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Malcolm Lui:
Welcome to the High Value Sales Show of Eversprint.com. I'm Malcolm Lui, the Managing Member of Eversprint, and today we're speaking with Anthony Tivnan, the President of Magellan Jets, a provider of national and international charter jet flights. Welcome to the show Anthony.

Anthony Tivnan:
Malcolm thanks for having me.

Malcolm Lui:
Anthony, you grew your company's revenue from $19.2 million in 2014 to $38 million in 2017, a 98% increase, and in 2018 you hit around $38 million. Before we talk about how you grew your company so fast, can you briefly share what your company does beyond my quick intro, and how your company differs from the competition?

Anthony Tivnan:
Sure absolutely. So what we actually do is we have three business lines we do on demand Charter which provides customers with the ability to reserve and schedule on demand charter flight. So that's on a trip by trip basis. We also provide customers with Jet memberships which allow them to purchase increments in terms of hours of aircraft on nine different aircraft types. For example you could purchase twenty five hours on a challenge of three hundred or 50 hours on a citation 10. So we offer nine different aircraft starting at a couple hundred XP which is a light jet all the way up to the 14 passenger Gulfstream 450 and then the third business line is we also help and consult our customers with either aircraft acquisitions or sometimes selling their aircraft

Malcolm Lui:
All right now do you own your air aircraft

Anthony Tivnan:
We do not we own zero aircraft

Malcolm Lui:
Okay. And how do you categorize where you are on the spectrum of aircraft size the luxury

Anthony Tivnan:
Short and actually did to just go back to the second piece of your your question which was how do we differ. And the the the major differentiator for Magellan jet is we really work as consultants with our customers and we sit on the same side of the table with our customers and really understand what their needs for private aviation are you know as a business is it personal. These missions for skiing trips which are going to have to utilize a different type of aircraft than you know than a golf trip or you know or a business trip where certain amenities on an airplane are really going to vary depending upon the type of trip and also you know call out times house you know. How soon do they schedule out their flights. And that's really the reason you know where I talk about our different business lines. It's you know some customers an on demand charter flight is perfectly a perfectly good fit for their needs whereas somebody who flies twenty five hours an above annually might want to have a more consistent approach to that which would be a gym membership and then some of our clients you know we we actually really provide solutions for life is what we call it where we have customers that come in and they may start with us on a on demand charter flight. And as their needs evolve and and grow then they might look at a membership with us. And then at some point we have certain customers who then want to actually purchase an aircraft. So we provide really all three of those business lines which is very different from most of the companies in the industry. So it's you know we work more as consultants with our customers in making sure that you know whichever one of those solutions we want we want to make sure that it's you know it's a good fit for their portfolio.

Malcolm Lui:
Right. So you have customers potentially at the very beginning. Sounds nice nice fun all right. You have people who just want to fly a charter now and then on demand those who fly regularly these days 25 hours per month or twenty five hours per year regularly

Anthony Tivnan:
Yes. Twenty five per year is is where we really look at a membership with customers. And again it's it's it really varies from customer to customer and that's really where it's important for our consultants to be well versed you know in the different areas of the industry because we do have charter customers that fly you know 100 hours with us annually and it's just that maybe it might be their geographic location that they travel to call out times or you know certain variables that just you know charter might be a better solution for them. But certainly once a customer starts flying twenty five hours plus you'd least want to engage in the conversation because if they're doing it regularly sometimes jet membership can just be an easier way to do that in terms of knowing what type of aircraft there is always going to arrive having that ability to have a fixed price our jet numbers they have a guaranteed aircraft anywhere in the US within eight hours notice. And in Europe it's a guarantee with 24 hours notice. So it's just you know if they're flying regularly then it certainly merits the conversation of who they want to make that process a little bit easier and

Malcolm Lui:
Right

Anthony Tivnan:
And have more predictability. And also from a budget perspective when you're purchasing 50 hours at a fixed price they know exactly what their cost is so they can really budget for the year and certainly a lot of corporations like that you know for obvious reasons to be able to just say OK we know this is how much we flew last year we can allocate X amount of budget to that this year and just have that fixed solution in place

Malcolm Lui:
Right now I recall on your Web site you list prices for your on the man charter typically. Tens of thousands of dollars I believe. I recall

Anthony Tivnan:
Yep.

Malcolm Lui:
Seeing it properly and get membership huh. It's the pricing that typically.

Anthony Tivnan:
Sure. So the entry level jet membership is gonna run at around five thousand dollars an hour and that's more like jet you typically like Jet seeding is six to seven passengers. And from a mission perspective you're looking at right around three hours of range on the aircraft. So that's the starting point. And then it really varies the middle ground which would be like a mid-sized aircraft. Those run up about right around seven thousand dollars an hour. Challenger three hundred is running at ninety three hundred dollars an hour then a Gulfstream 450 which is a large cabin which can go from New York to Europe nonstop and certainly the cabin and how many seats. Also as has a lot of great luggage space that one is going to come with a flight attendant. So that's for you know whether it's I. We were just talking earlier about it but an IPO roadshow allows passengers to be able to move about the cabin freely have meetings on during their mission. But the Gulfstream 450 I believe is about twelve thousand five hundred for our

Malcolm Lui:
Nick and for these rates now. When you say membership means the membership for you to have access to the entire plane that you're buying in advance. Right as opposed

Anthony Tivnan:
Correct.

Malcolm Lui:
To just having

Anthony Tivnan:
Yep

Malcolm Lui:
A seat on the plane.

Anthony Tivnan:
Yes. So yeah exactly. So ours is your you know that that is giving you allowing you to have access to the entire plane. We do. We don't sell per seat on one of the pillars of our business which I mentioned solutions for life in purely private and then customer advocate. Those are the three pillars of our business model. So that purely private experience where it's completely customizable completely unique to our passengers for you know from an experience perspective certainly from a privacy perspective. But and just again for for the missions you know a lot of a lot of the reasons why people use private aviation. You know it's not so much the glitz and the glamour and the champagne and caviar that I think is a is a misconception of the usage but the primary you know that the majority of the usage is it's a lot of cooperation and flying into places that they they would not be able to fly on a commercial airline flying you know for instance that we have access to over 5000 airports in the US whereas commercially I think it's close to like two thousand.

Malcolm Lui:
Right

Anthony Tivnan:
So just allows companies a lot of manufacturing companies but allows our customers to really maximize their time and be very efficient in the way that they're using business travel

Malcolm Lui:
Right. And we talk about hours. Five thousand dollars per hour for your smallest jet. It's not actual time in the air as I listened to the time on the ground

Anthony Tivnan:
Great question. So that is that is just time in the air. So when our membership program is billed. Point the point our customers do not pay for any repositioning time so it's just from you know from their departure airport to their arrival airport flight time. There six minutes of taxi time which is billed per leg so you know essentially if you have a three hour trip you're going to be billed at three point two. But yeah it's your it's your flight time. Times your hourly rate whatever aircraft category that you have a membership in and it works similarly like a debit card where you know if you start at 50 hours and you take a three hour trip now your account has forty seven hours each month are our members receive their monthly statements and it shows the rowdies that they flew the number of hours that will build the type of aircraft that already upgrades or anything like that. So from again from a budgeting perspective makes it very easy very streamlined to keep track of that

Malcolm Lui:
And how do you maintain the branding. Do they feel like they're flying on a Magellan jet or the plane is however it is when they get on it.

Anthony Tivnan:
Chart. So quality control is a you know it is it's a great question a great topic because you know in the in the marketplace there are certainly a lot of companies that have a very inconsistent approach and you know consistency again is one of the really important decisions. One of the important features that our customers are looking for. There's probably three thousand operators and operators though that's who manages the plane who operates the aircraft and those are the partners that we work with. So you know there's close to three thousand of them in our Magellan jet the preferred network. It's probably closer to about ninety five of them. So we're very selective. We have a jet specific membership. So we we have to ensure that our partners fleets in the fleet makeups are very much in line with the memberships that we sell. So that could you know from a quality control perspective. The very first thing that we're looking at is safety which is the most important piece of that. And then certainly the consistency of the fleet age of the fleet all of our internally are the we have to tell them a ratings and scorecards and you know if that number goes below a certain number then that will that aircraft will be removed from our standards and from our Magellan network. So it is very important that you know to maintain that consistency. And that's one of the big reasons why we actually chose to go to a jet specific product offering which again kind of thing think there's there's not many companies in our space that actually do that. Some of the fractional provide well all the fractional providers do that. Like your net just like your flex jet but there aren't too many membership companies I can think of that actually offer specific aircraft it's usually category

Malcolm Lui:
Yeah

Anthony Tivnan:
Where like the light jet or mid-sized jet or. But when you're when you do it by category it's very difficult. Right. As a consumer because you know in a midsize category you have a citation excel you have a letter 60 of a hawker 800 x feet. All three aircraft in the same midsize category but luggage is very different in all three of those planes. The aircraft performance in terms of range is very different where its location excel you have about four hours of range. But then on the hopper 800 XP you have just over five hours of range. So it becomes very difficult for the passengers to really plan if they don't know what's going to show up

Malcolm Lui:
Right

Anthony Tivnan:
How much luggage do they bring. Are they going to need a fuel stops or what time should they depart. So you know to real real that back in and really make sure that we're providing consistency for that product offer and that was one of the big drivers of where we said you know what we're going to go get specific and and choose our partners accordingly. And that means dealing with a lot less partners. But we really believe that that's the only way to maintain that quality control

Malcolm Lui:
Yeah. Makes sense. Airlines do that as well. Right. They standardize

Anthony Tivnan:
Yeah

Malcolm Lui:
On the planes they fly because it makes life easier for them.

Anthony Tivnan:
Absolutely becomes very efficient

Malcolm Lui:
Now what about the left though I mean it doesn't say Magellan jets on the aside the plane of course right.

Anthony Tivnan:
Yes. No absolutely does not. And so there aren't too many you know companies that I'm trying to think even you know like Net Jets and there's not much branding going on in the airplane just from a cosmetic look it would just be a little bit strange. So certain companies have know consistent paint schemes and that sort of thing. But the partners that we work with the aircraft that we utilize for the most part are privately owned. Whether it's a corporation a corporate flight department or just a you know a high net individual. So. But again one of the big things that you know we look to do is certainly through our jet specific program. We just really maintain that consistency. So the good thing about being the you know having a jet specific product is. So for instance there's about 110 challenge three hundredths in our network and Lombardi the manufacturer of Challenger. They only offer to two interior configurations. The colors I mean generally speaking the colors are really consistent in the cabin but there's certainly like you know again from our from our preferred network if I think about the 110 challenger three hundredths I would say 80 percent of them have the exact same interior configuration.

Malcolm Lui:
Right

Anthony Tivnan:
So again that being that jet specific does help us to keep that consistent where the customer is getting onto an airplane. Same thing with the hopper 800 XP I think ninety five percent of the Hawker eight hundred XP is in our program. Have the exact same configuration. So getting on it's you know it looks the same it feels the same. There isn't a huge variation similar to you know if you fly if you fly on Southwest I forget where they used the A3 20 I think. But if you fly two different airlines JetBlue or Southwest you know the flight attendant uniforms you can certainly tell the paint but when you're in the airplane you know there's not much going on inside that's going to be where you're really going to understand. You know it's you know the seats are generally the same. The carpet is generally the same and then obviously the you know the side walls and everything. So it's very similar to that. You know how the private jet manufacturers are outfitting it's really the paint schemes are really the only big differences.

Malcolm Lui:
Right. Got it. So your business group fairly rapidly nineteen point two million in 2014. Three years later you almost doubled it. Fourth year you're flat. What were the three drivers behind the growth in your business from 2014 to 2017.

Anthony Tivnan:
Well the first driver which is one of our most important metrics to date and something that we heavily invested in last year and where I really believe is going to push us close to that 50 million dollar mark this year is retention. You know a lot of companies and entrepreneurs focus on new business new business and business and very difficult to grow. If you're you know you're walking past them on the front door and then showing them the back tour you know it's almost like a pocket with too many holes in it impossible to fill. And so our you know the the certainly the focus for us is retention. And the higher our retention the we see the more referrals more repeat business client lifetime value and certainly revenue per customer. And how much they're spending and buying multiple products. And so that's really helped us. So just focusing on the customer experience and ensuring that they have that we're very easy to do business with. We're having a very personalized experience and they feel like you know stepping on that plane that it's you know the mission is all about them the experience is all about them. And we're really making that very simple. Certainly the people we've invested heavily in and the people in our organization having the right you know people sit in the right seats and certainly we had to make some transitions through through that large growth.

Anthony Tivnan:
There's certainly a very large difference from doing you know like you said the 19 to close to 40 million. Lot of challenges a lot of hurdles a lot of learning a lot of expensive lessons happening through that transition. But having the you know having a core group of. People. That you know that really take care of our other colleagues internally and then you know take care of our customers has been absolutely crucial. And had the moment third driver I wouldn't say I would say brand our brand positioning you know stay away from all the noise. There's you know if you look at our business our industry there's been there was a big buzz around you know ride sharing and then that sort of thing and you know we really stayed the course. We we know who our customer is and who the customer we like to serve. And you know as I mentioned earlier the three pillars of our business that we just focus on stay course is purely private customer advocates providing solutions for life. And we believe if we keep it simple and really just focus on being really great at those three things then we'll continue to have the type of growth that you mentioned

Malcolm Lui:
Right. So when you talk about retention you think retention mostly of your charter customers or retention of your membership members

Anthony Tivnan:
Both really want is not more more important than the other. Retention and client kind of value whether somebody whether you know whether somebody is doing a charter with us or a membership is equally important.

Malcolm Lui:
Like

Anthony Tivnan:
We've we have charter customers that have been with us for 10 years and continue to fly. Continue to refer me and the other interesting piece is the in the last five years 40 percent of our members started out chartering with us. So the retention of our charter customers actually is you know it actually fueling our growth on the membership side.

Malcolm Lui:
Right

Anthony Tivnan:
So it's really important to keep them you know keep our customers and keep them reordering when they're in charter because you know at some point they may have an interest in membership. And when we talk about solutions for life it's you know it's very interesting because we work with a lot of entrepreneurs we work a lot of CEOs and business owners. It's really really interesting to watch their businesses grow and their portfolios change. So being able to sit on the same side of the table with them and be a part of that and provide solutions that really grow with them has also attributed to to our success and and again that retention piece of you know the the the on demand charter is almost you know them dipping their toe in and not kind of fully jumping in but getting to experience it and then you know we want to make sure that we're maintaining them keeping them and if a jet membership or an aircraft acquisition is makes sense for them later down the line than they already know like and trust us and rely on us to help them help guide them through that process

Malcolm Lui:
Right. How much of your revenue right now is coming from each of the three businesses that you have. The the charter flights the jet membership and the aircrafts buying and selling

Anthony Tivnan:
So I would say about 97 percent of the revenue is charter and membership we do. You know I would say probably two or three whether it's helping customers get rid of airplanes or purchase new ones. So that's a very small piece.

Malcolm Lui:
Like

Anthony Tivnan:
And that's more. Again just to help guide them through that process because you know they've they've been with us and we know them well we know their family we know their trips but we have a 97 percent is almost 50 50 between charter and membership. It's probably 50 by 45 charter to membership.

Malcolm Lui:
Right

Anthony Tivnan:
So you know it's a pretty even split and again and that's that's why I said retention is equally as important on both business lines

Malcolm Lui:
Yeah definitely. Now for people to become a member is there a cost incentive price incentive like it if you become a member and you prepay 50 hours it's less expensive than booking 50 hours normally it's not the value by being a member

Anthony Tivnan:
Against data. It all really depends on the customer and our consultants job is to sit down with our customers and really provide an analysis on their on travel. So the reason it depends is you know somebody is flying to obscure locations where there aren't a lot of aircraft but a membership could make sense because you're not paying any repositioning fees are good things from point to point.

Malcolm Lui:
Right. But

Anthony Tivnan:
You

Malcolm Lui:
If

Anthony Tivnan:
Know

Malcolm Lui:
They want

Anthony Tivnan:
We

Malcolm Lui:
Your charter

Anthony Tivnan:
Have

Malcolm Lui:
Option do they pay repositioning fees

Anthony Tivnan:
Yes. Yeah. So in

Malcolm Lui:
Ok.

Anthony Tivnan:
Charter. Yes charter. The charter market is and it's also variable pricing so it's extremely difficult from a budget perspective to really know ahead of time what you're going to be paying because it's all market driven. So you know during know we call it high volume days let's just say like the Wednesday before Thanksgiving where you know everyone from the northeast is getting you know he's going down to the southeast. So on a high volume day like that you know when you're when you're on a charter basis it's it's all supply and demand and

Malcolm Lui:
Right.

Anthony Tivnan:
Supply is very very low and high volume days. So the price goes through the roof and you on on charter you may be paying you know an on a non high volume day you could be paying ten thousand dollars to go from New York to Florida and for the same exact aircraft where you know the where supply is where demand is higher is higher than supply. You might be paying seventeen thousand dollars so to have a swing of that magnitude you know is it it's very difficult to plan.

Malcolm Lui:
Yeah.

Anthony Tivnan:
So in the end that's usually where you know again when folks is that when folks are flying 25 50 hours to have that variable it's sometimes it's just it's frustrating it can be frustrating frustrating or it could be difficult to plan. So they prefer to have just a fixed price. Know exactly what it is and not have to you know to the back and forth

Malcolm Lui:
Right.

Anthony Tivnan:
Scheduling flights and also a lot easier on a membership because it's already everything's prepaid. You have your hours all you're really doing is just scheduling the flight. We have a flight support team and a membership success theme. And you know they're there just say hey I want to go from here to here and you know 10 minutes later they have an itinerary and they know that the plane and it's off schedule whereas in charter you know you need to go into the market and see what's available because you know that it's a little bit of a different model.

Malcolm Lui:
So for those Wednesday flights right before Thanksgiving can your members book flights on that day and I imagine the operators of course might not be super thrilled. Because now they're doing a flight commemorate as opposed to the triple rate that you get from someone else who is desperate to get home

Anthony Tivnan:
Well I wish I wish that was the case so you know as for us when we give a membership rate that's that's assuming the risk. So we on the back end are you know we're playing the market we're also going we have key vendors we will do what purchasing so we'll purchase you know a set amount of hours or a set amount of days of availability where we're just going to kind of connect the dots and move the plane around ourselves. But and then we certainly do that on high volume so that we can control costs and not have ourselves in the same position as your typical target customer. But you know from the from the operators perspective not really and you know we we maintain pretty consistent pricing because of the volume that we do. And also you know we're selecting a much smaller group of operators. So we're a lot more valuable to you know we don't spread ourselves too thin. So we maintain the relationships and and keep the business with you know a select group of operators. And can that where does that cost Magellan are our cost of goods is probably impacted by doing that. However the consistency in the retention and client lifetime value I believe makes up the difference of me having to go out and pay a little bit more for newer planes or some of the nicer planes in the marketplace or not going and working with a larger group of operators. So you know there's there's give and take there but the brand the consistency the retention I believe is is higher value rather than you know going to a smaller company or an older airplane and you know saving you know 5 percent. I'd rather make it up by you know through a referral or something like that.

Malcolm Lui:
Oh yeah definitely. I mean the key is to keep the irritation factor as low as possible right. And people get irritated if they can't get a flight they're gonna get irritated if the flight's four times more expensive than normal. Even though the ads. It's high season and so it's still an irritation if he doesn't eliminate that irritation factor. I could see why people would stick around longer and fly more and refer more I think subjectively quality to qualitatively I would say that would benefit you in the long run

Anthony Tivnan:
Yeah absolutely. You get it on the head with the irritation. Right. Because the the the amount the premium that our customers pay for the service is substantially more expensive than flying commercial.

Malcolm Lui:
Oh yeah.

Anthony Tivnan:
So you know your expectation to your point is you know it is really should be higher. Right. Because that's what that's what they're paying for. And we understand that and we appreciate that. And so we make sure we deliver on that promise.

Malcolm Lui:
Yeah. So for your 90 some odd partners you have the flight operators. Are they doing all their flight. All of their flights with you. How busy keep them

Anthony Tivnan:
No no. And these you know the fleet size really ranges anywhere from on the small side kind of aircraft and you know we have partners that have a hundred and fifty aircraft. So you know it's probably I would say close to two thousand aircraft and it's situated all around the country because you know we guarantee our members a plane anywhere in the U.S. within eight hours notice. So we need to make sure that our network is spread out throughout the country. So certain pockets you know the northeast the southeast California Texas has certainly been a big growth market for us. So that those concentrations certainly see a lot more of our business because we have a lot more business in those regions. So yeah. So you know they supply lift also for their own owners. You know as I mentioned some of these are actually corporate flight departments for large companies so they're providing their own executive teams with lift. So essentially what we're doing is we're almost filling the filling the gaps or purchasing the excess capacity of their own usage

Malcolm Lui:
Right here. It's as you're describing half how you how your model works. I keep on thinking you know you're kind of Uber Black type service in a way right. The luxury end the higher end utilizing the jets that are out there that aren't being are sitting on the good I would be sitting on the ground right. We're not for you

Anthony Tivnan:
In

Malcolm Lui:
Being. Get them up in the air.

Anthony Tivnan:
Yeah absolutely. And it's a it's a good comparison in terms of the excess capacity the level of due diligence and in quality control certainly has to be a lot more consistent for some of the reasons that we talked about earlier. But yeah from the from an excess capacity and partner network pretty you know it's the same type of model. Absolute

Malcolm Lui:
Yep. And then for the second year I would think about people investing heavily in people. How many people do you have now on your team.

Anthony Tivnan:
Where I think we're about 40 or 40 we're usually right between 40 to 45

Malcolm Lui:
Okay. And when you say investing heavily. What does that mean when you say investing heavily in people

Anthony Tivnan:
Shook so heavily when I say heavily and you know it's it's certainly starts with the hiring process and making sure that you know the well you know before we get into you know the person's technical capabilities you know the most important thing is that a core value fit and making sure that they're gonna fit into our core values which you know which are going to you know our team is you know it's we're in aviation and you know when when everybody else wants to take a vacation that's when the customers are relying on us. So you know our operation is 24/7 365 and our office is staff 24 hours a day. So our people work very closely together and it's a very collaborative environment here. And and sometimes it can be very stressful you know

Malcolm Lui:
Yet.

Anthony Tivnan:
And in terms of you know this situation where an aircraft has a mechanical or you know what could be a situation where you know evacuations happen regularly. Last year last year all that you know that the hurricanes that happened down in south Florida it was unbelievable the amount of evacuations that that we were doing. And so you know there's it's a really really important that you know for us that you know first and foremost we have the right people sitting in the right seats.

Malcolm Lui:
Right

Anthony Tivnan:
So when I say the heavily invested we also invest heavily in training our flight support team have been through the Ritz Carlton by the top talking five diamond or camera the exact name of it and they've all received ongoing training my flight support team for all f based pilots which is I believe we're the only company in our model that actually does that and so what we did essentially is from our from an operations perspective our flight support team. They're the ones doing the execution piece. My business where they're providing our customers with their itinerary to doing feasibility checks on their flight background checks on the flight crew that are assigned to the trips weather briefings making sure that the the aircraft in the runway and the weights and what the mission is for you know from a safety feasibility perspective. And then they're also the front line with our customers throughout that throughout their experience. So we took pilots and we trained and we continue ongoing to train them on customer service

Malcolm Lui:
Right.

Anthony Tivnan:
Because as you can imagine how difficult it would be to hire customer service people and try to train them on aviation you know so. So that's an ongoing continuous process. And we've also made you know in terms of from a management team perspective you know heavily invested in our management team and continuing to give them the support and training that they need. So you know there's a there's a very large emphasis here in our in our organization just in terms of ongoing training and in making sure that our our colleagues have a fun safe and enjoyable experience here because again it can the work life balance in aviation can be be challenging because

Malcolm Lui:
Yeah.

Anthony Tivnan:
Again our customers are calling on us on you know not just the Tuesday morning when they want to go down. It could be an IPO it can be you know all different types of events whether it be it could be a wedding it could be a funeral it could be know all these very important and unique experiences. That's when they rely on us and that's when the pressure's on.

Malcolm Lui:
Right.

Anthony Tivnan:
So you know having the right people here and making sure that they're they're fully trained in making sure that they're they're having a great experience and making sure that you know they enjoy the colleagues that they're working with. It just really really important we put a huge emphasis and we invested very heavily in the

Malcolm Lui:
Yep. Now when I look at your revenue figure it 38 million last year. That's the value of the of the charter flights. Right. And then the way it works is that your company gets a commission I guess you cut of that somehow works

Anthony Tivnan:
Yeah. So Star you know our revenue is a little strange the way it works because we also you know the membership piece is also something that we like our membership sales we don't report in our revenue. Right. So we did last year I think around 16 16 or 17 million in membership sales. Now we don't add that to you know when we talk revenue we just we're just really talking about the flex loan. So we're not counting you know because to us we actually look at our membership sales as deferred revenue

Malcolm Lui:
Right.

Anthony Tivnan:
If that makes sense.

Malcolm Lui:
Yeah. Does

Anthony Tivnan:
Yeah. So yeah. So when we're talking revenue like you know when I say we expect to do 45 to 50 million this year that's in flight mode.

Malcolm Lui:
E

Anthony Tivnan:
And then we continue to do to continue to drive that funnel is you know invest in our membership product because you know we can I believe you know we we can really hit you know the 20 25 million 30 million is in my pipeline. In terms of membership sales and once we get there that's what world we'll see you know the flights and revenue to really increase. And

Malcolm Lui:
Right.

Anthony Tivnan:
Two weeks from now we're actually on May 1st we're launching a completely relaunch of our membership offering which we really spent a lot of time and evaluating other products in the marketplace evaluating our own product offering interviewed customers into new members and we're really excited about the product that we're coming out with. It's you know no promise of it is really making it simple to do business really making it simple to understand. You know some of these products out there whether it be a fractional or you know they have it's it can be very tricky to understand what you're buying. You know companies have blackout days where you have a membership in certain basic reply peak surcharges and penalties for interchanging into other products. So the new product offering that we're that we're launching and not to muddy the waters too much is really designed to take away all that guessing and really remove obstacles or hurdles for the consumer and again just just provide a very simple consistent and reliable membership product.

Malcolm Lui:
Right

Anthony Tivnan:
So we're really excited.

Malcolm Lui:
Yeah. Memberships the probably the wave of the future both for businesses and to consumers. You can offer more value in. And also from the consistency you get it also enables you to deliver more value than a non subscription business.

Anthony Tivnan:
Exactly. And we we really believe that to be true and you know some of the legacy companies in our space have had the same model and the fractional model has been around forever and you know we really believe it's becoming a thing of the past. And certainly that membership model as you know you made the comparison to Uber earlier and you know I really believe that you know that the millennial generation that they continue to grow you know they're less about owning assets so they're not the ones sitting on an underutilized asset. You know you look at HomeAway and Air B and B and you know all of these companies it's you know people want to use something for the time that they need it and then walk away and just be done with it. And you know fractional ownership does not allow you to do that. You know you have your monthly management fees whether you fly or not you're locked in usually for anywhere for three to five years. So very difficult to again budget or you know most customers don't know how many hours they're going to fly. Three years now.

Malcolm Lui:
Yeah.

Anthony Tivnan:
And that's that's very difficult. That makes that model you know there's there's a lot of obstacles in that model. And I believe that you know if you look at our industry I've been in the industry for about 18 or 19 years now and there's only two fractional companies left. And so that to me certainly gives me a lot of excitement in terms of our growth in the model that you know that we're we're sticking to and the product offering that we're relaunching because I believe that fractional owners will continue to migrate over to the simplicity and flexibility of the jet membership.

Malcolm Lui:
Yeah definitely. Now sales are flat in two thousand eighteen. Right. You're about the same not excluding your membership sales which aren't in your figures but at least for the charter side of things. Things are flat at 38 million in 2017. Thirty eight million in 2018. What happened there.

Anthony Tivnan:
So interestingly and in two thousand eighteen we actually brought in two hundred actually now one hundred and seventy section is the actual number one hundred and seventy six new customers. And but what we also did in 2000 18 and you know you mentioned the the amount of growth that we had 2014 15 16. And when I mentioned we made a lot of expensive mistakes that was that was true from my supply side. That was true from my people side you know certainly it's very difficult to know when things are moving that quickly you know you're making decisions on the fly and some are decisions that are with not much experience behind it and you know you'll learn from these experiences and they grow. But also from the customer side. So you know we were at a point in our business and I think a lot of entrepreneurs and a lot of businesses certainly in their infancy years have a tendency to say yes to everything. And you know it's it's it's you know it's it's actually you know how we got this business off the ground you know is saying yes to every deal and figuring out how to make it happen and then we certainly do that. But it's very difficult to scale a business that way. It's very different very different the scale of process and and as you start to do more revenue but more transactions whatever your business is you know if you're all things to all people then your focus is not there. So you know are we focused a lot on 2018 certainly and in our own people but also looking at accounts and whether it's memberships or customers that just didn't work for us and that was a very difficult decision. And that's a very scary decision. As an entrepreneur to say no or to say you know unfortunate this isn't a good fit for us is the first time we've ever done that in the business and it was it was it was a very amazing experience.

Malcolm Lui:
Right.

Anthony Tivnan:
And I belong to some different entrepreneur groups and that's the my groups and you know and I've been I've always heard of other entrepreneurs talk about it and you know but you kind of you can always sit there and I'll never do that or. That's crazy but you do get to a certain point in the business and numbers don't lie and you know again when you have a good team of people around to the end and certainly you know I would say focus when you talk about investment in people certainly have strong finance department is critical. You know they they bring information to you that you you can't avoid. You can't say no that won't be me because you know in order to grow you have to make those decisions. You know as a as a business owner in that law

Malcolm Lui:
Yeah.

Anthony Tivnan:
So that had a lot to do with it as well. But you know profitability is up and you know that's as as you know your net property profitability are sometimes more important than your revenue and

Malcolm Lui:
Kolya

Anthony Tivnan:
Revenue drive revenue drives ego and net profit drives results. So

Malcolm Lui:
Yeah.

Anthony Tivnan:
That was our focus in 2018

Malcolm Lui:
In another interview I did with another company. They did the same exact thing. They realized some clients were not a good fit. And one year they they let them go. They they referred to other providers. And yeah they took a hit on the top line but their profitability ability went up right because those clients that went elsewhere we're taking we're sucking up a huge amount of the resources and

Anthony Tivnan:
Yahoo. Absolutely.

Malcolm Lui:
Taking it taking away the ability for them to serve other clients in a better way in a more helpful way. So

Anthony Tivnan:
Absolutely.

Malcolm Lui:
Yeah.

Anthony Tivnan:
And the whole process is actually a great learning experience for us as a company. And you know we actually you know we implemented that experience to our training for our aviation consultant to ensure that that didn't happen again or put us in a position like that again in just a few weeks ago I was involved in a similar experience where were that was the answer was you know this actually is not a good fit for us but here's two companies that you know we feel as though would probably be a better solution for you and can execute this but you know so. So it's interesting but you know I I I'll tell you the same thing I actually told that particular customers you know I would much prefer to lose a deal before that happens than to damage a relationship. Because I took the deal and you know when you say no we're not a good fit but still helping consult in the right fashion. You know in my experience you you still get referrals from that you know you won't have any anyone out there you know saying oh this is how I do business what they don't deliver or anything like that. So we're more than happy to just consult our customers the best way we can. And sometimes that means it's you know it's consulting them to do something else and that's OK.

Malcolm Lui:
Yep. So for 2019. What are your plans. What are your targets. What what's the biggest challenge that you need to overcome to get there.

Anthony Tivnan:
So our plans as I mentioned earlier we've put a huge focus on retention which has been outstanding. We've watched our referrals go up since we've done that. And certainly our client value is directly impacted by that. Our future forward you know what we're working on some of the larger things is you know I mentioned you know making it easier to do business with us is a huge focus. So we've made a lot of internal changes. The launch of our new membership May 1st has been a lot of work a lot of man hours. And the team that that executed on that has just been outstanding here. And then the next piece to that you know in terms of making it easy to do. Making it easier to do business is the way our customers interact with us. So our application and customer log in is the next big project that we're involved in right now that will provide customers with an easy way to schedule flights for the catering and passengers pay for flights make changes Get Weather Updates get alerts that that you know all of those things. So that's the big thing that we're working on right now from all from a tech perspective and

Malcolm Lui:
Okay

Anthony Tivnan:
That's pretty exciting. So you know we kind of have been you know prepping for that with some of these other things that we've been doing in terms of retention and customer loyalty rewards and those sort of things and then you know taking those and applying that to a application you know because I'm a big believer that you know technology is not know technology it's not just so build it and they will come.

Malcolm Lui:
Yeah

Anthony Tivnan:
It's really about you know having a great product having really great people and then enabling those great people with technology.

Malcolm Lui:
All right

Anthony Tivnan:
So

Malcolm Lui:
Nadia Do

Anthony Tivnan:
That's

Malcolm Lui:
You have

Anthony Tivnan:
Where

Malcolm Lui:
A

Anthony Tivnan:
We're at now.

Malcolm Lui:
Do you have a formalized process to proactively generate. Make it easy for your customers to provide you with a referral.

Anthony Tivnan:
Oh yeah absolutely. Yeah. We have got our our our members and customers actually get flight credits for referring. There's there's actually us on our membership contracts or agreements. There's actually a place that they can fill out. They also have landing pages where they they have they'll get a link and they bring it right to a landing page and they can actually put in the customer the customers whether they're family friends or colleagues they can refer to the portal. So that's another way that a lot of it just the bill actually just make the introduction to their aviation consultant. That's the big way to do it. And then certainly when the app is complete they'll have an extremely easy way to record the.

Malcolm Lui:
Right. How about from a marketing and sales perspective. What sort of challenges the team need to overcome to get new customers on board get new memberships.

Anthony Tivnan:
From a marketing perspective you know I think we do a really you know probably a little bit biased perspective but you know even just talking to you know a lot of other of the the owners and MySpace we do a fairly good job with you know we're heavy on content video. We're doing some rebranding and redesign of of content and Web site right now mainly because of the launch that we have on May 1st. But you know we're heavy on on the marketing piece in terms of whether it's paid search we capture marketing. We have a very strong inbound marketing strategy that we've had in place for probably five or six years. We continue to you know it continues to evolve just like all the areas of our business. But where we had a great first quarter. We're on pace to bring in I believe about 250 new accounts this year which certainly is going to support a nice growth year for us. But you know we were always looking at you know what's new what's you know Trump the trends and in marketing we have an internal marketing department. We don't outsource that piece. Tried that for nine months and what was a challenge would be an understatement. So we prefer to keep it in-house and again where we talk you know culture is a big part of our company. And so to have a marketing team that fits the culture is in the culture and is interacting with the colleagues you know all the time it really helps to deliver that message and deliver you know that the same culture core values inside you know they're delivering it outside the content

Malcolm Lui:
All right. Yeah from my tools I see that you're spending a good chunk of change five digits a month on paper click ads. And I could see how I can get some individual folks looking to do a charter flight but I don't imagine the corporates are who have their own jets that might be under. Ah ah Ah ah searching so much on the on Google for charter flights right because they have their own flights in-house so how are you going about finding these corporate companies these companies that have planes are kind of literally lying around that you can utilize for them

Anthony Tivnan:
Yeah. So there's this tools that we're able to access. So there is you know there's companies like jet that there's companies there's don't call em that. So these are companies similar to your car. You have a license plate on your car. You know if somebody takes a new license plate or you know and I guess I will hold it but please I will touch the license plate and all your information comes up and a tail number on an airplane. It's just like the license plate of the car. So we we have access to services. The two I mentioned jet was Jet net and amps that were very similar to that where a tail number you enter in and that supplies you with you know whether it's quite department or chief pilot or whoever is managing or handling that aircraft and aircraft owners are a large portion of our customer base. So it's not just where we we get lift aircraft owners are always in need of a company like us for scheduled maintenance events and scheduled maintenance events for the crews and training their crews. You know they get a new crew and they have to perform for the airplane that takes time.

Anthony Tivnan:
So we actually do a lot of you know filtering through those resources in order to prospect for new relationships but yeah paid search is definitely. And it's surprising it be. I was I'm actually surprised at the amount of corporate business that we do that we do get from a search you know a very important piece of paid search as I'm sure you know is the quality of the search terms that you're implementing and making sure that you're continuing to be tested it continuing to monitor your results. I think where a lot of entrepreneurs kind of go stagnant they stop paying attention to it where they leave. You know they believe the same keywords up all the time. You know we you know we're analyzing ours every two weeks changing I'm updating them taking down what doesn't work investing heavily or what does work. So it's just like anything else you know what you put into it is what you're going to get out of it. And that doesn't you know just putting a big dollar amount to it is not going to always get you the results that you want in terms of conversion. So

Malcolm Lui:
Right.

Anthony Tivnan:
Yeah we we spend extremely heavily. But it does not for us it yields outstanding results and we'll keep on spending as long as we keep on getting that ride back.

Malcolm Lui:
Yeah.

Anthony Tivnan:
So we're comfortable

Malcolm Lui:
We share it with me. Doesn't sound like you have any big marketing challenges or sales challenges.

Anthony Tivnan:
Now. I mean you know there is a company that doesn't have challenges is either not giving you the full truth or they're just not growing. So you know when I look at challenges you know I I I. We internally we call them opportunities because now it's an opportunity to you know make a change to something or you know do something that you know that could have an impact on our growth. So those we would literally be there all day. I'm just trying to think. But again we've you know we've a very solid team. And you know challenges come up every day Malcolm And you know we actually form issues lists for every department and that issues list know other issues less opportunity list is never empty

Malcolm Lui:
All right

Anthony Tivnan:
In any department you know because we continue to solve on

Malcolm Lui:
Sure.

Anthony Tivnan:
The fly.

Malcolm Lui:
So what's the the biggest opportunity on your list right now.

Anthony Tivnan:
The biggest opportunity that I'm excited about right now I think is the relaunch of our membership program. The customer application. So yeah I would say that that has me the most excited I've read our attention the last couple of quarters have just been outstanding. So you know as I look at the new product offering we're going to market with that. The retention is exciting because what we're getting ready to do right now is put more folks into that bucket

Malcolm Lui:
Sure

Anthony Tivnan:
And will reap the benefit of that. Probably more so in the next I would say 12 to 18 months. That won't happen certainly the next two or three quarters but that should put us in a very very good position. Q I want you to 2020

Malcolm Lui:
Okay. And how you get the word out about the new relaunch of the membership programs adjust to your current charter flyers or you can get it. Tell the world everyone about it.

Anthony Tivnan:
We're gonna tell the world.

Malcolm Lui:
Okay

Anthony Tivnan:
Yeah. So we have a launch campaign that is all structured out so that's gonna be a variety of and that's being that's that's being executed by my director of marketing and PR firm but so it's a combination of paid search PR certainly our internal customers and you know aligning the new product offering with a great referral incentive so they can you know our customers and our members or sometimes our best salespeople so they'll certainly help spread the word world will tend to bite them to do so for us are our sales team I 15 sales consultants and they do a great job and we go and recapture as we're doing. I think that adds We have a nice B2B strategy to specifically target the corporate. So we get on the list there on the campaign there about 10 or 12 channels which which the you know everything from just campaigns on emails and so there's it's you know it's it's well planned and as you know any any plan is you know the execution piece of the plan is the most critical. So I've seen the plan and I'm extremely confident in the team that that we have in place to execute it

Malcolm Lui:
Yeah. And many of your team teammates are our pilots right so they're really big on planning each year to go before you start flying.

Anthony Tivnan:
Absolutely. Absolutely.

Malcolm Lui:
So three last questions I have for you. Anthony if you were to have a billboard message somewhere for Magellan jets what would that billboard say and keep in mind. Most people only have six seconds before they drive by a billboard. So you need a pretty snappy message for them.

Anthony Tivnan:
Buy it a billboard. I think it would say solutions for life.

Malcolm Lui:
Gay submissions for life maybe. Air transport

Anthony Tivnan:
That would be that would be the tagline of course you know Magellan jets and then solutions for life

Malcolm Lui:
Right this do it air more air transportation solutions right. Whether anything else. Or is there another are you solving another problem. That's not that's more important but not as obvious as travel by air.

Anthony Tivnan:
Yeah. So it's a very interesting point. So we are solving many and I don't know. You know not always problems but you know whether it's you know time is a lot of and tough time is our most valuable asset with humans

Malcolm Lui:
Yeah.

Anthony Tivnan:
Because the clock's ticking and we're only a lot of a certain amount of time and we can't no matter how much money you have know the time you can't extend it by you know but by your bank account size. So the way that you can the way you know I'd say one of the most important things that we do for our customers is we make their time more efficient and you know that that may be you know making sure that they're home with their family or they're allowing themselves to go away with their family. And you know the solutions Life piece is interesting because we're always thinking of you know how do we make our cost. How do we add value to our customers. And one of the things that we've done in the past is that's certainly a nice driver for us is the quality towards and the people we came up with college tour packages now some you know there was a lot of press around it with Austin you know certain before oh well you know what. You know this is too glamorous and you know what they didn't understand is you know this is business aviation and 90 percent of our customers are business.

Anthony Tivnan:
And so for an executive or an entrepreneur or you know I mean geez I would say you know I put in 70 hours a week 80 hours a week and you know to have that work life balance is extremely difficult. So all we did the college tours and you know what I would explain to a lot of members of the press is that this isn't about you know arriving in style or arriving in luxury. This is a very important time in a parent's life and being present is not always possible for an executive or an entrepreneur. And that's what we're saying is we're allowing them to wear you know if you would call it if you're going to see six or seven colleges that could take commercially that could take two or three weeks but we can make that happen at the weekend so that you know so that the parents are present and we just make that process a lot easier. So it's just really like thinking about our customers and thinking about different pain points in their lives. And you know how do we make that easier and how do we provide them with more time which is their biggest asset.

Malcolm Lui:
Yeah.

Anthony Tivnan:
So that's that's where we find pleasure and you know I I make it a habit to read every single survey after every flight that we do our customers receive a survey right through their phone. Quick three or four questions and then there's a note box and you know some of the notes that come back when time is of the essence when it's a you know a big event in their life. And again sometimes it's sometimes the birth of a child sometimes it's unfortunately a death of family member but being there for them and you know being a part of that where you know they can rely on us and hearing some of that feedback is just you know it's it's it's what gets me out of bed every morning

Malcolm Lui:
Yeah. So do you do the net net promoter score survey. And if yes what's your score.

Anthony Tivnan:
We have a four point eight. Three out of five is our. And this is just half of Q1. And that wasn't even a setup question. But I we just went with Rex you want results. A couple of days ago but our Q1 survey score was four point eight. Really we had a 90 percent perfection rate. When I say perfection right that means 90 percent of the flights went with with zero interruption

Malcolm Lui:
All right.

Anthony Tivnan:
In terms of you know from start to finish. Great

Malcolm Lui:
Nice good numbers there. And the last final questions. Who are your ideal charter customers and members and what's the best way for them to contact your team.

Anthony Tivnan:
Chart. So our ideal customers and members are certainly C-level exacts corporations entrepreneurs and high net worth individuals. We work a lot with athletes celebrities studios and you know the customers that fit our mold are really those that are looking for reliability consistency and in a purely private environment and focused on relationships. And that's what we focus on. And they can reach us by the Web sites. W w w dot Magellan jets dot com and that's the easiest way. And you know we're there. We're here

Malcolm Lui:
All right. Awesome. ANTHONY It's been great having you on my show today. I really enjoyed hearing how you grew your company so fast

Anthony Tivnan:
Thank you I appreciate it. And great conversation. Appreciate the discussion.

Malcolm Lui:
We've been speaking with Anthony Tivnan, the President of Magellan Jets, about his company's rapid growth. For interviews with other fast growing, high value sales companies, or to learn how we can accelerate your firm's high value sales through automation, visit Eversprint.com.

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