July 30, 2009 | Posted by Andrew Richmond
This article first appeared in the Air Charter Guide in May 2009
It is May 2009 – about a year after I wrote my last article for the Air Charter Guide. In that article, I covered the basics of aircraft acquisition and management, as well as alternatives to full ownership such as jet charter, fractional ownership, and jet card programs. At that time, there was talk of recession as the housing crisis developed, but the general outlook for our industry was good. For example, if you wanted to buy a brand new jet, you might have to wait years to take delivery. And if you wished to shorten the wait by purchasing a position from an existing contract holder, you could expect to pay a hefty premium.
What a difference just one year makes! Although OEMs still report backlogs of several years for certain models, contracts for new jets are being cancelled at a swift pace. This is despite the fact that buyers may be forfeiting substantial cancellation fees. Also, a growing number of aircraft owners find they now owe much more than their plane is worth. And the charter industry is seeing its worst downturn in recent history.
In this article, I’ll identify what I see as the four key factors behind this unprecedented downturn, discuss the impact on specific areas such as aircraft ownership and charter, and then offer some thoughts on what may be up ahead—as well as a few bright spots.
How Did This Happen?
As I look back, here are the chief developments that brought us to where we are in the Spring of 2009.
1. Glut on the market. Fact is, too many planes were being built. Take the emerging VLJ category. Cessna quickly came out with the Mustang and had a reasonable level of success, but the market was not nearly as robust as some predicted. At one point, Eclipse planned on building 800 airplanes per year. If we did not need this many airplanes prior to their entry into the market, how could we need so many now? The glut wasn’t limited to VLJs,
of course; the story can be repeated in most aircraft categories.
2. Astronomical fuel prices. Our real trouble began in Summer 2008, when fuel prices soared as high a $7.00 per gallon, while direct aircraft operating costs are traditionally based on an average of $2.74 per gallon. Needless to say, this wreaked havoc on everyone’s business models, made private jet travel prohibitively expensive for many people and companies, and caused the industry to retrench. To make matters even worse, the resulting shift to newer and more fuel efficient models caused the resale market—especially for older, less efficient aircraft—to collapse.
3. Stock plunge. As of this writing, the stock market is now at roughly half its October 2007 peak. Much of the wealth that might have gone to purchase a new or pre-owned jet has simply vanished. Even very wealthy people are safeguarding their assets, and businesses are holding on to cash. Aircraft ownership and jet charter are often among the first expenses to be cut.
4. Negative (and unfair) press. Like many of you, I cringed when the Big Three automakers flew separate private jets to beg for billions of dollars from taxpayers. I knew that this would make our industry an easy and immediate target for the press and legislators, and that is exactly what happened. Literally overnight—and completely unfairly— private air travel went from being chic, exciting, and desirable to a symbol of outright profligacy. It was suddenly “uncool” to own or charter a jet.
So, those are the causes. Let’s go into more detail about some of the effects on the main areas of our industry, as well the new reality for current and potential owners and charter customers.
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November 7, 2008 | Posted by Andrew Richmond
Owning an aircraft can be a very rewarding experience. It can also be one of the worst purchase decisions you ever make. There is a saying in our industry that the happiest two days for aircraft owners are the day they buy the plane and the day they sell it. While this is certainly not true for every owner, there is a lot to know about possibly take connecting flights. On purchasing and maintaining an aircraft, so that your plane enhances your travel abilities – and brings you joy instead of misery.
Whenever I assist a potential aircraft buyer with an acquisition, my first step is to do all I can to talk them out of it. If I throw every possible hurdle at them to convince them it is a bad idea, and they still want to move forward, I know they were meant to be an aircraft owner. Before I explore those hurdles – and then discuss the benefits of aircraft ownership – let’s briefly review your alternatives. Perhaps one of these options is a better choice for you.
Fly Commercial? Are You Serious?
First of all—and I say this only partly in jest—you should at least consider the commercial airlines, especially for international travel. Yes, I know what you are thinking – long delays, bad service, no privacy, limited airports, inedible food, and all the things that make us want to avoid airlines like the plague. However, for international trips the service on many first class airlines has gotten much better and actually rivals what you will experience on a private aircraft. Sure, you have to arrive several hours early, go through TSA, have your bags X-rayed, and possibly take connecting flights. On the plus side, though – and it’s a big plus – there is an order of magnitude cost differential between international commercial flights and flying on a private jet. You can easily save many thousands of dollars on every trip. Okay, now that I have made my plug for the commercials, let’s talk about your private travel options.
Aircraft Acquisition And Management, What To Know Before You Buy (PDF)
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August 16, 2006 | Posted by PressReleases
TWC Aviation, looking to develop long haul business to Europe and boost its worldwide charter business, is taking delivery of a new G550 in 2008.
“Gulfstream’s reputation for reliability and world-class accommodations made the G550 a natural fit for our growing clientele” says Andrew Richmond, president of TWC Aviation. “Our current fleet is already flying international trips on a regular basis, and the addition to the G550 further strengthens our offerings.”
The new G550 will join a Challenger 601 – along with Gulfstreams, Cessnas, Premiers and Astras – as TWC ramps up its long haul capacity.
TWC has steadily upgraded and added to its owned and managed capacity since being founded by entrepreneur Andrew Lessman.
But some recent purchases have been designed to enhance its North American services.
In February 2006 TWC added a six-passenger Raytheon Hawker 400XP executive jet to its fleet. The 400XP was targeted at regional charter flights to meet demand for trips between points such as Denver and Seattle and Dallas and Miami.
In October 2005, TWC added a six-passenger Raytheon Premier IA to its fleet. With a range of 1,460 nautical miles, passenger demand was centered on regional travel between points such as Los Angeles and Vancouver or Mexico City, New York and St. Louis, or Miami and the Caribbean.
Now it’s the turn of the long haul. Richmond said: “Our G550 will fulfill our client’s requirements for non-stop travel to far away destinations including Europe and the Pacific Rim”
He reported that business was up substantially from last year. Most regular TWC customers are businessmen but it also conducts trips for brokers, film stars and other VIPs.
Founded by entrepreneur Andrew Lessman, and headquartered in Burbank, California, TWC is a privately owned, company that provides jet charter, aircraft management, sales, and consulting services.
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August 3, 2004 | Posted by PressReleases
For Local Entrepreneur, Mind Changing Has Been a Healthy Career Choice
By JOHN G. EDWARDS, Las Vegas Review
Andrew Lessman has been many things and was nearly many more. Mind changing was healthy; it helped his career evolve.
Lessman came within a year of earning a medical degree, but dropped out. Then, he earned a law degree at Loyola University and built a profitable practice in six years. But he shut it to become a fitness trainer.
Instead of becoming a trainer, though, he established a vitamin manufacturing and sales company that now is the largest direct seller on television.
When he built an office building for his company, Your Vitamins (soon to be called ProCaps Laboratory), he ventured into general contracting and now owns TWC Construction.
He decided to buy a private jet to reduce travel time to St. Petersburg, Fla., where the Home Shopping Network has headquarters, from his home in Henderson.
Lessman is planning to expand his vitamins business domestically and abroad. Meanwhile, he is writing books on prevention of breast cancer and heart disease — that’s when he isn’t running high altitude mountain trails or participating in various sports.
Question: How did you become a vitamin manufacturer?
Answer: When I started the company back in 1979, it was just a hobby. Just a few thousand dollars a year in sales for 10 years. I started a law practice in Los Angeles, mostly medical malpractice, medical product liability and food and drug law.
Question: How successful were you?
Answer: As far as the growth of the business, the quality of the cases, the quality of the practice, it was much better than I had ever dreamed. I had done well. Life was good, but I hated being a lawyer.
I still spent inordinate amounts of time reading biochemistry journals, technical journals. I was as knowledgeable about supplements then as I am today. It was my hobby.
The woman I was dating told me: “You’re never going to close your law practice. You’re never going to commit to your vitamin company. You will always be a miserable lawyer.”
Question: So you closed the law practice?
Answer: I thought I was going to be the most over-educated fitness trainer, and I would be providing vitamins to my clients. I sold my home, sold my cars, bought a Honda Civic and moved into a tiny little studio apartment. I went from living the life, living large, to living very small. That was 1988.
Question: Would you talk about some of the turning points in your career?
Answer: Before I closed my law practice, I had created some advertising fliers that talked about our products and described how unique they were. And I decided to go to running events, marathons or 10Ks. I decided to put my fliers for comprehensive multivitamin formula on all the (runners) cars. The fliers had a toll-free number to call. I would have been happy to get a few calls. So I called the answering service two-days later, and it was over 200 orders.
Question: Why do people want to buy your pills?
Answer: Our products are, objectively, unique. No one else is 100 percent additive free, puts them in foil packages. If you are putting vitamins into your body every day, the amount of additives at the end of the year can be a pound or two.
Question: Do you market any differently from others in the business?
Answer: If you want to get informed and educated, we’ll help you. Most call centers require people to spend minimal amounts of time (with each customer). If you spend too long, you get fired. We encourage (our call-center staff) to develop relationships and to spend as much time on the phone as the customer wants.
No one does what we do in production and manufacturing to control the quality of the product.
Question: You were talking about company milestones.
Answer: I decided I wanted my products in the Sharper Image catalog around 1989. I managed to get the front cover of the Sharper Image. I managed to get my old girlfriend to pose on the cover of the Sharper Image.
It became the most successful product in the Sharper Image catalog. (The relationship with Sharper Image) continued for several years.
Question: Take me to the next step.
Answer: In 1991, I spoke to QVC, the TV retailer, about having my products on QVC, and QVC wasn’t all that excited. The chairman, owner, founder of QVC, was a guy named Joe Segal.
He said I don’t even know why you’re here meeting with me, because I will never sell vitamins on my network. He was afraid of liability. So the guy who’s now the CEO of QVC, a gentleman named Doug Briggs, said to Joe: “Just hear this guy out. He’s different.”
So Joe listened for a couple of hours and basically because I’m a food and drug lawyer, because I was a liability attorney, he gave Doug the go-ahead on my products.
Joe agreed. I said to Doug: “Now, we just have to find a celebrity to go on air with the product.”
Doug said: “We already have our celebrity?” I said: “Who’s that?” He said: “If you can convince Joe Segal to do vitamins on his network and if you want this purchase order, you’re going on TV. Otherwise, he’s afraid of liability. ” I’m like — no, no, no, I don’t go on TV.
Question: What was it like the first time on TV?
Answer: I just talked about science. I just talked about nutrition. After I got off air, there was nobody around. I figured what I talked about was really interesting to me but probably nobody else.
When I get back to the other room, everyone is clustered around the TV monitor that shows the numbers that are rolling in. Apparently, I did really well.
Question: How did that work out?
Answer: The business grew phenomenally, but QVC did not share my vision for the growth of the business. So I grew disappointed with our stifled growth.
Question: What happened then?
Answer: A gentleman named Barry Diller, who for about a year was CEO of QVC, left the company and purchased Home Shopping Network. They made me an offer I couldn’t refuse. I started at HSN in November 1996.
Question: How many people do you employ here?
Answer: The vitamin company is around 250 people, but, by the end of this year, we’ll be closer to 350 people. Probably 35 people at TWC Construction. Then, TWC Aviation employs just less than 100 people.
Question: Why did you expand into these other businesses?
Answer: When I was about to build a new facility, I asked some knowledgeable construction managers if they wanted to start a general contracting firm with me, and the first thing we would be building would be the building we’re sitting in now.
There were no direct flights between Las Vegas and St. Petersburg (Florida where HSN is produced). I figured I would buy myself a small private jet to get myself there directly. You can’t manufacture more time, but, with private aviation, it seems like you do.
So I figured when I’m not using my aircraft, I should charter it.
These are all businesses I’m passionate about.
VITAL STATISTICS
Name: Andrew Lessman.
Position: Owner and founder of Your Vitamins (soon to be ProCaps Laboratory), TWC Construction and TWC Aviation.
Age: 47.
Family: Single.
Education: Bachelor of science degree from the University of Pennsylvania; law degree from Loyola Law School, Los Angeles; and three years at medical school at University of Hawaii.
Experience: Private lawyer in Los Angeles for six years; founded Your Vitamins in 1979.
Hobbies: Running mountain trails, fitness.
Hometown: East Meadows, Long Island, N.Y.
In Henderson since: 1997.
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