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.