Making an Idea Fly

The following article is reprinted with the permission of Success magazine. Successis the magazine for today's entrepreneurial mind. Call 1-800-234-7324 to order your subscription!

Richard Santulli was peacefully running his own aircraft leasing company, RTS Capital Corp. of Montvale, N.J., when a banker persuaded him to buy a venerable charter company called Executive Jet Aviation Inc. Santulli's revolutionary strategy to make that company more profitable took years to bear fruit: Sell each of your customers partial ownership of a jet -- but through artful scheduling, give each the right to fly anywhere, anytime, on four hours' notice, as if the aircraft were his alone. Today, the profitable company has more than 250 customers, 35 planes, and $200 million in sales.

What was Executive Jet when you bought it?

It was the first charter jet company in the world, with great pilots and great mechanics, but no growth.

How did you think of fractional ownership?

I wanted to buy myself a private plane, which I'd never done. But I flew only 200 hours a year, and a small plane would cost me $3 million. That made no sense. So I thought I'd find four guys to share an airplane.

And that worked?

No. It turned out we all wanted it at the same time -- Monday to Friday. But we did the mathematics and found that with more planes and more owners, you reach a point where, when you call for a plane, you can get yours or one just like it. I thought a lot of guys must be interested in that. The U.S. airline system doesn't really cater to the businessman.

Did your new strategy turn the company around?

We got killed. When you make people an offer like that, they look at you funny -- it sounds too good to be true. And this was '89, '90, and '91, when people weren't buying airplanes, they were selling them. We lost millions of dollars. I had to fund Executive Jet from RTS Capital. A lot of my people said, "Sell the assets.'' Fortunately, I was the sole owner.

Why did you hang on?

I knew that once the recession was over, people would come back to buying airplanes -- especially guys who had lost theirs. We'd have operating leverage, because we had an infrastructure. We turned around in 1992.

Why is this idea just being tried now?

You need computers to schedule and optimize revenues for this many planes. And jets today are faster and more comfortable -- it makes it more attractive. It's not cheaper than going commercial, but it's easier.

How much room is there to grow?

I just ordered 32 airplanes, with options for 17 more over the next four years; that's more than $500 million. I think there's a lot of room.

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