Halogen Guides Jets | The Insider's Guide to Private Aviation

Business Jet Market Faces Slow Recovery

2009-07-02T23:44:19Z

The business jet market, which soared in recent years as U.S. companies posted record profits and new foreign buyers raised demand, is now facing a hard landing. That much we knew was true as of late. How bad it’s getting, however, is only just being revealed.

The sector could be poised for big drops in demand as corporations cut back discretionary spending during the recession and dried-up credit makes purchases by smaller companies and individual owners more difficult. Attacks from politicians who have portrayed business jets as extravagant and frivolous have also hurt. Some analysts say recovery will be slow in the face of lower demand and increased competition from used aircraft that have flooded the market.

“We don’t see the number of deliveries even hitting 2008’s level in the next 10 years,” said Brian Foley, president of Brian Foley Associates, a business aviation consulting practice.

Last year, deliveries of business jets reached a peak 1,315, according to data from the General Aviation Manufacturers Association (GAMA), a Washington, D.C-based group that tracks noncommercial aviation. Its data shows deliveries rose annually from 2003 to 2008.

Though GAMA does not forecast deliveries, it noted that business jet shipments dropped nearly 36 percent in the first quarter, to 191 from 297 a year earlier. Restructuring firm AlixPartners LLP projects business-jet deliveries will fall 30 percent this year, with an another 10 to 15 percent drop forecast for 2010. “The demand will not start to bottom out until 2011,” said Philip Toy, managing director and co-leader of AlixPartners aerospace and defense practice.

Even though major jet makers such as Textron Inc’s Cessna unit have already cut thousands of jobs to cope with slumping orders, more cutbacks could still be ahead.

Textron said earlier this year it expects corporate jet deliveries to continue to decline in 2010. Cessna, the world’s largest maker of corporate aircraft, expects to deliver 290 to 300 planes this year, down from 467 in 2008. “The overall economy has to start a noticeable pickup before the business jet market picks up,” said Wayne Plucker, aerospace and defense analyst with Frost & Sullivan. “This may be a slightly more protracted slump just because I don’t think the economy is going to come back roaring soon.” Cessna is cutting its workforce by about 45 percent to a target of 8,900 people by the end of this year. Cessna at one point employed about 16,000 workers. Canada’s Bombardier Inc and Gulfstream Aerospace, a unit of defense contractor General Dynamics Corp, have also cut jobs and reduced production. Jens Henning, vice president of operations for GAMA, said his group’s members have idled 17,000 workers since the fall of 2008.

Small businesses private jet programs are going to suffer most of all. “I think the business jet makers are in real danger of having more cancellations,” said Toy of AlixPartners.

He said a recovery for business aircraft generally lags a rebound in the general economy by 18 to 24 months. In other frightening news, Toy added, “I don’t think many industries are viewing the bottom of the recession yet.”

Perf Go Green Partners With a Private Jet Company in First Aviation Commercial Conversion

2009-07-02T23:38:29Z

Perf Go Green Holdings, Inc., the leader in biodegradable plastic products and everyday green solutions, announced its first aviation conversion with a private jet company. Perf Go Green’s commercial line of biodegradable trash bags will reduce the environmental impact of the Private Jet Company’s fleet of private jets.

“We, at Perf Go Green, are proud to partner with a private jet company in our first aviation conversion and are happy to provide our commercial line of biodegradable trash bags to contribute to their overall environmental impact. We expect commercial airlines to soon follow suit in this environmental initiative,” said Tony Tracy, Chairman and CEO at Perf Go Green.

Perf Go Green has completed commercial conversions nationwide in hotels, hospitals, office buildings, and through major distributors with their commercial line of biodegradable trash bags.

After the recent launch of Perf Go Green Biodegradable trash bags, availability has expanded nationwide throughout 25,000 locations in supermarkets, hardware, and drug store chains. The additional launch of pet products, Biodegradable Doggie Duty Bags and Cat Pan Liners, is increasing growth into hardware chains and independent pet stores across the country.

GM Ends Lease On Fleet Of Private Jets

2009-06-22T04:25:05Z

Last Thursday, General Motors sought approval from a federal bankruptcy judge to terminate the leases for all seven of its corporate jets, along with a deluxe hangar in Detroit airport.

Tom Wilkinson, a spokesman for GM, sen out a release stating, “The new GM will have no jets – we’re all flying Delta.”

Former GM chief executive Richard Wagoner Jr. was criticized by lawmakers at a hearing last November when he and other company executives flew to Washington via private jets to ask for a government rescue package. Last March, Wagoner was pushed out by the Obama administration, which has pumped billions of dollars to GM.

GM claims that private aircrafts are no longer valuable to its business activities. In addition, Detroit auto manufacturers Chrysler and Ford are also seeking to jettison jets.

Chrysler recently terminated two aircraft leases. On the other hand, Ford – the only Big Three auto maker who has not yet asked for a government loan said it plans to put its five private jets, which have been grounded since last year, on sale in the coming months.

Greenjets Announces Shared-Ride Private Jet Service

2009-05-19T19:09:16Z

HalogenLife has suggested purchasing carbon offsets to private jet owners who feel a little guilty about eco-conscious travel. And the hubbub over swine flu is still spreading like a, well, virus. So where does that leave the jet set? Greenjets recently announced a new option: “car”pooling.

According to the company, this service is a viable alternative to help “maintain the high productivity associated with private jets in a way that is more environmentally, socially and fiscally responsible”. It’s all in the power of number. Do the math: several customers per jet wastes less fuel and ensures fewer CO2 emissions.

Membership starts at $1,400 yearly. There’s a trip calculator on the Greenjets site. A flight from New York to Florida will cost around $1,800 per seat, which is a significant discount from private jetting.

Being eco-conscious and economically savvy are two travel trends that are only going to increase in popularity and viability. Greenjets has built a business model around that trend.

The Upside of a Down Market: The Advantages of Retaining and Buying Fractional Jet Shares

2009-04-30T18:59:23Z

The following article is a rebuttal to James D. Butler’s article, “Should Fractional Jet Owners Sell Their Share?” which appeared 02/09/2009.

It’s a fundamental financial management strategy: unless it is absolutely necessary, don’t sell in a down market. Bear markets are rarely the ideal time to let go of long-term investments, and fractional jet shares are no exception.

The reality is, for a comparatively low capital outlay, fractional jet owners have access to an entire fleet of aircraft. The benefit of a multi-year contract awards them the same advantages of diversified stocks. When approaching the situation from the long view, if owners can avoid selling now, they should sit tight. The only individuals losing value are those being forced to sell now at the bottom of the market.

In fact, the upside of the current down market is that now is a particularly opportune time to purchase fractional shares. The fractional industry has always cycled up and down with the economy, and it’s well known that those who invest during challenging times are often greatly rewarded. For prospective and current fractional owners who are unsure of their next steps, the wiser course is to either buy when shares fall to a relatively lower price or hold on to your shares until fair market values increase.

While some have argued that the fractional jet industry’s long term viability is suffering and fractional owners are better off exiting an industry that is fated to deteriorate, most fractional jet companies are secure in their projected futures and are resolute in creating programs that effectively respond to current economic conditions.

Flexibility has always been part of Flexjet’s DNA (it’s in our name), and we are utilizing our adaptive culture to respond to each individual’s specific needs and customize solutions for them. For example, for those that are nearing the end of their contract, Flexjet makes it easier for them to extend their lease without being bound by a long-term commitment.

In addition, one of the more recent initiatives that Flexjet has re-introduced is its “Walk Away Lease” program that allows owners to enter the market with little financial commitment along with the ability to exit the program with just 90 days notice. Once they feel the market has bottomed out, and a share becomes available, the owner can immediately transition into a full fractional ownership and all of the benefits that come with it.

Jet cards are another excellent alternative for those looking for the flexibility of private jet travel without the long-term investment. The Flexjet 25 Jet Card, operated by Jet Solutions, LLC under FAR Part 135, has also introduced the Split-Payment program, allowing jet card owners to divide the purchase price of a 25-, 30- or 35-hour jet card into two equal payments. The first half of the payment is made at the time of purchase. The second half of the payment is due after six months or upon scheduling more than half of the purchased flight hours.

The bottom line is that private jets are essential business tools that need to be utilized to help business grow and thrive, in good times and bad. Our aim is not to provide inflated optimism, but on the contrary, deliver a comprehensive understanding of how our industry is currently affected. The question isn’t whether or not you should sell your share; it is whether or not you will invest now if you haven’t done so already.

Bob Knebel is Vice President of Sales, Flexjet.

Steve Jobs Grounds His Private Jet

2009-04-29T20:29:49Z

In Silicon Valley news, the Wall Street Journal reports that Apple CEO Steve Jobs has been grounded for the first half of the year. His private Gulfstream, which is traditionally transportation of choice for the technology pioneer, has not been in use since 2008.

Apple says in a regulatory filing that it didn’t reimburse the CEO for use of his Gulfstream during the first three months of the year, and only $4,000 for the previous six months.

Compare that with last year, when Jobs was reimbursed $30,000 for the first quarter, and $580,000 for the previous six months.

The reason for the sudden drop-off in reimbursements is that Jobs hasn’t been traveling. He missed a trip to China to negotiate personally for Apple’s first iPhone distribution deal in the world’s biggest cellphone market. He also wasn’t onboard for inspections with Apple’s Asian manufacturing partners to analyze the new Mac computers and iPods the company began selling over the last few months. Jobs has been on a medical leave of absence, announced in January. To date, Apple execs have said only that they are looking forward to Jobs’s return to work in June.

Apple reports other reasons for the jet budget to be down: that $580,000 period in 2008 would have occurred during the manufacturing point of the iPhone 3G, and since most of the focus has been on software of late, traveling beyond borders is less necessary.

As a means of improving a company’s carbon footprint, many business are under a little more scrutiny and pressure in this economy; teleconferencing is being heralded as a next-best-thing alternative to flying to meetings across the world. Apple insists this is a key factor in their curbing of Jobs’s jet.

Planemasters Jet Charter Adds Two to the Fleet

2009-04-09T01:01:10Z

Planemasters Jet Charter recently announced it has added a King Air 350 and Citation Ultra aircraft to its fleet of private planes. Like its existing aircraft, the new planes will provide guests spacious and well-appointed interiors, and a raft of other amenities that promise a friendlier sky.

“We are very excited about the addition of the new King Air 350 and Citation Ultra aircraft,” said Todd DeSimone of Planemasters. “These sleek, yet spacious planes highly complement our existing fleet.”

With a cruising speed of 360 mph and an average range of 1,800 miles, the King Air 350 is a turbo-prop plane that seats up to nine passengers and offers an assortment of kits in the kaboodle, including an active noise canceling system throughout the cabin and double club seating with tables. Power outlets are located throughout the aircraft for added convenience.

The Citation Ultra aircraft also provides passengers with a sleek, steely ride (it cruises at 490 miles per hour and offers a 1,900-mile range). The comfortable cabin accommodates up to eight passengers and is kitted-out with a refreshment center and club seating. Additional features include XM radio, wireless headsets and DVD capabilities.

DeSimone added, “Our passion for providing comfortable and convenient air travel choices is highlighted by the expansion of our fleet. With a wide selection of aircraft options combined with our exceptional customer service, we are confident that Planemasters offers the most enjoyable charter flights in Chicago.”

Westchester County to JPMorgan Chase: Cool Your Jets

2009-03-26T00:37:50Z

If AIG’s bonus-bingeing sparked fury with the American public last week, then Monday’s corporate aviation scandal involving JPMorgan Chase added jet fuel to the fire. ABC News reported that the investment bank–the beneficiary of $25 billion in Troubled Asset Relief Program (TARP) funds–planned to spend $138 million for two new luxury corporate jets and a new aircraft hangar. JPMorgan dismissed the report and disavowed any plans to purchase new aircraft or gussy-up the hangar.

Not until after it pays off the bailout money, is what they failed to mention.

A spokesman for JPMorgan announced that once the TARP funds are reimbursed, the bank could purchase new jets to replace existing ones. These will be upgrades, not additions to the fleet. The state-of-the-art hangar remodel would also occur only after the loans get repaid. Among the proposed accouterments: quarry tile throughout, reclaimed wood embellishments and a rooftop garden.

ABC reported that the upgrade would include “nearly $120 million for two Gulfstream 650 planes and $18 million for a lavish renovation of a hangar at the Westchester Airport outside New York City.”

Westchester County officials postponed voting on whether or not the bank will be awarded the lease at the county’s airport. This prompted JPMorgan Chase spokesman Joseph Evangelisti to make a statement asserting that no TARP money would be used to make any payments for new jets or jet hangar improvements. However, he also refused to comment on whether JPMorgan had already put a down payment for new planes.

The Westchester Board of Legislators were scheduled to vote Monday night on the city’s recommendation that JPMorgan be awarded the 30-year lease starting April 1, 2010, at a cost of $1.1 million annually. But Legislator Gordon Burrows “overed” the vote, meaning that board members will have the opportunity to further review the bank’s proposal.

Should Fractional Jet Owners Sell Their Share?

2009-02-09T18:32:42Z

If you own a fractional jet share, now may be the time to sell. Share values are beginning to fall, but it’s likely that the worst is yet to come.

Like the rest of the economy, this is a tough time in the private jet business. Credit is tight, share sales have slowed considerably, flights are fewer and many fractional owners are concerned about the long term viability of their fractional jet companies.

As a fractional jet owner, you’re not merely a customer; you’re actually a joint venture partner with your jet provider. You’ve invested a lot of capital in a jet, with a promise from your provider that it will buy back your share based on your aircraft’s fair market value. But capital is dear, so much so that some fractional companies are looking to delay repurchasing shares. Indeed, we recently had a client for whom we were contesting a low repurchase offer opt to take a bit less in exchange for an expedited closing.

Even if your fractional provider remains financially strong, it still may be a good time to get out. Why? Because the market for preowned aircraft is in gridlock—many sellers aren’t willing to accept lower prices while buyers are sitting on their hands waiting for prices to fall further.

In this market, fractional aircraft will take a beating because they have more miles on them than low time non-fractional aircraft that also are flooding the market. (Fractional aircraft are flown as much as 1,200 hours per year, while non-fractional jets are flown on average around 400 hours per year.) Just as with a used car, higher mileage equates to a lower price.

For now, relatively few preowned sales are occurring. So, if you’re selling your fractional share today, the declining prices aren’t yet reflected in comparable sales that will be the basis for valuing your share. Yet, as the market declines and sales occur, these comparables will show declining values for low time aircraft (which will be the first to sell), perhaps significantly hurting the value of fractional aircraft, and thus your share.

At this a pivotal moment, the wiser course may be to sell your share before its value declines precipitously, reclaim your capital investment and use other private flying options like fractional jet cards that allow you to fly on the same fractional fleet or even traditional jet charter (there’s a lot of excess capacity out there so rates should be favorable). This way, when the dust settles, you can reassess your needs and budget without being stuck with a long term commitment.

A Word to the Wise

Fractional providers, faced with taking over management costs for your share with little prospect of reselling it, may not offer you fair market value. We’ve successfully contested low fractional jet share repurchase offers, either through negotiation or, if that fails, through the appraisal process provided in most fractional contracts so that, in the end, our clients receive all they’re entitled to.

James Butler is an attorney and the chief executive officer of Shaircraft Solutions LLC (www.shaircraft.com), based in Bethesda, Md. Shaircraft advises individuals and businesses with respect to the full range of private air travel investments, including fractional ownership, jet card programs, air taxi services and charter, and also specializes in fractional share valuation disputes.

Related Articles:

Fractional Jet Primer: Navigating the Contracts

Is a Fractional Jet Card Right for You?

How to Find the Right Charter

Record 600 Private Jets Descend on Obama Inauguration

2009-01-22T22:19:39Z

Jaws dropped at last year’s record number of 400 private jets descending on the Super Bowl, but the inauguration of President Barack Obama attracted a full-on airborne migration of well-heeled travelers this week. Robert Frank at the Wall Street Journal reports around 600 private jets landed in D.C. in the days leading up to the inauguration ceremonies. One of the four runways at Dulles was even closed off for extra parking.

It’s a veritable record, and more than twice the 300 private jets the Metropolitan Washington Airports Authority logged for George W. Bush’s second inaugural. Private flyers have come under recent scrutiny (who can forget some recent pointed ironies), but the deep-pocketed contributors to Obama’s campaign (and lobbyists looking for a new pal in Washington) had no intention of missing the inaugural celebration.

Flexjet Sweetens Deal on Jet Cards

2009-01-16T22:33:57Z

The economic pinch is giving way to some try-before-buying programs, even among private jet companies. While exclusive destination clubs have recently tested this tactic to entice new members, fractional jet operator Flexjet introduced a split-payment option for one of their popular jet card programs.

The Flexjet 25 jet card program originally (and still does) let flyers purchase a bulk of 25 flight hours up-front for $107,000 or more, depending on which jet model(s) they chose. The split-payment option, which is available through the end of February, lets prospective buyers pay for half the total cost up front. The second half of the payment is due after six months or upon scheduling more than half of the purchased flight hours.

The 25-hour card owners don’t have an equity stake in Flexjet’s fleet of jets—fractional ownership programs begin at around 50-hour purchases—so the new card program appears geared at consumers still on the fence about flying privately.

It remains to be seen if fractional jet operators like NetJets and Flight Options follow suit in some way, and extend their current programs to more wary consumers. Flight Options, who has a comparable share of the fractional ownership jet market, laid off 63 employees yesterday, adding to the 105 laid off in November of last year. Industry leader NetJets is deferring the delivery of new aircraft, according to the Aircraft Owners and Pilots Association (AOPA), but no widespread layoffs within the company have been reported.

2008: The Year in Private Jet Travel

2009-01-02T22:34:15Z

The last year was nothing if not eventful for private flyers. We’ve picked out some of the year’s top stories to get you up to speed. And don’t worry, it’s not all bad news.

Online Private Flight Booking Gets an Upgrade

Virgin Charter launched its online private jet booking site in March. Site founder and CEO Scott Duffy says the company, backed by the Virgin brand empire, is faring well.

Virgin Charter CEO Reflects on First Six Months of Business

Very Light Jets Take a Hit But See a New Entrant

The low-cost and technologically revolutionary very light jet (VLJ) industry predominantly fell short of expectations. Among the biggest headlines were the bankruptcy of Eclipse Aviation, and the collapse of air taxi operator, DayJet.

Eclipse Aviation files for Bankruptcy

Night Falls for DayJet

First Flight For Piper’s VLJ

A New Big Name to Operate Private Flights in Europe

NetJets sits comfortably on top of the fractional ownership jet market in Europe, but Jet Republic looks like it means business. We’re going to keep an eye on this new contender; after all, they just ordered $1.5 billion worth of Learjet 60XRs, and hope to be carbon neutral.

Jet Republic to Challenge NetJets in Europe

Sleek New G650 and G250 Jets Revealed by Gulfstream

They’re still in the design phase, but the newest additions to the Gulfstream fleet look nothing short of sexy. The G650 is also slated to be the fastest civil aircraft in the world with a top speed of Mach 0.925.

Gulfstream Reveals New Model, G650

Gulfstream’s G250 Jet

Phenom 300 Jet Rolled Out by Embraer

Priced at a moderate $6.25 million, the new Phenom 300 is a serious competitor in the category of light jets. The first model made its maiden flight this year and is slated for production in 2009.

First Flight for Phenom 300

NetJets Sets Lofty Carbon Neutral Goal for European Fleet

In a surprising move, NetJets decided to roll carbon offset costs into new contracts and renewals. The company hopes to be carbon neutral in Europe by 2012.

NetJets Plans for a Green Future

Despite Ailing Economy, Private Jets Still Rolling Off the Production Line

The General Aviation Manufacturer’s Association (GAMA) reported record business jet deliveries once again. Jet shipments during the first nine months of 2008 increased 30.1% over last year, according to GAMA. Canadian jet maker Bombardier topped last year’s deliveries at over $5.2 billion on 226 private jets. By September of this year they reported 193 deliveries, and are expected to crest at 264.

Ask a Jet Expert: Trimming Travel Costs

2008-12-10T22:23:18Z

What can owners do to trim private aviation costs?

Aircraft owners are always looking for ways to trim expenses—the current economic conditions only make it that much more important. Ironically, they have had some help from the turbulent economy, as oil is down 60-70% from its peak this summer.

There are a number of other things that aircraft owners can do to lower their operating expenses. Being mindful that jet fuel is most often the largest portion of variable operating expenses, owners can look into purchasing fuel under a contract (essentially “pooling” jet owners to leverage group buying power) or shopping FBOs [reader knows this acronym?] for lower fuel costs.

How an owner’s flight department operates the airplanes can have a big impact as well. By flying more direct routes or a slower, more fuel-efficient profile (referred to as a long-range cruise) can pay significant dividends. [sentence doesn’t make sense; something dropped?] This is where a good aviation manager really pays off. This may be an opportune time to look at renegotiating a hangar lease, insurance policy or maintenance agreement to see where savings can be made. One factor to consider—start by reviewing the operating budget to make sure you know where all of the dollars are going. It’s difficult to manage what you can’t measure; I’m often surprised to discover how many flight departments really don’t have this scoped out.

How is the private aviation market weathering the economy?

I am not sure if there is any aspect of the global economy that the current unrest has left unscathed—private aviation is no exception. The number of pre-owned aircraft on the market is up, sale prices are down and aircraft manufacturers’ backlogs will shorten as customers start to cancel orders. Buyers are happy to wait on the sidelines looking for an indication that the market has hit bottom. Sellers, often unwilling to accept the new world order, are slow to lower asking prices. At some point, prices move into a range where buyers see value and deals get done. But there is another factor currently in play as well—some borrowers are finding it harder to get financing.

Fractional and charter operators are also seeing an impact. The Financial Times reported that NetJets Europe is now forecasting revenue flights to be flat this year, as opposed to a 10-12% growth originally forecast. Numerous charter operators are reporting a drop in demand as well—some by as much as 40% or more. People who own aircraft may look to sell and get into fractional aircraft, fractional owners may not renew shares and instead turn to jet cards, or charter and charter customers may opt to fly business class. Bottom line, it is a softening market almost everywhere you look.

Ask a Jet Expert is a regular column from Craig Bowers, president of JetForward Aviation, an executive aviation search and acquisition firm based in San Jose, Calif. Craig’s unique background combines an extensive aviation career with an accomplished sales track record. As a former military test pilot, commercial airline captain and general aviation pilot, he is able to provide clients with first-hand knowledge of the aviation business to achieve a safe, cost-effective solution focused on an individual’s unique travel requirements. Got a question for the Jet Expert? Email us at editor@halogenguides.com.

Ask a Jet Expert: Booking a Charter in a Down Economy

2008-12-10T22:21:46Z

What do charter fliers need to know about the current market?

In short, there is no better time to be chartering an aircraft. Supply is up, demand is down, fuel prices are off their historic high and more charter operators are willing to negotiate with good (i.e., creditworthy) clients. As people fly their own aircraft less, the supply on the charter market increases, bringing hourly prices down in some areas.

In the United States in particular, where asset capitalization costs have never been factored into market rates, chartering is an incredibly attractive alternative to ownership, from a purely financial perspective. Of course there will always be the hidden costs of charter—questionable availability, operational control and aircraft condition.

How is the used jet market holding up?

In almost every segment, from large down to super-midsize and light jets, it is a buyer’s market. This is likely to continue for some time. Inventories have been climbing in recent months, and that trend is likely to continue. If the fundamental drivers of your travel patterns dictate a private aviation solution, that is, if you require a flexible schedule and travel to destinations not served well by commercial air routes, then the market has actually gotten better for you.

Year-End Private Jet Deals, Only Fools Rush In

2007-12-17T16:08:03Z

It’s the middle of December and private jet providers are pushing to get deals done by the end of the year. Salespersons have their eyes on sales quotas and bonuses. As a result, they may urge you to “Buy now to take advantage of end of the year incentives,” or “Buy now before the prices go up in January,” or “Buy now so you can fly that holiday vacation on a private jet.”

Some incentives may indeed expire at the end of the year, but new incentives likely will be available in January. Some prices no doubt will go up in January, but at least with the fractionals, your management fee and hourly rate will increase in January even if you buy now. Flying that holiday trip privately is enticing, but the holidays often include “peak travel days” when you may not be guaranteed an aircraft.

All that said, my advice is not necessarily that you hold off on making a deal, but that you not rush into a deal without doing your homework, because the cost of making the wrong deal will far outweigh any year end benefits and incentives.

Here are some suggestions to keep in mind as you consider any private air travel investment:

Know thyself. Make sure that you assess your needs carefully and thoroughly. How many flight hours do you need? Where do you intend to fly? What’s your budget (both in purchasing the investment and on an ongoing basis)? Do you have any special needs, such as luggage requirements or flying two flights simultaneously if say, you’re flying family in from various locations.

Identify the best type of jet program for your needs. Is fractional ownership best suited to your needs? A fractional jet card like Marquis? A block charter jet card like Sentient? Traditional charter?

Shop around. Once you determine the right type of program, shop around to find the one that best suits your needs and budget.

Know the cost. Use a sharp pencil and estimate what the investment will cost you all in. Include fuel surcharges, expense increases and, in the case of fractionals, a reasonable estimate of the resale value of your share.

Read the fine print. The contracts may look simple, but read them carefully and make sure you understand them. These documents, and not the beautiful brochure, will govern your rights and obligations.

Negotiate for a better deal. The jet company will tell you that everyone signs the same “standard” contract. Yet, there’s often room to negotiate. (In a recent deal, we negotiated over 150 changes to NetJets’ “standard” contract.) But don’t negotiate just for the sake of negotiating. Negotiate for concessions that satisfy your specific needs and thus add real value to your investment.

We traditionally close many deals at the end of the year. In doing so, we counsel our clients that there’s always time to be thorough. The same is true for you.

Related Articles:

How to Find the Right Charter

Yet Another Reason to Fly Privately

Is a Fractional Jet Card Right for You

Survival Tips: What to Do if You’re Stranded

Eclipse Aviation Files for Bankruptcy

2008-11-25T20:26:41Z

Eclipse Aviation, the maker of the Eclipse 500 very light jet, filed for Chapter 11 bankruptcy today. The company is seeking to sell the bulk of its assets to ETIRC Aviation, which is the largest investor in Eclipse.

Leading up to the bankruptcy filing, Eclipse endured several rocky months, including the departure of the founding CEO this summer, an FAA and Congressional investigation over the certification of its jets and, most recently, failure to meet employee payroll earlier this month.

Eclipse’s stumbles had some aviation watchers predicting that the company would stop making the Eclipse 500 in the first quarter of 2009. In the wake of this filing, the company has arranged interim financing that must approved by the bankruptcy court to allow the company to continue operating through the sale of its assets.

How the Recession Will Impact Private Fliers

2008-11-20T23:09:16Z

When three top auto executives traveled to Washington yesterday to plead for a multi-billion dollar slice of the government bailout, headlines blared about the trios’ choice of transportation. But even as private jets are being painted as the latest symbol of corporate excess—at least by Congress and taxpayer advocacy groups—private aviation companies report that now is actually a good time to be a private flier. With companies rolling out more deals and programs with increased perks for consumers.

As the end of the year approaches, everyone from jet makers to fractional and charter providers are readjusting their outlook for the slowing global economy. Here are three ways that this tough market can positively impact your private aviation bottom line.

More deals

Some private jet makers are cutting prices and throwing in incentives to sweeten the deal. This week, Diamond Aircraft, a manufacturer of single-engine aircraft, announced a promotion that includes a year’s worth of free fuel, maintenance and insurance—a package worth $13,750—for buyers who purchase Diamond’s DA40 model before December 31.

Used aircraft buyers should also see dropping prices. Used aircraft inventories were up again in October, according to a report from J.P. Morgan, and as inventory grows, asking prices are expected to dip. In the market for a used very light jet? When air taxi operator DayJet closed its doors this fall, the company sold its fleet of 18 Eclipse 500 jets back to Eclipse, which is now unloading them.

More flexibility

If you’re interested in fractional ownership or a jet card, know that buyers have more options than ever. Jet card companies are rolling out new card configurations, including ten-hour plans and options that allow access to more than one type of aircraft.

Fractional providers are giving owners more options for dealing with unused hours. Flexjet, for instance, now allows fractional owners to sell unused hours to other owners.

Empty leg bargains

Charter providers are beginning to see some changes in the travel patterns of private fliers. These types of shifts have a direct impact on where private fliers will see the greatest availability of empty-leg segments (cut-rate flights that are flying passenger-free after dropping off a traveler, or repositioning to pick a client up).

Justin Sullivan, president of charter jet provider Regent Jet, said that his typical client has multiple second homes in places like Aspen, Jackson Hole and Palm Beach. “They still have those homes,” said Sullivan. “Those routes are just as strong as ever.” As a result, those prime winter travel corridors are likely to remain flush with empty-leg deals. It’s the flights to second-tier locations—and even Europe—that are seeing less activity, according to Sullivan. “The Giants fan who flies to every away game—those flights have dried up,” said Sullivan.

Flexjet CEO Reid Talks About State of Private Jet Industry

2008-11-13T18:39:59Z

With just under three months on the job, Fred Reid, the CEO of private aviation provider Flexjet, is tackling marketing private jet ownership in an increasingly tough economy. Reid, who joined Flexjet after stints as head of Virgin America and Delta Air Lines, talks with Halogen Guides about the current demand for fractional jet shares, how private fliers are adjusting their travel purchases and how Flexjet is fine-tuning its programs.

How is the economy impacting your business?

Reid: There is no question that the percentage of fractional owners renewing ownership is declining somewhat. The majority still renew, and we are still selling new shares today, but we are seeing a lot of movement. We have some people who own multiple shares who trade down a bit to a lesser share. We have some trading up to whole ownership. We have seen some reduce shares to go with a jet card. But I’m also anticipating that a number of corporations that have their own fleet of aircraft will give us a serious look. I’m not pretending that we are not in a dreadful economy and there will be other forms of stress on us, including reduced consumer spending. But having said that, there are sectors that remain healthy, and we’re not excessively exposed to financial services as an owner base.

Are there any price cuts in store?

Reid: We are not price cutting now, but we are trying to do everything we can to meet our customers’ requirements. On the Flexjet 25 card, we announced a split payment option a few weeks ago. For those that buy a card before the New Year, they can pay the card price in two installments—one by December 31 and one six months later. We also have a combo jet card that lets fliers use different aircraft models. We’re also allowing fractional owners to put hours up for sale. Owners can carry over a quarter of their hours to the next year, or they can put unused hours up for sale. Say you need 20 more hours in the next six months. You buy a card or buy hours as you need them from this pool.

What is your focus for the next six months?

Reid: I’m looking for new product offerings. We are looking at how to be more creative on contract extensions. We are also looking at geographical expansion. Canada and Mexico are natural extensions. It was misreported that we were reopening Europe, but we’ve made no such decision. We will continue to retire older aircraft to keep our fleet the youngest in the industry, but the number of aircraft exiting the fleet will be higher than the number entering the fleet.

How’s demand looking for the holidays?

Reid: Most of our demand emerges just 10 to 24 hours ahead, so it’s hard to say. Like everyone else, our so-called live hours are down a bit in the last 60 days. One barometer for the business is budgeted hours—a measure of how much owners are flying. If 10 owners have 50 hours a year each, they tend to burn through 500 hours in a year. Now, we are seeing them burn through those hours slower.

The price of oil just hit a 20-month low. Are private fliers seeing savings yet?

Reid: They are enjoying much cheaper fuel. There is some administration cost—we have to source the fuel and pump the fuel—but that is standard across the industry. The cost of fuel is 100% passed on to the flier. It’s not like the airlines that institute a fuel surcharge, but when the price of fuel falls, the surcharge remains.

Air Taxis May Take Another Hit in 2009

2008-11-06T23:44:54Z

In mid-September, charter company DayJet grounded its fleet of very light jets (VLJ) and closed shop, bringing to an end one chapter in the fledgling air taxi industry.

Now the industry may be headed for another challenge, as one aviation market researcher speculates that production of the Eclipse 500, a workhorse in the air taxi world, will cease in early 2009.

Last week Connecticut-based Forecast International released a report predicting that Eclipse Aviation, the maker of the Eclipse 500 jet, may be forced to stop production of the aircraft in the first quarter of 2009.

The aviation market watcher estimated that just 12 Eclipse 500s would be produced in 2009. “Even this forecast may prove too optimistic,” said Forecast International aircraft analyst Douglas Royce, in a company-issued release.

The necessary economies of scale—dependent on fast, cheap production of the aircraft—never materialized for the company, according to Forecast International. As a result, Eclipse was forced to raise the Eclipse 500 price tag by 41% this spring while continuing to take a loss on every jet ordered prior to the price increase. Add in credit woes that have made raising new capital nearly impossible, and the business model gets even tougher.

So is the concept of air taxis, which launched amid promises to bring down the cost of private aviation by offering consumers short hops on small jets, grounded for good? Not necessarily.

There are still a handful of smaller regional operators in the U.S., including Linear Air, an air taxi operator in the Northeast that continues to operate and just announced a new round of funding. But no doubt new air taxi companies like POGO, slated to launch in 2009, will face a huge challenge if they do lift-off.

In Europe, the air taxi concept is still spreading. Blink operates flights throughout Western Europe and this fall, U.K. startup FlairJet announced that it would begin flights next May with a fleet of Phenom 100s, a new VLJ model that should hit the skies this year.

If the Eclipse 500 ceases production, air taxi companies and fliers will have fewer choices, since the Phenom 100 and the Cessna Citation Mustang would be the only two remaining VLJs in production.

Three Big Trends Impacting Private Fliers

2008-10-27T12:14:13Z

With the biggest private jet tradeshow of the year behind us, the traditionally busy holiday travel season ahead and the grasp of a deepening recession squeezing wallets and stock portfolios, we thought it was time to look into the private aviation crystal ball.

Whether you’re in the market for a jet (or more likely sitting on the sidelines waiting for the right time to make that investment) or simply trying to avoid LaGuardia this holiday season as you head down to Florida, here’s what you need to know.

More flat-rate pricing

More charter operators are offering flat-rate pricing on select routes. In August, XOJet announced a $25,000 one-way transcontinental fare. The price includes catering, fuel surcharges and even ground transportation.

This month, Regent Jet rolled out a $10,000 fare from New York to Florida on a Hawker 400XP. Flights operate between airports in the Tri-State area and New Yorkers’ winter stomping grounds in south Florida. Flights are sold in packages of five one-way trips for $50,000, or a single one-way flight for $12,000.

While these flights typically cost a bit more than booking an empty leg, fliers can book them in advance without worry that the schedule will change, or the flight will be canceled.

Shorter waiting lists for new jets

The Teal Group, an aerospace consulting group, revised its outlook for business jets, predicting deliveries of new jets will peak in 2009 rather than in 2010. The downturn will bottom out in 2012, but until then expect to see big order cancellations and buyers even deferring purchases.

Industry watcher Brian Foley was even more frank in his assessment, telling AINonline, “New aircraft orders are poised to fall off a cliff.”

What does all this mean for aircraft buyers? For those still in the market, the next few years could see shortening waiting lists for the most in-demand aircraft models.

Buy used, get a deal

The used aircraft market is starting to look like, well, the real estate market, with a swelling amount of inventory and stagnating price increases. The market is especially loaded with light jets, according to the most recent Honeywell Business Aviation Outlook, and prices have moved quite a bit from 12 months ago. The biggest demand has been for long-range models. Last month, a J.P. Morgan report said used jet inventory was up 52% since the beginning of the year. Also impacting the used aircraft market are the sluggish economy and jet buyers preference for newer, faster and more fuel-efficient models. Of course, if cheaper is on your list of criteria, this is likely the time to go pre-owned.