Many people ask what the options are to more traditional travel of commercial airlines. We know that on a commercial airline flight there are different classes of travel, be it coach, or business class or first class, but what are the options if you want to fly via a private jet? There are 4 options outside of commercial air travel that should be discussed. The options are listed as:
Each of these four types of corporate travel come with their own unique opportunities but none of them can be argued as the best option than outright ownership. I listed private ownership as the top spot here because that is what makes most sense if your travel extends beyond those of normal passengers in the business sector. I like the chart and discussion that was put together in the Wheels Up article written by Jeremy R.C. Cox. This is a great analysis of four types of of corporate travel listed above. He has listed out the annual costs associated with each option by using a Cessna Citation X and the Pilatus PC12. The Cessna Citation X is becoming one of my favorites in that category and it was interesting to note his analysis using that model.
The conclusions drawn by Cox in the article state:
“The Magic Formula: After analyzing the numbers listed above, you will see that there is a magic formula that comes in-to-play when you are deciding whether you should rent, or lease, or own. In this case we learn that you will have the lowest operating cost, per flight-hour ‘overall’, if you own your aircraft when your annual utilization is above 240 hours of flight-time.”
Having this type of analysis is crucial to the process of determining your own type of corporate or personal private jet usage. The analysis includes other costs that are not necessarily included in this formula such as your region, the type of travel you are doing and the Direct Operating Costs (DOC). This can be discussed at the time you decide on your own corporate jet purchase.
I was reading an article sent by a friend that indicates that studies have shown that corporate jet use is up and the month of June showed the increase as well. That means more and more companies are using their corporate jets for more travel and I am sure that personal use is up as companies and their executives use the aircraft for personal use associated with vacations. This increased use of the aircraft also means a possibility that you will have a higher maintenance budget. If you have budgeted for an amount certain for 2010, and that amount increases at all that may mean that your business aircraft or private personal jet may now be up for an inspection and those costs will be added to the yearly maintenance budget.
If your usage of your corporate jet increases over the year and it changes either your maintenance schedule or inspection, this can have a large effect on the annual budget you have for the use of that aircraft. You need to stay on top of that usage and the budget associated with the use so that it will not change your bottom line at the end of your fiscal year. Keep someone on top of the business use and the personal use and keep up to date with the maintenance of your aircraft. With the use of corporate jets increasing for both the business use and personal use it may be marking another indicator that the slide is over in this industry. It is good to hear that corporate jets may be on the rise.
The NBAA will be holding its annual convention and meeting in Atlanta, GA on October 19-21, 2010. The Georgia World Congress Center will be host to the vent for exhibitors, speakers and attendees, and there will be a static display of aircraft at the DeKalb Peachtree Airport. This is the 63rd Annual meeting for the conference and they hope to have 25,000 attendees in the business aviation industry attend the event, all looking for the newest and best in the world of business aviation. You can register for the event at the NBAA site. The description is stated:
NBAA2010 is the premier annual meeting place for the business aviation community. This event brings together business leaders, government officials, manufacturers, corporate aviation department personnel and all manner of people involved in nearly all aspects of business aviation.
This event should give us a good look at whether the industry as everyone is stating is making a comeback from an economic downturn. I expect that since we are seeing record numbers at other events for this event to be well attended and many professionals all looking to see the future of the business aviation industry. Let us know if you plan to attend the event and whether you too have the same outlook that 2010 marks the year of the comeback in corporate and business aviation.
When purchasing a corporate jet or company jet it is necessary to determine if you are purchasing the aircraft as a sole owner or if you are intending to be a co-owner of the aircraft. Each has its own set of issues related to the ownership.
A sole owner of a corporate aircraft or business jet means the company or person owns 100 percent of the aircraft and does not share in the ownership. This is by far the best way to own a corporate jet as it affords the owner the great benefits and flexibility. This allows the owner to use the aircraft at any tie and for any reason and it need not be shared with other owners and their needs and uses of the aircraft. This also allows the owner to have full control over the management of the aircraft including maintenance, safety and security and the amenities that the aircraft will have. It has been stated that if you intend to use the aircraft for 250 hours or more of travel it is beneficial for your company to won its own jet. This is merely a guideline of course and not meant to be a rule. Many companies use business jets for less or more.
if you are in a co-ownership situation this means that the owners all own a portion of the aircraft but are still responsible for the costs associated with its use. many companies handle their own costs and use, but it is also a common practice to have a management co0mpany provide all of the needs of the aircraft. If in a co-ownership role, it is not quite as flexible in the travel schedule and the personal use of the aircraft. It is important that this not be confused with joint ownership or partnership roles of ownership. There may be benefits or other business, legal or tax reasons for the different types of ownership and these should be flushed out before making your next purchase.
I have been traveling around Colorado and parts of Wyoming this week, not as a business related trip but because I am taking my family around sightseeing. It hasn’t been in a private aircraft or a business jet but more along the lines of a family minivan. I wouldn’t mind showing the family all of Colorado and Wyoming in a corporate jet so if you want to loan me yours for a the rest of the summer feel free.
I was looking at the airport in and around Vail Colorado and wondered about how they service the world of corporate jets and business jets. I grew up in the mountain town of Vail Colorado in the late 60’s and early 70’s when my father helped work on the Interstate that runs through the Vail valley area. My grandparents actually owned 65 acres in West Vail at that time and I can remember when they sold the property in the early 70’s. I don’t have the heart to tell them now what they particular tract of land sells for in present dollars.
Vail, Colorado, has a great airport at Eagle County Regional Airport (EGE) and it can handle most needs and the folks at Vail Valley Jet Center can help you with travel.
We passed through near Aspen, Colorado and that is the world of the celebrities that visit there and you can see a Hollywood celebrity there almost anytime of the year but mostly while ski season is at its peak. I worked in Aspen during college and I can tell you that it has its share of luxury jets landing at that airport.
I also made our way through Steamboat Springs, Colorado on the return trip and wondered about its airport and how it caters to the world of private and corporate jets. They have Bob Adams Field (KSBS) in Steamboat Springs.
All of these mountain towns have a simple thing in common, they are ski towns. They also have their share of visitors that have their own luxuries like private or corporate jets. They also have airports that can service these types of aircraft and it makes it easy for high dollar clients to vacation there. I love Colorado and their mountain towns. Perhaps you could spend some time there, and if you do take your jet and be in and out easily.
We are continuing to see more and more commercial airline companies teaming up with private jet charter companies to offer different opportunities in travel. The most recent company to join the private jet charter market is British Airways.
British Airways has teamed up with CitationAir to offer the latest in no frills private jet charters. AirlineTrends.com recently reported:
British Airways has teamed up with CitationAir, the private jet charter subsidiary of Cessna Aircraft, to offer its passengers a private jet connection within North America and the Caribbean. The new PrivateConnect service pitches itself as a ‘no-frills’ private jet service.
It is also stated in the article that:
“The service is available to anyone who has flown with BA in the past 12 months, members of BA’s frequent flyer programme, as well as employees of the airline’s corporate clients. BA customers can also use PrivateConnect to fly within North America if they haven’t arrived on or are due to depart onto another flight. Costs range from USD6,000 to USD10,000 per jet per hour depending on the type of aircraft. Chauffeured transport will be on hand after clearing customs to drive customers between their British Airways flight and CitationAir private jet. BA currently flies to 19 destinations in America.”
British Airways is joining Korean Air who recently joined with FlexJet and they join of course Delta and Lufthansa who has been partnering with private jet companies since 2008 to offer the service. As stated in their report, private jet companies, due to the current economic issues and industry decline are finding other distribution channels for their services. This also offers up ways for some of the larger commercial airlines to offer ways for their premium customers to find ways to expand their ability to land at airports where the larger commercial airlines are not able. This allows some of the passengers to go to destinations that were not available to them in previous bookings. This does make sense for the private jet companies, the airlines, and the luxury passengers.
Everyone seems to be getting their feet back under them in this rebounding economy. The aviation business is seeing some light at the end of the tunnel and it seems that part of the reason is how those with the means are investing their money. Katya Kazakina of Bloomberg reported yesterday:
As millionaires’ assets rebounded in 2009, they put more money in tangibles such as art, jets and gems, according to a report released this week by Capgemini SA and Merrill Lynch & Co.
It seems that wealth management firms were very hard hit as the report indicates that 30 percent of the millionaires in the world withdrew their funds in the wealth management sector as the Standard & Poor’s fund dropped like a rock. It seems that index is beginning to rebound however, from a 38% drop to a 22% gain over the last year.
Of note also was the reports listing of 6 major areas of investment by the world’s most wealthy:
Six “passion” investments listed in the “World Wealth Report” typically account for about a third of a millionaire’s total holdings, Van der Linde said: luxury collectibles such as yachts, jets and high-end cars; art; jewelry, gems and watches; other collectibles such as wine and coins; sports investments, including teams and race horses; and a “miscellaneous” category comprising club memberships, musical instruments and other items.
It seems that private jets or business jets are a good place to put the money that would normally be invested in a wealth management company or other vehicles. Americans and Japanese millionaires appear to be the best market for the corporate or private jet whereas other countries are more likely to add art or or other luxury items.
Also of note was the fact that in this tight economy and when things are tough it seems to be tougher for nonprofits and other philanthropic companies. When there is not much of the pie they seem to be the hardest hit.
From our perspective corporate jets or private aircraft have always been a good investment for those that can afford to have the luxury of owning their own jet. If we can help you with your investments, please contact us and see what we have in our inventory.
Today at the Air Transport World 3rd Annual Eco-Aviation Conference, J Randolph Babbitt spoke about the environment and how the FAA is working to make it better. He states that over the last three decades aviation has done an exceptional job of reducing the noise and emissions of aircraft. He gave us an example of that reduction by stating that a fully loaded 787 flying from San Francisco to Kennedy yields fuel efficiency that’s similar to a 2010 Honda Accord at almost 10 times the speed. Very impressive statistic being that we are moving 3 times the amount of passengers as the 80’s.
In addition to the remarks about how well the industry has done over the last thirty years, Babbitt stated that the FAA is launching the CLEEN program. The CLEEN program, Continuous Lower Energy, Emissions and Noise, will award $125 million in contracts today to five separate companies to develop and demonstrate technologies that will reduce commercial aviation jet fuel consumption, emissions and noise. These five year contracts are going to: Boeing, General Electric, Honeywell, Pratt and Whitney, and Rolls Royce. Babbitt stated:
“The bottom line here is that we want engine and aircraft technologies that can be incorporated into the U.S. fleets by 2015 and will produce a 33 percent reduction in fuel burn regardless of the aircraft class. We want to cut nitrogen oxide emissions by 60 percent. And we want to make a cumulative reduction in aircraft noise levels by 32 decibels. These are ambitious goals, but they are achievable goals.”
Babbitt stated that this new technology could be seen in commercial aircraft as soon as 2015. This seems to be a new strategy for everyone as we begin to see how we can become more eco-friendly in out industry and how we can make our world a better place. These companies and the FAA seem to be leading that new directive well.
If you’d like more information about GE Aviation’s commitment to reduced emissions and fuel consumption, visit their website: www.geaviation.com
I have been looking around recently at the business that must be conducted on aircraft and how we as a business world are staying connected. Part of the business of owning a private aircraft is the ability to conduct business while on that aircraft. I have also been looking at some of the solutions for staying connected on flights and was particularly interested in how we stay connected via the Internet. There are many enterprise software systems and applications that allow us to conduct business virtually and can eliminate some of the travel that has been necessary in the past. There are times however when travel is a must and on a corporate jet flight business can be conducted during travel. Staying Internet connected during the flight allows the business traveler to get to the business of business.
Aircell is such a company that is providing a solution for the business traveler to stay connected while on a corporate or business jet. Aircell tells us how they can keep us connected:
With the arrival of Aircell High Speed Internet, business aircraft passengers on U.S. flights can now use their laptops or PDAs to enjoy a true high-speed Internet experience – from full-on web surfing, to real time e-mail with attachments, streaming video, transferring large files, and accessing corporate VPNs. Simply stated, Aircell High Speed Internet represents the absolute best combination of speed, size and cost available today for any business aircraft.
Imagine you are having to take a quick flight across the country without having he opportunity to prepare for that sales meeting or get prepared for that presentation that could spell disaster or make you a huge success in your company. You did not have the proper time to prepare but could prepare on the trip to the location of the presentation. With the ability to have High Speed Internet in flight, that time spent could be invaluable. Not only were you able to drop everything and have the flexibility of having your own private jet take you to your destination but now you have the ability to prepare in flight. Technology is gaining ground in this area as well with the invent of Apple’s iPad, making it even easier to conduct business on the fly.
This is an idea that is not lost on those in the industry as XOJet is installing the Aircell solution on its entire fleet by the end of July as was announced June 10, 2010:
Business aviation leader XOJET, Inc. announces that its fleet of Bombardier Challenger 300 and Cessna Citation X jets will feature high speed Internet. In partnership with Aircell, the world’s leading provider of airborne communications, XOJET is currently installing Aircell High Speed Internet on all aircraft in the fleet. With more than 70% of the fleet installed by the end of June and the entire fleet scheduled for completion in July, XOJET will become the first business aviation operator to offer wireless service on every flight in the Continental United States.
I am looking forward to seeing how technology changes how we stay connected in the sky. If you are purchasing a private aircraft or a business jet, make sure you can conduct business while enjoying the new purchase.
[photo via aircell]
Earlier this year the Transportation Security Administration was discussing the idea of creating tighter security with the use of private or business aircraft. The threat of terrorism seems to be more of a commercial issue than it is a private jet or corporate jet issue. With the crack down in security on the commercial level many people were concerned that terrorism may be looking to the use of private aircraft or the business jet industry. So far this has not been an area of concern and the TSA has not implemented any changes.
With more than 300 small airports to make sweeping changes to in the area of security it would be a fairly costly maneuver. At this juncture the TSA has not implemented the changes and has not discuss any further ideas towards that idea. The current security falls into the hands of the individual operators of the aircraft, the crew and the passengers. The likelihood of a terrorist action using private aircraft remains a possibility but as yet this has not been an area where the TSA has made any changes. At this time the aviation community is doing a good job of reducing the risk of terrorism and private jets or business aircraft.
The most recent event of terrorism involved a small plane in Austin, Texas. The Washington Post covered that event and reported:
Pilots of private planes fly about 200,000 small and medium-size aircraft in the United States, using 19,000 airports, most of them small. The planes’ owners say the aircraft have little in common with airliners.
“I don’t see a gaping security hole here,” said Tom Walsh, an aviation security consultant. “In terms of aviation security, there are much bigger fish to fry than worrying [about] small aircraft.”
It is not discussed about the issue of private aircraft or the size of a large business jet, but in that case it seems that they have tighter restrictions on the passengers and the use than a commercial airliner. We will keep you up to date on any changes in the private aircraft security.
