Industry Research

General Aviation Bringing A Slow Return

Posted on June 1, 2010 by LCT Staff - Also by this author

In January 2009, LCT ran an article about the future of ground transportation for the general aviation sector, in which near-term prospects looked bleak.

About a year and a half later, operators, jet charter companies, and booking service companies are seeing a brighter 2010 after a rock bottom 2009 recession year.

Recession Hits Hard

Mark Crocco, vice president of New York City-based Jets.com, a private jet charter broker, says the company’s business thrived in 2009. His explanation was this: “You’re dealing with people with very high net worth. There’s no recession for them.”

While some will agree that the recession didn’t affect the superbly affluent enough to change their luxurious lifestyles, most other jet charter companies, booking agencies, and chauffeured transportation operators did see a decrease in their aviation bookings, at least in the beginning of 2009.

Dennis Adams is president and CEO of Celebrity Jet Charter, a jet charter broker specializing in servicing the limousine industry, and Celebrity Worldwide Chauffeured Transportation, both based in Philadelphia, Penn. In the unique position of being involved in both jet charter and ground transportation, he says charters suffered much more than ground transportation.

“With the recession, businessmen could no longer justify the price of flying private because flying private is so expensive, although sometimes the cost is justified in time,” Adams explains.

“Stockholders, employees, etc., said, ‘You’re going to fly commercial for a few hundred dollars rather than tens of thousands.’”

The chauffeured transportation industry has undoubtedly been seeing some grim numbers. However, Adams says if the average limo industry was seeing a 30-50% decrease in revenue, then jet charter probably saw a 50-70% decrease. Many charter companies went out of business. Adams, who operates more than 40 vehicles through Celebrity Worldwide Chauffeured Transportation, reported a 50% decrease of pickups and dropoffs of private air passengers.

Rajeev Sharma, co-owner of Silverline Sedan and Limo in Herndon, Va., says about 20% of the company’s revenue comes from aviation-related business. “It started slowing down in the last couple of months of 2008, pretty much until about the end of 2009,” he says of trips to Fixed Based Operators (FBOs). “Compared to the good times of 2007, 2008, there were less bookings.”

But It Gets Better

In the last quarter of 2009 and into the first quarter of 2010, many ground transportation operators and brokers saw a rebound in work to FBOs.

“It’s been picking up,” Sharma says. “The last few months have actually been good.” He adds that toward the end of 2009, the market steadily improved, although it hasn’t yet reached its pre-recession peak.

Fortis Riders, a Greenville, S.C.-based global chauffeured network, also reported the beginning of 2009 as starting off slow, but founder Nathan Foy says around August or September 2009, business began to recover. “It was definitely up for the end of 2009 — it was a strong finish to the year,” he says.

The year ended so well, in fact, that Fortis was recognized as the second fastest growing chauffeured company by Inc. Magazine, says Foy, posting a 167% growth rate.

As a chauffeured network, Foy says the number of trips that his company sends out hasn’t decreased much. “I think we may comprise a bigger percentage of our affiliates’ business than we used to, because so much of their other business is down,” he says.

Foy says select people are flying private even more. Many operators were working with jet charters and fractional jet services, and although business was great in 2007 and 2008, it wasn’t strong in 2009. He finds the ones still flying frequently are private flight departments, corporations, or individuals that own their jets.

A Changed Market

Foy notices a change in general aviation. “It’s a different environment than it was last year,” he says. “I think a lot of people, especially in aviation, that were just dabbling, have moved on to other, more profitable areas, and the folks that are in aviation are pretty much the career people, and I think the same about chauffeured.”

LimoLink International, based in Marion, Iowa, is a booking service for ground transportation, founded with the intent of focusing on the private aviation business.

“In 2009, it was difficult, but this year, we’ve seen a great increase in revenues and a lot of that is just rebound in the private aviation sector,” says Chad Hartke, manager of private aviation services and vice chair of the schedulers and dispatchers committee for the National Business Aviation Association (NBAA). Hartke says the last quarter of 2009 and the beginning of this year have been among the company’s strongest periods.

“Client retention has more than doubled since the recession,” Hartke says. Retention is measured by repeat bookings within a year. Hartke says the recession did not lead to a drop-off of accounts, but led instead to less frequent bookings as people traveled less. He remains optimistic about the rest of 2010 and the future. “I would say we’re trending in the right direction,” Hartke says.

Opportunities for Operators

Ground transportation for general aviation looked bad, but it’s gotten better. Does that mean it’s a good time for operators to hop on board? “It’s as good a time as any,” Foy says.

He advises operators: “It’s a competitive market… I think anybody who wanted to go into it would probably need to verse themselves in the customs of private aviation.”

Adams predicts it’s going to take longer for jet charter to fully rebound, but he says, “Obviously there are still private jets flying. Every limousine company should have a relationship with their FBO.” He adds that sometimes private jets fly in on short notice and need ground transportation, and it’s in a chauffeured operator’s best interest to be the one they call.

Sharma agrees that it’s a good market for operators, but warns: “It’s not something [where] you can pick up a car and start. Operators should do some homework before getting into it.” He explains that because FBO clients are more liable to make last-minute changes, it’s best to be located within half an hour of the FBO. He also adds that clients used to flying in private jets expect more amenities and service than the corporate customer.

Hartke says it’s a good idea for operators looking to get into FBO work to partner with booking networks. “I encourage local providers to embrace what companies like us are doing, because we can be a significant amount of revenue to them in those markets,” he says.

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