Special Report: Business Jets-Private Jets Benefit From Spiraling Commercial Usage

Despite the economic downturn, several private jet companies are moving forward with program improvements meant to attract corporate business as commercial airlines pare schedules and cut certain services and amenities.

Chicago-based Indigo, for example, last week relaunched private scheduled service between Teterboro, N.J., and Chicago Midway. The company, backed in part by American Express, had pulled down most service—save traditional charter operations—when it ceased using older Falcon jets. It now is focused on using newly arriving Embraer Legacy jets and selling its services—initially four daily flights between the two airports—to corporations. To that end, Indigo expanded its salesforce from one person to seven. "Our direct salesforce is out there and targeting companies for this type of service, particularly privately owned, entrepreneurial-type companies," said Indigo chairman and CEO Pete Pappas, who noted four or five investment banks and law firms already have signed contracts.

Indigo also is continuing marketing efforts through partner American Express, which maintains a minor stake in the company. "We continue to have an interest and recommend the service for clients both on scheduled service routes and for traditional charter," an Amex official said. "We think their new planes represent a very good option for companies flying those routes anyway and with a high percentage of their fares in the full fare range." As such, smaller clients, such as those serviced by American Express One or those too small to warrant discounts from commercial carriers, would be well suited for the product.

Indigo also is working with such corporate travel agencies as Best Travel & Tours, Carlson Wagonlit Travel, Robustelli World Travel, Tzell Travel Group and Valerie Wilson Travel, according to Pappas. Unlike commercial airline reservations, Indigo bookings earn agencies a 5 percent uncapped commission. Indigo's services are available via the Galileo, Sabre and Worldspan reservations systems.

Pappas said Indigo next will set its sights on serving Westchester County Airport in White Plains, N.Y. "There are a number of other markets we have identified for the future, including Atlanta, Boston, Denver, Hartford and Philadelphia," he said, "but we will look to serve those places through alternate, convenient airports."

The Embraer Legacy is a modified version of the 37-seat ERJ-135 widely in use by such regional carriers as American Eagle and ExpressJet. Indigo, which recently received its second Legacy and expects to field nine of the jets by the end of the summer, configures them with 16 "executive style" seats with 43 inches of pitch. The total order calls for 25 deliveries, with another 50 options. "I am hoping they will be so well received that we can advance the delivery schedule," Pappas said. Aside from spacious seating, Indigo's inflight service also includes customer service managers. "Both onboard and on the ground, these people become the executive assistants for businesspeople who use our services."

Meanwhile, the concept of private aircraft membership continues to gain traction. Delta AirElite, a Delta Air Lines private aircraft subsidiary, last month launched its Fleet Membership Program, enabling companies to prepurchase blocks of corporate jet services in 25-, 50- and 100-hour increments. The company claimed the program is the industry's only private jet membership program with a specifically designated fleet.

"Delta is pleased to offer a new product that takes full advantage of the benefits of Delta's industry-leading customer loyalty programs and creates a high-quality, easy-to-use business jet travel option that complements scheduled passenger service on Delta Air Lines," said Delta president Fred Reid.

Similar to other membership programs, Delta AirElite's new product allows customers to select aircraft and schedules that meet their needs without hefty financial commitments required for full or fractional ownership. The program offers guaranteed availability and, as an added attraction, integration with Delta's mainline frequent flyer program, notably elite status distinction.

Norwell, Mass.-based Sentient also offers a membership program and recently reported strong results from 2002. Annual sales jumped 78 percent over 2001 and membership in Sentient's debit-model TravelCard program grew 76 percent. "Membership is by far the fastest growing segment of private aviation," said CEO Mark Stone, citing the slow economy for what he called diminished interest in jet ownership.

By the beginning of 2003, Sentient said it had 1,400 members, 60 percent of which were corporate, "but we have not done a good job getting in front of corporate travel managers," Stone acknowledged. "It is one of our top two priorities." Sentient's corporate business thus far generally has been only for clients' top executives.

Sentient also claimed to offer the industry's only upgrade reward program, enabling repeat customers to upgrade to larger jets. "But for the corporate travel manager, our greatest benefit is being an outsourced service provider with set prices," Stone said. "It gives them the ability to do all the calculations and know precisely how much they will spend."

Debit accounts are set with an initial balance of $100,000, $250,000 or $500,000 and have no exit penalties. Cardholders are guaranteed a five-hour response time and can work with Sentient on ground transportation, concierge services and other onboard amenities.

As companies like Sentient cite growth of the membership model, others remain bullish on traditional charter and fractional ownership programs. For example, Executive Jet Management—provider of aircraft management and charter services—recently added seven planes to its charter fleet and now manages more than 100 aircraft in 50 locations nationwide. The company last month opened a charter services office at Teterboro Airport. "Last year, the number of Executive Jet Management's international departures out of New York markedly increased," said president and CEO Albert Pod. "We look for our new Teterboro office to increase that business even further this year."