For those working in the corporate jet industry, it was the moment when growth prospects went into a tailspin. During hearings on the near collapse of the U.S. auto-industry in the aftermath of the 2008 credit crisis, the Big Three automaker CEOs appeared before a congressional committee to account for themselves. When asked how they had gotten to Washington, they all admitted that they all flew in to the capitol on corporate jets. With millions of Americans losing their jobs, homes and retirement savings, the optics couldn’t have been worse.
“You saw a ripple effect,” says Sean Gillespie, who is a director and vice-president of Flying Colours Corp., a Peterborough, Ont.-based firm that customizes private and corporate planes, including Bombardier Learjets and Gulfstreams. The North American market, which accounted for much of Flying Colours’ revenues, slowed almost immediately, he adds. Sensitive to mounting criticism, owners of business jets either sold them or stopped using them.
That moment marked the firm’s first real stall. The company was founded in 1989 when his father, John Gillespie, a pilot, decided to buy a four-person plane painting shop in Kingston, Ont. and move it to Peterborough. It grew steadily through the 1990s and early 2000s. Today, Flying Colours has 400 employees, and operations in the U.S. and (by year end) Singapore, where it is establishing a joint venture with Bombardier. More than half its revenues come from exports.
The firm specializes in fitting out new private jets with features such as high-end bathrooms, stone floors and armchairs. It rebuilds the interiors of regional jets that have been acquired by firms for their own use, and provides maintenance services.
For years, the firm soared along on a steady stream of contracts with wealthy individuals and corporate executives, most of them American. It even bought a St. Louis firm, JetCorp, which was well positioned to service customers in the U.S. mid-west. But that fateful appearance by the Big Three auto executives turned out to be a crucial wake-up call—a sign that Flying Colours was over-exposed to one geographical market, however large.
Gillespie says that in the mid-2000s, the company, which relies on word-of-mouth referrals for new contracts, had connected with a couple of Asian customers. A few years later, with the U.S. market in a nose-dive, Flying Colours decided to find new customers in the Asia-Pacific region, which wasn’t experiencing the same kind of economic implosion as North America and Europe.
In Asia and Russia, the company discovered, fast-growing companies flush with cash were buying their first corporate jets, which meant the market was expanding. Gillespie also points out that they saw that some corporate clients were buying old 50-seat Bombardier CRJ airliners from airlines for about $12 million with the goal of refurbishing them inside and out for their own use.
Five years after the meltdown, the Russian and European private-jet markets are plodding along, but the U.S. economy has rebounded. Consequently, Flying Colours is planning to substantially expand its facility in St. Louis within two years. But the company has staked its future on a new sort of expansion strategy—a joint venture with Bombardier, announced in February.
The aerospace giant these days is actively marketing its next generation of commercial airliner, the CSeries, as well as boosting sales of its private jet lines. To that end, it is building a large maintenance shop in Singapore, and Flying Colours has negotiated a contract to provide exclusive customization services for Bombardier’s Learjet and Challenger jets out of the same facility. Gillespie says its own piece of that operation will be running later this year.
In fact, Gillespie can now look back on that fateful session in Washington with the automaker CEOs as a critical turning point—an opportunity to be grasped. “From an international perspective, we’ve seen real growth in the last five years.”