Demise of a Legend
Associated Air Center's
exit from the
US completion landscape
By: Perry Ashcromb
If you're old enough, you can remember who the first US players were in VVIP. Arguably, the first was Dee Howard in San Antonio - the man and the company that effectively started it all. But the other company that came onto the scene almost simultaneously was Associated Air Center (originally Associated Radio) based on Dallas's Love Field.
In 1978, AAC completed its first VIP conversions on two Boeing aircraft for the President of Mexico. In 1998, they completed their first wide-body: a Boeing 747 SP. Over the next decade, their growth and experience continued, as they became recognized as experts working on Boeing Business Jet (BBJ) and Airbus Corporate Jet (ACJ). It was in many ways an unlikely tenure of success. Firstly, anyone who ever visited AAC (then or recently) knows that the facility itself is, well....less than impressive. With dilapidated buildings and hangars dating back to the 40s and zero room for expansion, it's never been a showplace befitting the work they accomplished. But it certainly never deterred their VVIP customers. They came from all parts of the globe. And they continued to come across almost four decades; Heads of State, Billionaires and Corporate Clients alike. Throughout numerous and often tumultuous changes in management and ownership, AAC continued to succeed in a very tough and highly competitive global market.
But, after 70 total years in business, Associated Air Center ceased its operations and closed its VIP completion facility on leased property at Dallas Love Field at the end of 2017. A spokesman for parent company Standard Aero, cited "Basic return on investment as a major reason for shutting the doors. The business case for continuing to operate AAC is no longer economically viable for the company and its investors. Current and future work volumes do not support the fixed costs necessary to operate the facility,” the company said, also citing a limited pipeline of new business, excess industry capacity and slowing demands in the VVIP aircraft marketplace.”
But AAC isn't alone. Albeit not a US center but certainly underscoring the climate, France's, Airbus Corporate Jet Center announced in November of last year that after a decade in the business, it would also exit the business of Airbus Corporate Jet cabin completion, refurbishment, MRO and service. There are more than 180 ACJs in service worldwide, and more than 30 of them were outfitted by ACJC.
Following suit, although for reasons that run well beyond market conditions, GDC (formerly Gore Design & Completion) on Alliance Airport in Ft. Worth, is effectively off the US completion map as well. Although still operating at current, word is they will complete the Saudi owned aircraft currently still in works (both well beyond their scheduled completion), then close it up. Industry insiders say it's unlikely they'll return.
Then there's Tulsa, OK based Bizjet International, a subsidiary of VIP completion and MRO giant Lufthansa Technik, which effectively shut down in late 2015. According to the parent company, it was being placed “in dormant mode” in terms of completions and would focus on MRO and engine service.
Suffice to say, there are a lot of companies out there feeling the effects of a longer than anticipated downturn and other unfavorable market conditions. Some will go by the wayside, as did AAC. Others will re-posture themselves and live to fight another day! Lean times always thin the landscape.
But AAC weathered bigger storms than this before, so why their demise - and why now? The easy answer is Standard Aero dumped the business unit, plain and simple. It happens all the time and for their board, it was likely a pretty clinical decision; one might even say a smart one from a business case / ROI perspective. But the real reason is not one reason at all. The VVIP completion business is a strange and unpredictable one to say the least. It has one of the highest risk profiles in aviation, as well illustrated by the long roster of US centers that have come and gone over the prior four decades.
AAC like all centers, dealt with downturns, internal staff issues, acquisitions, regulatory snags, management turnover, schedule overruns and the myriad of other challenges indigenous to a business that most outsiders don't even understand. And then there are "the customers"; powerful individuals with whom even a small altercation can spell disaster. And despite sound contracts and the highest customer service levels, there are the odd ones that can grind your margins to powder before you've even cleared CDR.
And then there is timing, which amounts to chance - which amounts to luck. As many in the industry will readily attest, luck plays a much bigger role than some would ever be willing to admit. And in the completion business, you better have the tumblers fall your way now and again, or you'll be packing it in spite of everything.
Steve Jobs once defined luck as "all those things completely outside your purview...things you can't possibly foresee or control". His insight is poignant but certainly not new. It's a fact of life and a governing force in all businesses. But for those involved in the completion of very large, very expensive VVIP completions for billionaires; it goes double. There are a staggering amount of influences that go into a VVIP customer's decision, many well beyond the tangible or foreseeable - before the stroke of pen.
All completion center CEOs know this and hold "luck" as a sort of malleable asset. Along with hangars, workforce, back-shops and all the rest, luck is something you need to have in your pocket always. One can argue - we make our own luck, but the reality is, outside forces can launch you into the stratosphere or throw you to the ground at any moment. And these forces don't pay attention to your longevity, your savvy intellect or all those hyper-efficient ISO systems you just installed. It's it's own thing and it wields a mighty hand. And if you care to look at good fortune as a commodity, then you also know you can run out of it. AAC, while they certainly had their share of favorable (and timely) luck over the years, it may be they simply ran short of it when they most needed it in early 2017.
AAC had a long run and a proud one. They will be missed from the US completion landscape - and their exit is felt abroad as well. There was a great deal of talent amassed within Associated Air Center and a lot of serious "down in the trenches" acumen acquired there. These talented people that will no doubt go on to fill positions in other centers; centers that continue to hone the still young but rapidly growing craft of completing large VVIP aircraft.
But in spite of all the risk, the finicky clients and its supremely unpredictable nature, the large aircraft completion business is also a very seductive one, and there will always be companies and entrepreneurs to step up to that plate.
In the meantime. we bid farewell to Associated; one of the first kids on the block and and a true Legend in our industry.
Boeing 787 Dreamliner - delivered 2016