Magellan Jets expands with private jet sales, administration and private terminals

The Magellan Jets enter their 15th seasonth year of its most significant expansion. It comes after racking up a record $125 million in sales through 2022. Last year, the Quincy, Mass.-based jet charter and charter broker moved into its new headquarters, doubling the space of its operations center. It will start 2023 by opening its first private terminal and adding aircraft sales, acquisitions and administration to its services.

The moves come as demand for private jet charters and used aircraft has begun to wane. The wider economy is experiencing major layoffs and austerity from the likes of Microsoft, Google and Goldman Sachs, which recently cut free coffee for employees. For Magellan’s three co-founders, bumpy skies are nothing new. The trio launched the company in late 2008 after leaving another broker, subletting office space from a business that had closed.

The Great Recession marked the beginning of a lost decade for business aviation with a crash followed by tepid growth and depressed prices that lasted until the Covid-induced tidal wave that took the industry to new records. During that period, the partners, CEO Joshua Hebert, Anthony Tivnan, who serves as president, and Greg Belezerian, who serves as executive vice president, built the company into one of the largest players in the jet pass and membership market.

In the early days, Magellan capitalized on full-flight and parts owners who were downsized but still wanted to fly privately, so they moved to low-commitment products like on-demand charters and jet passes, which could be purchased for 25- hourly intervals. Still, it wasn’t easy. Tivnan remembers, after entering the door, many rejections. “We knew these customers wanted high-touch service, and the meetings would go well, and then someone would ask how many employees we had.”

While Tivnan says many of the early customers who took the plunge are customers today, scale is no longer an issue. Magellan’s charter revenue places it in a select group of brokers that can claim annual sales over the century. Still, taking the next step presents the privately held company with new hurdles to navigate, such as expensive long-term terminal leases, construction costs and additional headcount to support the new initiatives.

When it comes to its own terminals, it also breaks new ground. While charter and fractional operators such as Jet Linx Aviation, Flexjet and NetJets all have their own dedicated facilities, Magellan becomes the first broker outside of Blade to do so. Hebert says the idea first came about after the company leased a storefront in Nantucket several years ago. He says, “During the season, a lot of people come through the island at least once, and we were right on Main Street, and they came into our store. We spend a lot of time and money trying to go out and meet our customers, and we sat there, and they came to us. They came in with friends and extended families, and it sparked some great conversations.”

Magellan’s first private terminal officially opened Friday at Laurence G. Hanscom Field just outside Boston, the nation’s 20thth busiest private jet airport. Plans call for adding one to two more such facilities per year, and the company is already negotiating a lease for its second location, though executives declined to say where it would be.

This first terminal includes a spacious lounge area, an open bar, snacks, two private conference rooms, high-speed WiFi and direct access to the tarmac. Hebert says with private jet volume still near record levels, the facility, located behind a security gate, allows customers to relax in peace, freshen up before or after their flight or make important phone calls. That comes because FBOs, the general terminals used by private jets, are sometimes so busy that it’s hard to find a seat and crowded ramps can delay departures. In bad weather, customers can now travel from a connected hangar.

Since customers often travel with friends and colleagues, like the Nantucket pop-up, it gives Magellan a chance to generate more referral business. With Hanscom’s location near some of Boston’s finest suburbs, Hebert envisions the facility also serving as a meeting point for customers even when they’re not flying. While top customers spend millions of dollars on air travel annually, a broker like Magellan, which does not own or operate aircraft, may rarely, if ever, meet the end user, so the investment in airport locations is designed to enable personal interaction.

An equally important move is the company’s expansion within aircraft administration, sales and acquisitions. Tivnan says the initiative is being run to keep customers in the fold after moving from jet cards to full ownership. He says Magellan had informally advised those customers about acquisitions anyway. It also provides new revenue growth opportunities. Jetcraft projects $66.6 billion in sales of used private jets in the period 2022-2026.

Aircraft management, done through partner management companies such as Priester Aviation, also offers additional capacity for Magellan’s card and membership customers, whose programs have guaranteed availability and age obligations, one reason Tivnan says he targets late-model and recently refurbished jets.

For the jet owners, Magellan can offset some expenses with charter revenue guarantees when owners are not using their planes. The aim is to have 10 aircraft under management by the turn of the year. Keeping these customers close will also drive card and membership sales since many private jet owners also use jet cards for extra lift when their planes are down for maintenance, or their plane isn’t fit for specific missions.

“Due to our existing platform of charter and program solutions, we can guarantee aircraft owners charter revenue to help offset their cost of ownership. Owners will also have access to Magellan’s full product portfolio for any supplementary aircraft needs, giving them an unlimited number of resources to resourcefulness, says Tivnan.

Nevertheless, the new industries present new challenges. JetNet’s latest survey of flight departments and management companies found in North America, 73% of respondents said they have had trouble recruiting and retaining pilots in the past year, while 69% cited similar problems with mechanics.

A key part of Magellan’s recent growth was the hiring in 2017 of Todd Weeber, a top NetJets executive, as COO. After starting his aviation career as an airline pilot, Weeber flew for the fractional operator before being hired by founder Richard Santulli as management. “Todd is a respected industry veteran who has helped bring our safety and service management system to the top of the industry,” says Tivnan. Weeber also serves as chairman of the Air Charter Safety Foundation, whose mission is to set and guide the standards for all charter operators across the nation.

“Having the right people in the right seats is our number one priority, and we will continue to bring in the very best, like Todd, to expand our future growth and retention strategy,” says Tivnan.

So far, Magellan has not been involved in any of the industry’s frenzied M&A activity. Tivnan says: “We are debt free and profitable year over year and are always open to acquisitions as a growth strategy.” One direction leaders say Magellan is not going is towards democratization. While mega-players Wheels Up and Vista Global are pushing jet-sharing and by-the-seat solutions, Magellan Jets recently changed its slogan to “purely private.”

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