Aurora Rising

On June 20, the Morningstar group officially opened a brand new hangar and headquarters at Edmonton International Airport. Canadian Skies contributing editor Graham Chandler visited the company before the launch as it prepared to usher in a new era, and a new name, in grand fashion.

It’s balmy and breezy at the Edmonton International Airport, and Jeff Kufeldt is driving me to Morningstar Air Express/Aurora Jet Partners’ new hangar and headquarters adjacent to Runway 12-30. Kufeldt, director of sales and marketing, is going to show me around the new facility, where we’ll meet with president Bill McGoey to discuss how the last 40 years’ evolution has led to where they are today, and where they’re looking to go tomorrow.

With three weeks left before the scheduled opening, workers are buzzing around in the fine construction dust; painting, routing electrical wires, moving office chairs and making sure everything will be ready. Corporate signs aren’t up yet; but when they are, there will be two: Morningstar Air Express and Aurora Jet Partners, reflecting the two major operating arms of the Morningstar group.

“The Aurora Jet Partners’ side deals primarily with fractional jet ownership, aircraft management and aircraft purchase,” explained Kufeldt. “The Morningstar Air Express side operates the fleet of cargo aircraft for FedEx Canada.” About the change, he said: “Morningstar Partners technically operates as Aurora Jet Partners now, resulting from a recent merger with Opus Aviation in Vancouver [a Ledcor company] which now creates a different ownership structure than Air Express.”

That rebranding is the latest for an aviation group with a history of success and family involvement going back four decades.

Taking off with FedEx

We find a finished boardroom and McGoey joins us. “The foundation of the company is really from 1971,” he said. “It started out as Brooker Wheaton Aviation, which was a partnership between Don Wheaton Ltd. [who had a string of Chev-Olds dealerships] and Dr. Bev Brooker. They set it up as a small charter and freight service to the oil patch.” The partners started out with twin piston airplanes, but by 1980 they were using Learjets and Citations. In the early ’80s, Wheaton became sole owner; the business grew to include more than a dozen jets, a Cessna dealership and an FBO at the Edmonton Municipal Airport.

“By the mid-‘80s they had acquired various courier contracts, including FedEx, and in 1989 obtained the first Boeing contract across Canada [two 727s],” said McGoey. “We flew from coast to coast.” Around this time, Wardair changed hands, and, Wheaton Sr. being best of friends with Max Ward, the Ward family bought 50 per cent of Brooker Wheaton. The company was renamed Morningstar Air Express. It was a good alliance, reckoned McGoey. “We moved into the larger jets and gained many of the Wardair practices, manuals and staff.” That partnership endures to this day.

It was the beginning of a solid relationship between Morningstar Air Express and FedEx Canada. “When the Boeing contract came along, we slowly divested ourselves of the Metroliners and the old twin turboprops, and became fully FedEx-focused,” said McGoey. Between 1990 and 2000, Morningstar expanded into many major Canadian cities, where it still maintains facilities, mechanics and pilots: Halifax, Moncton, Montreal, Toronto, Winnipeg, Edmonton, Calgary and Vancouver. “We also lease 34,000 square feet in Calgary for our main 757 maintenance base,” said McGoey. The company plans for more 757s to supplement the existing five, as well as their seven Caravans and an ATR-42. An ATR-72 is coming this year – all of these in FedEx livery and devoted exclusively to the courier company.

“We are a contractor to FedEx so our airplanes are 100 per cent committed to them,” said McGoey. “They are an excellent customer. They compensate us on a per aircraft basis to manage all aspects of the airline in Canada.” FedEx does the loading and unloading and ground delivery, and Morningstar Air Express does everything else, including weight and balance, maintenance, flight operations, logistics and the provision of more than 60 pilots. “We are the airline for them in Canada,” explained McGoey.

The network is wholly intra-Canada. “One route has an airplane in Halifax that runs all the way across the country to Vancouver; and one in Vancouver that runs all the way through to Halifax,” said McGoey. “They crisscross in the night, stopping at every major city along the way.” Schedules are also timed to meet the international connections; but Morningstar does not fly into the U.S.

Morningstar Air Express’ contracts with FedEx have generally been three to five years in duration; but, as the relationship solidifies, contract terms have lengthened. “The last contract we did was a 10-year deal,” said McGoey. “We anticipate a long continued business with FedEx; as they expand, hopefully, so do we.” Should expansion plans include flights out of Canada, Morningstar is already licensed for non-scheduled international operations.

Fractional Approach

It was the FedEx success that led indirectly to the fractional jet ownership idea. Don Wheaton and Kim Ward, Max’s son, hatched an idea. Morningstar had always managed corporate jets, so why not use the infrastructure and sharing experience to create a for-profit model?

“When one owner takes a jet out and another brings it back, we devised a fair way to share these types of expenses,” said McGoey. “We said, ‘Why not get a jet pooling/sharing company going? We used some of the non-FedEx committed infrastructure from the airline, and ordered a couple of jets to sell some fractions.’” This incorporated into what became Morningstar Partners.

They studied the NetJets model in the U.S., and figured if NetJets operates 400 to 600 jets, then on a population ratio basis they should be able to get eight per cent of that number, or about 40 jets, running around Canada. They first bought two Hawker 900XPs and sold them in fractions of 100-hour pieces, then went on to buy a Challenger and sold that. But in 2008, the recession started and the phone stopped ringing.

“In 2008-9 jets were sale-proof,” said McGoey. “It was seen as a sign of excess rather than success.” But that had a silver lining. “We looked at it as an opportunity. If a company didn’t want to show their customers they were flying around in their own jets, they could explain ownership in a piece of a jet.” By late 2009, business picked up again, and continues to this day. “We figured by now we would be up to about 10 airplanes. We think our sweet spot would be about 20 in the next three to five years. The more airplanes you have, the more efficient the model,” said McGoey.

Last year, new shareholders entered the Morningstar Partners fractional business picture: Ledcor Group, which owned Opus Aviation; and previous to that, another private investor, each took a 25 per cent ownership in the company. At that time, Morningstar was rebranded to the Aurora Jet Partners’ name. It is still incorporated under Morningstar Partners, which holds the operating certificate, Transport Canada and FAA documentation. “But our trade name is Aurora Jet Partners for the purposes of branding and marketing, to differentiate and separate it from the cargo business,” explained Kufeldt.

Aurora is streamlining towards fractional ownership in just one or two airplane brands: currently Bombardier and Embraer, the latter with the recent introduction of the Phenom series of corporate jets. “We were the first in Canada with one, and it sold out before it even landed here,” said McGoey. “Less than one year later, we bought a second one and we’ve just ordered two more.” Currently they have two 100s – Embraer’s four-passenger model – and two 300s will soon arrive. The first of those is already sold. Owners can buy a one-fifth piece of a 100 with its 1,100-mile range for just $800,000.

Under Aurora’s fractional model, clients buy an undivided interest in a specific jet by serial number. “Then we have an agreement that you lease your interest back to us as the operating company, to be pooled in the fleet,” explained McGoey.

The company’s fractional model leverages the history of Morningstar Air Express – it was initially incubated by the airline. The two companies have the same president, the same accountants, and the same dispatchers; all of which provide synergies and a presence across Canada. “If one of our fractional jets happens to go down for maintenance in Toronto, we have people on the ground so it leverages our infrastructure further,” said McGoey. “When our jet lands in Vancouver, for example, we put it in our Aurora hangar that shares space with Morningstar.”

“It gives peace of mind to a potential buyer,” added Kufeldt. “When someone is considering investing near a million to several million dollars in an aircraft, they want to make sure they are investing with an operator who has decades of experience, and is financially strong enough to weather any economic downturn.”

Fractional owners tend to be high-net-worth individuals and multi-million dollar corporations, so marketing is done accordingly. Aurora’s June 20 grand opening was a joint marketing approach, which included high-end car distributors such as Bentley, Aston Martin and Mercedes – it’s an elite group.

Or, essentially, it’s a group of owners who pool their jets together. Once an owner buys in they can use their own jet – if it’s not available they get an identical one. If that’s not available, they get one of the larger jets; and if that’s not available, Aurora will charter one from their own pool – they keep some ownership to have some excess capacity to charter.

Payment is convenient and transparent: a set monthly fee which covers fixed costs like pilots, insurance, maintenance and hangar storage, and an hourly variable cost for the time the owner occupies the seat. “A big part of why we are calling it Aurora Jet Partners is we run it like a partnership with the owners,” said Kufeldt. “There’s no hidden agenda; everybody sees the costs at the end of each quarter.”

Kufeldt pointed out another feature clients like. “Once you buy a share in a jet in our fleet, you can request to trade up or down into a different-sized jet depending on the trip. So if you bought a share in the four-seat Phenom 100, that works for most of your missions throughout the year, on the occasion you needed to take 10 or 12 people on a longer trip, you could request a larger jet, like our Challenger 605.” To accommodate this, every aircraft in the fleet is assigned a trade factor relative to each other jet. And a bonus: fractional owners have the chance to fly on deadhead legs for a fee of just $100, regardless of jet size.

For those who own an entire jet, Aurora will manage it on a cost-plus basis. For those who don’t own a jet but want to, Aurora will sell them the jet and run it for them, too. Those owners would have the option of placing their airplane in the fractional fleet to be available when they don’t need it; Aurora pays them the revenue.

There’s More

The Morningstar group has a third piece – Airside Properties, which is a partner in this new office complex with four 20,000 square foot corporate jet hangars attached to it. McGoey points to a copse of trees to the north opposite the stylish new departure lounge, where three more 40,000-square-foot hangars are optioned in the next phase of development. “Phase Two will be for commercial jets,” he said. “Airlines expanding jet service here have no hangar availability right now, so we see them using maybe one or two bays, plus a big office complex or training centre.”

The fourth part of the company will be a branded FBO that is currently being finalized – a public fuel, maintenance and ground support facility. Pilots will be able to utilize the extensive facilities of the new complex, and a bright new departure lounge will be available for private jet passengers, too.

To round out the synergy, there’s one more piece of the group planning to locate at this site: an aircraft maintenance and servicing centre, where corporate jets can come in for anything from minor servicing to unscheduled maintenance.

In the longer run, McGoey envisages perhaps adding more to the business mix. “If we added a little passenger piece and a northern piece, we could put together a very interesting portfolio,” he said. But for now, growing the fractional fleet is the top priority.

Graham Chandler is a Calgary-based freelance writer with specialties in energy and aviation. His work appears regularly in several oil and gas publications as well as international magazines such as Saudi Aramco World and Air & Space/Smithsonian. Along with degrees in physics, business and archaeology, he is an engineering graduate of the US Naval Test Pilot School.