GETTING ARROW BACK ON TARGET

GETTING ARROW BACK ON TARGET

George Batchelor, 74, is one of America's leading aviation entrepreneurs. He is president of International Air Leases, a Miami aircraft-leasing company, and recently turned over the presidency of cargo carrier Arrow Air to his son Jon. He is the principal owner of both companies.

At IAL, Mr. Batchelor developed the business of leasing used aircraft. He has been particularly adept at cornering the market on such out-of-favor planes as the DC-7, DC-8, the CL-44 and the C-130.He founded Arrow Air in 1947 and has built it into one of Miami's leading cargo carriers - despite having to rebuild it three times.

In 1953, Mr. Batchelor shut down Arrow, then a passenger carrier, because - like dozens of other carriers that started up after the war - it was continually embroiled in conflicts with the Civil Aeronautics Board.

Restarted in 1964, Arrow had to file for bankruptcy protection after the Dec. 12, 1985, crash of an Arrow DC-8 military charter in Gander, Newfoundland. The crash killed 248 American servicemen returning home for Christmas.

In the aftermath of the crash, passengers stayed away, and the Federal Aviation Administration temporarily grounded 10 Arrow DC-8 jets for maintenance violations. When Arrow emerged from bankruptcy, it gave up its passenger business and became an all-cargo airline.

In March, the FAA again shut down Arrow for maintenance violations. The carrier resumed flying on June 1, and has been gradually building its business since. The shutdown cost Mr. Batchelor an estimated $30 million in lost revenue.

Mr. Batchelor discussed these and other issues in a telephone interview with Ted Reed, a special correspondent in Miami for AirCommerce.

Q:How did you get into the airline business?

A:I always wanted to be a pilot. I started flying in Shawnee, Okla., in 1937 in a Curtiss pusher, a single-engine plane that looks like a glider with an engine on top of the wing and the propeller behind the wing. The propeller pushes instead of pulling.

Then I went out to California. I was a sheet metal mechanic for North American Aviation, and I got civilian pilot training through a government program. I started instructing for the military in 1942, and later I went to Europe as a pilot, delivering and picking up different airplanes.

Q:When did you start Arrow Air?

A:After the war, I went back to California, to the Lomita Flight strip (now Compton Airport). I went off to Honolulu and bought some DC-3s. One of them I flew back myself - it was 18 hours and 35 minutes. I didn't have the money for a co-pilot or a navigator, and I thought it would never end. It wasn't very smart.

I started Arrow with one of the DC-3s. It was a passenger carrier then. I carried minor-league hockey teams around the West Coast. But the CAB (Civilian Aeronautics Board) and I disagreed on what Arrow should be doing. They kept changing the rules, and we kept trying to evade the rules. So we quit flying and started leasing planes and maintaining planes.

In 1964 we moved to Miami, and after that we started Arrow again, and we started flying passengers and cargo. We did cargo because we had some people who had been in the cargo business.

We started flying to the Caribbean for Air France, and we gradually built up that business.

Q:How has the cargo business in Miami changed?

A:It has become very crowded and very competitive. The number of passenger flights into Latin America has grown, and that means there's a lot of cargo space in the bellies. So you have to get enough cargo on the trip down to pay for the trip down and half the trip back. So it's not a good place to make money.

But right now, the business is still in its infancy. It will keep generating more and more traffic because the cargo rates are getting down close to what it costs to ship by boat. Also, the U.S. package carriers are growing by 25 percent a year, and they require more and more of our aircraft.

Q:We're closing in on the 10th anniversary of the Gander crash. Some people blame Arrow for that crash. What happened?

A:It was a terrible tragedy. I knew almost every crewmember. There were 10 of them. The captain was a friend, one of the flight attendants was the daughter of our attorney. And the 101st Airborne was legendary. They were all young guys, and their parents, wives and children are still missing them.

I know the crash was not because of the way the plane was maintained. The top investigators in Canada, the Canadian Aviation Safety Board, came to the conclusion that they could find nothing that we did wrong or that we didn't do right. They did criticize the fact that we didn't have a better flight recorder that gave more readout, but those weren't available to us.

I don't believe, either, that there was icing, although one part of the board felt there was. There was testimony that crewmembers checked the wings and felt them. So we think it was an explosion or fire of unknown origin.

Q:Why did the FAA shut Arrow down?

A:The reason they gave me was that we had an airplane leased to Dominicana, and the airplane went over to the Dominican Republic and was placed under a Dominican certificate of airworthiness. Dominicana returned it to us in Miami, canceled the registry and airworthiness certificate.

So the management here - and I would have done the same thing but I was in the hospital - decided to scrap the plane out, which we have done many times. But the FAA took the position that it was illegal to use the parts because the aircraft had been on foreign registry and we didn't do a conformity check to

put it back onto U.S. airworthiness. Their position was that since it didn't have airworthiness, every part was unairworthy.

Q:How is the rebuilding of Arrow going?

A:We will build it back, but don't ask how long it's going to take. We got knocked down and we have to get up. Arrow is operating only about half of the 18 airplanes we had. Getting customers back once you've lost them is hard. But I think by the end of the year, we'll be close to 100 percent. We will recover old business or develop new business so that our volume will be the same.

One thing we're doing is modifying some L-1011s into cargo planes. We're going to use three of them.

Q: What did you learn from the Arrow shutdown?

A:There's an old saying: People don't do what you expect. They do what you inspect. So I will be doing a lot of inspecting.

SNAPSHOT

NAME: George Batchelor.

HOME: Miami Beach.

BORN: Dec. 20, 1920 in Shawnee, Okla.

EDUCATION: Graduated Shawnee High School. Attended Compton Junior College and Reedley Junior College, both in California.

FAVORITE BOOK: "The Egyptian," by Michael Waltari.

FAVORITE MOVIE: "Gone With the Wind" (10 times).

HOBBIES: Boating; auto racing.

HOPES TO BE REMEMBERED . . . : As someone who did a little bit of good.

FAVORITE POLITICIAN: John F. Kennedy.

HERO: Charles Lindbergh.

PET PEEVE: Government bureaucracy.

PROUDEST ACHIEVEMENT: Principal contributor to Batchelor Children's Center, a research and diagnostic institute at Jackson Memorial Hospital in Miami that will open in 1997.