What You Need to Know About the World of Private Jets

Posted on January 1, 2007 by LCT Staff - Also by this author

Chauffeured transportation companies wired into the world of private jets and business aviation are sitting in a good place. Business aviation is a thriving business in the U.S., and limousine operators allied with fixed-based operators (FBOs), jet charter companies, and industry brokers, are positioned for growth.

There are reasons for this growth: ·Alternatives to owning and operating private jets have grown including jet charter and fractional ownership, helping to bring the cost down for corporations and private individuals.

·A proliferation of industry brokers has brought the cost of private jet charter service down, as brokers have been selling segments of trips and bringing more competition to the marketplace. The Internet has helped make all of this more efficient.

·Corporations are seeing the value of investing in private jet service, as opposed to having top executives fly first class on commercial airliners. Private jets can take executives to two or three cities in one day for meetings, and can bring them closer to their destination, cutting down on car travel time. Time is money, and for a CEO earning $5 million a year, his time is especially valuable.

·Commercial aviation airports are becoming harder to get in and out of because of vehicle traffic around the airport, heightened security measures, and high volumes of airline passengers traveling through already overtaxed U.S. airports. Add to this flight delays because of bad weather or other reasons, and the time factor gets worse. Wealthy individuals and corporate executives are increasingly choosing to bypass this gridlock.

Networking with Decision Makers So the question becomes: How do you break into this market segment? For some limousine operators, the issue is taking advantage of business you’re already doing.

“For a lot of operators, about 10% to 20% of their revenue is coming from taking clients to private jet airports,” says Dennis Adams, president of Celebrity Limousine. Adams believes so much in the trend that he started a new company called Celebrity Jet Charter, which serves as a broker for limousine operators who want to book jet charter for their clients a make a commission while doing so.

For operators already traveling to private airports, the next logical step would be ask FBO managers for referral business. “FBOs are like concierges,” he says. “They must be able to count on the limousine company. Their client is ordering car service after taking a $20,000 jet ride. The client will expect a comparable experience in the car — a new vehicle, a professional chauffeur, etc.”

Another angle is breaking into the broker world. Celebrity Jet Charter offers limousine operators one channel to get into the jet charter arena. Clients enjoy the “one phone call” convenience of contacting their limousine company, who can then book a private jet for them, Adams says. Adams also suggests that operators look at brokers in the chauffeured transportation industry such as Savoya, Fortis Rider, and LimoLink, which find chauffeured transportation for corporate clients and may also secure jet charter for them. Plus, there are many brokers in the jet charter business that can be contacted by limousine operators for their referral business.

Getting involved with the National Business Aviation Association (NBAA) and attending the organization’s events is another networking strategy for chauffeured transportation companies trying to build revenue in this segment. The NBAA has an annual convention and other regional and specialized meetings during the year that provide access to key decision maker such as FBO managers, jet charter companies, and industry brokers.

Private Jet Market Trends There are some private jet market dynamics and developments to keep in mind:

·Business aviation does have its ups and downs, like the overall travel industry. “Business aviation tends to track with the economy,” says Dan Hubbard, VP of communications for the NBAA. The business was starting to taper off before 9/11 and then took a downturn, but has been doing well more recently, he says.

·The jet charter business, like chauffeured transportation, looks highly lucrative on the surface, but is tough business. Even though it’s a big ticket purchase, there are very high costs involved in keeping private jets in the air. And the brokers are making things tougher with pricing pressures.

·You may not have a lot of advanced notice on jet charter referrals. A pilot on a private jet might call the FBO for a car, and the FBO might call you expecting you to send a chauffeured car without much notice.

·“Very Light Jets” are coming on the market that carry about 4 passengers. Some companies are offering scheduled service to small airports along with private jet charter. These are being billed as shuttle service in the sky and could be a wave of the future.

Private Jet Terminology Air Charter/Jet Charter — A commonly used method of traveling by private aircraft. As opposed to companies or individuals owning a private plane, they would hire a charter company to provide flight accommodations for an individual or small group. The practice is commonly referred to as “jet charter,” but may also include propeller and turbo-prop planes in addition to jets.

Brokers — Intermediaries that link up air charter companies with customers, similar to the way a travel agent links an airline to a consumer wishing to book a flight. Brokers have proliferated in the jet charter business, having the effect of making jet charter more affordable for travelers.

Business Aviation — the operation of general aviation aircraft for business travel.

FBOs — Fixed-based operators, or FBOs, are companies supplying fuel, maintenance, and other services at an airport to charter companies and private plane owners.

Fractional Ownership — a business model similar to time-shares where an individual or company owns a percentage of a private plane. NetJets is a well-known company in private jet fractional ownership.

General Aviation — Airports that serve aircraft other than commercial airliner or military. Corporate jets and charter aircraft generally takeoff and land at general aviation airports.

Private Jets — A commonly used term for jets and propeller-driven aircraft used by corporations and private individuals. These airplanes are much smaller than commercial airliner planes, usually carrying parties of less than 10 passengers.

Business Aviation Statistics

Number of Airports General aviation airports (in the U.S.): 5,300 Commercial passenger airports: 500

Largest Categories of Business Aviation Aircraft 1. Piston twin propeller 2. Turbo prop 3. Small jets (6-8 seats with no bathroom) 4. Medium & Large jets

Business Aviation Airplanes in the U.S. 1991 – 9,504 2004 – 16,423

Market Growth ·Worldwide shipments of business jets increased more than 20% in 2006.

·Usage of private jet charter was up 40% in 2006.

Sources: National Business Aviation Association; General Aviation Manufacturers Association

An Association You Should Know About: The National Business Aviation Association is the leading trade group serving the world of private business jets. It’s events provide an excellent opportunity for networking with the key players in this arena including travel managers, FBOs, and jet charter companies.

National Business Aviation Association, Inc. 1200 18th St. NW, Ste. 400 Washington, D.C. 20036-2527

Phone: (202) 783-9000 Fax: (202) 331-8364 Email: info@nbaa.org Website: www.nbaa.org

NBAA 60th Annual Meeting & Convention (NBAA2007) Sept. 25-27, 2007 Georgia World Congress Center Atlanta, Georgia

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