loading Loading please wait....

If you are a registered, please log in. If not, please click here to register.


Fifteen years ago an investment industry professional with a passion for flying turned his day job expertise toward creating a business that stabilizes the financial challenges of operating a corporate aircraft. The idea: offer an independent avenue for business aircraft operators to simplify the task of covering the occasionally unpredictable cost demands of the company aircraft.

Dave Higdon   |   1st October 2004
Back to articles
Dave Higdon Dave Higdon

Dave Higdon writes about aviation from his base in Wichita Kansas. During three decades in...
Read More

Ensuring operators of cost stability by assuring that maintenance costs are covered.

Fifteen years ago an investment industry professional with a passion for flying turned his day job expertise toward creating a business that stabilizes the financial challenges of operating a corporate aircraft. The idea: offer an independent avenue for business aircraft operators to simplify the task of covering the occasionally unpredictable cost demands of the company aircraft.

Jet Support Services Inc. opened in 1989 managing a handful of engines and covering zero aircraft. From an office of three – which included founding partners John F. Haskins- Marla Gelfond and Ronald Zilberbrand – the idea grew to a point that it now takes 75 employees working from far-flung locations around the globe- to support about 120 airframes and more than 2-000 engines.

No- JSSI staff don’t turn a wrench or open a hatch. No one there checks a dipstick or airs a tire. However- Haskins’ team still successfully manages all those assets’ maintenance expenses by creating programs that assure operators fixed-cost maintenance covering anything from a simple inspection to every turn of every screw needed to correct a catastrophic event.

In turn- the effectiveness of JSSI’s programs also pay dividends for the owners by maintaining not only a business aircraft’s reliability and utility- but it’s long-term residual value too.

Whether you consider such programs an extended warranty or a specialized insurance program- that blend of benefits attracts customers to the overall financial stability and peace of mind JSSI provides.

Insuring needs with maximum choice
John F. Haskins and his partners launched JSSI into existence in 1989 after hearing the idea pitched to them as a business opportunity.

'My partner and I were in the investment business-' explained Haskins. 'Someone came to us with an idea for this business. We looked at it- liked it – and went after it-' said Haskins.

The mission- as explained by company literature- is to 'facilitate high quality- cost effective and timely turbine engine repairs and overhauls- and airframe maintenance resulting in safe- reliable aircraft- significantly reduced operating costs- budget stability and enhanced resale value for clients.' Put more simply- JSSI covers a defined area of maintenance needs on the basis of hourly use – and does so in a way to embrace anything from only catastrophic coverage for the engines to everything on the business airplane but paint and upholstery.

JSSI differs from defined maintenance programs between a service provider and an operator based on fees linked to hours flown. Instead- JSSI guarantees the costs of maintenance based on the coverage defined and hours flown – and the operator selects the service provider who does the work. As Haskins notes- 'We don’t turn a wrench. We are a financial-services company.'

Ahead of the curve:
'We were ahead of our time- by three or four years-' Haskins said as he reflected on the early years of JSSI.

'A hard sell?' Think of it- calling on the human decision maker in control of a corporate aircraft- selling financial stability for the maintenance costs of that airplane. The operator pays JSSI monthly based on hours flown- in exchange for risk-free maintenance expenses including: known costs for scheduled and unscheduled events- rental engines and maintenance reserves.

Like we said at the onset- Haskins and Gelfond were in the financial services business – and they had the aviation expertise needed through their own investment intelligence networks.

A hard sell? 'Next to impossible-' Haskins admitted laughingly. Next to impossible – not impossible. Indeed- was JSSI ahead of its time… or just in time?

To resolve questions about JSSI’s ability to fulfil its obligations under its agreements- the company makes its finances as secure and transparent as possible. 'We created a trust fund- a third-party irrevocable trust-' Haskins explained.

Now if everybody understood how to manage assets this way- we’d have a lot more insurance companies to cover other aspects of our lives. As it is- we already enjoy access to extended warranties for new and once-new products- from autos to appliances- homes and home entertainment electronics.

These trades have grown dramatically in the past 15 years – little-known and often mistrusted in the early years- these days it’s hard to get out of a consumer retail store with a big-ticket item and not hear a pitch to purchase an extended warranty.

About the same time such protections caught on with consumers- JSSI started catching on with business aircraft operators. 'Sure enough- in the fourth year- we landed a couple of choice customers-' Haskins noted- 'Boise Cascade- Philip Morris (now Altria)…

'We handled 17 engines and 17 units in the first year- then it went to 50. Then it took off from there.'

A key to JSSI’s success: controlling its own costs. 'It’s always been a lean operation-' Haskins said. 'We built from the bottom up.'

'Up' today means a staff of 75 handling about 120 business aircraft and more than 2-000 engines.

Defined Maintenance:
Although JSSI’s programs may sound similar to an extended warranty- with what JSSI does for its customers- there are differences. As the numbers above attest- many operators find the JSSI approach attractive- both for operational and financial reasons.

Operationally under JSSI’s newest program- 'Tip-To-Tail'- for example- operators fly knowing that the program guarantees the costs of virtually any maintenance needed- whether engine or airframe – scheduled or unplanned – the same as many other OEM-offered maintenance-coverage plans.

JSSI also offers programs more narrowly focused than the five-year-old Tip-To-Tail – down to and including catastrophic engine failures- alone – each of them offers the client more control and more predictability for budgeting the costs.

JSSI Complete is the company’s best-selling program. The company covers approximately 85% of all engine-only clients under Complete.

In addition- under JSSI Vest- clients can invest in a return on their own assets in a way that is win-win- according to Haskins.

'With JSSI Vest- we offer the opportunity for customers to get back a percentage of any equity balance when they come to the end of a term-' Haskins explained.

If the client is correct about the need for the coverage- the client is shielded from unexpected costs. If they have it wrong- they may elect to get some of their money back – there really is no down side to enrolling in this program- according to Tony Kioussis- vice president of new business development.

How do they do it? JSSI stays competitive by re-insuring and investing in vehicles that generate enough income to cover both the company’s profits and the burden of unexpected cost – say the costs of unplanned expenses due to unplanned maintenance needs of clients. That is- as long as the client keeps up on its obligations.

'We require our clients to adhere to the (maintenance) schedules and help them manage their costs-' Haskins noted.

Another cost-saving step involves knowing the service providers and the manufacturers. 'We also work with OEMs- as a customer-' continued Haskins.

Although representing a vast customer base has some advantages for JSSI’s dealings with maintenance providers- the strength of that leverage has declined with the consolidation of the maintenance industry.

Altogether- is selling any easier? 'It’s sort of easier- these days-' Haskins noted. 'The big difference today is that we are known and have established a good reputation. Yet it’s not easier in the end. Now there are a lot of other programs out there and more competition. People can do more comparative shopping today. Everything we’ve gained from being better known comes up against the increased competition.'

Those challenges to growth help keep JSSI’s staff focused on creating more clients.

Finding and minding:
JSSI’s COO- Ed Hawkins knows that yesterday’s success is history- today’s success is tomorrow’s history – and tomorrow’s history only happens with tomorrow’s clientele.

However- convincing a business jet operator to entrust you with the financial demands of his jet isn’t exactly like asking the buyer of a new DVD player- 'Would you like our extended home-replacement warranty?' Financial strength- depth of knowledge- personal contact and trust are the things that help sell clients on spending hundreds of thousands of dollars for maintenance costs control.

'It’s based on relationships-' explained Hawkins. 'We knock on doors. We go out and use the relationships we’ve built.'

These aren’t cold calls- though- but event-driven- focused approaches keyed by the knowledge JSSI’s staff have of the business aviation community and its members.

'A lot of events happen in an aircraft’s life-' Hawkins explained. 'An announcement of a new CEO who wants his own kind of business jet; a hot section (inspection); an (engine) overhaul. These are all keys to the dynamics of that aircraft’s life. We track these through industry databases to identify candidates for our services. Then- we go face-to-face.'

Moreover- there are more than enough transactions to keep busy a much larger staff.

'There are some 20 percent (of the business jet fleet) that turn over in any given year-' Hawkins noted. 'That’s about 3-000 aircraft in play in any given year.'

By type- Haskins said- 'Light jets turn over every three years or so; medium jets stay around longer; large jets even longer.'

With its own records from 15 years in the business- and its own people on shop floors every day- JSSI calls its own a formidable database of activity and maintenance information. 'We have a pretty good database on what it really costs to operate an airplane-' Haskins said. 'If we can improve on those numbers- we work very hard to bring down those numbers-' he continued.

Gazing into the future:
Where do Haskins and company intend to go? 'We want to offer one stop shopping even OEMs can’t match for the value.'

'Five years out- on our engine programs- the idea is to refine our services and make us more of a value-added proposition-' Haskins explained. 'We’re a good value-added proposition today. We just need to make them better.'

Haskins and his veterans also intend to expand the Tip-To-Tail program to better match their expectations. 'Tip-to-Tail… has an enormous amount of growth potential – but it’s going to take some missionary work-' Haskins noted.

In addition- JSSI’s airframe program has strong potential as business airplanes fall out of warranty and roll over in ownership – that’s another area with potential. 'And we have some new products on the drawing board… but those will have to wait for their time.'

Already- JSSI is the preferred maintenance provider offered by Fleet Capital’s (recently acquired by Bank of America) aircraft-leasing programs. A tool that allows Fleet Capital to reduce its exposure – and hence improve its aircraft lease position – the JSSI connection benefits both parties to the transaction. Of course- JSSI improves its position- as well.

That- however- was the idea of the business from the start: provide business jet operators with a value-added way to manage maintenance costs in a way profitable to both sides. With 15 years to show- JSSI obviously succeeded.

More information from www.jetsupport.com/


Related Articles

linkedin Print

Other Articles