Greater Mankato-based duo managing regional airport revs up jet aircraft management business.
Photo by Kris Kathmann
Business partners and opposites Mark Smith and Wayne Andersen don’t get on each other’s nerves the way Oscar Madison and Felix Unger did in the ’70s television series The Odd Couple. But they do have their differences. For one, Smith prefers flying a Falcon 50 and Andersen a Hawker 800.
“Everybody says that opposites attract,” says Smith from North Star Aviation company offices adjacent to Mankato Regional Airport. “Wayne and I have different personalities. I’m more a detail-oriented person and visionary. Wayne is more hands-on and enjoys flying and teaching.”
Andersen also has a double-bass voice, the menthol-cool nerves of a longtime aviator, and says that partner Smith enjoys office work “a bit more.” He is age 62 and thinking about thinking about retirement while his junior opposite, 45-year-old Smith, enjoys numbers and planning, and leans on steady Andersen for advice. They co-own North Star Aviation, an aviation-related business based at Mankato Regional Airport since its 1991 start. They may have their personality differences, but Smith and Andersen get along famously and share a passion for flying and aviation. And they share an aggressive business growth philosophy.
Both flew out-of-the-way career paths before landing in southern Minnesota.
Smith first became enthralled with aviation after a family tragedy. “When I was a junior in high school, my brother and sister-in-law had a gas leak explosion in their home,” he says. “They were burned over 40 and 70 percent of their bodies.” At the time, another of Smith’s brothers owned two small aircraft, and for a while those aircraft shuttled the Smith family back and forth from a hospital burn center in Iowa City, Iowa. It was while riding as a passenger on one of those flights when Mark Smith first became intrigued.
He attended Iowa State to major in agribusiness and a year later transferred to Iowa Central in Fort Dodge. “Then I took a part-time position at the Fort Dodge airport at age 19,” he says. “I decided I was much more interested in working around concrete and asphalt than cattle yards and feedlots. It didn’t take too long before I took flying lessons and realized it would be my career.”
Once sensing his calling, he made a beeline for it. He quit college and moved to Louisiana for 30 months of on-the-job training to earn a mechanic’s certificate. Soon in 1980 he was in Sioux Falls obtaining commercial instrument and flight instructor training. Then events happened fast as a speeding Falcon 50: he was a flight instruction teacher at 21, married his high school sweetheart, Vivian, at age 22, and during the week following his marriage they moved to Fort Collins, Colorado, where he’d just been hired by a commuter airline. Fasten your seatbelts.
“At the time, getting hired so young by a commercial airline was unusual,” he says. “I was the youngest of eleven children and our family worked hard on the dairy farm. We were driven to succeed.”
He flew for Airlink Airlines (no relation to the current Airlink) until that company a year later took a Chapter 11 nosedive into bankruptcy. Discouraged but not beaten, he returned back home to Iowa, where he began a crop dusting business in Sibley that lasted three years. Then he heard in December 1985 of an opportunity in Mankato, Minn., to fly for Hubbard Milling.
Wayne Andersen was born and raised in Chatfield, Minn., southeast of Rochester. In 1960, he began studies at Mankato State College, then married, and in 1963 went off to help tend his in-law’s farm near Redwood Falls. While there, his brother-in-law taught him flying. In 1969, he earned his commercial and flight instructor ratings and in time landed a position in the state of Virginia as one of three pilots for Chesapeake Corporation, a large paper and cardboard box manufacturer east of Richmond.
“Then in 1973 my father-in-law retired, and my brother-in-law and I came back to the farm in Redwood Falls,” he says. “But I kept my hand in flying. I did crop dusting work and helped out as a pilot in Marshall and New Ulm. From 1973 to ‘86 though, my full-time occupation was farming, eventually about 3,000 acres.”
He could not be kept from his true love, though. In 1986 he and a partner purchased New Ulm Flight Service while wife Rachel hired a full-time manager to run the family farm. While operating his business out of New Ulm airport in 1989, he crossed paths with a 30-year-old Hubbard Milling pilot named Mark Smith.
Andersen and his New Ulm Flight Service partner purchased what they would rename North Star Aviation in November 1991, their second joint venture. A year later, Mark Smith emptied his family bank account and left Hubbard Milling to join them as equal, one-third partners. Then in 1998, Smith and Andersen purchased their partner’s shares and have since been 50-50 owners.
Today, they could be likened in part to an automobile dealer. For instance, they buy and sell new and used airplanes for themselves and clients and have a repair shop. But there any similarities end. Says Smith, “An automobile dealer might have hundreds of cars in inventory at any given time. We may have only a couple of aircraft in inventory, but ours can be up to $10 million each.”
The company also manages seven corporate aircraft in Mankato and a jet for a client in Little Rock, Arkansas. Six of their seven management clients use North Star in part because its hangar and fuel costs are much lower than that of any aircraft management company in Minneapolis or St. Paul. When one of these clients calls, a North Star Aviation pilot flies the client’s aircraft to a Minneapolis area airport where they meet up.
Eyeing growth potential, Smith and Andersen soon will construct a second company-owned hangar to house even more managed aircraft from metro-based and beyond companies. And they better hurry: By April 1, 2005, they’ll have two more. This will complement aircraft from Lakes Entertainment (Grand Casinos), Tom Redmond (formerly of Redmond Hair Products and the Aussie Shampoo line), Al Sween (Alwyn), Burwell Enterprises (two aircraft), and DRC Transportation.
Another cornerstone of their business is airport management. In 1997, The City of Mankato privatized its airport management, becoming one of the first upper Midwest cities to do so. “Pat Hentges (Mankato city manager) was the driving force,” says Smith. “Previously, City of Mankato personnel managed the day-to-day operations. The City saw this as an opportunity to perhaps make the management more efficient. They knew we were already on site. I believe Pat saw it as a cost savings measure.”
The detail- and numbers-oriented Smith now dips into his briefcase for a printout of past budgets and reads out loud their litany of success, saying, “From 1993-96, the City averaged an operating deficit of about $86,000 annually. We took over management in 1997 and by 2000 the airport was at break-even. In 2001 it had a surplus of $700. In 2002 the surplus was $13,000. In 2003, it grew to $24,000.”
The company has only two employees involved in airport operations, including airport maintenance manager Kevin Baker. North Star Aviation does all the airport operations budgets for the City, sends out hangar invoices for 68 occupied hangars, pays the bills, and does everything from snow removal and grounds keeping to restroom cleaning and light bulb changing. The City owns all the hangars except for North Star’s current one, which houses the seven managed aircraft and its main offices. The company leases 70 percent of the city-owned terminal and in turn sub-leases about two-thirds of that to Mankato Aviation, the current flight school provider of Minnesota State University.
The state-of-the-art terminal was built in 1997 from income generated by the City’s 1/2 percent sales tax. North Star Aviation was “instrumental,” says Smith, along with the City’s Luther Krepstekies, in contributing to the terminal layout. “It’s the welcome mat to our community for much of business and industry,” says Smith, “and it’s a first impression. Many large corporations use their corporate jets as their tool to move throughout the nation.”
Another aspect of business is its long-term and well-publicized relationship with the flight aviation program at Minnesota State. Smith says, “North Star Aviation had the student training contract with the University from 1991 until early 2000 when our board of directors decided not to renew our contract coming due in October of that year. Wayne and I had other avenues we wanted to pursue. In particular, one was jet group maintenance and management. Also, as insurance premiums and labor and parts costs continued to climb, the University and us weren’t keeping up as fast as we should have by increasing rates to the consumer. Our margins were shrinking. The flight school was taking up 80 percent of our time and contributing 10 percent to our income. And it was consuming 75 percent of our payroll. We simply made the decision not to renew and to let someone else provide that service. We have no regrets today.”
He claims that had Minnesota State offered more of a financial incentive, North Star Aviation still likely would be managing the program today. As it turned out, the program since 2000 has had some turbulence, with much of the troubles splashed across the headlines of a local newspaper. For this article, Smith says that to rehash the controversy would be too painful, considering he and numerous others, including the mayor of Mankato, were named in a lawsuit involving a former head of the University aviation program.
At its peak, the flight aviation program had 400 students of which perhaps 180 were flying during any one semester. North Star Aviation owned 23 program-related airplanes and leased them to students. After deciding not to renew, the company sold all the airplanes, including eight to the new flight-training provider.
Today, the University’s flight instruction provider, Mankato Aviation, leases space from North Star. The last nine months Smith has been especially upbeat about the program’s future, saying, “I’m hearing positive things about Mankato Aviation and the University working together. I think you’ll see a day when the program’s prominence will return. I’m very optimistic it’s moving in the right direction.”
As for the two getting along, Andersen doesn’t envision any problems between he and Smith. They have had only a few minor disputes the last 14 years. He’s talked with his younger partner about retiring, but isn’t quite ready yet for the “rocking chair or golf course.” Likely, he’ll work in some capacity until age 70.
He says of their relationship, “Sometimes similar personalities don’t get along together in business. We are two different people, which I think is good. Mark does his thing and I do mine. We know what the other is doing but don’t get in each other’s way from a micromanagement standpoint.
That’s probably because there is less for each to micromanage. Andersen says, “Mark for a long time managed our day-to-day operations, but he’s gotten away from that to devote more time to aircraft management. We hired a general manager about four years ago, Kevin Doering. At that time we had 45 flight instructors because of the University program. It was like trying to herd cats.”
What They Do
Says Smith of North Star Aviation: “We are a full-service, fixed-base operation. We dispense aviation gas and jet fuel to based and transient customers and provide aircraft maintenance for single- and multi-engine piston-powered aircraft. Our avionic shop repairs and installs navigation and communication equipment. As for our jet group, it maintains our managed aircraft. We do inspections and repairs to jets. Anything beyond our capabilities we outsource to larger facilities, but right now we’re doing 85 percent of all the required maintenance on our managed jet aircraft.”
Hopefully Not Waiting For Godot
We hold out hope that as our economy improves and airlines get their financial feet, Mankato will have regularly scheduled service. The city and airport commission want to wait until we can have reliable service offering a minimum of five round trips daily. We have the facilities and parking area now. St. Cloud has proven that you can be a stone’s throw from MSP and still operate efficiently and profitably. They have seven flights daily.
Attracting another airline here, one that doesn’t stop at MSP, is another viable option. One of the most successful routes ever operated out this airport was Mankato-Rochester-Chicago. By today’s standards that would mean we’d need American Airlines for that connection.
Any airline coming in here would need to lease space from the City—and we have space to lease. Our 5,400-foot runway has had DC-9s, 737s, 727s and a Soviet transport aircraft land on it. This airport has a lot going for it. It’s just a matter of time before we get regularly scheduled commercial flights established. —Mark Smith.
On Fun And Sun
North Star Aviation has flown clients all over the U.S., and Alaska, and into Central America, Mexico, and the Caribbean. Wayne Andersen, co-owner of North Star Aviation and a New Ulm resident, has never flown a client to Europe in his managed aircraft, the Hawker 800, but partner Mark Smith has in a Falcon 50. Charter flights can cost clients up to $2,000 an hour.
Andersen says, “For a business person managing a large corporation that needs to get there and back in the same day, the few extra thousands spent flying with us is well worth it. What amounts to a one-day trip with us could take two or three days using commercial airlines. We can save an executive time, effort and money.”
Costa Rica and some Caribbean islands are two of the more “exotic” locations he’s visited. A few years ago he was hired by aircraft maker Beechcraft to provide pilot training in Bombay, India.
In his flying career, co-owner Mark Smith has had a number of famous people as passengers, including Sen. Orrin Hatch of Utah back when Smith piloted an Airlink commuter prop in the ‘80s. Later he was the pilot for Sen. Pete Domenici, Sen. Alan Simpson, and Elizabeth Dole, who were traveling from Washington to Minneapolis for a Dave Durenberger fundraiser. Dole was especially gracious, writing Smith a “very nice” thank you note. In 1999, Smith had the opportunity to fly Colin Powell from Washington to Minneapolis for a benefit speaking engagement. “Powell was very much consumed with business activities,” says Smith. “He did speak to us for a minute, but once on board he was very occupied with notes and writing, and dictating.”
Q&A With Mark Smith
What happened to golfer Payne Stewart?
From the government report I read, when departing Florida, apparently Stewart’s pilot never had the plane pressurized. Going back through the cockpit voice recorder later, the controllers noticed the pilots at 23,000 feet beginning to slur their speech. The co-pilot was relatively inexperienced and the captain new to the company. When reaching 27,000 feet Stewart’s pilots could no longer communicate with controllers. Evidently, the cabin was never pressurized. There must have been a malfunction. Audible and visual warning systems exist that would tell the crew the cockpit wasn’t pressurizing. Either they never addressed those or they chose to ignore them. In any event, hypoxia took over, which is a lack of oxygen. Eventually everyone passed out. The aircraft climbed with the autopilot engaged and crashed in the Dakotas when it ran out of fuel.
How did September 11 affect your industry?
I first heard of it while driving to work. At first I thought it might be an accident. Then I walked into the pilot’s lounge area where the TV was on and saw staff members crying.
It was devastating to the industry. The air traffic control system was completely shut down for general aviation for three weeks. We had 75 people then on the payroll and no revenue source for more than three weeks. Not one plane took off from this airport.
Now our business is growing because some companies prefer sending their employees on safer charter or private flights versus commercial airlines. Then there’s the hassle associated with security and long lines at airports. Corporate aircraft sales are certainly increasing dramatically.
Fly The Friendly Skies
I use flying to get away from the hustle and bustle of business. I enjoy on a cloudy day going above the clouds to see sunshine. Traveling and going to new places is something I enjoy. Flying is something that gets in your blood and something most pilots can’t get away from.
I had an opportunity one night to watch the sun set twice. We departed a particular airport as the sun was setting and as we climbed higher the sun came back up and we watched it set again. The sunrise can be just as beautiful. —Mark Smith
© 2005 Connect Business Magazine. All Rights Reserved.