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Sharing economy for private jets

Published: 01/12/2016 - Filed under: Home » Archive » 2018 | 2017 | 2016 » December 2016/January 2017 » Special Reports » Home » Features »

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Old definitions are dying by the dozens each day, and we scramble to rewrite digital dictionaries to keep up.  So it is with the business jet – that one-time corporate bauble signifying success or excess that’s become (some argue) an essential tool of business travelers on momentous missions.

Over the last quarter-century Gary Gennari has witnessed the metamorphosis up-close and personally.  When Priester Aviation’s senior vice president of charter first started, he says “it was mostly a relationship business. We were dealing with the likes of the Rockefellers and the Whitneys. That was the caliber of people that chartered aircraft.” Now, Gennari says, “the market has developed so much.” 

Then what had been a toy became a tool, as corporations sought to make the most of high-value business travelers’ time. Business jets didn’t exactly become mass transportation, but corporations bought them, leased them and chartered them as never before. Their prime selling point was, and remains, enhanced productivity for senior executives on an increasingly planetwide stage. 

Next, in the mid-1980s, “the whole market shifted,” with the advent of fractional ownership, Gennari explains. Propelled by fractional ownership juggernaut NetJets, the concept took off, especially among companies disenchanted with the traditional charter concept. With the fractional model, “one of their big selling points was that you pay only point-to-point pricing – ‘live hours’ (the time during which passengers were on board). “In charter you also pay ferry time: If people flew one way down to Florida and wanted to come back one week later, they’d fly back empty.”

In the aviation business, whether corporate or commercial, there is little operators loathe quite as much as an unproductive flying machine, one that’s not making any money. You don’t make money by flying empty – unless you levy a ‘ferry’ fee. 

As a result, “companies started popping up that would go out and buy a fleet of aircraft that was put out just for charter,” says Gennari. “There were ‘virtual’ crew bases. So if you wanted to fly just one way from New York to Florida they’d fly you one way and just leave the airplane down there and see what business they could pick up. They’d just keep moving the airplane around the system.” 

New Kid on the Block 

The latest bizjet business model entails selling memberships on private jets. Those memberships translate to seats on certain routes, blurring the lines between business jets and airlines. One of the prime practitioners is a company called JetSmarter, which bills itself as “the world’s largest mobile marketplace for private jets.” The company’s fact sheet asserts it has “fundamentally rewired the marketplace, and reinvented an industry for the on-demand economy.”

JetSmarter offers three categories of service:

JetShuttle – This lets members (there is a $11,000 annual fee with a one-time $4,000 initiation fee) search and book a seat on an already scheduled bizjet route such as New York-San Francisco, Geneva-London or Dubai-Riyadh. That fee gets you a first seat “free.” You pay extra for additional seats.

JetDeals – Offers one-way flights on private jets. In contrast to JetShuttle, these flights are sporadic. Members can get anywhere from one to four “free” seats on JetDeals by virtue of that membership.

JetCharter –  You can book the entire airplane. Or share the ride with others from other companies.

”JetSmarter is the only private travel service company to operate by way of innovative app technology,” says CEO and founder Sergey Petrossov.  He contends his operation is “unlike any other private jet venture,” and labels previous booking and payment methods “archaic.” 

Costs are kept comparatively low, he says, because JetSmarter partners with more then 800 carriers globally.

JetSmarter’s goal here appears to be luring commercial airline business travelers out of the first or business class cabin and into business jets that can afford them digital booking options in our got-to-have-now world. “The biggest trend we’re seeing is a steady growth in the need for on-demand travel,” says Petrossov. “Consumers like the ease of being able to book on-demand from the palm of their hand.” He asserts bizjet models such as JetSmarter “will only continue to grow as the demand increases.”

Even as JetSmarter and comparable companies surge, other more traditional business jet operators are quick to differentiate their product from this latest iteration of corporate mobility. “The whole aggregation model is the latest and greatest,” says Pat Gallagher, executive vice president of NetJets, the company that pioneered fractional ownership. “At the end of the day, all they are doing is just aggregating demand and trying to put people into seats on empty airplanes.”

Gallagher maintains that’s not the product he nor charter companies are selling, “not really what the private aviation experience is.” As for on-demand, Gallagher says, “They tell you when to go, and you’re flying with complete strangers.  That’s not the business that NetJets is in.  It’s an entirely different value proposition.”

Whether you’re considering booking charter, fractional or aggregate-generated bizjet passage, you’d do well to do your due diligence. According to Lufthansa Private Jet senior manager Stephan Grandy, “There are many brokers who sell empty-leg flights for very low prices. The downside of this concept is less flexibility in regard to timing and routing – as well as uncertainty about the service level and operator.”

Bizjets’ very reason for being to begin with revolves around time well spent, maximizing productivity and convenience. “Our customers have guaranteed access to an airplane on X amount of notice,” says Gallagher. “That can be four hours to ten hours, depending on the aircraft they own.”

A quick refresher from Gallagher on fractional ownership: “A  person or an entity purchases a share of an aircraft. They’re actually buying an undivided interest in a specific serial numbered aircraft, and then placing that piece of the aircraft into a large interchanged pool.  That allows them to draw from that pool as needed. So they actually have title to an aircraft, have the benefits that go along with the acquisition of an aircraft.  You have the tax benefits for your company that go along with owning a capital asset.”

Long Legs

Increasingly, corporate jets are called on to make heretofore-impossible nonstop leaps from continent to continent. With its fleet of 700-plus aircraft deployed across the planet, NetJets is seeing a demand for long-legged aircraft, as are many other operators. 

Consider the Bombardier Global 6000. Its 6,000 nautical mile (6,904.8 statute mile) range is impressive, right up there with some new long-range commercial airliners.  Among the stable of 45 flying machines owned or managed by Priester Aviation is the Gulfstream G650, whose nonstop range is a full 8,053 miles. 

For corporations with offices distantly dispersed worldwide, long-range nonstops are imperative, a critical element in today’s service equation. 

Ranging closer to home is another of NetJets dozen mission-specific aircraft types, Embraer’s EMB-505 Phenom 300. Its range is a more workmanlike 2,268 miles. The smallest airplane in Priester’s portfolio is Cessna’s CJ3+. It can fly 2,040 nautical miles nonstop.

Accessibility is another important service component, the ability to get to your ultimate destination with as little friction as possible. The new Cessna Citation Latitude fits nicely into that niche. Gallagher says it can operate into “over 5,500” airports in the United States. By contrast, the number of airports hosting scheduled commercial service in this country is somewhere in the neighborhood of 500.   

Hybrid Connections 

Some destinations “are not easy to get to with commercial airlines,” says Lufthansa Private Jets’ Stephan Grandy, a company that uses NetJets’ fleet to provide an extension of premium service. Here’s the way it works: Fly Lufthansa or SWISS intercontinentally, say from Frankfurt to JFK. At Kennedy, hop on a NetJets operated Lufthansa Private Jet the rest of the way, perhaps to one of the 5,000 airfields in the US that accommodate bizjets, but are bereft of commercial airline service.

So, if some business jets boast all that nonstop range, why not just fly a Gulfstream 650 or a Bombardier Global 6000 all the way? European and North American-centric Lufthansa Private Jets (LPJ) “does receive a few requests for long-range flights,” says Grandy. But in most cases he recommends booking an intercontinental First Class ticket on Lufthansa proper and hopping on an LPJ to fly the rest of the way. 

“Most people underestimate the cost of long range private jet flights,” he argues. “The cost can exceed the price of a first class ticket by far. Secondly, no matter how new and well equipped a private jet is, it just cannot quite match the comfort and spaciousness of a First Class cabin.”

Ah, cost. “If you’re just comparing the cost of flying NetJets to the cost of flying commercial from LaGuardia to LAX, we’ll never compete,” concedes Pat Gallagher. But then with charter and fractional, price per se is not the issue. The value of the time for executives is. The ability to hold confidential business meetings aloft is an underestimated bonus in today’s Wikileak-y world. The ability to eschew traditional TSA security lanes is too. Then there’s the tweaking of your trip aboard true point-to-point flights, without connections or refueling stops. 

Evolutionary Tweaking

If aggregating empty-leg unused seats, then turning them around so they sell is getting the most press of late, certain charter and fractional operators quietly go about the business of polishing their products. And the elemental service is most significantly safety. “One of the areas where we place the most significant amount of innovation and R&D is safety,” says Gallagher of NetJets, by far the planet’s largest player.

Getting the data to plan and implement a safety program, he contends, has much to do with size. A “lot of it is our sheer scale. With a company of over 6,000 employees and 700 aircraft we have access to a lot of data to learn from.” NetJets operates hundreds of flights a day, monitoring the flight data recorders every takeoff and landing. It downloads that data to continually tweak and improve its training program. 

Rest time for pilots is another issue that’s made headline for a number of commercial carriers in recent years, prompting NetJets to “invest in software packages that track pilot alertness and circadian rhythms,” says Gallagher, “to make sure that our Netjets pilots are not being put into scheduling situations that would conflict with their rest.”

He contends NetJets efforts go far beyond Federal Aviation Administration requirements. Case in point:  FAA requires pilots to have ten hours of uninterrupted rest.  But Gallagher points out, “If you have someone who flew overnight for a week in a row, took one day off and then comes back and flew a different shift next that could have a material effect on their alertness. We monitor things like that.”  

Such quiet, incremental action rarely makes the headlines. But business travelers can live just fine with that.  

By Jerome Greer Chandler

 

BUSIER SKIES

More private jet entrants mean more options for business fliers 

By Tom Otley

DELTA AIR LINES is targeting the private market with its Delta Private Jets subsidiary. As well as selling regular charters, it also offers a private jet card with an initial purchase of $100,000 to $500,000 – you can earn ten Delta SkyBonus points per dollar spent. The flights can also work in conjunction with regular Delta services, with chauffeured cars taking you from one domestic flight to the next, missing out the terminal experience altogether.

JETFLY is a fractional ownership program allowing individuals to buy anything from a 1/8th share (62.5 hours per year) to a 50 percent share (250 hours per year) of an aircraft from a pool of 20 twin-piloted Pilatus PC-12s (single turbine propeller aircraft). These have either six or eight seats and, because they can land at a lower speed, they can access out of the way airports. A monthly management fee applies (Jetfly has 70 full-time pilots) and there is guaranteed availability within Europe at 24 hours’ notice. The aircraft could fly from London to as far as Marrakech with four passengers.

VICTOR is known as the Uber of private aviation, with its sleek app and website for booking empty legs on jets. Its Victor for Business corporate travel arm has seen it set up a partnership with travel management company CTI, giving the latter’s clients access to more than 7,000 aircraft worldwide.

PRIVATEFLY has opened a US office in Miami. The company, established in Europe in 2008, says the launch is a step forward in its ambitious US growth plans, following strong sales over the past two years. The new team, at Fort Lauderdale International airport, will handle US client flight sales for any global route.


 

 

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