Easy Fly, Easy Buy: The Business Aviation Boom

Business aviation is booming around the world and there is a good reason why: It has never been easier to use.

In 2006, worldwide shipments of business jets jumped 18 percent to 885 aircraft, according to Washington, D.C.-based General Aviation Manufacturers Association (GAMA). Deliveries of business turboprops increased 11.5 percent to 407 aircraft. Shipments of new GA aircraft generated $18.8 billion of revenues last year, 24 percent more than in 2005.

The boom is continuing. In the first quarter of 2007, deliveries of business jets climbed 12 percent on the same period last year. Turboprop shipments zoomed 30 percent and total billings for GA aircraft deliveries grew more than 11 percent.

General economic growth is partly responsible. But in North America and elsewhere the development over the past 15 years of flexible ways to charter or own business aircraft has reduced the price of business aviation (in industry-speak, private aviation) to a level many companies and individuals can afford.

Business aviation has become much more accessible through the development of jet cards, block charters, fractional ownership and negotiation of discounts on whole-aircraft charters when paying by cash or check rather than credit card.

These techniques make blocks of aircraft operating time available to private-aviation users, said Mike Nichols, vice president of operations, education and economics for the National Business Aircraft Association.

A fixed-fee jet card usually requires a 25-flight-hour minimum purchase and--when offered by companies such as Bombardier subsidiary Skyjet--either specifies one particular aircraft model that provides the seating capacity the buyer requires, or offers general availability on several equivalent aircraft models.

Some jet cards let buyers trade up or down on the aircraft model for individual flights or even allow a general upgrade or downgrade of aircraft type if the user?s seating requirement suddenly changes, for an adjustment in the per-hour aircraft charge.

The efforts of Skyjet and others to develop online booking for private flights have taken the hassle out of chartering business aircraft. These companies also have made private aviation reliable by using aircraft operators whose flight programs they have audited and approved.

Now corporate and individual consumers needn?t fear that the business aircraft they?ve chartered won?t turn up, leaving them stranded at small airports.

?We give you a 1-800 number to call and we offer guaranteed aircraft availability and no [aircraft] positioning costs. It takes the confusion out of the equation for the consumer,? said Chris Milligan, managing director of Skyjet.

Block-charter purchases usually make most sense for customers buying up to around 100 hours of aircraft time a year, said Nichols. Above that amount, fractional ownership arrangements--similar to timeshares on vacation homes--become economically viable and offer resale potential.

However, financial modeling can justify a five-year fractional ownership deal on a business jet for as little as 50 hours? usage a year, said Milligan.

That represents a one-sixteenth share, the smallest share one can buy on a business jet. Fractional shares on helicopters can be as little as one-thirty-second of the aircraft?s time, since helicopters generally fly much shorter distances and don?t operate as many hours for any given client, said Nichols.

Business-aviation users fall into three groups: athletes and entertainers, those flying privately on business and people who prefer to use private aircraft in their private lives rather than risk airline delays.

?They?re busy and the one thing they don?t have is time. This is the one thing that can bring time back for them,? said Scott Duffy, founder and CEO of Virgin Charter.

A Virgin Group company, Virgin Charter plans this fall to introduce an online whole-aircraft charter marketplace that is transparent to buyers and sellers alike and offers quality ratings of charter-service providers.

?In an open market, price transparency creates competition and that ultimately reduces pricing,? said Duffy. ?We?re not trying to reduce it to the price of commercial air travel, but we are trying to create more efficient private aviation and bring costs down.?

Business users form the fastest-growing community of private-aviation flyers. ?Companies no longer look at private aviation as luxury, but as productivity,? said Duffy.

This may be especially true for the new breed of very light jets (VLJs). Would-be VLJ air taxi operators such as Florida?s DayJet intend to offer single-seat charters. Their competition will not be airlines, but automobiles, said Nichols.

Rather than have a technician drive, say, seven hours to install an urgently required replacement part in a factory assembly line, a company may choose to fly the technician there by air taxi to deliver the part in under two hours and get its highly skilled employee back the same day.

NBAA has developed a consumer guide for business-aircraft charter. The most important lesson for the new buyer to learn is that, ?One cannot look at price alone,? said Nichols. Before booking, the customer should understand the level of customer service and the amount of insurance coverage it is getting, as well as the level of pilot training the operator maintains. Often, booking through intermediaries such as charter brokers or card providers provides an easy way to obtain the requisite expertise.