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Growing an Aviation Business
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 By Bill Coleman
Cutter Aviation, Inc. recently opened its fifth FBO, located at Dallas Executive Airpark (previously known as Redbird Airport). The new $3 million location includes first-class FBO services, Piper aircraft sales, aircraft maintenance, charter services, and parts and avionics service. Like the four other Cutter Aviation FBOs in Albuquerque, NM, El Paso, TX, and Phoenix and Deer Valley, AZ, the new Dallas FBO is a class act. In addition to the FBOs, Cutter also has aircraft sales offices in Santa Monica, CA and San Antonio, TX. Cutter Aviation has more than doubled in size over the last five years, and is now selling more than 14.5 million gallons of retail and freighter fuels annually, and employs almost 300 people. How do they do it?
CUTTER HISTORY
History and lifelong experience continue to shape Cutter Aviation. The company came into being in Albuquerque, NM, in 1928, the year barnstormer William P. Cutter opened for business in a dusty hangar on an empty airfield where the now-defunct Albuquerque airport had yet to be built. That FBO is still in operation, though it moved to a new hangar at Albuquerque International Airport in the 1960s, making it the oldest continuously run family operation in the general aviation business today. The company has been a Beechcraft dealer since 1947.
Will and Kay Cutter are the third generation of Cutters to operate the family business. Will and Kay Cutter were raised in the world of general aviation, as was their father, and they work closely together based on that shared past. "I took my first flight when I was six months old," Kay said. "I didn’t take my first real car trip until I was 18. Will and I share a unique perspective about this business because we grew up in it."
William R. Cutter (Bill), father to Will and Kay, passed the business on to his children five years, ago but retains a position as company chairman, and can still be found at the Phoenix offices or walking the tarmac almost daily. "This business changes every day, and adaptability is how we’ve succeeded," said Bill Cutter.
 ESSENTIALS FOR SUCCESSFUL EXPANSION
1. Look for Market Niches with Long-Term Benefits
Will Cutter explained that it was his father who first delved into expanding the business by moving their Phoenix FBO operation to the 20-acre south side of Phoenix Sky Harbor 15 years ago. "My dad took a risk when there wasn’t even a third runway at Sky Harbor," he said. "He wanted to be in the fuel business there because he saw it had a great future. Now Phoenix is our most successful FBO."
Since then, Will Cutter has continued to hunt down opportunities for the company, whether it be finding a new FBO or a new aircraft fleet. Working closely with Kay on the financial side, Cutter determines a specific customer need and its long-term possibilities before moving forward. "We see a market opportunity, we develop a plan and we execute it," Kay Cutter said.
Will Cutter added, "We have a long-term business philosophy. We want this company to be worth a whole lot more in 20 years, so unlike some public companies, short-term gains aren’t our main focus. Sometimes that means spending now to make more later. "At Deer Valley, for example, we spent almost $3 million on new hangars and office space. We didn’t even begin to think about doing that until we knew, in real terms, that the market would support it. So, that space was filled before we began to build."
Aircraft sales office openings in Santa Monica and San Antonio followed the same logic. "We knew that if we had local offices in California and Texas that could support our sales team with avionics and parts service, we could develop lasting customer relationships. Those are the relationships that pay off," Will Cutter said. Cutter explained that the new Dallas operation is an extension of this thinking. "We saw a need for local Dallas/Ft. Worth representation and we filled it," he said.
2. Diversify
"Probably the area in which Will and Kay have been most successful is in diversifying the business, opening it up to new opportunities," said Bill Cutter. "Between the seven different locations, our company now offers everything from fuel sales, aircraft maintenance, chartering and a full scale travel agency, to aircraft sales, parts service, and avionics. The most innovative business move they’ve made has to be the development of a maintenance department in Phoenix servicing the airport’s ground service and jetway equipment. It has become a great profit center."
The senior Cutter explained that over the years, changes in the FBO and aircraft sales businesses have made alternative income streams necessary. "The enormous aircraft sales industry changes that went on in the early 1980s taught us that we needed to be able to adapt," William Cutter said. "In 1979, 18,000 new aircraft were built. In 1982, that number plummeted to 1,200. It was a harsh lesson for all of us. Since then, of course, the industry has rebounded, but diversification and growth will help us weather the storm if it ever happens again."
3. Consolidate Suppliers
Last year, the company decided to go with a sole fuels supplier to simplify accounting practices and optimize fuel sales margins. Finding the right supplier was not simply a matter of the bottom line. "We are the only family-run FBO chain with a 75-year history behind us, and that means we have specific needs," said Kay Cutter.
"We have a reputation as a premiere operation, and we needed our fuel supplier to support and even enhance that image. Phillips 66 is perennially voted the favored fuel brand by pilots, and we have a 60-year history with the company, so it was a good fit. Of course, they had to meet all our criteria before we moved forward with them at all our locations."
To determine the best choice, Cutter Aviation reviewed what each of the potential suppliers offered to gain Cutter’s entire business. "In the end, Phillips 66 met our criteria at the right price and we’re happy to continue our very long history together," she said.
4. Don’t Expand Beyond Your Reach
The Cutter family has always maintained personal contact with each of its operations, and for that reason, the company has focused its expansion goals on the Southwest only. "At one time, we actually looked at opportunities in the Northwest, but we realized that we wouldn’t be able to maintain that all-important family-style presence if we spread ourselves too far afield," Cutter said. "I want to be able to get to all of our facilities on a regular basis. As it is, I can jump in the Baron and be at any location within a couple of hours."
Will Cutter tries to visit all the locations at least once a month, often in three or four day loops, and often unannounced. "I like to stop in unexpectedly at odd times of day - early in the morning or late at night - so I can see us at our worst and we can fix it. I want our people to know I’m there with them on the front line, and I can’t do that if I’m spread too thin."
Cutter also pointed out that operating only in the Southwest has allowed the company to take advantage of synergy between the businesses, especially aircraft chartering.
5. Remember Your Employees
"In this business, you succeed or die based on your people," said Will Cutter. "For three generations, that has been a priority at Cutter Aviation. If you hire the right employees and treat them well, they will take care of treating the customer well." To that end, the company offers several education and incentive programs along with regular personnel training and monthly management meetings.
Cutter Aviation’s CARE (Cash and Recognition for Everyone) program is a profit-sharing plan whereby a percentage of the company’s profits are divided equally among all employees each month. "Some months, that doesn’t add up to a whole lot, but I like to be there to hand out the checks. That’s part of the fun side of the business," Will Cutter said. The company’s AERO program offers bonuses based on employee seniority in addition to matching their 401k contributions.
Three times a year, the company gets its 40 managers together for a conference which features a key speaker and one or two day training sessions. The meeting then breaks up into smaller more business-specific sessions. "These meetings address specific company business, and also allow the managers from our different locations to develop personal relationships which helps to keep everyone connected even as we expand," Will Cutter said. Cutter Aviation also holds senior management meetings two or three times a year to discuss strategic planning.
Employees are encouraged to take additional training including everything from outside management courses to personal productivity training. "We find that employees who have the chance to make a little more money, grow in their job, and continue to learn new things are happier and feel more connected to us, and that makes us a better company."
"You simply can’t put a price on a customer comment card that says your line person is the best in the nation," Will Cutter concluded.
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