Headed by Kenn Ricci, the legendary aviation executive and pilot, Directional Aviation has become the largest aviation firm in the world by profit through its ownership of more than a dozen companies.
With over 2,200 employees worldwide, $2.5 billion in revenue and over 200,000 flight hours annually, Directional Aviation operates in nearly every aspect of business aviation, competing with the likes of NetJets, VistJet and even Cessna to various extents!
Background
Before Directional Aviation was born, Kenn Ricci was a University of Notre Dame graduate and former ROTC cadet who’d begun working as a pilot. Early into his career, however, he was laid off as a result of the early 1980’s recession.
After talking to pilots with more experience, Kenn found that whenever there’s a recession, scores of pilots find themselves out of work as demand for air travel dries up and operators cut costs by laying off expensive pilots.
Deciding that he couldn’t spend his working life worrying when the next recession would be, and when he’d next be out of a job, Kenn decided to go out on his own and start Corporate Wings in 1981.
An FBO offering aircraft management and charter services, the company grew rapidly, going from reporting sales of $300,000 in 1981 to reporting sales of $3.4 million in 1984.
Besides seeing the company report record profits that year, 1984 also saw the addition of accountant Michael Rossi, who’d later go on to be one of the two principals of Directional Aviation Capital.
As it continued to grow, Corporate Wings expanded into other areas including maintenance, refueling and storage, leading to the creation of Flight Options in 1998, a company offering fractional ownership of business jets.
Just as Corporate Wings had done over a decade prior, Flight Options grew quickly, going from reporting a revenue of $35 million to $300 million in only 17 months of operations, something virtually unheard of in any industry, let alone aviation.
This rapid growth caught the attention of industry titan Raytheon, who proposed a merger of Flight Options and their Raytheon Travel Air subsidiary in 2001. The resulting company would double Flight Options’ size at the time and give it access to Raytheon’s huge financial resources.
Safe to say, it didn’t take long for the merger to go ahead and the new Flight Options continued to grow. However, differences between Raytheon’s top brass and the pair soon led to Kenn divesting his shares in the company and the pair’s departure in 2003.
Now flush with cash, Kenn Ricci elected to start another company – Directional Aviation Capital – in 2004 whose express purpose was to invest in other aviation-related companies and hold them under one central umbrella.
Corporate Wings, which had remained independent from Flight Options throughout this period, would become its first subsidiary. Additionally, Directional Aviation would purchase a stake in Flight Options in 2009.
Holdings
Since its founding in 2004, Directional Aviation has made dozens of investments and presently has around 13 subsidiaries in nearly every aspect of business aviation imaginable!
OneSky
Since its inception, Directional Aviation has owned numerous charter brokers and operators located across the world. To better streamline these holdings, Directional Aviation created OneSky in 2013 to act as a holding company for all these companies.
A subsidiary under Directional, OneSky’s portfolio includes:
- FXAir – On-demand charter brokerage
- PrivateFly – Charter brokerage
- Sentient Jet – Charter brokerage and jet card provider
- Flexjet – Fractional ownership
- Sirio – Aircraft management
- Halo – Helicopter charter and fractional ownership
Thanks to OneSky only owning companies whose aim is to fly people privately, each individual company is able to both take advantage of more cost savings and more knowledge as OneSky itself is made up of industry experts who can provide the solution to any problem the subsidiaries face.
Soujourn Aviation
Having acquired many brand new jets for their various holdings over the years, Michael and Kenn were no strangers to the sales departments of manufacturers like Hawker Beechcraft.
Aware that many fractional ownership customers progress onto acquiring used jets when the constraints of fractional ownership got too much, Directional Aviation launched Sojourn Aviation in October 2010.
Bringing onboard Brad Hatt, the former VP of Sales at Hawker Beechcraft, and Chuck LeGrow, also of Hawker Beechcraft, Sojourn Aviation was launched at the 2010 NBAA Convention in Atlanta, Georgia.
An aircraft brokerage firm, Sojourn offers consulting, acquisition and brokerage services for aircraft ranging from turboprops to large jets.
REVA Air Ambulance
Though all the companies which operate aircraft fly under the OneSky banner (no pun intended), REVA Air Ambulance is the only one that doesn’t by virtue of its operations: MEDEVAC flights.
Operating a fleet of used jets (primarily ageing Learjet aircraft, as well as two Hawker 800XPs and a Cessna 402) refitted as MEDEVAC aircraft, REVA doesn’t fly famous celebrities or business moguls, but rather ordinary people in dire need of lifechanging surgery.
Most often, these flights involve the patient and their family (next of kin) from an area that lacks the ability to perform the lifechanging, or indeed lifesaving, surgery to an area that specializes in that surgery.
As many patients are just stable enough to be moved, REVA typically employs a team of paramedics on board all flights to ensure the patient remains stable throughout the flight, just as you’d find in a normal ambulance.
Initially an independent company, REVA Air Ambulance was acquired by Directional Aviation Capital in 2018 for an undisclosed sum. At least in terms of fleet size (16 aircraft), REVA is the largest fixed-wing air ambulance company in the world.
Constant Aviation
Through his experience as an operator, Kenn Ricci was intimately familiar with the fact that business jet operators were being skinned alive financially by maintenance companies when it came to airframe inspections.
Whilst commercial operators – those who operate a large fleet of aircraft for profit – could afford to hire their own maintenance crews to do this, smaller operators and those operators who used them as VIP transports often could not.
Aiming to do something about it, Directional Aviation Capital established Constant Aviation in 2005.
Established as a single hangar operation with only a handful of space, Constant Aviation used Directional’s huge financial resources to undercut its competitors whilst still making a profit.
Through this, Constant Aviation were able to draw considerable business away from its competitors and begin expanding its operations to their present size; namely by adding more hangar space and employees.
And though much of Constant Aviation’s growth has been organic, as with Directional’s other holdings, part of it has been through acquisitions, which has allowed it to become the largest maintenance, repair and overhaul (MRO) in the world!
As a result of expanding through acquisitions, Constant Aviation has expanded away from just performing airframe inspections, to also providing avionics maintenance, interior and exterior design services and engine overhaul services among others.
Nextant Aerospace
Through Constant Aviation, Kenn discovered that instead of selling them to operators in less wealthy countries who could afford to operate older aircraft, most operators would begin scrapping business jets once they reached 30 years old.
Knowing that each time this was done meant one less aircraft in the global business jet fleet (and thus higher prices for anyone looking to buy, operate and/or charter a jet) Kenn aimed to do something about this too.
After becoming familiar with a process called “remanufacturing” – a process that had been used with great success in other industries but not in aircraft manufacturing – Nextant Aerospace was launched in 2007.
Run by several former executives at Constant Aviation (a company which also served as Nextant’s parent company under the Directional Aviation banner), Nextant began remanufacturing old Hawker 400s.
Known as the Nextant 400XT, the jet differed from its predecessor in the sense that Nextant changed the engines, replaced the fuel lines, fuel tank, avionics and redid the interior and exterior of the jet.
Despite many saying it could not be done, the Nextant 400XT has sold quite well, persuading the team to produce two further aircraft:
- Nextant G90XT, a remanufactured Beechcraft King Air 90
- Nextant 604XT, a remanufactured Bombardier Challenger 604
SIMCOM Aviation Training
Ask any aviation boss what the biggest issue is with their labor force and they’ll tell you it’s finding enough qualified pilots to fly their fleet. Getting the aircraft themselves is the easy part.
Very much aware of this fact as the owner of numerous aircraft operators, Kenn and Michael made the decision for Directional Aviation to establish an aviation training company to help train new pilots they could later hire.
This company was SIMCOM Aviation Training.
Providing flight training from three locations: two in Orlando, Florida and one in Scottsdale, Arizona, SIMCOM provides training for specific type ratings for an array of pistons, turboprops, regional jets and business jets.
And yes, the type ratings they offer are almost exclusively for aircraft operated by the other companies owned by Directional.
In the spirit of diversification, SIMCOM has also expanded into maintenance training as well, providing Nextant Aerospace and Constant Aviation with a plethora of highly trained maintenance staff to choose from.
The Directional Aviation Way
As the largest aviation investment firm in the world, Directional Aviation have developed what many have come to know as the Directional Aviation Way – a set of principles that have led to their unrivalled success.
#1 Passion AND Expertise
When you look at the management of most aviation companies, you will find that they are run by one of two types of people: Avgeeks, who have immense passion for the industry, or businessmen, who run it solely for the money.
Despite their difference in management style, their companies both end up the same way: Bankruptcy.
This is because they lack the other’s skills and perspective. Avgeeks lack the businessman’s business sensibilities for things like capital management and marketing, whilst the businessman lacks the avgeeks’ passion for the industry.
Directional, on the other hand, has both. As a pilot and longtime aviation enthusiast, Kenn Ricci primarily brings the passion, whilst Michael Rossi primarily brings the business knowledge, though both certainly have the other too.
What this means for Directional Aviation is that it has the best of both worlds; Kenn Ricci can drive expansion through his own love of aviation, whilst Michael Rossi can drive expansion through sound accounting and business decisions.
And this has helped them succeed where so many before them have failed.
#2 Interconnectivity
A key feature of Directional’s holdings is how much they rely on and support one another. If one of their companies can’t help you, they’ll redirect you the sister company that can.
For example, when a charter client begins looking at scaling up to aircraft ownership, Directional’s charter brokers will introduce them to Flexjet or Flight Options and introduce them to the concept of fractional ownership.
If a client instead indicates that they’d rather own their own jet in its entirety, the brokers change tack and put them in contact with Sojourn Aviation or Nextant Aerospace depending on their needs.
Likewise, if they choose either of the latter two, brokers at the those respective firms will introduce them to Constant Aviation for all the MRO services they may need with their new aircraft.
Though this may appear as though they are just trying to help out a longtime client, it is actually to ensure that Directional Aviation keeps their business in the long run.
They may lose out on a charter client today, but gain a far more valuable fractional ownership or sales/MRO client in the long run, as these clients are more likely to bring in a more stable source of revenue for the company as a whole.
Through their brokerage businesses, Directional Aviation are also able to drive additional traffic to their own operators at the expense of competitors, thus using up spare capacity and keeping Directional-owned operators cash flow positive.
#3 Don’t Micromanage
Each of Directional’s 13 or so subsidiaries (depending on how you view it all) have their own CEOs who are given near-total autonomy on how they run their company, save for the most important aspects, which are decided on by Directional directly:
- Overall vision of the company
- Capital raising
- Executive compensation
That isn’t to say, however, that Directional don’t monitor the behavior of their subsidiaries’ CEOs.
Subsidiary CEOs hold regular meetings with Directional’s management – either weekly or monthly depending on the size of the company – to report on the state of their company, discuss how to take the company forward and anything else of note.
By keeping their subsidiaries at an arm’s length, whilst also having regular contact with them has allowed Directional Aviation to play the role of the puppet master, pulling the strings of the entire company.
This has allowed them to look at the big picture and plot their expansion, whilst relying on their CEOs’ individual knowledge and expertise to get them there. Genius.
#4 Invest Wisely
Watch any interview with Kenn Ricci about Directional Aviation’s growth, and he will always remind you of one key detail: “Directional Aviation Capital is not a fund”. Instead, it’s an aviation investment firm.
And though this may seem insignificant to most, and perhaps quite strange that he brings it up at almost every interview, it highlights exactly why he has been so successful, whilst almost aviation industry funds have not.
Unlike funds, Directional doesn’t look make huge returns by lowing low and selling high. Rather, it looks to own a portfolio of profitable businesses who grow organically, rather than by being pumped full of money by a fund manager.
It is precisely this difference that allows Directional to place an emphasis on profit maximization, rather than growth, as they don’t have investors breathing down their neck for high returns.
This allows them to rank first most years in terms of the most profitable business aviation company.
However, Directional is not afraid to sell its holdings when the time is right, as seen in the 2007 sale of Mercury Air Centers to the Macquarie Infrastructure Trust.
This philosophy can also apply to expansion too. When expanding the business, Directional has often acquired existing companies at below what it views as market value.
But unlike many of its competitors, the company has also started many of its subsidiaries from scratch too, allowing it to save millions by growing from scratch, and instead use those millions to grow the company for free, in effect boosting their returns.
What do you think about Directional Aviation Capital? Tell me in the comments!
Featured image courtesy of Kenn Ricci/Directional Aviation Capital