Private aviation is no longer the preserve of the mega-wealthy ? an increasing number of corporate clients is choosing to hire or buy aircraft as a viable alternative to using scheduled airlines. Colette Doyle weighs up the different options on offer
The phrase ?private jet? evokes an image of ?ber-luxury, VIP treatment and copious amounts of bubbly that is rather at odds with this current climate of austerity measures. However, that picture is far from accurate, according to business aviation operators, who point out that corporate use of jet charter is more about time-saving considerations than a glamorous lifestyle.
?The cost of a senior executive?s time away from the office will often be prohibitive. So if private jet travel is arranged in the most cost-conscious way, it can be a justifiable expense,? explains the CEO of PrivateFly, Adam Twidell.
Emma Wilkinson, Director of The Charter Company, says it depends on the circumstances. ?Using a 19-seat VIP Airbus to fly one board member to a meeting in Geneva may not be the most cost-effective choice. Using a small private jet to transport seven people to the same meeting, however, may be comparable to business class fares and will offer the maximum amount of flexibility should you need to make any changes to the itinerary.?
Glenn Hogben, Head of Charter at ACC Aviation, highlights the fact that private jets can provide a higher level of security than regular airlines, adding that ?being able to have maximum flexibility when conducting overseas business… can be vital in achieving the purpose of your trip.?
Clive Jackson, CEO and Founder of Victor, points out that private jets also offer more connectivity, ?meaning no lengthy delays at a connecting airport waiting for the next scheduled departure. The private jet can take executives straight to their destination ? it?s a door-to-door service.?
At Air Partner, Simon Wheatley, UK Director for Private Jets, makes a bold statement that will surely give PAs making company travel arrangements pause for thought. ?In today?s competitive environment, who can afford not to consider the benefits of private jet?? he asks. ?There is no other transport solution yet conceived that can match the private jet?s capacity to magnify the productivity and influence of your most precious asset: people. If you are to pay people good money for their time, the private jet can ensure that every minute of that time is used effectively. [Your executives] can plan their day around their work instead of planning their work around an airline?s routes and schedules.?
So what are the prevailing trends within the sector that canny PAs need to be aware of? ?People are looking for complete transparency ? a service the end user can trust entirely that guarantees peace of mind and saves them time,? according to Victor founder Jackson.
Transparency is a topic also picked up on by PrivateFly?s Twidell, who identifies the key themes in private aviation for 2013 as ?more efficiency, more transparency, more competition… [and] innovation?. He goes on to say: ?The industry is emerging from the recession and undergoing significant change ? becoming more efficient and catching up with other travel sectors in terms of its use of technology. Competition in the market is driving more cost-effectiveness too, so it?s all good news for the end user.?
Air Partner?s Wheatley, meanwhile, refers to research conducted by financial services firm JP Morgan that predicts an eight per cent growth in business jet delivery for this year. Wheatley sees this as being based on an increase in the number of corporate clients who opt for charter solutions ?as an alternative to less flexible private aviation options?. ACC Aviation?s Hogben pinpoints the fastest-growing area of the market as being ?long-distance travel, where corporations are investing in [developing] overseas markets?.
At The Charter Company, Wilkinson comments that the current state of the market should prove advantageous to end users as, with aircraft availability relatively high at present, it will enable them to ?obtain a larger selection of potential aircraft at competitive rates.?
The introduction of new aircraft to the market is also a positive factor, notes Wilkinson, elaborating that it ?ensures cabin interiors are fresh and new, airframe hours are low and cost-efficient engines mean charter rates can be more competitive.?
When it comes to choosing private aviation, one of the biggest decisions that PAs and other travel buyers are faced with is whether to opt for fractional ownership of a private jet or go down the chartering route. Opinion is divided as to the various merits of each option.
?When it was launched in the 1980s, fractional ownership was seen as a way of sharing the ownership perks of a jet ? including instant availability, ease of booking and consistent service ? without the drawbacks of directly managing the aircraft?s maintenance and crew. A sixteenth share would typically give you 50 hours of flying time a year,? explains PrivateFly?s Twidell.
More recently, there has been a sea change in how companies tend to view the concept. As Twidell points out: ?Fewer companies are happy to make the upfront commitment required by fractional ownership. In the current economic climate, the amount of flying time required could change, plus there is the negative impact on company cashflow to consider.?
Victor?s Jackson agrees: ?Times have changed and no one wants to pay in advance for a service they might not use ? if they don?t use it they will lose the money they?ve paid.? At Air Partner, Wheatley concurs: ?There is an underlying move away from fractional ownership programmes, as people continue to be disillusioned with the lack of flexibility and onerous fixed-term contracts. If you join a fractional programme you are buying part of that jet; if the market falls, therefore, so does the value of the asset. The question educated buyers are asking themselves is this: if I want access to a private jet, a depreciating asset in this market, why should I buy it when I can rent it??
The Charter Company?s Wilkinson suggests, however, that it is contingent on the needs of the individual client ? for instance there may be tax benefits in purchasing an aircraft in this fashion based on the company?s financial profile.
?Whether this option is more cost-effective than ad hoc charter rates will depend entirely on the type of trips you undertake,? she says. ?For example, should a client require a high number of one-way trips, a fractional ownership programme may be more cost effective as you only get charged for the ?live legs? that you fly.?
She proffers a possible solution. ?Some clients may benefit financially from owning both a fractional share and using a good broker to source cheaper [charter] rates for certain trips to give them the best of both worlds.?
But if your company executives are constantly flying all over the world, might it be time to splurge and invest in buying a company jet outright? PrivateFly?s Twidell says it?s really only a practical option for very high frequency users. ?The hassles and costs involved make this a less popular choice, even with larger corporates. The annual fixed costs of owning a private jet make it a prohibitive choice for most businesses. And, much like a used car, private jets are also subject to ferocious depreciation, so they are not considered a financial asset.?
At Air Partner Wheatley, too, believes the trend is towards chartering, explaining that ?large corporations that previously purchased a whole aircraft are buying blocks of jet time instead, to limit their exposure to future market dynamics and ensure a better return on investment.?
?With the chartering option you are leasing the specific aircraft relevant to the trip, whereas if you buy an aircraft it may only be suitable for some of the flights you take,? notes ACC Aviation?s Hogben.
The Charter Company?s Wilkinson sounds a note of dissent, noting that buying a plane could be a viable choice for some. ?At present there are globally more than 2,500 pre-owned jet aircraft available for purchase of varying size, range and price. With a market this flooded with available aircraft, purchase prices are very competitive and could be a feasible financial consideration for passengers who fly in excess of 200 hours a year,? she comments.
She does add a note of caution. ?You have to take into account the initial cost of the aircraft, the type of flights you wish to undertake, the destination airports you visit and whether your chosen aircraft can land there. In addition, you need to think whether your charter requirements will remain consistent. For example, will an eight-seat aircraft always fulfil your requirements, or would you sometimes need a larger 12-seater?
?The number of charter hours you fly in a year will influence your financial decision, but so many more factors need to be considered when weighing up an aircraft purchase versus the various charter options,? she concludes.
With consumer buying habits having changed dramatically following the advent of online price comparison websites, it would be relatively simple to assume that PAs could make use of the same technology when it comes to organising private jet travel. At Air Partner, however, Wheatley contends that while the internet might be a useful tool, ?the human element continues to be what business jet users ultimately demand. Aircraft charter flights are really not a uniform commodity that can be easily traded online.?
He goes on to provide an example. ?While two aircraft may leave the production line the same, they may be used entirely differently in their lifetime, maintained and operated to different standards, and one crew?s attitude towards passenger service may be in complete contrast to that of another aircraft operator. In short, the passenger experience may vary wildly, even between two apparently identical aircraft. But how can you tell that online??
Technology, according to Twidell of PrivateFly, has its place in that it expedites the process and provides PAs with ?the confidence to know they have looked at [all the] options and are paying a competitive price for the right aircraft.?
Hogben of ACC Aviation again focuses on the human touch. ?The number of complex factors affecting the availability and pricing of aircraft makes this [using online booking comparison sites] almost impossible. Most PAs want to speak with an industry professional who can guide them through the process and support them at all stages.?
The Charter Company?s Wilkinson also stresses the importance of using a made- to-order service. ?When it comes to sourcing a private jet charter, there are very few online tools available for a PA to use when comparing aircraft or charter broker companies.
?I would always encourage the end user to contact a broker by telephone to discuss their requirements in detail,? she continues. ?As each client?s needs are very different, a bespoke quotation should be discussed thoroughly so the PA can be sure they are sourcing the right aircraft for the trip. The choice of aircraft, airfields and operators can be confusing, so use your broker?s knowledge to help you decide what is best for you, and never be afraid to ask questions,? she advises.
The broker in fact is seen as key to travel bookers being able to arrive at the correct business aviation decision based on their individual requirements. ?Corporate jet users continue to work within tight budgets and look to get even more for their money without compromise,? says Air Partner?s Wheatley.
?In line with this, brokers will continue to play an important role, albeit one in which they [need to] embrace innovation in products and services and are creative in finding the best solution for the client, while providing financial stability in a sometimes fragile supplier market.?
At PrivateFly, Twidell also underlines the broker?s need to be truly flexible: ?Today?s broker must adapt, designing his services to meet the needs of the individual customer and building trust through greater transparency.?
The last word goes to The Charter Company?s Wilkinson, who says: ?A broker can use his extensive industry knowledge to offer you completely impartial advice. Each enquiry you make will consist of a scan of the entire charter market and offer the best aircraft for each trip, based on suitability and price. Brokers are not committed to one specific operator, so can truly offer the best possible solution, comparing thousands of deals and giving you a selection of the most suitable aircraft.?
With such a wealth of advice, innovation and practical solutions available, it certainly seems that when it comes to using private aviation as a mode of business travel, the sky is no longer the limit.
Top tips for chartering a private jet
? Use a company that is reputable and reliable. They should have a proven track record and must take contractual responsibility for the success of your flights.
? Look for clear and competitive pricing. De-icing charges are commonly charged extra (and occasionally catering and inflight phone charges too) but everything else should be included in the price.
? Use a specialist broker experienced in the type of product you need. All brokers should tell you that they only use legal charter solutions, but look for additional service guarantees.
? Use a broker who can provide 24/7 worldwide support. It is important to choose a broker that can meet the demands of your passengers wherever they may be in the world.
? Make sure you are given a dedicated account manager. Regardless of the size of the broker you deal with, you should expect a one-to-one, personal service from your own account manager. With thanks to Simon Wheatley, UK Manager of Air Partner Private Jets.
