Eye-popping growth—in airlines?

Chief Executive, The, June, 2005 by Sheridan Prasso

HOW DO YOU MAKE money in an industry that's in deep trouble? Look at the case of a small Atlanta-based company launched in the post-9/11 era. Frank Argenbright saw that America's troubled airline industry would need to outsource services to cut costs and stay in operation. So after 20 years in the airline security biz, he set up Air Serv in May 2002 to de-ice planes, handle cargo, check tickets, drive carts and provide wheelchairs for major airlines.

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He must be doing things right. Since then, the company now headed by CEO Jim Childs (Argenbright remains chairman) has grown from revenue of $7.2 million and 726 employees in 2002, to $94.6 million in revenue and 3,900 employees in 2004. It hired more than 1,000 new employees this year. Growth has been organic, without acquisitions, although Air Serv is looking to do that next. In April, it was honored as the fastest-growing small company in Atlanta. "Airlines are looking at everything, and some functions that they thought were core to what they do really aren't," says Childs. "Nothing is sacred now at the airlines."

Air Serv has service contracts with not only all the major U.S. airlines, but with FedEx, British Airways and others--a total of 25. After expanding into England, Air Serv now has plans to move into Germany and France. Last year, Air Serv added large-scale cabin-cleaning and baggage-handling, in some cases sparking tension with airline unions. "There's an inherent conflict there at times," admits Childs, "but we don't always displace union people. Many of these functions are already outsourced."

In fact, he says, companies like Air Serv are the ones investing in technology and processes, allowing airlines to take advantage of innovations they could not develop by keeping services in-house. Childs notes that Air Serv's corporate culture is "very close to religious" in its concentration on customer service and employee loyalty; in fact, Argenbright has sent personal Christmas cards to every single employee for the past three years. Last year, he started writing in September. Clearly a first-class move.