Wednesday, April 1, 2009
Can Victorville Become a Maintenance and Mod Mecca?
As Jim Worsham pages through his flip charts showing Southern California Logistics Airport’s (SCLA’s) plans for expansion, it becomes clear that the former Air Force base where he works is poised to become a major air cargo hub and, potentially, principal aircraft maintenance and modification center. SCLA already offers commercial carriers one-stop service, including maintenance and painting, even aircraft and engine storage. In addition, Pratt & Whitney, GE, Boeing and Federal Express have facilities there. If all goes as planned, the airport will grow, more companies will move in, and SCLA will become an early bright spot when the dark clouds of the current recession begin to recede.
Worsham is not given to hyperbole, and his 57 years of aviation experience gives his vision of SCLA’s future credibility. He spent 30 years with GE and was president of Douglas Aircraft Co. for 10 years before launching his own aircraft leasing company. He is currently in charge of aviation marketing and business development for Global Access, a public/private partnership that joins the nearby City of Victorville with Stirling Airports International, a California-based development firm, to shepherd SCLA’s growth.
In selling SCLA to aviation firms, Worsham has a good story to tell. His flip chart reveals the following: SCLA has the second longest runway in the U.S.; only Edwards AFB, about 90 miles west, has a longer one. Its 15,100-foot length can accommodate a Space Shuttle landing; however, it was lengthened primarily to assure the safe takeoff of the largest, fully loaded cargo plane during the hottest desert temperatures.
The 893,000-pound Antonov AN-124 lands there regularly, usually bearing U.S. military helicopters. SCLA also has a second, 9,100-foot runway and an instrument landing system.
SCLA is a Free Trade Zone — no tariffs or quotas exist there — and it is a 24/7 U.S. Customs port of entry. Worsham claims incoming cargo planes can taxi in less than five minutes and offload and clear Customs in just two hours. He says taxiing alone can take up to 30 minutes at Los Angeles Intl Airport, which is about 70 miles from SCLA. Non-U.S. carriers seeking maintenance can fly their planes directly to SCLA, foregoing customs at busier airports.
SCLA has an air traffic control tower operating 24/7; there’s no curfew. The facility encompasses 8,500 acres and is surrounded largely by sagebrush and sand. It draws no noise complaints — certainly not from the only nearby inhabitants, in a federal prison complex. Located some 60 miles from Los Angeles and in the southwest corner of the Mojave Desert, SCLA enjoys warm, clear weather and low humidity nearly year round. For aircraft support, SCLA has 1.25 million square feet of hangar space plus 500 acres of tarmac. Two of the hangars can shelter the Airbus A380. Currently, all hangars at the airport are occupied, but Worsham assures that "more will be built."
In addition to complete support services, the airport has a fixed-base operator (Million Air), a fuel pipeline with more than two million gallons of storage and a fully equipped and manned fire department.
And while many trained aviation technicians reside in Southern California, a fresh source of A&Ps exists through the newly certified, airport-managed SCLA School of Aviation Technology, in which $2 million has been invested. The school has three classrooms, a computer room, two laboratories and five instructors. Worsham says the school can turn out 200 licensed A&Ps yearly.
What makes SCLA most unique is its aircraft storage capacity. Of the several desert areas in which commercial aircraft can be stored in the United States, only SCLA has a concrete surface. No aircraft tires will sink into rain-soaked ground. More than 200 aircraft are parked there now. Worsham says the current economic downturn will assuredly bring more by year’s end. Managing the parked aircraft — periodically starting engines and auxiliary power units plus protecting interiors and avionics — and preparing them for re-use represents a lucrative business for the maintenance and support companies at SCLA.
Once Called George
To fully appreciate SCLA’s potential as an air-cargo and aircraft-support hub, it’s best to look at the airport’s history and plans for growth. The airport was once George AFB, established in 1941 and named after Brig. Gen. Harold H. George, a World War I fighter ace. It was home to numerous fighter wings before being decommissioned in 1992, a victim of the Pentagon’s base realignment and closure program. Playing important roles in converting the airbase into a commercial enterprise were President Clinton’s "Five Part Plan" to facilitate economic recovery and the persistence of Victorville leaders, particularly that of local congressmen and a visionary city councilman. Looking into the future, Worsham likens SCLA’s plans for expansion to a three-legged milk stool in which a proposed rail hub and new highway, along with the airport, creates a multimodal point of convergence to a large logistics center.
The City of Victorville is understandably keen on expanding SCLA. It is the second fastest growing city in the U.S. — thanks largely to SCLA development. Its population of some 40,000 when George AFB closed has mushroomed to 105,000 and is projected to grow to a quarter-million inhabitants when the multimodal plan reaches fruition. In little more than a decade, the logistics center, rail hub and airport are expected to generate 25,000 jobs.
The plan revolves around making the airport and land around it a thriving inland port. Global Access planners envision a time when containers offloaded from ships at four nearby seaside ports — San Diego, Long Beach, Los Angeles and Port Hueneme — are trucked directly to Victorville, where goods would be distributed throughout the country via rail, truck or air. The inland port would not only relieve the seaside ports of customs processing and product storage and distribution, but also do so inexpensively. "We’re a non-union area," Worsham explains. To expedite container transfer, a multilane, east/west highway is planned to complement Highway 15 running north and south, thus providing multiple truck routes linking SCLA with the seaside ports. Worsham believes the rail hub, linked to two nationwide rail services, will be in operation within "a few years."
In his chart, Worsham referred to a list of 14 companies signed up to occupy the logistics center, which measures 14 million square feet and borders SCLA’s main runway. These include such well-known firms as Dr. Pepper-Snapple, Sherwin Williams, Goodyear and M&M/Mars. Whether or not they use air cargo services, these companies may well draw corporate aircraft activity to SCLA.
Dick Cole, the local foreign trade zone director, says a modest 35 to 50 tons of cargo are flown into SCLA annually, largely in C-5s, C-17s and charter aircraft. Cole’s and Worsham’s success in reaching its goal of expanding SCLA’s air-cargo activity hinges on agreements with the nearby seaside ports and with at least one regularly scheduled, commercial, air-cargo carrier. Until those are finalized, neither one would estimate the air-cargo activity in SCLA’s future. Cole would only say, "We currently have two or three [cargo] airlines knocking at our door."
Cole and Worsham are well aware of the current economic downturn and its impact on the air cargo business. (The Intl Air Transport Association reported a four percent drop in air-freight traffic last year.) Worsham says the downturn may delay projects, "but we’re still building."
Current aviation activity at SCLA includes a full array of aircraft support services and, because of its proximity to Edwards AFB, considerable engineering development. The U.S. President’s new Marine One helicopter was test flown at SCLA, as was Australia’s Wedgetail surveillance aircraft. Currently, Boeing Phantom Works is flying its A160 Hummingbird unmanned rotorcraft from the airport, and Boeing Commercial Airplanes plans to bring its 787 for flight test. In addition, GE bases its 747-100 flying test bed in an SCLA hangar.
The aircraft support companies AM visited provide distinct services that minimizes competition at SCLA. In fact, they refer customers to each other. AM found most of the companies, lined along each side of the SCLA control tower, are financially stable, if not thriving, though one firm is in a critical transition period.
Leading Edge Aviation
Leading Edge Aviation Services Corp. (LEAS) renders perhaps the rosiest economic picture at SCLA. In its 20-year history, it failed to make an annual profit only once. In contrast to the current U.S. economy, this aircraft stripping and paint facility seeks more workspace and more employees.
"We have a little more than 100 workers now," executive vice president David Patterson reported in early February. "By next month we’ll have at least 150 employees." The LEAS facility comprises one widebody hangar and two narrowbody hangars, and Patterson claims, "We definitely need another hangar."
Contributing to this rosy picture is a Delta Air Lines contract secured in late 2008 to paint all the Northwest Airlines planes in Delta livery. (The two U.S. carriers announced their merger in April 2008.) LEAS will strip and paint half of the 350 Northwest aircraft at SCLA; the other half will go to its Greenville, Miss., facility. LEAS also has a facility in Amarillo, Texas, and its headquarters at Southern California’s John Wayne Airport. The SCLA facility is LEAS’ newest, opened in 2006.
The company has contracts with about 20 airlines. On top of the Delta contract, it also sealed a recent new deal with Air Canada in September 2008 to paint about 15 aircraft this year. Some of the planes will go to Amarillo. One of its largest, ongoing customers is Continental Airlines. Last November, LEAS painted the 600th Continental aircraft. "We’ve painted the majority of Continental’s airplanes, and now they’re starting to recycle through," says Patterson. "Their planes are repainted every four to five years."
Despite the volume of its commercial work, LEAS’ staff finds time for unique jobs. For example, it painted a B747 for the Harrison Ford movie, "Air Force One," and a Blue Angles aircraft for the San Diego Air & Space Museum. (Occasional jobs for the moviemaking industry, with its evident deep pockets, provide a tidy side income for SCLA companies.) During AM’s visit, a newly painted, World War II-era, Douglas A26 Invader attack bomber was being rolled out for delivery to an aviation museum at John Wayne Airport.
To maintain a trained staff, LEAS provides initial and recurrent instruction and has established a mentor program. In addition, the company has partnered with the City of Victorville in an equity sharing arrangement, in which the two entities assume up to 30 percent of the value of a house purchased by an LEAS employee.
Patterson says the commercial market makes up 80 percent of LEAS’ business. Much of the remaining 20 percent comes from Lockheed Martin, which has subcontracted LEAS to strip and prepare U.S. Navy aircraft (primarily P-3 Orions) for paint and to service fuel systems. Patterson views LEAS services as work other companies "don’t like to do and aren’t where their core competencies lie."
LEAS has come a long ways since Patterson’s high school classmate, Mike Manclark (now LEAS chief executive officer) placed a mop and bucket in the back of an old Ford pickup and began washing airplanes back in 1989. Patterson joined with Manclark in ’91. "We’d go to Norton AFB and wash military aircraft in the middle of the night," Patterson recalls. Washing led to aircraft stripping, then to painting. True to its roots, LEAS still provides a mobile service. Crews will travel to, say, an MRO to paint an aircraft while it is undergoing a C- or D-check. "This makes scheduling easier for the airlines," says Patterson.
Southern California Aviation
Not far from LEAS’ hangars, Southern California Aviation (SCA) takes advantage of SCLA’s desert environment by providing aircraft storage, which represents a major portion of its "asset management" services. SCA oversees around 170 parked aircraft, ranging from turboprops to 747-400s.
Like Leading Edge, SCA’s business has been growing. But John White, vice president-sales and marketing, feels the company’s good fortune is, in fact, "unfortunate" for the aviation industry, because parked aircraft means "people are out of work."
He therefore is reluctant to give figures and projections regarding idled aircraft, but did say the company has 250 acres of concrete surface to accommodate more than 350 parked aircraft, plus another 80 acres for expansion. SCA manages storage in accordance to Chapter 10 of the aircraft maintenance manuals.
White feels more comfortable talking about SCA’s other service: preparing aircraft for reuse. A Part 145 MRO facility, the company provides B- and light C-checks and, if requested, heavy D-checks, mostly to put aircraft back into service. White refers to these jobs as "transitional services."
SCA occupies one widebody hangar and two narrowbody hangars. It has about 125 employees; about 80 are A&Ps. It keeps its staff well trained and, indeed, has received the FAA’s Diamond Award for training five years in a row. At least 95 percent of SCA’s staff is full-time. "Our percentage of contract workers is low," says White. "We use them largely for specialized jobs." SCA’s backshop activities largely comprise light sheet-metal work and composite repair. The company otherwise takes advantage of Southern California’s many, available repair services. "I can drive and hour and make arrangements with repair facilities that work on landing gear, brakes and avionics," says White. "It doesn’t make sense to have all the overhead associated with backshops or to have them sitting idle."
The company will "consider modification work on a case-by-case basis," says White. SCA recently installed in-flight entertainment systems in Virgin America’s Airbus planes.
SCA’s specialized services include its Quick Response Team and aircraft recovery program. In both cases, SCA technicians usually are sent to a grounded aircraft either to put it back into service or make it ready to ferry.
Another specialty is aircraft recycling in which airplanes either are sold, or their engines are removed for use on another platform, or the plane is fully parted out.
Since SCA opened its doors in 1998, it has recycled more than 500 airplanes. "Usually removed parts go back to the airline owning the recycled plane," says White. SCA is a charter member of the Aircraft Fleet Recycling Association (AFRA).
SCA is a privately owned company, 49 percent held by Pratt & Whitney and 51 percent by Aviation Assurance Company (AAC), headquartered in Burbank, Calif. AAC’s principal shareholder is Craig Garrick, an attorney and private pilot who decided to launch and manage aviation firms.
Pacific Aviation Group
Complementing SCA’s services is Pacific Aviation Group (PAG), a joint-venture company that is 51 percent owned by Pratt & Whitney and 49 percent by AAC. Working "hand-in-hand," SCA and PAG "were launched about the same time," says Randy Lomax, in-house counsel for Pacific Aviation Group. PAG stores parts that either are new or have been removed from an aircraft by SCA technicians. SCA A&Ps, in turn, can tap from PAG’s parts inventory when needed for maintenance. In a warehouse convenient to SCA, PAG has 13 employees: management, sales personnel, warehouse workers and staff.
The parts also are available to other service centers. PAG’s inventory lists 50,000 to 60,000 parts, new and used, many of which are sold on consignment, according to Ron Pye, vice president of business development and the former vice president of marketing and sales for SCA.
In addition, PAG and SCA work collaboratively to support Pratt & Whitney Engine Leasing (PWEL). Working closely with PWEL, SCA has developed a "Continuous Product Improvement Program," designed to improve the lease pool’s longevity and, ultimately, improve the end product delivered to PWEL’s customers. PAG supports the program by providing dedicated, secured space. The lease pool contains approximately 130 engines; about 30 are now in SCA’s possession.
Like SCA, Pacific Aviation Group is an asset-management company. It manages, for example, the aircraft leases for still another AAC company, Aviation Financial Services (AFS). Through agreements with the aircraft owners, AFS leases planes that SCA has in storage.
With encouragement and support from Victorville, aircraft and defense systems manufacturer BAE Systems decided to launch a third party, MRO facility at SCLA in 2000. Its goals were ambitious — perhaps too ambitious. It planned to hire 900 employees to establish a major North American maintenance hub offering aircraft repair, refurbishment, modification and conversion services.
In less than two years, BAE Systems made a decision to exit the commercial aircraft MRO business worldwide and transferred ownership to five of the company’s managers, who renamed it, Victorville Aerospace LLC (VAL). They, too, struggled to find an "anchor" airline customer and grow the business. Today, Asgard, a Houston, Texas-based technical manpower company, owns VAL, which currently employs 150 to 200 employees.
As this is written, VAL continues the struggle to establish a solid business base and its future is in flux. It recently filed for reorganization under Chapter 11 bankruptcy and was to emerge under new ownership or as a restructured company early this year. However, the deadline was extended into March, to give investors time to complete due diligence.
It nevertheless has been "business as usual" at VAL, according to Bob McAndrew, executive vice president-sales and marketing. While in Chapter 11, the company "hasn’t lost any customers," he adds. It is installing IFE systems and other interior items in new B777s bought by Vaustralia, and it intends to provide heavy maintenance for the carrier "in a year or so." Also, this month, VAL continues to support Boeing Capital Corp. aircraft and was scheduled to take in two B747s for heavy maintenance in March, one operated by Nigeria’s Kabo Air, a steady customer.
VAL’s annual revenue currently is between $25 million and $30 million. McAndrew says VAL expects to see growth by "focusing on widebody Boeing aircraft." In its two widebody hangars — one 90,000 square feet and the other 140,000 square feet — the company provides a full range of maintenance, though C- and D-checks represent 90 percent of its overhaul and repair activity.
In addition to being certified to work on all Boeing aircraft and all Airbuses except the A380, VAL has maintained and modified McDonnell Douglas DC-10s and Lockheed L-1011s. It converted a DC-10 into a fire-fighting aircraft and maintains Orbital Science’s L-1011, used to air-launch into space the Pegasus rocket.
VAL’s workload has been steady, according to McAndrew, but it comes primarily from small airlines, such as Vaustralia and Kabo. The firm’s goal is to secure a long-term maintenance contract with a major carrier and ultimately, says, McAndrew, "become one of the U.S.’s major MROs."
McAndrew conveys confidence in VAL’s future — confidence shared by SCLA’s other aircraft-support companies, all anticipating a multimodal transportation hub as outlined in Jim Worsham’s flip charts.