Well-established cargo carrier Evergreen International Airlines isn’t resting on its laurels—it’s using corporate introspection to improve efficiencies for the future, David Hendricks learns.
Evergreen International Airlines, located in McMinnville, Oregon, just outside Portland, was founded in the 1920s as Johnson Flying Service, and today it holds the oldest air operations certificate in the US and has a fleet of ten Boeing 747 cargo freighters. Evergreen’s largest client is the Department of Defense, comprising about 40 percent of the company’s revenue, “carrying everything from beans and bullets to military vehicles and equipment, whatever the Air Mobility Command requires,” says Jim Dineen, Evergreen’s vice president of special operations. “We’ve been with the Civil Reserve Air Fleet program since its inception in 1952, which for us is an on-call commitment, and we’re proud of our participation there.”
The remainder of the company’s business is civilian or commercial freight forwarding, mainly for consolidators, and mainly carrying between Asian markets and the US. It also receives calls from individuals wanting to move anything from racehorses to expensive cars or yachts.
Technically, Dineen points out, Evergreen is a Part 121 supplemental air carrier, which is a specific category of charter, and carries all cargo. “We’re not doing any passenger service as we have in the past. But we’re the only full-spectrum aviation company—we have a ground handling company, a heavy maintenance modification center, airline maintenance, a helicopter company and a 3PL support company, so we’re agile. If you need something done with an aircraft, from developing it to employing it and supporting it, we can do that. We have some licenses that other aviation companies don’t have. We’ve had some interesting programs, with Boeing, for example, on the large cargo freighter, as well as our own, internal 747 Supertanker fire fighter that we built and certified.”
Most of Evergreen’s commercial business is moving freight out of Asian markets to the US, and recently there has been a decent increase in the “back-haul” business out of the US to Asia. Evergreen is increasing its presence in Chicago and New York with freight going to Shanghai and Hong Kong, and also maintains a presence with Nagoya, Japan.
Currently Evergreen is expanding its fleet to about 15 aircraft by retiring its older freighters and adding new, more efficient planes. “The problem with an airline meeting its requirements is that a 747 and its related peripherals is an enormous investment, so you have to know which way the market is going,” Dineen explains. “Just adding an additional crew requires a four-month lead time. So to add six full crews, which means 12 to 18 pilots, you need to get them through the pipeline. You have to level out the peaks and balance the opportunities that you may be leaving on the table with the fact that the peaks will go away and you’ll be left with some very expensive capital assets and payroll to meet.”
Another major challenge is planning for the future. “A company that has been around as long as we have tends to become not exactly complacent, but we think we’re doing well where we are. What I’m pushing for right now is a lot more corporate introspection: what we’re doing and how we work together. Many of us have been here for upward of 30 years, so we bleed green. We’re dedicated, cross-functional people, kind of a lean, family-like company.” Dineen notes that they always meet whatever challenges they face, but he wonders whether they’re getting the best out of their talent and motivation—are they using it as efficiently as they can?
“Business environment analysis has to be continuous,” Dineen says, “and we need to look at a two-to-five-year range when we look at capital assets, as to which way the market’s going, where we want to penetrate and what kind of contracts we can pursue. We need to look at our strategic planning, then take it back in an introspective way to look at our near term, what I call tactical planning and structure. I should be able to go to anybody in the company and ask what that person thinks this airline will look like in two years, in five years. If I can’t get an answer, then I’m not doing my job as a leader. Everybody in the company needs to be able to say where we’re going, what we’ll look like, what size we’ll be and what kind of work we’ll be doing.
“For example, I’m currently doing airline planning,” he continues. “We’re an ad hoc charter carrier, classified by the Federal Aviation Administration as a specific type of carrier, not a flag carrier or a scheduled carrier. People tend to look at that and say that’s what we are, it’s the business we’re in. Basically, it’s accepting a business model or label that’s then applied to us externally. But it’s not necessarily so. How much of what we do is actually known? Surprisingly, in a somewhat volatile market with downhill trending in our Department of Defense work and uphill in our Asian business, it turns out that more than 80 percent of what we do is known a good 90 days ahead—actual days of flights and the cargo.
“So despite what label we may have,” adds Dineen, “if the actual environment is 90 days out, then are we using the tools and procedures and the structure to operate the way we actually are, not the way we’re labeled? To that end we’re evaluating some longer-range planning software, and we’ve joined with JetBlue; they’re helping us with benchmarking and how to use the tools. It’s different for us, and it’s working well.”
Dineen summarizes, “In this business we tend to look at profit and loss, payroll and revenue, and it’s easy to get stuck in data points. My job is linking more of our goals and the trends back to the data. My advice to anyone in a volatile business is: make sure you’re capable of expressing the more theoretical, long-term strategic views of what you want to do and where you want to be, and bring that back through the data while keeping your eyes on the trends. Make sure everybody’s involved in knowing how they’ll support it. And keep everyone enthusiastic.” www.evergreenaviation.com
