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While last month’s news of a terrorist plot in the UK sent shares in airlines down, it has proved to be of benefit to private jet companies. Rather than being humiliated at airports, which now require passengers to check in three hours before departure, and for a while did not allow them to take a BlackBerry or a laptop on board, a growing number of executives is choosing to fly privately.
Big players in the US private jet business reported that interest in memberships increased immediately after the incident, with some of the interest translating into sales.
Private flying is similar to riding in a limousine as opposed to taking a bus. You do not have to be in the company of strangers, and it is more flexible and customer-friendly. You are able to reach more remote destinations and change course on request. The service is more reliable and you are insulated from the rules and hassles of regular travel, such as immigration, customs and rules on what you can and cannot take on board.
If you are flying to the US, you still have to go through customs and immigration. But an immigration officer will be requested and the procedure of checking your passport and, in some cases, taking fingerprints, lasts about 15 minutes. And in case the immigration officer is late, you can rest in a luxurious lounge, which certainly beats waiting in long queues.
To compensate for all of the above, private jet companies ask for nothing in return, apart from a lot of your money. And even on this point, a number of club and fractional ownership schemes are now making it more affordable.
Steve Hankin, chief executive of Sentient, one of the leading membership-based private jet companies, says revenues from trips booked through membership programmes in the two weeks immediately following the alleged bomb plots increased 150 per cent – an unusual volume for a season that is traditionally quiet.
The use of private jets had been surging since well before the UK incident. According to Joe Moeggenberg, president of the US-based Aviation Research Group, there was a rise in interest five years ago immediately after September 11 2001 but that did not quite translate into sales. “It was not until late 2004 that it really took off,” he says. This time there is increased interest and usage.”
Ten years ago, to fly privately you would have to own a jet, or charter a plane and pay for a round trip. With the introduction of fractional ownership and, more recently, membership programmes and jet cards, the industry is able to reach out to a considerably wider pool of wealthy individuals. Nowadays, you can fly privately for as little as $41,000 by purchasing a “jet card” – similar to a timeshare – which gives you 10 hours of flight time on a specified aircraft.
Delta AirElite, a subsidiary of Delta Airlines, has reported a 70 per cent increase in interest, which translated into 30 per cent more sales in the two weeks after the terrorist scare at London’s Heathrow airport on August 10. Since then, the company has had a sustained sales increase compared with the same period last year. Brandon Greene, Delta AirElite’s marketing director, says 10-hour “Perfect 10” jet cards are the most sought after options. “The majority of our customers combine private flying with commercial flying,” he says.
Fractional ownership is a lengthier and more expensive commitment. At NetJets, the Warren Buffett-controlled leader in the fractional ownership business, fractional shares start at $406,250 for a 1/16 interest (the equivalent of 50 hours’ annual flying time) in a Hawker 400XP large-cabin aircraft that seats seven.
Fractional ownership companies such as NetJets and FlightOptions also offer leasing and jet card options.
NetJets declined to report any sales figures but has issued a statement saying it does not expect its operations to be affected significantly by the latest threats.
Another essential advantage of flying privately for those who can afford it is the access to 5,000 airports across the US, while commercial aircraft can access only 500. This allows private jet operators to avoid crowded airports and change course in mid-air if weather conditions or other circumstances create delays. Everything points to continued growth in the market next year.
Gulfstream, a General Dynamics company that supplies aircraft to most of the private jet companies, sold 89 carriers last year and expects to sell 111 this year, a 24 per cent rise. Robert Bougriet, director of corporate communications, says that in the past year sales periods have shortened. In other words, customers who showed interest in buying an aircraft used to take three months to make a decision. It now takes them only two months. That is no surprise. If the figures are any guide, wealthy customers are deciding that it is worth paying extra to fly privately.