It used to be that the only alternative to flying commercially was to pay millions to purchase your own private jet. Now, there are more options and some innovative new ventures that make it easier for infrequent travelers who still want the freedom and flexibility a private jet provides.
Private flight alternatives
Up until recently, there were only a few options for flying privately without owning a jet:
- Jet chartering, which is popular, but has also proven to be financially inefficient due to empty return flights.
- Fractional ownership, which is another popular option but still ultimately expensive for the number of flight hours you get when maintenance and fuel costs are factored in.
- Jet cards, which are used to prepay for a set number of flight hours that can then be used at will.
Each of these options has its drawbacks, but during the recent economic crisis, less expensive alternatives to private flight were necessary. Many jet companies and corporate travelers tried to make the best of a bad situation by coming up with more creative options for flying private. As the industry tries to find ways to make private jet flight economical, we’re seeing a lot of innovation surface. Here are two recently launched ventures attempting to make private flight more flexible.
Brokering empty legs: Fresh Jets
Timmy Wozniak, who previously worked for a guest services company, estimates that 33% of charter jets are vacant for one leg of the flight. That’s why he and business partner Johnny Sengelmann launched Fresh Jets: a service that offers the available seating on empty flight legs to their website’s users.
About 410 companies and more than 1,400 individuals have signed up for the free website’s service so far, and jet operators pay the company a licensing fee to be listed on the site.
Cutting out the middlemen: Returnjet
In another creative move, Mark Blanchfield has launched Returnjet, which lets globetrotters search for and reserve private planes using a website that cuts brokers out of the equation and substantially reduces the cost of chartering a private jet. By connecting people who need to fly with already-scheduled flights, Returnjet helps customers save costs by sharing flights.
Taking advantage of the fact that 40% of private jet flights (an even higher number than the vacant legs on charter flights) are empty, this new UK-based business has already signed up two-thirds of the UK’s private jet operators and gives jet-setting customers more choices.
Despite the state of the economy, travelers still want to fly in private jets. Instead of crushing the private flight business, the economic downturn has spurred innovations that are making private flight more accessible.
While recent regulation changes in China have aviation experts drooling over the potential for a major upturn in the Asian jet market soon, private jet makers are still counting on the U.S. for new orders for the time being.
And with good reason — the U.S. is still home to the world’s largest population of high net worth individuals. Ultra high net worth Asian owners account for only 6% of private jet owners globally, despite the region having 22% of the world’s ultra high net worth individuals. So, the U.S. remains the world’s largest market for private aviation. Around two-thirds of the world’s 20,000 business jets are based in the U.S., and American buyers are likely to continue to be the primary source of demand.
The gap between the markets can be explained in part by one of the key differences between Eastern and Western thinking in regards to private jets: In the U.S., having a private jet is widely viewed as a useful business tool that gives executives needed flexibility. In Asia, they are seen as simply a symbol of wealth.
Still, the Asian market shouldn’t be discounted, either. While it’s not at U.S. levels yet, China is the second largest economy in the world and their business aviation market will undoubtedly be influential in the coming years and beyond.
Some predictions from industry experts include:
- 50% growth in global demand for private business jets in the next decade
- 20% growth in the Asian market for private business jets
- New business jet deliveries totaling $250 billion (9,250 new aircraft) over the next decade
Furthermore, the industry predicts a phenomenal year as demand gets a jump start due to the global economic recovery. The most important driver fueling jet orders and inquiries regarding existing jet resales is simply how comfortable business executives are feeling about the growth of their own business and the stability of the economy. This means that people who have been putting off buying a jet during the leaner years are now starting to figure out their order.
St. Patrick’s Day is this week and, with the luck of the Irish, the business jet market is finally showing some growth. Industry experts have indicated that in 2013 the industry hit bottom and that we should all expect a modest upturn in 2014.
In reality, the difference between 2011 and 2012 was only a negative 2.9 percent. But the lean years continued for the business jet market in 2013 with the lowest private jet delivery numbers in nearly a decade.
Last year suffered a very rocky start with Beechcraft’s production halt at the end of 2012, and Cessna’s production halt of the Mustang, CJ2+, CJ3, and CJ4 lines in April, 2013. Ultimately, 2013 business jet sales topped 2012 by a mere six total jets, just barely beating the previous year’s numbers in what could only technically be called growth.
While no one is expecting great strides, the early analysis of 2014 shows a far brighter outlook:
- Back orders of the Gulfstream G650 are getting caught up and Gulfstream is on course to ship the highest number of aircraft in the last five years.
- Airbus deliveries already stand at four — half of 2012’s total.
- Boeing has delivered five BBJs and one BBJ2 already.
- In the year to date, Bombardier has delivered 127 aircraft.
- Dassault’s numbers were bolstered by the first six deliveries of the Falcon 2000S.
New products, including the Citation M2, the Sovereign and Citation X from Cessna, are expected to drive the market; current planes are aging and the long economic dry spell meant many owners put off replacement and repairs.
Although experts predict that the small and midsized segments of the market won’t return to their 2008 peak until around 2020, the big market is already doing well. “We think there is a good five-year run-up coming,” says Teal Group aviation analyst Richard Aboulafia.
The bizav industry has been sheltering from the economic thunderstorm, but now the skies have cleared, and these predictions are the rainbow leading us to the pot of gold at the end — a recovered economy and a full-strength bizav market again!
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Want a faster way to fly from Los Angeles to Tokyo? You’ll have it about four years from now, when the world’s fastest business jet comes on the market: The S-512 supersonic jet from Spike Aerospace. According to the Boston-based aerospace firm, when the S-512 is released in 2018, it will be able to make the Los Angeles to Tokyo run in eight hours (that’s a 16-hour flight today).
Windowless cabin
One of the more revolutionary features of the S-512 supersonic jet is its windowless cabin. Instead, the interior walls are embedded with display screens. Exterior cameras will reconstruct panoramic views of the outside and project those images onto the screens. Passengers can dim their screen when they want to sleep or change it to display other scenic images stored in the jet’s computer system.
According to Spike, windows present a variety of structural design complications. Eliminating them means eliminating weight and additional structural support, as well as reducing the drag usually caused by windows. Before the S-512, it wasn’t possible to create a windowless aircraft.
Advanced features, upscale price
The Spike Aerospace team, along with a handful of entrepreneurs and investors, wants to make the S-512 the world’s first private supersonic jet. The S-512’s hefty $80 million price tag will buy you a plane that
- cruises at Mach 1.6 with a maximum speed of Mach 1.8,
- flies from New York to London in just 3-4 hours (today that’s a 6-7 hour trip),
- has a range of 4,000 nautical miles,
- measures 131 feet long and has a 60-foot wingspan, and
- has a 40-foot-long, 6-foot-2-inch-high cabin.
Sonic boom challenges
As you might have guessed, it is no accident that Spike quotes overseas flight times and not continental U.S. flight times. The Federal Aviation Administration (FAA) prohibits supersonic flight over land (with a few exceptions) because of noise regulations regarding sonic booms.
While Boeing, Lockheed Martin, and even NASA have been working on ways to redesign supersonic aircraft to reduce the boom that occurs when breaking the sound barrier, those efforts have not yet succeeded.
So is $80 million too much to pay for a plane that can only perform overseas trips? That’s up to you to decide.
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Honeywell’s Global Business Aviation Forecast released in October 2013 shows good news for the next 10 years, particularly for North American markets. This news is a welcome up note following the 2009 economic low.
According to Honeywell, North America is a reemerging market: 61% of projected demand between 2013 and 2017 will be North American, which is an 8% higher demand than last year. The rest of the world, including Brazil, Russia, India, and China (BRIC), are falling behind; however, 50% of buyers in the BRIC countries plan to make a purchase within the next two years. The outlook for the European market is bleak with only 12% of new jet deliveries over the next five years headed there, a 6% decline compared with the forecast in 2012. However, analysts remain optimistic that those numbers might improve.
Honeywell’s forecasts paint a positive picture for the next decade. For 2013 through 2023, the company’s outlook predicts 4-5% average annual industry growth. In addition, the report forecasts as many as 9,250 new business jet deliveries, which equates to more than a $250 billion value. In addition, 28% of jets will be replaced with new jets over the next five years, and more than 55% of new purchases are expected to be large-cabin jets.
This statistic highlights a trend towards larger aircraft. Super midsize through ultra-long-range and VIP-configured narrow-body airliners are expected to account for more than half of total deliveries and 83% of the deliveries’ value. This scenario highlights the reason that current forecast for the number of units is lower than it was in 2012, but the value is 4% higher: Price increases and the market trend toward larger models.
“The trend toward larger cabin aircraft with ever-increasing range expectations and advanced avionics is seen more strongly than ever in this survey,” said Rob Wilson, president of Honeywell Business and General Aviation.
What does all this mean for current aircraft owners and those in the market? The future looks bright! With new jet orders gaining strength this year, used jet sales should also see activity. Whether you are looking to sell or purchase a jet — new or pre-owned — an experienced broker can help you navigate the best deal.
Contact L & L International if you need assistance in purchasing or selling a private jet. You can reach our sales specialists today at sales@L-Lint.com, call us any time at 877-453-8276 (+1.305.754.3313), or visit us online.
Traditionally, China has not made private jet flight easy for its citizens. China remains a country where the military controls 80% of the airspace, and there are formidable obstacles to obtaining a private jet license. Even the approval for a three-hour trip on a private jet takes at least two weeks to obtain — and it’s never a guarantee.
On top of all this, China has a significant lack of facilities where small planes can take off, land, and refuel, and there are few low-altitude aviation maps available. This means hopping on a private plane to see the other side of the country generally remains a dream — even for the country’s wealthiest people.
Recent shifts, however, indicate that China is preparing to open its airspace to private pilots. More and more people have begun to buy private aircraft and apply for flight certifications for business and recreational purposes. China recently eased the requirements for trainee pilots by changing the standards for theoretical exams, flight tests, and even the physical conditions for flight students.
More importantly, a little-noticed guideline issued in 2010 by the China State Council and Central Military Commission will likely lift the ceiling for low-flying aircraft by 2020.
Business jet manufacturers are hoping to cash in on the demand for smaller planes in China and have begun making plans, if not deliveries:
- Bombardier reports the sale of 100 business jets and indicates deliveries between 2013 and 2032 will be around 2,420.
- Dassault has sold 30 jets in China and has 20 scheduled for delivery in 2014-2015.
- U.S.-based Gulfstream reported that China accounts for about 6% of its worldwide delivery of 2,150 jets.
- Cessna has already started delivering its Grand Caravan EX jet, which is manufactured in China.
“There is a beautiful potential in this market,” says Beijing-based Jean Michel Jacob, senior VP of international sales with France’s Dassault Falcon.
Keep an eye on what is sure to be a rapidly growing and changing industry over the upcoming years.
Just before Thanksgiving, President Obama signed the Small Airplane Revitalization Act into law. This means big changes for the FAA, which will be required to reform certification regulations by Dec. 31, 2015.
The required changes will affect Part 23 general aviation airplanes — that is, most light civil aircraft weighing less than 12,500 pounds. The new act means that Part 23 regulations, which are decades old, will need to be rewritten. There will also be additions to Part 21, which covers aircraft parts, among other things.
The new certification regulations are intended to benefit airplane safety and reduce certification costs. Under the law, the FAA needs to create consensus-based, design-specific standards. The new standards will not be based on existing aircraft weight and propulsion type method like the current regulations, but instead on aircraft and systems-specific parameters. These new standards should speed up adoption of new aircraft designs and lower costs overall.
Kansas Congressman Mike Pompeo, who authored the bill, is thrilled with the progress that has been made. “This is an enormous achievement for general aviation across the nation,” Pompeo said in a press release on his website. “By reforming and modernizing these regulations, this law unleashes small airplane manufacturers to do what they do best: Build airplanes and get them in the air.”
Pompeo is far from the only one who is excited to see the act put into law. “This law is a win for the government as well as general aviation airframers and suppliers,” Pete Bunce, president and CEO of the General Aviation Manufacturers Association (GAMA), said in the same press release. “But more importantly, for the general aviation pilots and passengers who will be able to benefit more rapidly from new safety-enhancing technologies.”
Insiders are sure that the law will benefit everyone, from manufacturers to pilots to passengers. Judging by the fact that the act passed both the Senate and the House unanimously this past fall, it looks like just about everyone is excited to see how the new certification regulations can streamline the aircraft business and improve safety and cost.
The biennial Dubai Airshow, a five-day event that attracts visitors from all over the world, wraps up today. It’s the fastest growing air show in the region — mirroring the growth of Dubai itself as a major hub of the aircraft industry — and has grown exponentially in the more than two decades since it began as the Arab Air Show in 1986.
Some of the world’s largest and most influential aircraft manufacturers spent the week showing off their latest and greatest products:
The Dubai Airshow was held at Dubai’s $32 billion new Al-Maktoum International Airport. The airport will be the world’s largest when it is completed in 2027, but it already boasts a lot of space: More than 130 jets were on display at this years’ show and over 1,000 exhibitors, 60,000 attendees, and 1,500 members of the media were able to comfortably peruse the planes.
Beating expectations
This must-attend event focuses on connecting buyers and sellers, and this years’ show facilitated an unprecedented number of deals. In 2007, over $155 billion worth of deals were executed at the airshow, and this year has already blown those numbers out of the water — on the first day alone, there were $192.3 billion in commercial jet transactions.
Three Persian Gulf carriers — Emirates, Etihad, and Qatar Airlines — were responsible for a large part of the deals. Together, the three organizations placed orders for 393 commercial jets. Emirates alone added 150 of Boeing’s new 777X jumbo jet and 50 Airbus A380s to its already substantial fleet.
Boeing is particularly pleased with the interest it received in the new 777X — the latest iteration in its ever-popular 777 series. In an interview with CNN, Boeing Chairman and CEO Jim McNeary says, “With around $100 billion worth of orders, this makes it the largest aviation product launch. We look forward to … continuing to support Dubai’s expansion into a global aviation hub.”
This outstanding show proves why Dubai is quickly becoming a key region for the aviation market.
After a slow start in 2013, the business aviation market’s future is getting brighter. Sources such as J.P. Morgan, Airclaims, and Aviation International News (AIN) have cited good reasons for positivity in the business jet market.
New jet sales
One of the biggest reasons for the hopeful outlook is the increase in new jet sales. Recent reports highlight Flexjet’s $5.2 billion order for 85 new Bombardier business jets, featuring the Challenger 350, Challenger 605, Learjet 75, and Learjet 85. The agreement also includes options for an additional 160 business jets.
And hopefully bizjet sales won’t stop there, as experts are predicting a growing need to replace older business aircraft. According to Airclaims, the demand for next-generation aircraft will be stimulated by the market arrival of new business aircraft, with a total of 20 new models. Offering benefits like longer ranges, less fuel burn, and lower noise levels, these new models will be an appealing option for businesses looking to increase efficiency. According to AIN Online, Airclaims estimates that the rate of new aircraft deliveries will reach 1,000 to 1,100 units annually around 2020.
Market recovery
Another good sign that the market is rising comes from J.P. Morgan. The firm reports that U.S. flight operations climbed 4.7% year-over-year in July 2013, which is the best result since May 2011 and the fourth consecutive month of year-over-year growth. With these numbers, broad-based recovery of the market isn’t difficult to imagine.
These hopeful statistics are welcome news after several slow-to-flat years in the bizjet market. Though the market was steadily climbing until the financial crisis of 2008, the sales of very light jets have been in decline since. At the same time, the delivery of large business aircraft has been more or less flat since 2003. The forecasted upswing is a light at the end of the tunnel for businesses in the private jet arena.
The bizav industry always keeps a close watch on emerging markets, and Turkey is one that has insiders excited. What makes Turkey such an industry hot spot?
- Turkey’s economy has shown continued growth even during the economic turmoil experienced by its neighbors in the European Union (EU).
- Turkey’s strategic location makes it a prime link between businesses in Europe, Asia, and Africa.
The last point is part of the reason why industry insiders are so excited about the country’s opportunities; growth in Turkey’s business aviation market is expected to provide additional opportunities in surrounding regions.
The emerging market in Turkey prompted the European Business Aviation Association (EBAA) to host a conference there in early October. The EBAA is hoping to pave the way for manufacturers and business jet brokers to start doing big business in the eastern European country.
The Republic of Turkey is eager to help foster more growth, but there are obstacles that have to be overcome in order to support a robust business aviation sector. One issue is the fact that Turkey currently doesn’t have open sky agreements with the rest of the EU. However, the country recognizes this and similar shortcomings, and it seems interested in taking steps to remove barriers and encourage bizav development.
In fact, officials have signed an agreement with the EBAA to facilitate long-term solutions for the sale and operation of business jets within the country. And, if recent trends are any indication, sales in the coming years should be good — it was revealed at this week’s NBAA 2013 convention that a Turkish businessperson is the first in line to purchase Dassault Aviation’s new, luxurious, and technologically advanced Falcon 5X.
Turkey joins the list of exciting emerging bizav markets along with Brazil, Russia, India, and China. These markets indicate that the coming years should continue to improve for manufactures and brokers within the business aviation industry.
