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Last week, Virgin Charter publicized a new "online marketplace" for private jet reservations and named Travelocity Business as its "exclusive launch business travel agency." Virgin Charter aims to bring automation, transparency and simplicity to a process that generally has been manual, complicated and inefficient.
There are indications that private jet travel will expand, especially if air taxi services--enabled by a new breed of "very light jets"--become more widely available. High airfares for transoceanic commercial flights also may help further the appeal.
"There's still a big tailwind for corporate aviation," said Robert Sturgell, acting administrator of the Federal Aviation Administration, in a speech this week.
FAA's latest forecast calls for a continued increase in general aviation, particularly corporate operations. "Corporate safety/security concerns for corporate staff, combined with increasing flight delays at some U.S. airports have made fractional, corporate, and on-demand charter flights practical alternatives to travel on commercial flights," FAA wrote. "The relatively inexpensive twin-engine VLJs (priced between $1 and $2 million) are believed by many to have the potential to redefine the business jet segment."
However, FAA cautioned that "the market for business jets is largely dependent upon the growth in the economy and corporate profits and it is unknown how well this market will fare as the U.S. economy and corporate profit growth slows."
At Virgin Charter, "We're seeing tremendous growth in the private charter industry, something along the lines of 25 percent a year," said chief marketing officer Brian Pope. "That growth is coming from business travel. There is a growing recognition that flying private is not a luxury. It's a productivity tool."
Virgin founder Richard Branson evidently saw a long-term opportunity in the charter segment when he invested last year in Smart Charter, the technology company that took on Virgin's branding.
More recently, Virgin Charter said it completed a "beta period during which an exclusive group of corporate and individual buyers utilized the marketplace."
The Internet-based reservations process allows users to search for and compare schedules and pricing from hundreds of pre-screened charter operators, and buy online. Searches also can include "empty legs" that operators would otherwise be flying without passengers and that they may offer at a discount. Those empty legs may account for nearly half of all private jet flights.
Users would see the operator's safety ratings, aircraft details (including specific onboard items and amenities) and "comments from other customers who have used this operator." They can access the contract, cancellation policies and payment online through Virgin Charter, which also offers 24-hour customer support.
Unlike some brokers, Virgin Charter does not mark up pricing. Instead, it charges operators "a small" percentage-based fee for trips booked through its system, and charges users a 3.5 percent "service charge."
"We're working on individual deals with individual corporations that range across a number of variables," Pope said, mentioning the potential for "exclusive servicing of their account, as well as potentially different financial dealings."
At Travelocity Business, Virgin Charter mostly would be used as part of VIP services. "Typically in the past, if we were requested to manage a charter, we would go out and shop for them and come back with some alternatives, but that was strictly all telephonic," said DeAnne Dale, TBiz vice president of account management and consulting services. Now, the idea is to train VIP agents to use the Virgin Charter tool.
"There is a lot more travel increasing across our client base to the Asia-Pacific region and Australia. And the cost of those flights, for a business class ticket, could average $15,000 or $20,000," Dale explained. "Looking at ways to optimize [clients'] spend for travelers going to those long-haul destination was one thing that cropped up and made us say, 'Hey, maybe we should look at alternatives.' The [commercial] airlines are not real aggressive in discounting on those long-haul flights right now. Average fares are just so exorbitantly high.
"If we start identifying opportunities to move some of that long-haul service away from the legacy carriers and to charter, down line they may be more aggressive coming back to us with discounts in those markets," Dale added.
In addition to comparative analyses of commercial versus charter options, TBiz also would provide management reporting on charter activity and spending. Already in place is new automation and a profile management database to help TBiz determine, for example, which VIP travelers have been approved by their companies for charter services.
The TBiz-Virgin Charter marketing arrangement is not the only link between the two companies. Eric Hofer, Virgin Charter's senior vice president of sales and customer care, previously served as vice president of sales at TBiz. "This is a great opportunity for travel managers to extend what they are doing internally and get their arms around some of these expenses," Hofer said, suggesting Virgin Charter would help companies complement corporate fleets and streamline ad-hoc charter processes.
Virgin Charter isn't the first to try to automate the private aircraft reservations process. Air Charter Guide in 2003 launched a system to aggregate availability from various providers and enable travel managers to compare prices. Virgin Charter claims to be the only system offering users complete "end-to-end" functionality and online management of all aspects of the transaction and trip planning.
Other corporate travel technology vendors said they would develop charter-booking functionality if they perceive a need among their clients. "We don't hear a lot of demand for that," said Tom DePasquale, Concur executive vice president of product and services strategy. "If it becomes a reality of the business, then we will want to support it."
At Expedia Corporate Travel, "we have had some discussions with the Virgin Charter guys and we'll see where that goes," said ECT North America senior vice president Robert Greyber. "Overall, do I think there's a big change in how corporations are thinking about it today? I haven't seen a big change."
Greyber suggested that big corporations interested in private jet services may find Virgin Charter "intriguing," but would prefer to exert more direct control over the process, given safety and security concerns.
"As a potential end user, I think it's a fantastic idea," added Patrick Grady, Rearden Commerce chairman and CEO. "We don't want to build a yield management tool, for example for extra capacity on a jet. We'd prefer to let others aggregate that. I'm not sure how much it scales."
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