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The business air charter market is expanding and this method of travel is no longer regarded as just for millionaires and FTSE 100 firms. This rising demand has been driven by a number of factors, including congested air space in Europe, the globalisation of business requiring increased travel for time poor senior executives, and the economic factors - it can cost the same or less to fly three-plus passengers by chartered aircraft than by scheduled business or first class. Private air services can also offer high levels of in flight privacy, and address the safety and security concerns that were heightened by 9/11.
The time factor is a major concern for business, as illustrated by new research released in July 2005. Scandinavian Airlines System (SAS) revealed that UK businesses are losing valuable hours and revenue due to employees being out of touch while travelling on business.
According to the survey, more than 31 million hours were lost by business travellers being inaccessible while flying. Robert Dranitzke, the business development director of NetJets, explained that productivity is the main driver for anyone considering a private air service. “The private jet is an extension of a business - if you and I are in competition and you have access to that tool and I do not, you can easily visit three European cities in one day, while I need three people to do that. Of course it is a lot more expensive than traditional commercial air travel, and like any other business decision there should be a cost benefit analysis, but when you look at the productivity gains that private aviation offers, there is a compelling argument.” Robert identified a number of benefits that flying privately brings.
“Passengers are able to leave from the airport they want, and set their own schedule. They have the ability to work while on-board, and can fly directly to the destination required, plus check-in and security are far less time consuming.”
Jamie Martin, co-founder and director of corporate development at aircraft charter company Hunt and Palmer, agreed that the majority of their business is made up of teams of executives who need the flexibility to control their own air schedule. “The time of these high level people is extraordinarily expensive,” he said. “And private air travel can mean achieving targets in one day instead of two.
“There has been an increase in leisure/business activity too,” he continued. Hunt and Palmer call this the quasi-leisure business market, where people may be going on holiday but will do business while away. Using executive jets makes the whole process of travel more relaxing and there is much more of that kind of traffic going on at the moment in the leisure market.” Patrick Margetson-Rushmore, CEO of LEA noted that the opening of the Eastern Bloc has really highlighted the benefits of private aviation, and LEA is seeing increased demand for these destinations. “You can save a material amount of time by knocking off the extras involved with commercial flying plus you can really reduce the time it takes to get to your final destination at the other end.
“One example is a client that we took to Bulgaria. It was a company looking to restructure its debt and the advisors managed to get three different banks to go over and visit a factory and come back. To perform this trip via scheduled routing would have required flying into Frankfurt, spending the night and then flying into Bulgaria, and then travelling six hours by car to get to the factory, look at it and then repeat the journey in reverse. Doing it privately involved a long day, but nevertheless, the entire visit was completed in less than 24 hours.
“On board the jet the bank representatives had the full attention of the owner looking to restructure, they could discuss the issues on the way there and back and with a party of 12 people, the cost was around £28,000. This was cost effective from a business point of view because they managed to do something that they wouldn’t have been able to do otherwise. From our perspective that is the key reason why executives fly in a private jet.” Executive aviation is also becoming more attractive to smaller businesses, and Robert explained that NetJets’ clients range from industries all across the board. “Typically we see industries that are doing well,” he explained, “but we have any and all industries flying with us, from major multinational companies to smaller middle sized companies.” Jamie Martin added: “It used to be the preserve of the very rich or the larger companies but there has been a change for a number of reasons. One is the entry into the market of fractional ownership, which has undoubtedly opened up the market to a sector of the business community who wouldn’t have normally thought in these terms.” Patrick pointed out there are of course very wealthy people that fly and continue to fly, “but actually it is about getting business done quickly and efficiently, not necessarily just the chairman or CEO, but also middle management who are finding value in leaving their desk in the morning, going to Zurich and being back by 2pm. If they are going to a key destination and time isn’t an issue, then an EasyJet or Ryanair will be fine, but cost wise for business people, especially in a group, the private option can work.” When it comes to the cost of private aviation, Jamie believes that many clients buy flights as a commodity. “It operates in the same way as people buying any other business service, so customers will make a decision based on price, so we can lose a $50,000 executive aircraft charter because of a $200 difference.” But Robert at NetJets thinks this method is misguided. “To treat this as a commodity, you have to believe that a plane is a plane and a pilot is a pilot, pilot training is pilot training and all the other services are more or less equal, and price is the only differentiator. That is just not the case - a new aircraft is different from an old aircraft, and a pilot with 3000 hours of flight experience and bi-annual simulator training is different from a pilot with 300 hours experience and no annual simulator training.
“There are different options out there and people should look at them because the more people look into this industry the happier we are - just as long as people understand there are substantial differences.”
But private aviation isn’t all about jets. If you have a smaller distance to fly but still want door-to-door convenience, then perhaps a helicopter is the answer. Robin Taylor Hunt, head of charter and management, PremiAir, explained that the company recently undertook some research to assess the feelings of business leaders towards helicopter travel. Although 44 per cent of UK business leaders felt positive about the idea of travelling to and from UK business meetings in a chartered helicopter, Robin feels that there is still not a high degree of recognition of this form of travel in the UK, compared to the US.
The finding Robin felt most significant indicated that 60 per cent of leaders said they would spend more time visiting key contacts if they could find a more time efficient way of travelling, yet don’t consider the helicopter in their plans. “I say why travel three hours on the road when you can do it in an hour in the sky,” he said. “A helicopter provides point-to-point travel and you can organise two or three meetings at two or three sites that are hours apart by car but can take minutes by helicopter. If you use the helicopter time wisely and take a group of people, it starts becoming economically realistic.” The main benefit of the helicopter is its point-to-point capability. Robin commented: “We think that helicopters are the new Concorde - they save considerable time, but also enable travel in luxury, so it makes good business sense from our point of view. Of course if you organise a helicopter to liaise with your existing business jet arrangements, the time savings can be even more significant.”
NetJets
l NetJets Europe is the leader in European business aviation. It is the only pan-European business jet operator and it runs four times the number of aircraft as the next largest business jet operator. NetJets flies the largest and most varied fleet of executive aircraft in the skies. It comprises more than 600 light, midsize and large cabin aircraft, of which 84 are based exclusively in Europe including
18 Citation Bravos, 8 Hawker 400XPs,
19 Citation Excels, 19 Hawker 800XPs,
13 Falcon 2000, Falcon 2000EX and Falcon 900 aircraft and 3 Gulfstream V/550 aircraft. NetJets currently undertakes an average of over 120 flights a day to over one thousand approved airports in Europe alone.
www.netjetseurope.com
LEA
London Executive Aviation is the UK’s largest executive aircraft charter operator, with a fleet of 15 aircraft. It operates the UK’s largest fleet of Citation Excels, Europe’s top new mid size corporate jet. On average, LEA makes 300 flights per month between the UK and locations throughout continental Europe, flying more than one million miles per year. From London, LEA’s non-stop range extends as far as Dubai.
www.flylea.com
Hunt and Palmer
Hunt & Palmer International is one of the largest aviation charter brokers in the world, offering personalised schedules for heads of state, executive travellers particularly the banking community, governments and celebrities. Hunt & Palmer International has access to the complete range of aircraft including modern wide-bodied, luxury jets from the Falcon, Challenger and Gulfstream series, all with intercontinental capability and customised seating for up to 16 passengers.
www.huntpalmer.com
PremiAir
PremiAir offers the largest and most comprehensive business helicopter charter service in the UK. With over 140 employees it operates from South-East bases at Denham near Uxbridge and Blackbushe near Camberley. PremiAir’s charter fleet includes a mix of Sikorsky S76, Agusta 109, Bell 222 and Eurocopter Twin Squirrel aircraft.
www.premiair-aviation.com
Options
Fractional ownership:
Fractional ownership is where an individual decides they want to own part of an aircraft, so they pay the fractional equivalent of the whole aircraft purchase price. NetJets pioneered this approach. Although customers own their shares, NetJets manages and operates the aircraft including providing total flight crew management, trip scheduling, ground support and all maintenance, for a management fee. The client also pays a fee for occupied flying time. Through this method NetJets offers guaranteed availability of a plane anywhere in Europe or the US with only a few hours notice and the company does not charge positioning fees or daily minimums. LEA also offers this service.
Chartering:
Chartering involves no upfront financial commitment as the client pays by the trip. Flights can be organised via a broker, such as Hunt and Palmer, or directly with the executive aviation company, such as London Executive Aviation.
Leasing:
NetJets offers several leasing options, depending on the needs of a client, and also offers acquisition services where a client can buy a fraction of a jet as an undivided asset.
Card services:
NetJets also offers the Private Jet Card and the Corporate Card. These are pre-paid cards for flight time, offering the same guaranteed availability, which has been paid for up front. The client only pays when they use the aircraft in this system.
Block hours:
As an alternative to paying per journey, London Executive Aviation enables customers to purchase blocks of flying hours in advance, thereby offering cost savings to regular travellers.
VTR
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