Pinnacle Air Buys Next Learjet, Earns Top Rating From Phillips 66

Pinnacle Air Group wasn’t immediately inspired to start a luxury air charter service in Northwest Arkansas. Credit Bubba, former Wal-Mart Stores Inc. executive Robert Thornton’s chow dog, for that one.r

The canine’s photograph hangs in Palm Springs International Airport, next to a framed glossy print of former President Gerald Ford and several other valued customers of a California charter-plane service. Thornton used to fly his dog commercial. But a few years back, an unfortunate airline incident prompted him to upgrade the pooch to private planes.

Bubba has flown charter ever since.

Thornton, along with fellow Pinnacle Air Group principals Bill Schwyhart, J.B. Hunt, Tim Graham and Collins Haynes, decided in 2000 that the time for Pinnacle Air had arrived. With its recent purchase of a third Learjet, the Springdale company now owns Arkansas’ largest charter-jet fleet.r

“We should really call it Bubba Air Service,” Schwyhart said with a laugh.r

Since its inception, Pinnacle Air has purchased two fixed-base operators (FBOs) and three total multimillion dollar jets. It logs 50-60 hours of flight time per plane per month. At an average of $1,925 per hour, that’s $105,875 monthly or $1.27 million annually in estimated revenue.r

Schwyhart said Thornton’s dogged experience wasn’t the only reason the company believed Northwest Arkansas was underserved for charter service. Pinnacle Air’s investors surveyed some “key potential customers,” he said, and there was not another premier operator in the region with first-class equipment and professionally trained, two-man crews.r

There also was no competitor with anywhere near the level of liability insurance coverage Pinnacle Air was prepared to offer — $100 million — which Schwyhart said is critical for a firm that wants to fly corporate executives and the super wealthy across the country.r

Scott Van Laningham, executive director and CEO of the Northwest Arkansas Regional Airport (XNA), agreed that Pinnacle Air has filled an underserved niche.r

Although commercial airlines don’t break out first-class passengers in their enplanement figures, Van Laningham said those seats are in demand. American Eagle and Northwest Airlines both offer first-class seats on some of their flights, and the regional jet service that most airlines offer at XNA is considered upscale overall.r

“I know from talking to the [airline] station managers that have first class that that’s a big plus for them,” Van Laningham said. “Customers really like it, and they’re almost always sold out during the business week. Northwest, for instance, flies the Avro jet that has about 68 passengers. Well, only 15 of those are first-class seats, and they’re sold out.”r

Schwyhart said the time it takes to fly commercially, plus other concerns such as security have prompted more companies to consider chartering flights for their brass. Competitive pricing, he said, is the key for charters.r

So far Pinnacle Air has transported fun-seekers to destinations such as Las Vegas, Mexico and the nearby Tunica, Miss., casinos. The company is also responsible for transporting a human heart for transplant from Atlanta to Little Rock.r

Pinnacle Air will arrange “whatever the customer wants,” Schwyhart said — from limo rides to football tickets. Frequently the trips involve a four- to five-day stay at a destination. Customers are then charged variable rates depending on demand for the grounded plane. Sherah Stuckey, Pinnacle Air’s flight coordinator, is also on call 24 hours a day to serve customers.r

“[Customers] want to go out, and they are people of high profile,” said Nelson Erdmann, Pinnacle Air’s general manager.r

“You can go from alert to launch in about an hour. Pull up planeside here and hop on board, and our guys are ready.”r

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Full-service Fill-upsr

In January 2003, Pinnacle Air Facilities LLC bought the assets of Springdale Air Services Inc. for $2 million, making it the only FBO at the Springdale Municipal Airport. r

Not only does the charter service act as a hub for its passengers, but as the only FBO, it provides the fuel for every plane at the Springdale airport and for many planes that stop for refueling on their flight plans.r

“We want to be fully integrated, we want to have airplanes and we want to have maintenance,” Schwyhart said. “We are going to build this company to be Arkansas’ premier air service.”r

Erdmann said Pinnacle Air buys a purified form of diesel jet fuel by the truckload from Phillips 66. r

An 8,000-gallon truckload of fuel can range from $2.26 per gallon ($18,080 per truck) to $2.70 per gallon ($21,600 per truck). FBOs in other markets pay as much as $3.15 per gallon depending on their location.r

Erdmann said the operation saves money by providing its own fuel in addition to its own maintenance crew. An average of 15 to 20 planes will stop there daily.r

Pilots can land and wait in a recliner-filled lounge and watch TV or first-run movies while their clients attend to business on the ground, they can revise flight plans in the computer area, or they can take a nap in the fully reclining chairs in the sleep room. Pinnacle also provides courtesy cars and shower facilities all free of charge.r

Lou Clark, a pilot based in Baton Rouge, La., said the Pinnacle FBO is in the top 10 percent of FBOs he has visited in United States. Clark has more than 34 years of experience, has logged more than 11,500 hours of flight time and this August alone stopped at 23 different airports.r

“The service [at Pinnacle Air] is great, the amenities are excellent, and the facility is clean,” he said.r

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Sky’s the Limitr

Phillips 66 upgraded Pinnacle Air in September to an Aviation Performance Center, a title that is granted only to the top 10 percent of Phillips aviation fuel providers. Pinnacle will be featured in some of Phillips 66’s national advertising as a result of that nomination.r

“I think what really puts us head-and-shoulders above the competition in four states is the quality of our service,” Schwyhart said.r

In fact, more than 30 percent of Pinnacle’s customers do not depart from Springdale. Pinnacle receives referrals from other charter services such as Flexjet, a subsidiary of Bombardier Inc.r

“We’ve had several instances where their customers started requesting us,” said Lee Nichols, chief pilot at Pinnacle Air.r

About 2,000 Learjets have been made since the line’s 1964 inception. Also a subsidiary of Bombardier, Learjet is the No. 3 maker of civil aircraft and one of the world’s largest makers of business aircraft.r

Pinnacle Air is in the process of completing its application for a 135 certificate, which basically means it could carry passengers for hire. Right now, the charter service is operating under an alliance with Jet Solutions Inc., another Bombardier company.r

“It is pretty hard to get a 135 certificate,” said Erdmann. “You have to meet certain financial requirements, and the process requires lots of paperwork.”r

The process for passenger-for-hire certification takes six months to a year. The firm’s investors are also considering buying a Learjet 60 model and adding another base but haven’t reached a verdict.r

“The market will decide our future,” Schwyhart said. “We are as big as a lot of carriers in Dallas right now.”