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Charter booking service Virgin Charter ceased operations last month, a casualty of the challenging economy and scrutiny on corporate use of private jets. The Virgin Group company, which provided an online booking tool for private aviation customers, was in service for less than two years before succumbing.
Speaking at the National Business Travel Association convention in August, Virgin Charter COO Brian Pope said market conditions forced many in the private jet segment to fight for the little business that was left. "Supply is exceeding the demand right now," he said. "You are getting a market-competitive price on each and every trip and not being stuck into a fixed rate; that might have been appropriate a year ago, but it's not appropriate today.”
Some speakers at the NBTA event said congressional criticism of private jet usage in Corporate America--especially targeting companies requesting public funds--continued to pressure the business aviation sector nearly a year after the bailouts.
"This segment of the industry really has been under attack," said National Business Aviation Association senior vice president of government affairs Lisa Piccione. "There are folks out there that have the perception that business aviation is excessive, it is inappropriate and it’s in the way. Business aviation is not a luxury; it is essential to your business, it is essential to your local community and it's essential to the national economy."
Private Aviation Options Still Useful
Pope, for example, said Virgin Charter had not typically seen "CEOs flying around or heading to Aspen. It is groups of people heading to meetings and utilizing charter as a productivity tool. The corporate travel department is increasingly getting involved, and often it is the travel management company or the agency that books all the commercial trips. Travel management companies, procurement tools and travel agencies are becoming better trained and better equipped to help find charter aircraft."
Using both private and commercial aircraft in a managed corporate travel program is a best practice, according to Wilmorite Property Management travel manager Judy Mercel. She advocated a closer look "at the bottom line of your corporate spend" and being "open enough to look at all possibilities."
"Private and general aviation became very cost-effective tools for top management when they are able to arrive at their destinations having maximized their effectiveness, being fresh and ready to perform the task at hand and able to get back and move onto the next assignment," Mercel added.
Though economic conditions forced Wilmorite to sell its aircraft, the company still found a useful private aviation option. Mercel said prepaid debit cards available from business jet brokers and operators have proven to be successful because of their convenience. She said Wilmorite also is considering a fractional ownership program with the supplier now providing her company with the prepaid cards. An attractive option should business pick up, Mercel said, fractional ownership would give Wilmorite at least a one-sixteenth share in a business jet.
Meanwhile, those organizations considering charter flights should be aware of the various taxes and fees associated with such services. NBAA vice president of operations, education and economics Michael Nichols cited federal and state taxes, including a per-seat fee and a 7.5 percent excise tax. Such added costs, he said, "may be a very big consideration for some companies."
Virgin Charter 'Ahead Of Its Time'
Virgin founder Richard Branson in 2007 invested in Smart Charter, the technology company that took on Virgin's branding. In March 2008, Virgin Charter publicized a new "online marketplace" for private jet reservations and named Travelocity Businessas its "exclusive launch business travel agency." Virgin Charter claimed to be the only system offering users complete "end-to-end" functionality and online management of all aspects of the transaction and trip planning. At that time, Pope, then chief marketing officer, noted growth in the private charter industry of about "25 percent a year," driven primarily by business travel.
In July of this year, Virgin Charter founder and CEO Scott Duffy resigned, with Pope assuming day-to-day operational responsibilities. A statement attributed to Branson credited Duffy with creating "a whole new model for private aviation."
By last month, the company shut down. "Our technology platform was ahead of its time," according to a statement posted online. In a statement emailed to Management.travel, the company wrote, "With the severe decline in corporate travel, Virgin Charter was unable to generate sufficient sales to underpin its business plan and has taken the difficult decision to close its doors."
Before Virgin Charter announced that decision, Market America travel manager Cathy Picone during the NBTA conference indicated a preference for booking with charter companies with which her company has established long-term relationships. A service like Virgin Charter lists flight options offered by a multitude of operators, including some that may be unknown to the customer.
"I do a lot of charter, and I have for the last five years, and you definitely need to know who you are booking your planes through," Picone said. "Because there is not as much demand, everyone is knocking on your door for your business and if there is something that seems like it is too good to be true, it normally is."
Pope acknowledged "some issues" with charter services. "Finding the right aircraft and the operators can be time consuming," he said. "You have many operators out there. Unless you fly in the exact same airport and you are very familiar with your local operator, it can be a challenge and it does require some specialized knowledge."
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