Silver Air (United States of America) (SIS, Santa Barbara, CA) plans to modestly grow its fleet, sticking to its current business model of managing aircraft with heavy charter availability, President and Chief Executive Jason Middleton told ch-aviation at NBAA-BACE in Las Vegas.
"We will grow until a point where we cannot maintain the level of focus and the level of service that we have now. You can't run a 300-airplane management company and give the level of service that you can at Silver Air. Right now, we're running about 35 aircraft in our fleet. I think somewhere around 50 aircraft is what I've modelled out [that we can grow to]. Maybe a few more, maybe a few less," he said, adding that by operating in a relationship - rather than price-driven model - its business is less affected by charter market downturns.
Fleet strategy
With 22 aircraft in its Part 135 fleet, Silver Air has positioned itself as a midsize aircraft management company. It wants to offer more personalised services than the largest management companies can provide, but at the same time intends to be big enough to have a broad business scope. Its current charter-certified fleet ranges from light jets such as a Hawker 400XP and a Citation Mustang, through various midsize types to long-range jets such as a GV, three G550s, two Global 5000s, and two Global Express. It also operates a B737-700(BBJ) under a Part 91 management certificate.
With its focus on charter availability, Silver Air aims to have most of its aircraft on a Part 135 certificate. While it has some exclusively on the Part 91 fleet, this is not its core focus.
"One of the things we've really defined ourselves as is a good charter management company. Our focus in bringing new customers is - if charter is a part of your ownership strategy, then we're the right company for you. If you're just going to be a Part 91 managed client, we're not really set up to do that. We really want to partner with owners that have charter as part of their strategy," Middleton explained.
He underlined that Silver Air's management model is attractive to the market, but the operator is reluctant to accept pure Part 91 aircraft.
Despite the focus on charter availability, there is no single target regarding the number of hours a given aircraft has to fly commercially.
"Every airplane is different. Every owner is a little different. And we sit down with an owner, map out what their plan is, and then our team executes on that," Middleton explained.
On the criteria for taking aircraft onto Silver Air's fleet, there is no limit on size. The operator actively pursues a broad range of types to cater to all aspects of the charter market. However, there are strict guidelines governing aircraft in other regards. The operator will generally look at aircraft manufactured in 2000 or later, are well-maintained, and refurbished. It also pays attention to onboard wi-fi solutions, as they are an increasingly important factor.
"They've got to be crewed properly. We've got to base it in the right location. We have to have a reasonable amount of availability on it. Because we're partnering with the owner, and they have a big financial stake in it, they have to be in alignment with us. These are things that we learn about an owner in the early phases and sometimes we just will admit we're not the right company," Middleton said.
Base and charter market approach
In principle, Silver Air aims to base the aircraft at an airport serving the owner's location. However, this approach is flexible and depends on charter availability. If the owner of a charter-heavy aircraft is based in a city with limited charter demand, the operator might choose to base it elsewhere to minimise empty legs. For example, one of its owners flies mostly out of Bakersfield Meadows, but as the aircraft has high charter availability, it is based out of nearby Van Nuys.
"Very few charters initiate out of Bakersfield. So we would be flying the airplane from Bakersfield to Van Nuys more than we'd be flying it from Van Nuys to Bakersfield. So we would be flying it more empty if we base it in Bakersfield. So we worked with this owner and came up with this strategy, and it just makes more sense," Middleton said.
Similarly, Silver Air is bringing in a new aircraft for an owner based out of Spokane International, but will base it at Seattle Boeing Field due to much higher charter demand there. Conversely, if the owner of a plane with relatively low charter availability is based out of a city with low demand, it can still make sense to base the aircraft there.
"We're working with an owner that's down in Chattanooga Lovell, TN. It is a terrible charter market, but the owner flies it a lot, so there's going to be more owner flying than charter. So we'll just move it out of Chattanooga when we have a charter," Middleton explained.
The operator concentrates on four main markets for its charters, the largest being Van Nuys in California, while the others are Teterboro, Miami Opa-Locka, and Dallas Love Field.
Demand environment
Silver Air has not seen the slowdown in charter demand that has affected the market at large as, according to Middleton, the market is divided into two large silos: one which is price-driven and the other relationship-driven. Silver Air has positioned itself in the latter and, as a result, its customers are loyal despite market fluctuations, while being less likely to shop for the lowest price available.
"If somebody wants to fly with us, we really want them to call us directly. We don't work with all the brokers out there. We have a retail sales team as well," Middleton said.
Silver Air emphasises personal connections with returning charter customers and building lasting relationships with them. It also invests a lot in the marketing of its fleet and both retail and wholesale sales. "Not only pictures of the aircraft's technology, we also talk to our customers about the crew, because that's part of what their experience."
In terms of aircraft size categories, demand fluctuates a lot. During the pandemic, it was skewed towards domestic travel and even long-range jets were flying within the country. Afterwards, in turn, demand for long-haul travel spiked. Nonetheless, the "bread and butter aircraft that are continuously busy" are the midsize jets.
Maintenance challenges
Silver Air does not have its own Part 145 maintenance facility in order to remain neutral and seek out the best deals for its customers. Middleton argued that with in-house maintenance, the operator could easily become biased and non-transparent because it would have an incentive to make additional profit on maintenance. In contrast, when it is fully outsourced, Silver Air simply identifies the best options and passes the cost onto the owners with no markup.
Despite this approach, the current supply chain crisis has forced Silver Air to get more involved in sourcing parts for third-party maintenance providers. This allows them to expedite the maintenance process when a particular MRO company cannot find the part, even though it requires much more work.
"We had to get a lot more creative with sourcing parts," Middleton stressed. "Supply chain issues are definitely a thing. It's getting better - it depends on the OEM. Some airplanes are being supported really well. Some are not. Legacy aircraft that are no longer in production are getting really difficult."
Regulatory reform
Middleton said the FAA is doing "an amazing job", particularly regarding safety oversight, but needs an organisational revamp to increase efficiency.
"I see a lot of efficiencies that could be made. Flight Standards District Offices, to me, are a thing that should go away. This is something that was put in place, you put in place years ago, because operators were regional. They had paper records. But now, with technology, you can manage these certificates and operators from really anywhere," he underscored.
Middleton also pointed out the lack of uniform approvals for training manuals. Even though all operators have essentially the same training programmes approved by the OEMs, each has to undergo separate certification with the FAA.
"Even though they're all identical, the FAA looks at them differently. There are so many efficiencies that could be had by creating a government standard," he argued.