The business jet market is booming, at least according to numerous private transportation companies that recently have reported strong sales and developed new, more flexible models. Executives at these companies said corporate interest is driven by several factors, including the decreasing number of premium seats offered by commercial carriers, service cuts to certain smaller communities and the increasing need of corporate flight departments for supplemental lift.
"On both corporate and leisure, we are seeing a lot more business to places that are hard to reach," said Ken Austin, executive vice president at Marquis Jet, a private jet membership company affiliated with NetJets. "As the hub and spoke becomes more broken, it will be even more difficult to go directly to more places. Productivity and morale are being destroyed, and many more people can afford to fly privately than they know."
Marquis has sold more than 2,000 jet cards. About 30 percent of its business is corporate.
Norwell, Mass.-based Sentient Jet said it has sold 1,700 memberships, roughly 60 percent of which are used for business travel. Of that 60 percent, about half is "true corporate," which involves travel managers and other corporate decision-makers. Sentient CEO Mark Stone cited the "continuing demise of the commercial sector." Though he acknowledged that first- and business-class passenger migration from commercial carriers will take years to build, he has seen growing momentum. "I can imagine developing a product that is more inviting to travel managers, to tempt them to give our model a try," Stone said. "We also hope to make progress on the travel agency front."
Meanwhile, Delta AirElite Business Jets, the only business jet operator in the United States affiliated with a major commercial airline
(BTN, March 15), recently said that in the past year it had doubled its revenue flight hours.
Executives at some private jet companies told BTN that surging interest in the domestic market, as well as in Europe, has not spilled over to transatlantic routes. "Transatlantic business jet travel is very expensive and commercial carriers still do a decent job on those routes," conceded Sentient's Stone. "Most clients tell us they still use commercial to Europe."
British Airways corroborated that observation. "Executives will use corporate jets once they land in Europe or once they land in the United States, but we haven't seen an impact over the water," said David Noyes, BA executive vice president of sales and marketing for North America.
Nevertheless, Bombardier Aerospace last month introduced Bombardier Transatlantic Express, a fixed-price charter service operating between Western Europe and North America through the Bombardier Flexjet Europe program. The company claims the service, which will launch this summer with long-range business jets, "will establish a new speed standard faster than any other civil aircraft since the Concorde." The service will operate from more airports than flights offered by commercial transatlantic carriers.
Transatlantic Express clients also will receive complimentary limousine service to and from departure and arrival airports, full inflight meal service, power ports and other amenities. British Airways CEO Rod Eddington added that the carrier carefully is monitoring the development of all-business class transatlantic services offered by Air France
(BTN, Feb. 9) and Lufthansa. "Twice in my time at BA we have looked at doing all-business class operations, once with Boeing 757s," Eddington told investors last month in New York. "Whenever we have done the analysis, it doesn't make sense. If you are going to offer an all-business class product, you better make sure you maintain frequency and timing."
New Companies, New ModelsAs commercial carriers continue to explore opportunities for new corporate-focused products, the private jet market continues to see new players and diversified products. Launched late last month, OneSky Network is an online portal providing users with step-by-step information for actually purchasing the services of specific charter aircraft. The company expects its system will help those seeking to use charter for the first time, as well as corporate flight departments that need supplemental lift.
OneSky Network works closely with more than 30 carefully selected charter operators, providing users with access to more than 200 aircraft. Executives said they are working toward building an available fleet of more than 1,000 aircraft.
"The charter industry is a fragmented one that can really benefit from systems integration," said OneSky president and CEO Greg Johnson, referring to the system's quoting engine and links between operators and the end-user interface. "People may not need to use brokers anymore." OneSky derives a 5 percent commission from any bookings, but said that figure is factored into the quotes that system users see.
Johnson said discussions with corporate flight departments helped the company build in data points and other filters to make the system fit their needs. Users can view detailed information on individual aircraft, including price points, liability insurance, inflight amenities, safety inspections and aircraft photos. The system also can store mission profiles. Johnson added that the company is looking to work with travel agents and hotel concierge services, educating them so they can help clients make informed decisions when chartered aircraft are needed.
Another new model comes from Bombardier Flexjet. The company this spring announced a new financing arrangement for its fractional ownership program, allowing more travelers to take advantage of private jet transport aboard Bombardier Learjet 45, Learjet 60 or Challenger 604 business jets. Dubbed Jet Rich Quick, the program's only upfront cost is one month of payment. Clients then are charged a monthly lease payment during a two- or four-year term. The monthly payment ranges from $4,600 for a one-sixteenth share of a Learjet 45 over a four-year term to $12,000 for a one-sixteenth share of a Challenger 604 over a two-year term. Clients also are charged a standard monthly management fee, a variable rate per occupied hour and fuel component adjustment.
For corporate clients seeking larger aircraft, Private Jet Services Group manages reconfigured Boeing jetliners that accommodate 20 to 60 passengers. The North Hampton, N.H.-based company launched last summer with a specific focus on the corporate market. Much of its business is corporate incentive travel, though it also furnishes corporate shuttles, including a Boston-southern California operation crafted with a travel agency. "Between small corporate jets and commercial airlines there is a massive vacuum in which we fit nicely," said founder and president Greg Raiff. "If you a have group with 40 or more people on business or first class airfares, our value proposition and price points are so compelling that our conversion ratio is significantly higher than 80 percent."
Crossing Boundaries, a meetings and incentive agency affiliated with Conlin Travel, is one Private Jet Services client. The agency had used larger planes for a few incentive trips last year for one of its corporate accounts. "My client wanted to really make sure he had rewarded his people," said Crossing Boundaries president and COO Jim Walter. "If you need to move a lot of people in first class, commercial airlines don't have the space and may be hesitant to sell all first class seats on a plane to one group."