When Tim Keenan relocated to Kokomo in 2005, Hangar 2 at the Kokomo Municipal Airport wasn’t much to look at.
“The hangar had been empty for several years, and the door had blown off its hinges,” Keenan said. “I wasn’t real excited about Kokomo to begin with; it was kind of a last choice. But the rent was cheap.”
Eight years later, Keenan is quite a bit more positive about both Kokomo and the municipal airport, where he’s brought his aircraft sales company, Aircraft Ownership Solutions, through a major recession as a profitable concern.
It’s a specialized business, and Keenan gets most of his customers through online inquiries. Most people in Kokomo have no idea there’s a business selling one and two-engine prop planes out at the airport. Even fewer know that Keenan and his staff sell upward of 70 aircraft a year.
“This location has been great for me and the business,” he said, recalling how at his former location, the Mt. Comfort Airport east of Indianapolis, prospective customers would take a $45 shuttle ride from the Indianapolis International Airport. If they didn’t buy a plane, Keenan or one of his staff would have to drive them back to the airport.
“It’s a really long drive if they didn’t buy the aircraft,” he said.
Eight people work full time at the dealership, and four of them find and purchase aircraft. Running an aircraft dealership, it turns out, isn’t like running a car lot, where auctions supply most of the new stock.
At AOS, they have to go out and find planes they can sell for a profit. That means they send out a ton of direct mail, hoping aircraft owners will get sick of their current planes and feel like selling.
Keenan, who worked as a delivery pilot and flew for an IndyCar team, just got back from picking up a plane in North Carolina. He was back in two hours, five minutes. That kind of rapid, independent travel is the main selling point at AOS, but then again, most of the customers come ready to purchase.
“For less than the cost of [a Cadillac] Escalade, you can throw your luggage in the back, get the wife and kids seated, and you can be just about anywhere you want in no time,” AOS salesman Jimmy Rezo said. “We call them ‘magic carpets.’”
Keenan estimates his closing rate for sales exceeds 90 percent because customers have to line up financing, insurance and pay their way to the dealership. If they come, they’re most likely going to purchase a plane.
They’ve usually got more than a dozen planes in stock, about half of which they keep at the airport. Prices range between $20,000 and $80,000, and that’s the niche Keenan wants to stick with.
Many aircraft brokers and dealers lost their lines of credit around 2007, and aircraft values, which had been steadily appreciating since the 1980s, took a steep dive in 2008-09, Keenan said.
What sets AOS apart from some of its competitors is the fact it goes out and buys its own inventory. It’s sometimes a laborious process, where negotiations with a potential seller go for a long time.
“2007 and 2008 were really tough years, and even in 2009, airplane values dropped, but owners weren’t being realistic about how much their planes were worth,” Keenan said. “Aircraft values dropped by about 30 percent; it was really hard for these guys. Some of them had paid double what something was worth back in 1984.”
Over the past couple of years, aircraft have at least maintained their value, and buyers are coming back into the market. Last year, AOS sold 73 aircraft, Keenan said.
From his corner office at Hangar 2, Keenan can look out over the runway and see corporate bigwigs as they come and go.
From his perspective, the roughly $200,000 the city spends each year to keep the airport functioning (a figure separate from the local funds being used to expand the runway) is a prudent investment.
The value of commerce, in the form of business people flying into and out of Kokomo, AOS’ operations and the maintenance work performed at the airport, is something hard to quantify.
But business is good, and they’re hoping it gets even better once the $10 million airport runway expansion is complete. When finished, the runway will be 6,000 feet long, a length Keenan and Rezo said is becoming standard in general aviation.
“It’s getting where insurance companies don’t want corporate CEOs landing on anything shorter than 6,000 feet,” Keenan said. “There’s just too much investment riding in that plane.”