×

Warning

JUser: :_load: Unable to load user with ID: 2549

Startup: An idea with wings Featured

9:56am EDT July 22, 2002

Bob Williams and Dave Ogborne headed to Ireland last year with their hats in their hands after their airliner interior restoration business fumbled on its first project for Ireland-based Shannon Aerospace. But the pair returned to Pittsburgh like a couple of tycoons sporting pricey new Stetsons.

“We got them back in time but we didn’t do a very good job,” says Williams of the panels that the company refurbished for the interiors of a group of airliners. Fearing that their reputation in the business could be blunted by a less-than-stellar performance, they figured a face-to-face meeting might help smooth things over.

“We went to apologize and see what we could do to regain their confidence and get more business from them,” says Williams, president of Air Excellence, an Oakdale firm that is in the esoteric business of refurbishing the interior panels of airliners.

While they were in Ireland, the partners dropped in on the economic development office. That meeting led not just to potential new business, but also to Air Excellence establishing an interior refurbishment facility in Shannon.

“We went in to talk with them and they fell all over themselves,” Williams says. The company got a year’s free rent, $4,500 for each job the company created there, access to a well-educated work force and a handful of other perks to establish operations there. The facility opened in December, and the company expects it to do about $1 million in sales this year.

That was a strike of good fortune, and Ogborne and Williams talk a lot about how luck has played a part in their success. In fact, there have been some happy coincidences that have played in their favor, like a spate of airline mergers in recent years that spurred carriers to revamp interiors of acquired aircraft to reflect a uniform corporate look.

But there is little doubt that the experience of Air Excellence’s partners has played an even bigger role in its success. The company’s reputation for quality, established quickly within the industry, led to an assignment to cover interior panels for the new International Space Station. At $100,000 and as a subcontractor to another subcontractor, it was a tiny but prestigious project.

At first meeting, the partners appear an unlikely pair. Williams, shorter and gray-haired, with glasses and a voice in the upper registers, has an accounting background. Contrast him with the towering Williams, a kind of Marlboro man with a gift of gab delivered in a thick baritone. Nonetheless, they have formed a smoothly working partnership at Air Excellence, where revenue has gone from a few thousand dollars in its first year to more than $4 million in 1998.

After long careers in the airline supply business, Williams and Ogborne, the company’s vice president, started Air Excellence in 1995. Both had been squeezed out of AID International, a Coraopolis manufacturer of airliner interior panels.

Ogborne now finds himself persuading customers that repairing is better than replacing.

“I sold against recovery for years,” he quips.

On the surface, recovery should be a fairly easy sell. New panels cost the airlines thousands each, while having one refurbished costs hundreds.

But Ogborne and Williams first thought they would get into manufacturing the panels, since that was their background. But a noncompete clause tied Williams up for a year, and meanwhile, Ogborne had scored equipment to do recovery.

Airlines formerly handled panel repair and refurbishment themselves when the aircraft were in for a major periodic overhaul. Both Williams and Ogborne knew that the airlines had little love for doing it, and that using highly paid maintenance employees for the work was expensive and inefficient.


Operations

Air Excellence operates a recovery facility in Oakdale, where its approximately 50 workers refurbish interior airplane panels in a simple but thoughtfully arranged shop. Customers remove panels and ship them to Air Excellence in large wooden crates. When they arrive, the parts are stripped of their old coverings, checked for damage and repaired, then fitted with a new vinyl covering.

The work is extremely labor intensive, with workers using simple hand tools to remove old laminates from the sheet metal panels. The facility houses little in the way of automated equipment, save for a rig that applies the laminate and a few other small machines. Wooden molds are used to hold panels in a press that applies the laminates. Workers trim and do the final fitting by hand.


Financing

Williams provided the start-up capital by selling his shares of stock back to his former employer, then putting the proceeds up as collateral for bank loans.


Market outlook

Commercial airliners undergo major regularly scheduled maintenance every few years. In some cases, the work requires that the interior components be removed to gain access to certain mechanical systems and to perform checks and services. It’s during those inspections that the airlines either replace or decide to redo the panels.

U.S. airlines operate approximately 1,700 airplanes and the European fleet is made up of roughly 1,500 aircraft. A study by the Air Transport Research International Forum estimates that growth in airline travel will increase in 1999 by 4.3 percent in Europe and 2.3 percent in the United States.

European airlines tend to be smaller than those in the U.S., and many have their maintenance done at the facility in Shannon. With the global fleet expected to increase significantly in upcoming years, more aircraft will require major maintenance each year.

In an industry in which relatively few players compete, Air Excellence relies heavily on referrals and repeat business from airlines. As Ogborne points out, airline purchasing agents look for outside vendors that can handle large parts of their business seamlessly, from scheduling pickup to delivering the service to their doors. With recovery a fraction of the cost of purchasing new panels, Ogborne figures an economic slowdown will make Air Excellence even more attractive to companies seeking to conserve cash.


Sales to date

Air Excellence posted sales of only $23,000 in its first year. Contracts with large customers such as Delta and US Airways have allowed revenue to grow quickly since the company’s first project, refurbishing 60 panels for a single aircraft owned by a Venezuelan airline. Last year, it logged $4.3 million in revenue, and is projecting it will reach the $6 million mark in 1999.


Sales and Marketing Strategy

Ogborne handles the sales at Air Excellence, and has tapped long-time customers and relationships he has developed over the years to secure business. Much of the work comes by referral, often from suppliers and vendors, and the company has a backlog of work that reaches several years into the future.

The airline industry is a relatively small one, with a small circle of contacts that makes most of the decisions when it comes to replacing or repairing aircraft interiors. Williams and Ogborne keep their eyes and ears open for new business.

“Because it’s so small, everyone knows exactly who’s doing what,” says Williams.


Biggest challenge

Because of the size of the projects it’s logged, Air Excellence has enough work to keep it busy for years. Projects for US Air and Delta comprise a big chunk of the company’s work.

“Now, it’s keeping ourselves from becoming complacent,” says Williams.

Ogborne says the company will have to pay close attention to ensure that it maintains the quality standards that have helped Air Excellence capture the work while moving the projects in and out the door on time.

Says Ogborne: “Once you say quality’s not an issue, it becomes one.”