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Peninsula Airways Inc.: 1988 revenue: $14.1 million; employees: 135; rank: 47.

AN ALASKAN WITH MORE THAN 30 years experience and 30,000 flying hours under his safety belt, Orin Seybert has built Penninsula Airways Inc. with care and devotion. Cautiously steering his passenger airline through turbulent growth cycles, Seybert has nurtured his company from a single-plane Bush taxi service to a major Alaskan commuter service with a fleet of 34 airplanes.

Using $650 earned from commercial fishing, 16-year-old Seybert bought his first private plane to "gadabout" the wilderness. But due to the remoteness of his village, Pilot Point, he soon was flying medical emergency patients to Dillingham. An area doctor encouraged the teenager to get his commercial license so he could contract with hospitals to fly in emergency medivac cases.

By age 18, Seybert had obtained his commercial license. Within a year, he purchased a Piper Tri-Pacer 4-seater, launching one of Alaska's most successful airlines.

"I guess I'm just a kid that started flying for fun and has been having fun flying ever since," says 53-year-old Seybert. "I've been doing the same thing all my life. It's all I know. I've always been my own boss - never had to work a job my whole life."

Now celebrating his 40th year in Alaska, Seybert says Alaska has been good to him and to his business. He credits his success to a reputation for safety. "One reason we're successful and people will inconvenience themselves to take our flights is that we give them secure service," he says. According to Seybert, he has at times charged between 20 and 30 percent more fare than his competitors.

Seybert's reputation for safety has brought him full circle to the birth of his company. Earlier this year, Peninsula was awarded a three-year contract as the medivac carrier for Humana Hospital-Alaska. "We've been very busy on that alone this year," says Seybert. "I've got this long history of working for fish companies in the capacity of medivacing their workers and just plain supporting them in general."

The pilot and businessman recognized that Bush industries, particularly fishing, had a need for secure, reliable transportation. With that in mind, he developed a work-ethic philosophy that has allowed success to unfold beneath his wings. Seybert's philosophy: Put out emphasis. Service is becoming more important, particularly in terms of product selection and free delivery."

Another shift in the industry, Ballow says, is more sophisticated tools demanded by business. Among the new technologies: fax, electronic communications, memory typewriters and faster copiers.

The business also has changed due to an increase in the number of small businesses, and The Office Place is serving a growing number of home offices. "There has been slower growth in general office supply business and a corresponding increase in home office service and supply," Ballow notes.

One reason for the company's success: The Office Place is sensitive to the most basic of business needs machines that work, It employs 35 business machine technicians statewide, 24 of them in Anchorage. Ballow boasts that the company stocks more than 32,000 parts. "Service is important in Alaska, and The Office Place understands that a broken machine keeps a business from being as profitable as it could be each hour the machine is down," he says.

Training is another priority at the office supply firm. According to Ballow, 45 employees went to Outside training courses in the company's first year. The Office Place also sponsored an Anchorage training seminar that focused on sales skills in the office supply industry.

Not content to wait for business to come to its doors, The Office Place publishes its own catalog. This year's catalog offers more than 6,000 products. According to Muriel Taylor, vice president of finance for the firm, the volume of combined local and Bush mail deliveries from Anchorage positions The Office Place among the top 10 postal customers in Anchorage.

In its contract furniture division, the company installed a computer-assisted design (CAD) program. The only program of its kind in the state operated by an office supply firm, it assists businesses in choosing and placing furniture. The computer software helps customers select office furniture that fills both size and quantity requirements. Using office floor plans, immovable features such as electrical outlets and doors can be accommodated. Because customers can move the furniture around and simulate layout, they won't go home with a desk two inches bigger than the room.

Says Ballow, "Our salespeople like CAD because it can make changes easily if the customer changes his mind; the customer likes it because he gets exactly what he wants. That's the way we like doing business: providing a service that helps businesses stay in business." an honest effort and customers will stay loyal.

He doesn't mind referring business to competing airlines if it is in a customer's best interest. "We will meet their needs whether it creates revenue for Peninsula Airways or not," he adds. "We do this without reservation because next time they'll check with us again first."

Beginning with chartered flights out of Dillingham and Pilot Point in 1958, the airline later added service to King Salmon. Peninsula moved its primary base of operations there in 1965 and merged with Tibbetts Flying Service of Naknek in 1969.

In the mid-1970s, Peninsula began providing subcontract transportation for Reeve Aleutian Airways in the Cold Bay area. In 1985, Peninsula expanded to Kodiak, acquiring Air Transport Services, an air taxi operator, and filling voids left by the disappearance of other carriers. Seybert's airline gained the majority of business to the city's outlying communities.

Peninsula also began operating a small terminal in Anchorage in 1985. Seybert says Peninsula did not begin to grow dynamically until he "revolutionized" the company by expanding its Anchorage base, building up the company's fleet and computerizing operations to directly compete with larger Alaskan airlines. His goal was to evolve from a primarily commuter airline serving smaller communities from Bush hubs to a carrier capable of flying from Anchorage to those hubs, as well as beyond.

Scheduled direct flights from Anchorage to King Salmon and Dillingham were added in the first half of 1986. Investment in new aircraft and equipment as well as the cost of hiring additional crews, ticket agents and pilots, tied up the company's cash flow and left it plodding in red ink.

"We had it rough for two years, with big losses in 1986 and 1987," says Seybert. "We had a big loss of over a half million dollars." But revenues began to rise as Peninsula Airways became an alternative to MarkAir, he notes.

In 1988, Peninsula expanded to include scheduled service to more communities outside Dillingham and to Dutch Harbor. The Dutch Harbor route, particularly, helped to boost revenues by more than 30 percent over 1987. Seybert reports gross revenues of $14 million in 1988 and a profit of $413,258. He anticipates slow growth this year, maybe $1 million to $1.5 million.

The company president believes the variety of Peninsula's fleet - 18-passenger Fairchild Metro-Liners, 5-passenger Piper Cherokees, and 9-passenger Cessna Conquests, Piper Navajos and amphibian Grumman Goose airplanes - gave Peninsula an edge in the competitive aviation market. Filling smaller planes destined for remote sites was far easier than filling 112 seats on MarkAir's 737s, Seybert points out.

MarkAir began operating smaller airplanes on the same routes and, according to Seybert, offered to buy his business as the competition grew stiffer. Earlier this year, the larger carrier slashed its air fares by 50-70 percent on the routes.

Seybert says he had no choice but to match the fares, adding, "My own mother wouldn't ride on my airline if she could save 100 bucks elsewhere." Peninsula's early 1989 revenues dipped as a result.

Although he says he wants to give his company time to become more liquid before pursuing further expansion, Seybert says he won't pass up a good opportunity to buy out a competitor or add services to a new destination if demand increases. "Our goals now are to pay off long-term debts," adds Seybert.

Even with more than 150 employees, Seybert takes pride in Peninsula's ability to retain the comfortable atmosphere of a small company, noting his very first "hired hand," Gust Griechen Jr., is still on the payroll. Griechen, who joined the business in 1958, still pilots for the airline. "We've tried to create a family atmosphere with long-term employee relationships," adds Seybert.

The majority of his company's growth has come within the past three years. "We've managed to double our revenues, employees and sales," he says. "In equipment, we've grown about 33 percent in that period of time, but the value of the planes are worth more than double what we paid for them, so we're doing better than we anticipated."

Annually, the company's pilots rack up more than 30,000 combined flying hours. Five years ago, Peninsula was averaging only 20,000 flight hours per year.

While Alaska's economy lagged due to the drop in oil revenues, the aviation industry in Southwest blossomed due to increases in the area's tourism and fishing industries. Seybert says the fishing industry, which he calls the backbone of his airline, has prospered and thrived particularly along routes from King Salmon to Bristol Bay and Kodiak to Dutch Harbor. "A better future for the fishing industry means more workers needing transportation," says Seybert.

Seybert's family helps run the business. His wife, Jennie, serves as secretary/treasurer and is one of the company's three directors. Four of his eight children are pilots: Two, sons Daniel and Lloyd, fly for Peninsula. A third son, Victor, plans to begin piloting for the company later this year.

Although Seybert, who flies almost daily for the company, says his wife will always come first, he admits he's "married" to his business. He says, "I have a single purpose in life and it's this airline."

Peninsula is one of many Alaska companies cashing in on the March 1989 Exxon Valdez oil spill. Three company airplanes have flown under contract to Exxon, transporting corporate executives and clean-up workers to and from Anchorage.

"I hate to admit it, but this oil spill is going to be the best thing, financially, to hit this state since the pipeline," says Seybert. "Our contracts are going to provide a substantial shot-in-the-arm to our company revenues." He estimates work for Exxon will make up 5-8 percent of Peninsula's total revenues this year.

A former president of the Air Carrier's Association in 1979 and 1980, Seybert says competition has probably been the key to his success. Always looking for a way to win has sharpened his natural instinct for improving on an existing situation.

"While we never actually made future plans, we always kept our eyes open for opportunities," says Seybert. "Its our motivation to provide the best service to the customer. When a need has arisen, I've had the capability to rearrange my priorities and schedules to fit the customers' needs." He adds, "So those other carriers better be sure they have all their bases covered."
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Title Annotation:The New Forty-Niners
Author:Evangelista, Catherine
Publication:Alaska Business Monthly
Article Type:company profile
Date:Oct 1, 1989
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