Fractional Jets may be the answer for economical flying

Private Aviation Fractional Jets,
In the current economy, it’s easy to miss the good stuff!

There’s been plenty of bad news in the private aviation sector in recent months. New business jet deliveries are down and OEMs have scaled back production as much as 30%. The pre-owned aircraft market is swelling with inventory and seeing tight credit and few buyers. Private travel is way, way down - - 25% to 45% over last year depending on where you look.

Then of course there’s all the negative publicity about the excesses of private air travel. The public continues to clamor for corporate blood. (Darn those GM guys for choosing the wrong mode of travel to Capitol Hill. Maybe they should have driven their cars to D.C.)

OK, OK. The business climate is difficult these days. The economy has taken its toll on business aviation in a very big way. We get it. But all the gloom and doom really misses the point. So let’s flip it!

Sure, this may not be the best time to take on the capital expense of buying a whole business jet. They don’t come cheap. Likewise it might be a smart move for a company to unload a plane that’s been sucking up dollars even while sitting in the hangar. But those situations address concerns that come with whole aircraft ownership. There are other options that make very good economic sense. And they certainly don’t challenge or lessen the business advantages of private aviation – things like improved productivity, incredible time savings and a level of safety that can’t be beat.

When you look at the big picture, it seems that the recession actually bodes well for fractional ownership programs, jet card programs, even on-demand charter. As the economy improves, people will start utilizing business aviation again. Demand will gradually increase. Now, given the pain of the past two years, companies will certainly be watching dollars very closely. They will question the wisdom of owning a jet vs. participating in a program of some sort. .

This is a good thing for the fractional providers, card companies and charter operators. Why pay millions of dollars for an entire jet when you can buy a fractional share for far less? Why take on responsibilities and expense of managing an aircraft when your fractional provider will manage and maintain the aircraft for you? Why invest in an aircraft at all if a jet card membership or charter service satisfies your travel requirements perfectly well. The point is that companies and individuals have more private travel options than ever. As they evaluate their choices, the opportunities for providers are immense.

We’re already seeing innovative new programs being developed that suggest an exciting evolution in business aviation. Our client, Flight Options, is introducing a fractional ownership program built around the new Embraer Phenom 300. The Phenom 300 is one incredible aircraft, featuring the performance benefits of a super-light jet while flying at a cost-per-mile similar to a twin-engine turboprop. In fact, the Phenom outperforms every other jet in its category in range, fuel efficiency, comfort and lower maintenance costs. As a result, the Flight Options Phenom program offers the lowest hourly rate in its class – almost 30% lower than comparable competitive aircraft. There’s a lot to love here for a discerning CEO or CFO.

Other fractional ownership companies are reshaping their programs in different ways. Lease programs allow buyers to avoid a capital purchase by leasing a fractional share. The buyer may also exit the lease at any time without penalty.
Because aircraft values have declined with the economy, some providers also offer residual-value guarantees. In another twist, a charter operator has launched a shared-ride charter jet membership service. Memberships are sold on a one year basis and feature fixed per-seat costs for specific routes.

All of these developments are positive signs for an industry rich in potential. Rather than nay saying, we should salute the companies who have creatively responded to extremely challenging times with innovative programs that set the stage for the future of business aviation.

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TRIAD inc.
614-846-8761 Steve J.