury jet.
This year, the combination is paying off. Maine Aviation Corp. has closed more deals in the first two months of 2009 than in all of 2008, fueled primarily by overseas sales. Four of the five planes sold so far in 2009 went to international customers and four of the six new orders will be traveling overseas as well.
“Before 2009, I’d say about 10% of our sales were to international customers,” says Jim Iacono, director of business development at the 50-year-old aviation company that sells, leases and services aircraft. “Moving forward, I project that by year’s end, international sales will be 70% to 80% of all transactions.”
More than half of the sales are courtesy of the company’s retrofitted luxury jetliner, the CRJ200GLS (the GLS stands for Grand Luxury Series.) Its posh, 16-seat interior with hand-stitched leather seats and customized wood cabinetry appeal to clients from Russia to Dubai who don’t blink at the typical $20 million price tag. “These are people who have some wealth and want to capitalize on what’s going on in the aviation market,” says Iacono of Maine Aviation’s newfound clients.
It’s a unique strategy that gives Maine Aviation a hedge against a domestic market that has seen aircraft sales decline over the last year. Iacono says there is only one other competitor converting regional jets into luxury liners, an international consortium that is testing the waters with one just-in-time prototype. Katie Pribyl, director of communications for the General Aviation Manufacturers Association, says she hasn’t heard of anyone else converting the CRJ200 into luxury jets, but says it’s an interesting strategy to capture a growing segment of the international market. She says 10 years ago about 75% of business jets manufactured in North America stayed here; last year that number dropped to 54%.
“Europe in particular is a big market,” says Pribyl. “Twenty-six percent of all business jets went there last year.”
She attributes the growth to the number of companies that are expanding globally, and the growing economies of emerging countries. “Europe is finally waking up to business aviation,” she says. “We are certainly seeing developments in countries like India, China and the Middle East where [business aviation] was virtually nonexistent before.”
Landing deals
Maine Aviation spent a year showing the CRJ200GLS at trade shows in places like the Middle East, Switzerland and Russia, while building relationships with global sales reps, says Iacono. The reps — “we call them our strategic partners,” he says — are scattered from Singapore to Dubai to France and specialize in corporate jet sales, earning commissions that range from 2% to 5%. Iacono says the popularity of the CRJ200GLS opened a lot of doors for Maine Aviation, which expects to sell other aircraft through its new global network.
Forming those sales relationships was something Caruso practiced for years in the United States, says Iacono. Maine Aviation is the oldest Cessna dealer east of the Mississippi, and attributes its success to the strength of its New England sales network of seven partners in three states. “We just took that template and applied it internationally,” says Iacono. Caruso began looking for new opportunities for the company a couple of years ago to diversify its core services. That desire to diversify, and to satisfy a customer’s request for a roomy corporate jet, sparked the CRJ200GLS.
“Basically, he took a 50-seat airliner, converted it into a 16-seat executive luxury liner and resold it,” says Iacono, a process that produced a lot of global attention and earned the jet a mention in the November 2008 edition of Aviation International News.
The actual work of retrofitting a CRJ200 — a Bombardier class of aircraft — into a luxury GLS is done at Flying Colours, an aviation refurbishing plant in Peterborough, Ontario. Iacono says Maine Aviation, which employs 70 people, has partnered with the company for 30 years because of its professionalism and outstanding craftsmanship. Last summer, Flying Colours had orders for more than a dozen conversion aircraft jobs — including Maine Aviation’s — according to an article in the June edition of Aviation International News. “It’s the niche thing right now so we are looking to take advantage of it,” said sales director Sean Gillespie in the article.
Typically, Maine Aviation finds a 6- to 8-year-old CRJ200 jet, then has Flying Colours retrofit it into a luxury liner. Since the interior dimensions of each aircraft change slightly over the years, all the work is custom. The aircraft typically sell in the neighborhood of $20 million and bring Maine Aviation a return on investment of between 2% and 8%, says Iacono, who declined to reveal revenue figures.
The U.S. aviation industry is seeing an abundance of used corporate jets that are being unloaded by owners such as GM, Lehman Bros. and Coca-Cola, companies that are dismantling their fleets to avoid the appearance of corporate excess while the country struggles in a recession, says Iacono. That influx lowers the market value of the jets by about 30%.
Maine Aviation’s market position is further enhanced by a three-year wait for new, similarly sized corporate jets at aircraft manufacturers, which sell between $30 and $32 million, says Iacono.
“Our timing was perfect,” he says. “We can give customers what they want for two-thirds the price in seven or eight months.”
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