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					                                                                                                                      Inside this report:                                                                          CitationAir has shifted its              and TAG Aviation in 2000, and         a share of Learjet 60 or Hawker
                                                                                                                                                                                                                focus during the past few years             Cessna gradually acquired more        800XP to go from Texas to San
                                                                                                                      • Providers surviving and growing…page 22                                                 to offer whatever kind of sup-              of the company over the years         Francisco when a Phenom 300
                                                                                                                                                                                                                                                                                                                                                                                             Fractional Flight Activity
                                                                                                                      • Major U.S. players gain confidence about                                                plemental lift customers need,              until finalizing the full pur-        can do it for a lot less money?”
                                                                                                                        growth in the hard-hit sector…page 22                                                   rather than focusing solely on              chase last year. Earlier this year,   The successful adoption of the                                          40                  August 2010 - July 2011




                                                                                                                                                                                                                                                                                                                                       Number of flights (in thousands)
                                                                                                                                                                                                                fractional shares. What cus-                CitationAir recalled all of the       Phenoms, he added, “reaffirmed                                                              August 2009 - July 2010
                                                                                                                      • International markets feel the squeeze,                                                 tomers want, he said, “is a                 pilots it had furloughed during       the decisions we made several
                                                                                                                        but still full of opportunity…page 26                                                   combination of those product                the recession, to handle growing      years ago when we first ordered
                                                                                                                      • NetJets holds the fort in Europe,                                                       elements with the best pricing.             demand from new and existing          the Phenom 100s and 300s.”
                                                                                                                        looks eastward for expansion…page 32                                                    They’re also looking for the least          customers.                               AirShare’s Texas operation                                           35
                                                                                                                                                                                                                amount of risk. The purchase                    For CitationAir, growth is not    recently moved into a new facil-
                                                                                                                      • Firms find traction in a flat market…page 34                                            of a share in this market has got           reflected by changes in the num-      ity at Dallas Love Field, where
                                                                                                                                                                                                                risk attached to it. For those for          ber of fractional shares sold but     the company also is a limited
                                                                                                                                                                                                                whom tax depreciation is impor-             in the total amount of business       Embraer service center for the
                                                                                                                      Major U.S. players gain confidence                                                        tant, we still sell shares.” But not        generated. CitationAir’s frac-        Phenoms. The Buffalo facility
                                                                                                                                                                                                                                                                                                                                                                          30




                                                                                                                                                                                                                                                                                                                                                                                                                                                              Source: Argus International
                                                                                                                                                                                                                                                                       tional sales “shrank a     signals AirShare’s East Coast
                                                                                                                      about growth in the hard-hit sector                                                                                                              bit,” Harford said, but    expansion plans. “I think Buffalo                                            Aug    Sep    Oct   Nov   Dec    Jan   Feb   Mar    Apr   May   Jun    Jul

                                                                                                                      by Matt Thurber                                                                                                                                  that’s been more than      is our springboard for potential
                                                                                                                                                                                                                                                                                                                                                                          Argus International’s analysis of fractional flying activity during the past year
                                                                                                                                                                                                                                                                       made up by customers       growth in the Northeast,” he said.
                                                                                                                                                                                                                                                                                                                                                                          shows that total flights remained stable through February, then from March
                                                                                                                                  Avantair                  FBOs at its Clearwater, Fla., head-                                                                        joining the Jet Access        “We continue to see growth in




                                                                                                                                                                                                   BILL BERNSTEIN
                                                                                                                                                                                                                                                                                                                                                                          through July this year flights were ahead of last year’s numbers.
                                                                                                                                                            quarters and in Camarillo, Calif.,                                                                         program and taking         adding owners and flying,” said
                                                                                                                          Avantair’s single aircraft type   and Caldwell, N.J., those have                          CitationAir Sovereign
                                                                                                                                                                                                                                                                       advantage of other         Plumb. “June was good, July
                                                                                                                      strategy based on the Piaggio         been refocused on handling inter-                                                                          CitationAir products.      better, and August better than       and we even did better in the sec-                                          kind of a hybrid between jet
                                                                                                                      Avanti twin turboprop is pay-         nal Avantair customers, not retail                  all customers want to tie up their          “We’ve had three times the num-       July. I’m glad we stuck to our       ond quarter in terms of new                                                 cards and fractional shares. “It’s




                                                                                                          EXECUTJET
                                                                                                                      ing off as the fractional operator    transient operators. “We’re not                     money in an asset, especially               ber of customers join us as have      business plan.”                      growth.” The growth was a com-                                              sort of a medium commitment,”
                                                                                                                      continues to grow. Recent growth      looking to build the FBO busi-                      one that suffered steep drops in            left,” he added, a result of the                                           bination of renewals from con-                                              he said, “but it allows customers
                                                                                                                      has led to hiring of an average       ness,” Santo said. “We’re looking                   residual value during the reces-            company’s ability to offer more                      Flexjet               tracts that ended recently and                                              to fly their hours as fast as they
                                                                                                                      of six pilots per month this year.    to build our core business.”                        sion. Some shareowners realized             than just fractional shares and           Bombardier’s Flexjet flies an    new shares sold.                                                            need to.”



FRACTIONAL
                                                                                                                      But more important, accord-              One way of growing could                         as they came to the end of their            also the company’s taking mar-        all-Bombardier        fleet                                                                                         Flight Options has a firm
                                                                                                                      ing to CEO Steve Santo, is that       be expanding outside the U.S.                       five-year share contract that               ket share from competitors.           of Learjets and Chal- Flexjet Challenger 605                                                                     order for 100 Phenom 300s
                                                                                                                      sales and leases of frac-                                                                 while they based their costs on                                                   lengers and the com-                                                                                             with options for an additional
                                                                                                                      tional shares are key to                                                                  an expected residual value of 80                   Executive AirShare             pany has already begun                                                                                           50, and so far has taken deliv-




& CHARTER
                                                                                                                      the company’s high level                                                                  percent of the price of the share,             Executive AirShare is one of       selling shares in the                                                                                            ery of eight. The Phenom 300
                                                                                                                      of activity, as opposed to                                                                the value had fallen to 40 or 50            what is now a rare breed, a pure      new Learjet 85 all-                                                                                              offers performance that fits the
                                                                                                                      jet cards.                                                                                percent. “The price advantages              fractional-share provider. Sub-       composite jet. Begin-                                                                                            needs of light and midsize jet
                                                                                                                           “We tried hard to                                                                    are negated because the values              sidiary Executive Flight Services     ning in August, buyers                                                                                           owners, according to Silvestro,
                                                                                                                      move people into longer-                                                                  have shrunk so much,” he said.              manages aircraft, but AirShare        were offered an opportunity            Some interest in new shares is                                            and thus attracts former share-
                                                                                                                      term programs,” he said.                                                                      But on the other hand, while            doesn’t charter the Embraer           to purchase a share at a 5-per- attributable to bonus deprecia-                                                  owners of Beechjets, Citation
                                                                                                                      “We’ve been focused on Avantair Avanti                                                    some customers want to fly a                Phenom 100s and 300s in its           cent discount, and this was tion benefits, according to Reid,                                                    Excels, Ultras and CJ3s and even
                                                                                                                      shifting away from cards                                                                  couple of times a year using a              fractional fleet, and the Flight      made available for the first four but he also sees buyers gaining                                                Hawker 800s and Learjet 45s.
                                                                                                                      and not [building] that               A recent news report suggested                      jet card, others want reliable lift         Services-managed Phenoms are          Learjet 85s, according to Flexjet more liquidity and thus the abil-                                                 By the end of this year, Flight
                                                                                                                      business.” Avantair still sells 30 that Tata Group, part-owner of                         provided by a reputable operator            not offered for charter. AirShare     president Fred Reid. As of late ity to buy a fractional share of a                                               Options expects to add four
                                                                                                                      to 35 cards a month, but Santo Piaggio Aero, might be interested                          flying aircraft with a low average          recently expanded to the North-       August, Flexjet had sold a one- jet. These buyers want to belong                                                 Nextant Aerospace 400XTs to
                                                                                                                      wants to keep that business to in having a company like Avan-                             fleet age and a dedicated cadre             east with a new facility in Buf-      sixteenth Learjet 85 share.         to a system like Flexjet’s that                                              the fleet. Retrofitted with new
                 pArT One OF A TWO-pArT                    by Charles Alcock, Ian Sheppard,                           about 15 percent of Avantair’s tair build a fractional program                            of pilots, Harford said. Citation-          falo, N.Y., and a new Phenom              Flexjet has diversified beyond provides redundancy and guar-                                                 Williams International FJ44-
                SpeCIAL repOrT                             Matt Thurber, James Wynbrandt                              revenue because having too many in India. Although Santo said he                          Air’s Jet Access product isn’t a            300 began shareowner flights          the core fractional share busi- anteed service.                                                                  3AP engines and Rockwell Col-
                                                                                                                      cards that need to be serviced is can’t comment about any nego-                           jet card but offers access to the           there in September.                   ness that it started with in 1995      Flexjet’s fleet should be add-                                            lins Pro Line 21 avionics, these
                                                                                                                      risky and isn’t a sustainable busi- tiations with Tata Group, he did                      CJ3, XLS, Sovereign or Citation                By the end of this year, Air-      and offers customers a variety of ing three to six new jets in the                                               modified Beechjet 400s offer a
Providers surviving                                focusing just on selling shares of aircraft but are
                                                   also offering to serve customers in whatever
                                                                                                                      ness model. “We like to keep that say, “We are exploring expanding
                                                                                                                      risk low,” he said. “It’s nice to get our brand globally and there are
                                                                                                                                                                                                                X with a minimum annual com-
                                                                                                                                                                                                                mitment of 50 hours. “It pro-
                                                                                                                                                                                                                                                            Share will take delivery of two
                                                                                                                                                                                                                                                            to three more Phenom 100s and
                                                                                                                                                                                                                                                                                                  supplemental lift services, from coming year. “We’re measur-
                                                                                                                                                                                                                                                                                                  charter brokerage to jet cards to ing our retirements to remain
                                                                                                                                                                                                                                                                                                                                                                                                                   significant range improvement
                                                                                                                                                                                                                                                                                                                                                                                                                   and operating costs that are 20
and growing                                        way best suits their non-airline travel needs. If
                                                   a potential customer doesn’t see the need to
                                                                                                                      cash up front, but that’s not a some great opportunities.”
                                                                                                                      strong long-term business model.         Another move that Avantair
                                                                                                                                                                                                                vides a level of flexibility that
                                                                                                                                                                                                                just does not exist in the frac-
                                                                                                                                                                                                                                                            one or two more Phenom 300s,
                                                                                                                                                                                                                                                            according to Keith Plumb, exec-
                                                                                                                                                                                                                                                                                                  whole-aircraft management and the fractional with the youngest
                                                                                                                                                                                                                                                                                                  fractional shares. While Flexjet fleet,” Reid said. “We’re now at
                                                                                                                                                                                                                                                                                                                                                                                                                   percent lower than those of the
                                                                                                                                                                                                                                                                                                                                                                                                                   original aircraft. The 400XT will
                                                                                                                      If we make it a smaller part of the made this year was accelerat-                         tional program,” he said.                   utive v-p and COO. “We’ve             offers whatever lift customers four years average age.”                                                          feature the same seven-passen-
    Like most of the general aviation industry,    buy an asset that runs the risk of losing value,
                                                                                                                      business, we can use it as an entry ing maintenance events such as                            Cessna Aircraft acquired the            seen the trend shifting to more       need, fractional shares remain                                                                                   ger cabin, but now with a divan
the charter and fractional sectors have reported   then jet cards or leases are an option. For those                  level into what you really want to aligning heavy checks with times                       final 8 percent of CitationAir              demand for the capability of          the core of the company’s busi-              Flight Options                                                      and club arrangement.
stable activity during the past year, with         travelers who need the flight time available                       get people into, and that’s what we of slow activity, to prevent down-                    that it didn’t own last February.           the Phenom 300,” he said, “and        ness, Reid said. “We’re seeing         Flight Options is “in the                                                    “We’re always looking for
pockets of growth and decline although the         by owning a whole airplane and the flexibility                     focus on.”                            time during peak travel peri-                       CitationAir (formerly Citation-             our most recent sales have been       much more relative strength in black,” according to CEO                                                          additional aircraft in the fleet,”
number of charter hours flown so far this year     offered by large flight operations with plenty of                      Card owners don’t have a ods. This increased maintenance                              Shares) was founded by Cessna               Phenom 300 shares.”                   fractional shares. It’s our core Michael Silvestro, “and we have                                                 Silvestro said. Next up could be a
is higher than the number of fractional hours.     support, all of the big providers offer whole-                     long-term commitment and can costs in the short term but, Santo                                                                          Plumb credits AirShare’s           business that we do well at, so more people coming in than we                                                    new midsize or super-midsize jet.
Some charter operators are reporting record        aircraft management services.                                      quickly exit aviation when finan- said, “that will come back to us                              Top Departure Airports–               strategy of focusing on fractional    we’re gratified to see renewed have leaving [the fractional pro-                                                    Meanwhile, Flight Options has
results, including high-flying monthly hours           The landscape of charter and fractional                        cial problems occur. The sale of in reduced maintenance costs                                 North America (last 12 months)          operations for the company’s suc-     interest in fractionals, rela- gram]. During the ’08, ’09 time                                                   had several rounds of employee
                                                                                                                      a fractional share comes with a and better uptime. It increased                               Rank               Airport              cess and recent growth. AirShare      tive to our other product offer- frame it was the opposite. Things                                               recalls during the past six to 12
logged or other encouraging statistics, but        operations hasn’t changed that much from
                                                                                                                      long-term commitment, usually dispatch reliability by about 8                                                                         was first to operate a fractional     ings. There hasn’t been a major were really bad and people either                                                months, putting pilots, mechan-
overall, there are no magic economic bullets       last year to this year. But compared to when                       at least five years. Avantair also percent. That will make a big dif-                          1      Teterboro (KTEB)                Phenom 100 and an early oper-         shift from fractional into wholly couldn’t afford it or weren’t flying                                           ics and administrative personnel
for charter and fractional operators. As the       fractionals were the fast-growing darlings of                      offers share leases, which are sim- ference on next year’s financials.”                        2      McCarran International (KLAS)   ator of the Phenom 300. “We’re        owned, wholly owned into char- at nearly the level that they were                                                back to work after furloughs dur-
global economy limps along, especially in          aviation, they have now matured and are much                       ilar to car leases, where the buyer      Overall, he said, “It does appear                                                            getting inquiries from national       ter, charter into fractional.”      before. But we are now selling                                               ing 2008 and 2009. “It’s no secret
regions where aviation has long been a strong                                                                         doesn’t have to pay for the entire that things have gotten better for                          3      Van Nuys (KVNY)
                                                                                                                                                                                                                                                            fractional customers who [appre-          The fractional industry as a more than people are leaving.”                                                  that the whole industry was stag-
                                                   more integrated with their charter operations
part of some countries’ industrial output,         and offer many more options to customers.                          share upfront or worry about everybody. For us, we’ve contin-                                  4      Miami International (KMIA)      ciate] the capability of the          whole has suffered from an out-        Flight Options offers three                                               nant during the last couple of
growing economies in other parts of the                In recognition of this transition, this year AIN               residual value at the end of the ued to grow and add airplanes.”                                      Los Angeles International       Phenom 300,” he said. “Why own        flow of customers leaving the fold main programs, including the                                                  years,” Silvestro said. “Every-
                                                                                                                      term. “With our lease we’re less                                                               5      (KLAX)                                                                          that exceeded the influx JetPass 25-hour jet card, Jet                                                 body was quick to say the frac-
world such as China and India offer hope to        is covering the charter and fractional segments                                                                      CitationAir
                                                                                                                      expensive than a straight frac-                                                                                                                                                       of new owners buying Club membership program and                                                       tional model was broken but I
aircraft manufacturers and commercial aircraft     together, in two parts. In the first part, the                                                                                                                    6      Dulles International (KIAD)
                                                                                                                      tional jet share from all the other      “People are looking for value,”                                                                                                              shares during the reces- traditional fractional shares. Jet                                            don’t believe that. There are a
operators of new avenues for growth.               current landscape of charter and fractional                        [fractional providers] with the said Woody Harford, CitationAir                                7      Westchester County (KHPN)                                                       sion, according to Reid. Club was introduced about three                                               lot of factors that are positive
    One marked change has been that charter        operators will be covered, including statistics                    cost of the asset included in the senior v-p and chief revenue officer,                                                                                                               For Flexjet, he said, months ago “and has been well                                                    for fractionals.” He said these
                                                                                                                                                                                                                     8      Logan International (KBOS)
and fractional-share segments of commercial        showing activity levels around the globe. The                      price. That’s why leases are selling explaining why the company’s year-                                                                                                               “that is starting to bal- received,” according to Silvestro.                                           include the relative value of frac-
operations have begun to merge. Companies          second part, which will appear next month,                         so well,” Santo said.                 over-year Jet Access and fractional                      9      Opa-Locka Executive (KOPF)                                                      ance out. Our first quar- Jet Club buyers commit to 75                                                 tional shares, especially when
are not only surviving but growing, and part       will explore issues affecting the charter and                          Earlier this year, Avantair share business sold to new cus-                                       Lester B. Pearson                                                               ter registered 64-percent hours in Flight Options Embraer                                              needed for supplemental lift; the
                                                                                                                                                                                                                    10      International (CYYZ)
of the reason is that these operators are not      fractional segments. n                                             opened a maintenance facility in tomers has grown by 63 percent.                                                                                                                      growth quarter over Phenom 300s over a three-year                                                      poor service available on airlines;
                                                                                                                      Dallas. And while Avantair owns “Value is not the lowest price.”                              Source: Avinode                          Executive AirShare Phenom 100                  quarter, 2011 over 2010, period, making the program 	                                                                 Continues on next page u


22 Aviation International News • October 2011 • www.ainonline.com                                                                                                                                                                                                                                                           www.ainonline.com • October 2011 • Aviation International News 23
     FRACTIONAL                                                                               months of 2011 versus 2010, due           Management subsidiary allow                order for Globals will fill strong

     & CHARTER                                                                                to cost increases passed on to
                                                                                              customers and “modest increases
                                                                                              in fractional interests sold and
                                                                                              revenue hours flown.”
                                                                                                                                        the company to offer a full suite
                                                                                                                                        of services. “We can provide con-
                                                                                                                                        sultative advice and we can ana-
                                                                                                                                        lyze [customers’] flying patterns
                                                                                                                                                                                   demand in that category. “We’re
                                                                                                                                                                                   very tight in inventory for long-
                                                                                                                                                                                   range aircraft,” Hansell said.

                                                                                                  “We’ve seen steady growth             and their use of the program,                          PlaneSense
                                                                                              year-over-year,” Hansell told             and we can provide advice on                  Since its inception in 1996,
     uContinued from preceding page
                                                                                              AIN, but that growth mirrors              what makes sense for them on a             Alpha Flying’s PlaneSense frac-
                                                                                              the slow growth of the global             service level and economic basis.”         tional-share program has flown
and growth in cost of jet cards                    $91 million loss in 2009. Shortly          economy. NetJets also has oper-                                                                 just one type of air-
                                                                                                                                             NetJets Citation Excel
due to high financing costs for                    before leaving, Sokol announced            ations in Europe and the Middle                                                                 plane,   the     Pilatus
aircraft driving more customers                    a purchase agreement for up to             East, and business there, he said,                                                              PC-12     single-engine
into fractional shares. “We’re feel-               120 Bombardier Global worth up             “is bubbling along, much as [it                                                                 turboprop. PlaneSense,
ing pretty positive,” he said.                     to $6.7 billion. This followed an          is] in the U.S., with flight hours                                                              from the Alpha Flying
                                                   order for 125 Embraer Phenom               increasing in conjunction with                                                                  headquarters in Ports-




                                                                                                                                   NETJETS
             NetJets                               300s a year ago. NetJets also pur-         overall economic trends.”                                                                       mouth, N.H., flies with
   NetJets has undergone some                      chased jet card partner Marquis                A new product introduced                                                                    two-pilot crews and
major changes this year, includ-                   Jet late last year.                        during the past year is NetJets              Fractional shares won’t grow            offers the lowest minimum flight
ing the departure of chairman                         In its latest financial state-          Finance, which provides loans             exponentially as they did after            time requirement of any frac-
David Sokol on March 28 and the                    ment, Berkshire Hathaway noted             at 6 percent interest for share           NetJets founded the market in              tional operator, just 30 minutes.
elevation of company president                     that NetJets’ second-quarter               purchases of at least $100,000,           1986, he said. “But we think that          PlaneSense hired 40 new pilots
Jordan Hansell to chairman and                     earnings during 2011 declined              amortized over 20 years (minus            the corporate flight department            this year.
CEO. Sokol was credited by War-                    $11 million and for the first six          the age of the aircraft). NetJets         is an underserved market, not                 PlaneSense does not sell jet
ren Buffett, chairman of NetJets                   months of 2011 were down $65               also offers a lease program,              necessarily as replacements for            cards or offer retail charter ser-
parent Berkshire Hathaway, for                     million. These drops reflect neg-          which allows customers access             corporate fleets but as contin-            vices, although Alpha Flying
turning around the company,                        ative foreign-currency exchange            to the NetJets fleet and services         ued supplemental lift. Fractional          did add a charter subsidiary
driving it to pre-tax profits of                   for operations outside the U.S.            without investing in an asset.            is our foundational product. We            called Cobalt last year. Cobalt
$984 million during 2010 versus a                  and impairment charges for “the            During the downturn, there was            think the economic and service             was launched, said president
                                                             planned disposition of           a natural reaction by potential           case remains compelling for a              and CEO George Antoniadis,
                                                             aircraft later in 2011 and       buyers to reductions in asset val-        significant portion of the mar-            “to increase flexibility to our
                                                             fees incurred to cancel          ues, Hansell said, and less inter-        ket and we do not anticipate               PlaneSense clients.”
                                                             certain aircraft purchase        est in owning shares. But values          that basic relative foundation or             This year, PlaneSense has bro-
                                                             commitments.” Despite            have stabilized and there is more         structure changing significantly.”         ken all the company’s records for
                                                             these drops in earnings,         interest in share ownership.                 NetJets has long offered large-         hours flown each month. “The
                                                             NetJets revenues were                Hansell emphasized that               cabin and long-range jets as               year has been busy,” he said.
  Flight Options Phenom 300
                                                             up during the first six          NetJets and its Executive Jet             part of its product mix, and the              Another positive indicator is
                                                                                                                                                                                   that PlaneSense has no used frac-
                                                                   Fractional Operators’ Fleets (by make and model)                                                                tional shares for sale. “We have
                                                                                            Executive                                                                              had used shares,” Antoniadis
 Manufacturer                   Model                    Avantair            CitationAir                    Flexjet     Flight Options             NetJets            PlaneSense   said, “but they do not stay around
                                                                                            Airshare
  Bombardier           Learjet 40XR                                                                           19                                                                   for a significant amount of time.”
                                                                                                                                                                                   He attributes the strong interest
                       Learjet 45XR                                                                           12
                                                                                                                                                                                   in PlaneSense shares to the low
                       Learjet 60XR                                                                           10                                                                   cost of the PC-12, which “in these
                       Challenger 300                                                                         31                                                                   choppy times is appreciated.”
                       Challenger 604/605                                                                     12                                                                      While the strategy during the
  Cessna
                                                                                                                                                                                   recession was to “remain stable
                       Citation CJ3                                                24
                                                                                                                                                                                   and not worry about growth,”
                       Citation Excel/XLS/XLS+                                     27                                                                 139                          he said, PlaneSense continued
                       Citation Sovereign                                          15                                                                  44                          to grow “in small single-digit
                       Citation X                                                  7                                         14                        72
                                                                                                                                                                                     PlaneSense PC-12
                       Citation Bravo                                              5*                                                                  17
                       Citation V Ultra                                                                                                                10
                       Citation Encore                                                                                                                 29
  Dassault             Falcon 2000EX/2000                                                                                                              54
                       Falcon 7X                                                                                                                       2
  Embraer              Phenom 100                                                             12**
                                                                                                                                                                                   percentages in the number of
                       Phenom 300                                                              4                              8
                                                                                                                                                                                   clients.” The fleet has been con-
                       Legacy 600                                                                                             6                                                    stant at 32 PC-12s for a few years,
  Gulfstream           G200                                                                                                                            38                          although older models have been
                       G400/IV-SP                                                                                                                      28                          replaced with new ones. The
                                                                                                                                                                                   PlaneSense fleet will grow, likely
                       G450                                                                                                                            17
                                                                                                                                                                                   next year, and the team is con-
                       GV                                                                                                                              7                           stantly evaluating areas to locate
                       G550                                                                                                                            15                          new bases. PlaneSense now flies
  Hawker               King Air 90B                                                            5                                                                                   as far west as Texas.
  Beechcraft
                                                                                               5
                                                                                                                                                                                       While PlaneSense did place
                       King Air 350
                                                                                                                                                                                   an order for the Grob SPn, that
                       Hawker 400XP                                                                                                                    47
                                                                                                                                                                                   program went bankrupt, and
                       Hawker 750                                                                                                                      12                          PlaneSense is “still interested
                       Hawker 800XP                                                                                          12                        61                          in adding a complementary jet
                       Hawker 900XP                                                                                                                    10                          to our fleet,” said Antoniadis.
                                                                                                                                                                                   “We still believe there is a value
                       Beechjet                                                                                              53
                                                                                                                                                                                   proposition if we had a sensible,
  Piaggio              Avanti                                57                                                                                                                    appropriate jet to complement
  Pilatus              PC-12                                                                                                                                              32       the value of PlaneSense.”        o	
  *not flown actively but still used to fill busy days. ** seven fractional, five managed                                                                                            Special report continues on page 26 u


24 Aviation International News • October 2011 • www.ainonline.com
     FRACTIONAL                                                                                                                                                                    charter flying than face a return

     & CHARTER                                                                                                                                                                     to the dreaded airline service.
                                                                                                                                                                                   There is even a willingness to
                                                                                                                                                                                   use turboprops, rather than jets,
                                                                                                                                                                                   according to the company.
                                                                                                                                                                                      The Asian market is also see-
                                                                                                                                                                                   ing price sensitivity, accord-
     uSpecial report continued from page 24
                                                                                                                                                                                   ing to Jet Aviation, but clients
                                                                                                                                                                                   there generally prefer larger air-
International markets feel the                                                                                                                                                     craft. “There is strong demand
                                                                                                                                                                                   for quality charter aircraft, of
squeeze, but still full of opportunity                                                                                                                                             which the region is in short sup-
                                                                                                                                                                                   ply,” said Bernegger.
by Charles Alcock & Ian Sheppard                                                                                                                                                      But beyond the emerging
                                                                                                                                                                                   markets of Asia, there remains,
                                                                                         ABS Jets commercial director Antonia Tomkova estimates that the Czech Republic-based
   It’s hard to find a consistent             and pricing, remains largely               company has been flying 12 percent more this year than in the same period last year.
                                                                                                                                                                                   says Jet Aviation, gross over-
and objective view of the inter-              optimistic. Despite recent eco-                                                                                                      supply of aircraft to the point
national charter market. AIN                  nomic setbacks in Europe                       “Some operators have dam-               is when pricing tends to drop to              of price-sapping saturation. In
polled a selection of operators               and the U.S., it maintains that            aged the market by lowering                 levels that Gama deems “unreal-               Switzerland alone, four opera-
active in Europe, the Middle                  demand for charter services is             prices to below what is sustain-            istic.” It is also seeing operators           tors have gone out of business
East, Africa and Asia and a sum-              still in recovery mode after the           able and in some cases even                 in the U.S. flying for below cost.            since the financial crisis and Ber-
mary of their situation and per-              last crisis around 2008-09. But            below operating costs,” claimed                 From its mammoth global                   negger estimates that between 5
spective can be found below. But              this hasn’t been fully reflected in        ExecuJet Europe managing                    management fleet of almost 200                and 10 firms have disappeared
for a clearer view we also asked              a firming of flight-hour pricing,          director Cedric Migeon. “Some               aircraft, Jet Aviation has just               in the rest of Europe, with more
leading charter broker Hunt &                 as just about all of the operators         smaller operators have made                 under a fifth of these active in              consolidation still to come.
Palmer and online charter por-                below testified.                           this mistake to guarantee a cer-            the charter market. It is outside                In the Americas, Jet Aviation
tal Avinode for their assessment                                                         tain charter volume [for the air-           North and South America that                  reported a strong start to 2011
of the challenging conditions the                    Consolidation Efforts               craft owner]. They have ended               Switzerland-based Jet Aviation                in terms of charter demand,
market finds itself in.                           ExecuJet Aviation operates a           up dropping rates to build vol-             has seen the strongest growth,                only for this to trail off as early
   According to Neil Harvey,                  fleet of almost 150 aircraft and,          ume. This sets a precedent and              adding 10 aircraft in Europe,                 as mid-February and remain
Hunt & Palmer’s director of                   with bases in Europe, South                it’s a vicious circle.”                     the Middle East and Africa                    relatively soft through May.
executive aviation, this year’s sec-          Africa, Mexico, the Middle                     Some relief from this cycle             (EMEA), as well as in Asia,                   Activity then picked up again
ond quarter saw healthy signs of              East, Asia and Australasia, it is          has come from a number of
recovery, with long-suppressed                certainly one of the most global           smaller operators going out of
charter rates starting to edge up.            operators. On average, ExecuJet            business, concentrating capac-
Then July brought graphic evi-                is currently adding one new air-           ity more in the hands of big-
dence of the threat of another                craft to its managed fleet each            ger operators. “The market has
financial crisis and this softened            month and at least two thirds of           been cleaned by some compa-
demand once again. “April to                  these are available for charter.           nies going out of business, but
June were very strong, with some                  According to Christophe                there is always the risk that new
levels of activity that we haven’t            Gibert, ExecuJet’s charter direc-          ones will pop up,” said Migeon.
seen since 2008,” Harvey told                 tor for Europe, demand for char-               Gama Aviation is one of the             ExecuJet is adding an average of one new aircraft a month to its 150-aircraft-strong
                                                                                                                                     managed fleet to keep up with growing demand for charter around the world.
AIN, reporting growth as high                 ter is still rising. At the same time,     few charter and management
as 20 percent during that period.             however, pricing remains aggres-           providers with feet on both sides           over the past 12 months, with an              in June and, according to Don
   Avinode, which produces for-               sive and pressure has been partic-         of the Atlantic Ocean. Col-                 expectation of doing the same                 Haloburdo, vice president and
ward-looking indices of demand                ularly acute in the light jet sector.      lectively, its fleets in the U.S.,          again next year. Since last year,             general manager of Jet Avia-
                                                                                         Europe and the Middle East                  the company has added two                     tion Flight Services, demand
                                                                                         now run to almost 50 aircraft,              aircraft in the Americas, and it              stayed strong over the summer,
                                                                                         since the company added seven               expects to add up to nine more                with quoting activity about 15
                                                                                         since the middle of last year, and          next year.                                    percent up on the same period
                                                                                         it has reported strengthening                  In the EMEA and Asia                       last year.
                                                                                         demand for charter in all three             regions, Jet Aviation reports                    In the U.S., midsize aircraft
                                                                                         of the main markets it serves.              charter demand is slightly higher             have been in high demand in
                                                                                             In the Middle East, bookings            than it was 12 months ago. But                recent years, with clients who
                                                                                         have been “much stronger” this              the cloud on this horizon is an               formerly opted for large cabins
                                                                                         year than they were last year, and          overvalued Swiss Franc, which                 increasingly now willing to trade
                                                                                         Gama reports continued popu-                makes the company’s services                  down. Those still using large-
                                                                                         larity for its larger aircraft. The         expensive for customers outside               cabin jets tend to be putting
                                                                                         UK-based group estimates that               Switzerland.                                  more passengers on board to
                                                                                         in the first half of this year its             Over the past 12 months,                   boost the value from each trip.
                                                                                         European charter business has               reported Martin Bernegger,                    “Clients are definitely matching
                                                                                         been approximately 7 percent up             senior vice president and gen-                aircraft choices to their needs
                                                                                         on the same period in 2010, with            eral manager of Jet Aviation                  and spending wisely,” the com-
Dassault Falcon Service expects to be operating 10 aircraft by this time next year, as
clients continue to seek the comfort and productivity of business aviation.
                                                                                         larger aircraft accounting for              Business Jets, charter prices                 pany told AIN.
                                                                                         most of the growth.                         have decreased all over Europe.
                                                                                             Charter      bookings       also        But the weakness of both the                     Slow and Erratic Recovery
                                                                                         increased in the U.S., at least             U.S. dollar and euro against the                  TAG Aviation is another
                                                                                         during the first six months of              Swiss Franc means that non-                   global player with more than
                                                                                         this year. Gama is also seeing              Swiss operators have a pricing                100 aircraft under management
                                                                                         increased interest in its services          advantage of between 30 and 40                worldwide. At any given time,
                                                                                         from prospective clients in South           percent over Swiss operators.                 approximately half of the air-
                                                                                         America and Hong Kong.                         Jet Aviation’s EMEA oper-                  craft are available for charter,
                                                                                             Despite increased direct                ation also reported a greater                 and the Geneva-based group
                                                                                         operating costs, Gama has seen              interest in somewhat smaller                  is in the process of establishing
                                                                                         rivals cutting flight-hour rates            and younger aircraft (not older               a new joint-venture operation
                                                                                         to levels “not seen since the late          than three or four years). Evi-               in China.
                                                                                         1990s.” Sometimes as much as                dently this reflects a more prag-                 According to Walter Stark,
                                                                                         70 percent of the charter fleet             matic approach in which clients               TAG’s vice president for charter
                                                                                         in Europe is available and this             would rather economize in their 	                             Continues on page 28 u


26 Aviation International News • October 2011 • www.ainonline.com
     FRACTIONAL                                                                        two or three aircraft in the           extent to which charter demand                   Top Departure Airports–

     & CHARTER                                                                         Malaysian capital Kuala Lum-
                                                                                       pur to serve the Asian market.
                                                                                       These are largely flying north-
                                                                                                                              picked up during the second
                                                                                                                              quarter of this year. The oper-
                                                                                                                              ation made up for slower busi-
                                                                                                                                                                         Rank
                                                                                                                                                                                Europe (last 12 months)
                                                                                                                                                                                               Airport
                                                                                       wards to Hong Kong and China,          ness recorded earlier in the year            1       Vnukovo (UUWW)
                                                                                       where the company is find-             by positioning an aircraft at the            2       Le Bourget (LFPB)
                                                                                       ing operating conditions easier        popular Italian resort of Olbia
    uContinued from page 26                                                                                                                                                3       Cote d’Azur (LFMN)
                                                                                       now that it has more experience        during the summer months. In
                                                                                       with the country’s potentially         the belief that small is beautiful,          4       Luton (EGGW)
services in Europe, demand for               September, the VistaJet fleet             arduous flight permit approval         the group has no intention of
charter has been improving–                  reached 30. New orders and                process. Flohr’s next step is to       expanding its three-strong fleet             5       Geneva Cointrin (LSGG)
perhaps by around 5 to 7 per-                the reactivation of previously            establish a permanent and siz-         to any more than five aircraft.              6       Zurich (LSZH0
cent–over the last year in Europe            deferred deliveries from an over-         able VistaJet presence in China.       The fleet currently consists of
                                                                                                                                                                           7       Farnborough (EGLF)
itself. Nonetheless, he acknowl-             all $2 billion backlog of com-               In the Middle East, politi-         an Embraer Legacy, a Hawker
edged, “The recovery is still slow           mitments are set to increase this         cal upheaval has slowed charter        900XP and a Cessna CitationJet.              8       Pulkovo (ULLI)
and at times erratic.”                       to more than 60 jets in the next          market growth, as far as Flohr is         Nonetheless, pricing has                  9       Linate (LIML)
    Growing need for charter                 four years.                               concerned. But VistaJet is now         been tight, even for the gen-
flights in the emerging mar-                    VistaJet keeps its fleet on the        seeing bookings in and out of          erally higher-yield larger air-             10       Boryspil (UKBB)
kets of Asia, Africa and Latin               move to tap shifting demand               the once promising Egyptian            craft. Grossmann reported that            Source: Avinode
America is driving demand                    through Europe, the Middle                market once again and continues        her team has sometimes lost
toward larger, longer-range                  East, Africa and Asia. It has             to see rising demand from states       out on a charter booking for          be under tremendous pressure,”
jets. Unusually among its                    chosen not to operate in North            such as Saudi Arabia, Qatar and        a trip price differential as slim     he told AIN.
peers, TAG believes that flight-             America but provides service              the United Arab Emirates.              as $140. Grossmann told AIN              Over the last 12 months, two
hour rates have stabilized after             there through an alliance with               But Flohr clearly sees no room      that aggressive pricing has never     operators have gone out of busi-
declining in 2010. But, on                   Flexjet, whose customers it car-          for complacency, accepting that        been shown to pay in the longer       ness in Germany alone (Triple
the other hand, added Stark:                 ries in other parts of the world.         Western economies at least seem        run, usually costing the oper-        Alpha and Silver Bird). Bauer
“There is still excess capac-                   The past 12 months have seen           set for another rocky ride that        ators who resort to this signifi-     predicts that more German
ity available and while charter              VistaJet firmly shift the balance         potentially could adversely affect     cant hardship at some point.          operators will be forced out of
rates have stabilized there are              of its fleet in favor of larger, lon-     the executive and private charter         Despite the charter sec-           the market in the scramble to
still some economically unvi-                ger-range aircraft, having elim-          sectors. In response to July’s tidal   tor continuing to enjoy what          pick up the business left by those
able deals being offered.”                   inated the smaller Learjet 40             wave of bad news from finan-           she described as “very uncer-         recently departed.
    Ambitious VistaJet is well               from its inventory. In the next           cial markets, he instructed staff      tain times,” Grossmann indi-
and truly back in growth mode.               12 months, the Austria-based              to cancel any summer vacation          cated that some improvement             Intense Competition in Paris
Founder and chairman Thomas                  operator expects to add two or            plans they might have during           in trading conditions has been            Dassault Falcon Service has
Flohr doesn’t consider his com-              three more aircraft to a fleet that       August so that the entire team         achieved through greater access       increased its fleet from seven to
pany to be a charter operation               boasts an average age of less             could focus on the prospect of a       to the Asian market, recover-         eight aircraft over the past 12
in the conventional sense of the             than two years. Future deliveries         struggle for dwindling business.       ing demand from Russia and            months and expects this num-
term. Essentially what he offers             will include the ultra-long-haul                                                 improved seasonal business dur-       ber to reach 10 by this time next
is a form of block charter in                Global 6000 and 8000.                       Eastern Europe Operations            ing the summer months. But            year. Unsurprisingly, the French
which individual clients’ travel                VistaJet claims to have main-              ABS Jets, headquartered in         unsettled preowned aircraft val-      airframer’s Paris-based char-
needs are packaged into pro-                 tained 20-percent growth in               the Czech Republic’s capital           ues, in her view, continue to be      ter/management arm operates
grams giving them access to a                demand for its services this year.        Prague and with another base           a destabilizing factor for many       nothing but its own Falcons,
uniform fleet of Bombardier jets             Much of this demand is emanat-            at Bratislava in neighboring Slo-      owners and operators, espe-           with the following mix of types:
on assured terms and with a sim-             ing from Brazil, Russia, India,           vakia, operates a managed fleet        cially with some charter clients      one Falcon 50 (due for retire-
ple three-page contract. These               China and Nigeria. The com-               of 12 aircraft, having added two       and brokers unwilling to book         ment next year), a 50EX, a 2000,
days, about 60 percent of Vista-             pany recently established a part-         since the middle of last year. The     aircraft that they consider to        a 900B and four 900EX EASys.
Jet flying is for customers booked           nership operation in the West             fleet includes six Embraer Lega-       be too old. “Really the time for      Next year, it will get its first 7X,
under one of its programs.                   African country and has about             cys and a mix of Gulfstreams,          making good money [from char-         along with additional examples
    With the delivery of three               four aircraft available there.            Bombardier Learjet 60s and             ter] is over and there is not much    of the 2000 and 900.
new Challenger 605s in early                    Similarly, VistaJet now bases          Cessna Citation Bravos. The            scope for reducing costs now,”            According      to     Bertrand
                                                                                       strongest demand is for larger         she concluded.                        d’Yvoire, Dassault’s execu-
                                                                                       jets, with the Legacy having              Over the past 12 months,           tive flights and FBO director,
                                                                                       proved a popular option in the         Aero-Dienst has seen its fleet        demand has remained reason-
                                                                                       Czech and Slovak markets.              contract slightly from 11 to nine     ably constant over the past 12
                                                                                           As of late August, ABS             aircraft but it expects to be back    months overall. However, the
                                                                                       Jets estimated that its fleet has      in double figures by year-end.        latter part of 2010 saw “a sig-
                                                                                       been flying some 12 percent            Currently, the German com-            nificant increase” in demand,
                                                                                       more than it was in the first          pany, which is active in both         which was then stifled by the
                                                                                       eight months of last year. In          executive and air ambulance           fallout from the so-called “Arab
                                                                                       recent months, it has felt able to     sectors, operates a Bombardier        Spring” political upheaval in
                                                                                       increase prices slightly, but rates    Learjet 60, two Learjet 45XRs,        Egypt, Tunisia, Bahrain, Syria
                                                                                       are yet to recover to 2008 levels.     a Learjet 35, a Cessna Citation       and Libya.
                                                                                           With private aircraft charters     CJ3, a Dassault Falcon 900EX,             Until recently, a combina-
                                                                                       still relatively novel in Central      a pair of Dornier 328Jets and a       tion of the economic crisis and
                                                                                       and Eastern Europe, the relatively     Beechcraft King Air 350.              the expansion of broker activity
                                                                                       small number of operators trad-           According to managing              in France resulted in aggressive
                                                                                       ing there have arguably not felt       director Martin Bauer, demand         pricing for charters. According
Qatar-based Rizon Jet is simultaneously developing the Middle Eastern and European     the squeeze of reduced demand          for charter is largely unchanged      to d’Yvoire, prices have firmed
markets, flying two Challenger 605s, to appeal to Middle Eastern travel preferences.   seen in the west of the continent.     since 2010, although it has been      up somewhat due to increased
                                                                                       “In our region the market is still     doing about 10 percent fewer air      fuel costs and the fact that at
                                                                                       pretty new,” commented com-            ambulance flights. He shares the      least one Le Bourget-based
                                                                                       mercial director Antonia Tom-          view of many of his competitors       competitor has disappeared
                                                                                       kova. “There is still slow growth      that there are simply too many        from the market.
                                                                                       and we expect to see some new          aircraft chasing current levels           D’Yvoire predicted that
                                                                                       operators entering the market.”        of demand for charter. “There         at least one more Le Bour-
                                                                                           Also based in the Czech            has been an over-capacity of          get-based operator could shut
                                                                                       Republic, Grossmann Jet Ser-           small aircraft for a long time,       down by this time next year.
                                                                                       vice CEO Dagmar Grossmann              but also the number of midsize        He said that foreign operators
                                                                                       declared herself surprised by the      and larger aircraft is starting to    	                     Continues on page 30 u


28 Aviation International News • October 2011 • www.ainonline.com
    FRACTIONAL                                                                that it is achieving economies                be sold even to raise enough to                   Top Departure Airports–

    & CHARTER                                                                 of scale resulting in savings of
                                                                              as much as 20 to 30 percent on
                                                                              costs such as insurance, han-
                                                                              dling and maintenance.
                                                                                                                            clear the debt on them, there
                                                                                                                            would be some disappearing
                                                                                                                            from the market,” he explained.
                                                                                                                            In some cases, aircraft have been
                                                                                                                                                                             Middle East (last 12 months)
                                                                                                                                                                          Rank                 Airport
                                                                                                                                                                            1       Dubai International (OMDB)
                                                                                  Hangar 8 expects to be in                 repossessed by banks, only to
                                                                                                                                                                                    King Khalid International
                                                                              acquisition mode over the next                continue operating in the charter               2       (OERK)
    uContinued from page 28
                                                                              12 months. It is looking at sev-              market on behalf of these banks.
                                                                              eral charter/management firms                    In his view, there isn’t much                        Beirut Rafic Hariri
                                                                                                                                                                            3       International (OLBA)
attempting to enter this highly        had operated until 2010 having         right now and could close deals               that operators can do to change
competitive local market by            fallen out of favor. In Dhame-         within the next few weeks.                    their situation, other than to                          King Abdul Aziz International
                                                                                                                                                                            4       (OEJN)
positioning aircraft in Paris          cha’s view, the market is getting          The past 12 months have                   wait for brighter days to arrive.
have not had any success.              more educated about the value          seen London Executive Avia-                   “We simply have to wait for                             Abu Dhabi International
                                                                                                                                                                            5       (OMAA)
   “Our market is threatened           that midsize aircraft can deliver      tion expanding its fleet by 25                demand to increase and wait for
by financial aftershocks,” com-        for charter clients who are over-      percent, taking its tally to 24.              some operators to come out of                   6       Kuwait Interntional (OKBK)
mented d’Yvoire. “Whether              coming their fixation with large       Embraer’s Legacy 600/650s now                 the cloud-cuckoo-land in which
we like it our not, our level of       and luxurious models.                  account for one third of this                 they are operating at a loss,”                  7       Doha International (OTBD)
activity is partially linked to           According to Dhamecha,              total, along with seven Cessna                Galanopoulos concluded.                         8       King Fahid International (OEDF)
the performance of the stock           profit margins remain tight, with      Citation Excels and a mix of                     Putting aside the recent clo-                9       Marka (OJAM)
market.” Most immediately, he          operators who own their own            Citation Bravos and Mustangs,                 sure of its German subsidiary
believes any hope for a recov-         aircraft especially keen to get        plus a pair of Beechcraft King                Triple Alpha, Ocean Sky has                    10       Bahrain International (OBBI)
ery to the higher levels of flight     almost any income to cover own-        Air twin turboprops.                          almost tripled the size of its                Source: Avinode
activity last seen in mid-2008 is      ership costs. Several operators in         According to managing                     managed fleet in recent years.
dependent on European gov-             the United Arab Emirates have          director George Galanopou-                    The UK-based group now oper-                 told AIN. “But the market is
ernments overcoming their              gone out of business, just a cou-      los, charter bookings are up 20               ates 19 jets, and about half of              extremely competitive and mar-
chronic debt problems.                 ple of years after a full-blown        percent on 2010, with demand                  these are available for charter.             gins are fierce. The drive for us
                                       boom period there. Empire has          especially strong for the Lega-               For the most part, they are large-           is to be a quality operator. We’re
      Gulf Region Potential            embarked on a plan to expand           cys and Excels. But rates are still           cabin aircraft such as Bombar-               having to control our costs but
    Empire Aviation has emerged        eastwards into the largely             depressed. “Any increases [in                 dier’s Global XRS, Challenger                we are not in the bargain bucket,
as one of the more substantial         untapped Indian market for pri-        flight-hour rates] barely cover               601, 605 and 805, Dassault’s                 because there is no point doing
operators in the Arabian Gulf          vate charter and management.                                                                                                      anything for a loss.”
charter market and now fields a                                                                                                                                              Ocean Sky has seen other
fleet of 20 aircraft. These range in       Aircraft Oversupply in UK                                                                                                     operators bidding for flights at
size from Cessna C208 amphibi-             On the back of last year’s suc-                                                                                               rates that would give a profit
ans to a selection of jets includ-     cessful share flotation, Hangar 8                                                                                                 margin of barely $80. Factor-
ing the Hawker 800XP, 850, 900         has increased the size of its man-                                                                                                ing in administration costs and
and 4000, as well as the Bombar-       aged fleet by almost 70 percent                                                                                                   the time spent getting the book-
dier Challenger 300 and Global         since November 2010 to 32 air-                                                                                                    ings, this effectively means that
XRS, the Embraer Legacy and a          craft, most of which are fewer                                                                                                    the flights were made at a loss to
new Dassault Falcon 7X.                than three years old. The UK-                                                                                                     the operator.
    But despite the region’s           based group operates these in the                                                                                                     From its base in Qatar, and
undoubted potential, the Mid-          charter market under as many as                                                                                                   with a new base at London Big-
dle East has seen some of the          13 different national AOCs.                                                                                                       gin Hill Airport, Rizon Jet is
instability experienced to the             Chief     executive     Dustin                                                                                                looking to develop the Middle
north in Europe. Some air-             Dryden estimates that charter                                                                                                     Eastern and European markets
                                                                              Clients are taking a pragmatic approach to charter, according to Jet Aviation, which has
craft have been sold by own-           activity may have increased by         seen an increase in clients requesting smaller aircraft such as the Phenom 300.            in tandem. From its Doha head-
ers needing to liquidate assets,       as much as 10 to 12 percent since                                                                                                 quarters it operates four air-
but Dubai-based Empire also            2010 but, crucially, flight hour       the extra cost of fuel,” he told              Falcon 900EX, 2000EX and                     craft–a Global XRS, a pair of
has had more aircraft placed           rates have increased barely at all.    AIN. “There is too much sup-                  7X, and Gulfstream’s G450 and                Challenger 605s and a Hawker
under management contracts.            The supply/demand balance var-         ply [of aircraft] compared with               G550. The company employs                    900XP. The fleet has not grown
“What’s strange is that the char-      ies significantly between regions,     three or four years ago. We still             almost 70 pilots.                            over the past 12 months, but
ter fleet has shrunk by about 40       he explained, with Europe def-         see new people coming into                        According       to    Andrew             Rizon Jet has hopes of add-
percent,” said Empire executive        initely suffering from an over-        the market thinking they will                 Hughes, managing director of                 ing another two aircraft by this
director Paras Dhamecha. “You          supply of lift. Also in excessively    change the world and all they do              Ocean Sky’s aircraft manage-                 time next year.
would think that owners would          plentiful supply, from an oper-        is spoil the market. There is no              ment division, more private air-                 According to the company,
want to make them available for        ator/owner’s point of view, are        point flying if you are not mak-              craft in the UK are likely to                the charter market continues
charter [to cover costs].”             light jets, which, in Dryden’s         ing something from it.”                       gravitate onto commercial AOCs               to fluctuate unpredictably. It
    In the first quarter of 2011,      opinion, are simply not worth              Perhaps surprisingly, only a              to avoid VAT liability. This cre-            shares the commonly held view
Empire’s management team was           moving around to get paid work.        couple of operators have gone                 ates opportunity for those in                among operators that flight
optimistic about experiencing              Hangar 8 has seen rivals,          bust in the claustrophobic UK                 the management business, but                 hour rates have stayed low and
an upswing in charter demand           small and large, fall by the way-      charter market, but Galanopou-                it also runs the risk of flooding            that, in the long term, these are
but the second quarter brought         side these past few years and          los predicts a hard winter ahead,             an already over-supplied charter             unsustainable.
a dip and the summer season            Dryden expects there to be more        not least because of the turmoil              market with yet more capacity.                   In Germany, the fleet at
has also been down, with fly-          consolidation to come. Apart           in financial markets. He sees lit-                Nonetheless, Ocean Sky                   ACM Air Charter–a mix of
ing activity reduced by about 25       from poor profit margins, other        tle scope for industry rationaliza-           maintains that its focus on                  Bombardier, Dassault and
to 30 percent overall, compared        hazards for management com-            tion in today’s unsettled trading             larger aircraft is paying off, with          Cessna models–is unchanged
with recent years. Nonethe-            panies, in his view, are unrealistic   conditions, commenting: “There                demand rising for the types it               over the past year at seven air-
less, Empire, which has a strong       contracts with owners and a lack       is stagnation in the market. Why              operates. Conversely, the com-               craft. All are managed and
focus on aircraft management           of stability and transparency in       buy anybody [another operator]?               pany claims that its Triple Alpha            available for charter, with the
and sales, has still been able to      their financial management.            What benefit would there be,                  subsidiary collapsed in July                 company expecting to add just
increase both revenues and prof-           Further muddying the waters        unless you want to buy yourself               because of weak demand for the               one more long-range jet by the
its by roughly a third.                in the UK at the moment are            into a bigger part of the market              smaller and midsize aircraft that            end of next year in response to
    Dhamecha told AIN that             confusing changes to the way           [in terms of aircraft size]?”                 it operated–coupled with some                demand that it says has risen by
in a market where demand for           rules covering value added tax             According to Galanopoulos,                disadvantageous management                   10 percent this year. It claims
larger aircraft has been espe-         (VAT) on aircraft are being inter-     one of the reasons that so many               contracts to which its previous              to have improved profit mar-
cially strong, charter clients now     preted. According to Dryden,           aircraft remain in the charter                owners had committed.                        gins by 5 to 10 percent this year,
appear to want to seem more            these will further squeeze small       inventory is that their values are                “June and July [2011] were               making it exceptional among
discrete and pragmatic, with the       operators with just one or two         simply too low to make them                   the busiest months that Ocean                charter operators in Europe. o
larger Gulfstream G450 that it         aircraft. Hangar 8 maintains           worth selling. “If they could                 Sky has ever had,” Hughes                      Special report continues on page 32 u


30 Aviation International News • October 2011 • www.ainonline.com
    FRACTIONAL                                                                            that it invests in refreshing cabin    correctly in recent years, the

    & CHARTER                                                                             interiors.
                                                                                             Charter cards provide access to
                                                                                          light jets, such as the Hawker 400
                                                                                                                                 almost complete certainty that
                                                                                                                                 the values will tumble and stag-
                                                                                                                                 nate. NetJets claims that until
                                                                                          and the Cessna Citation Bravo,         2008 light jets were generally
                                                                                          starting at €141,000 ($197,000)        depreciating annually at rates of
                                                                                          for 25 hours. For the burgeon-         between 5 and 7 percent, while
    uSpecial report continued from page 30
                                                                                          ing Russian market, NetJets            larger aircraft were holding their
                                                                                          Europe introduced a split card         values. But in today’s more aus-
NetJets holds the fort in Europe,                                                         option through which custom-           tere market conditions, the com-
                                                                                          ers can have 15 hours per year on      pany concedes that at the end of
looks eastward for expansion                                                              a Dassault Falcon 2000 and 15          its standard five-year contracts,
                                                                                                                                                                                          Jordan Hansell

                                                                                          hours on a Hawker 800. Another         aircraft are generally selling for        NetJets Firms Up Plans
by Charles Alcock                                                                         new take on the concept was the        50 percent of their value.                 for China Expansion
                                                                                          10-hour card that it launched              But for Williams, this is a glass
    NetJets Europe remains the                equation, clients can now start             with American Express for hold-        that is more half full than half               One of Jordan Hansell’s
                                                                                                                                                                           tasks when he was president of
only example of the all-American              out with a mere one-thirty-sec-             ers of the Centurion card.             empty. “You still have complete
                                                                                                                                                                           NetJets was to explore expan-
concept of fractional ownership               ond share in an aircraft for as lit-           Today, the NetJets Europe           liquidity,” she argued. “Even if
                                                                                                                                                                           sion plans in the growing but
successfully transplanted outside             tle as $125,000, giving them 25             fleet consists of some 150 jets,       the worst comes to the worst,
                                                                                                                                                                           still tiny Chinese business avia-
the U.S. on any meaningful scale.             flight hours per year. On top of            serving about 1,600 clients in         you can sell your share and in 90         tion market. Bringing fractional
While enduring the same tough                 this, clients pay management and            Europe. This represents modest         days get your money back.” She            jets to China is part of NetJets’s
times as its cousins in the charter           flight costs that collectively run          growth over the 140 aircraft it        claimed that new share clients            10-year strategic plan, some-
sector, the company is at last turn-          from €4,000 to €10,000 ($5,600 to           operated in April 2008, before the     have included former whole-air-           thing that former chairman and
ing a modest operating profit and             $14,000) per occupied flight hour,          effects of the last financial crisis   craft owners who find fractional          CEO David Sokol implemented.
still claims to be growing. And it            depending on the aircraft type.             were fully appreciated. But new        ownership less of a risk than             Hansell, who became chairman
might be preparing to spread its                  NetJets also now markets                aircraft are on their way, includ-     being fully exposed to an uncer-          and CEO after Sokol departed
wings farther afield, with plans to           shares in pre-owned aircraft–               ing a batch of Embraer Phenom          tain aircraft value.                      in March, is also a dedicated
take the concept into more east-              quite a turnaround from the                 300 light jets, as well as Bombar-         Another change at NetJets             proponent of long-range plan-
erly continents.                              days when it made a great play              dier Global 5000s and 6000s.           Europe since a wholesale man-             ning and is moving ahead with
                                              of how it offered only the most                                                    agement reshuffle two years ago           steps that could eventually
   Options Beyond Fractional                  youthful of jets. This last move                   Customer Retention              is more rigorous planning and             see NetJets opening an opera-
   The impression given by                    is grounded in making a virtue                 Charter operators in Europe         closer attention to cost control.         tion in China. AIN asked Han-
NetJets Europe sales director                 of a necessity, with older air-             are forever claiming to be win-        “The next phase for us is stabili-        sell how the plans for China are
Emily Williams is that the com-               craft proving harder to sell on the         ning business from NetJets clients     zation in which we focus on deliv-        shaping up.
pany is older, wiser and per-                 open market. Nonetheless, it pro-           who do not wish to renew their         ering the best value for customers        Do you still see a future in
haps somewhat more humble                     vides clients with a more afford-           agreements. Williams wouldn’t          in terms of factors such as main-         China for NetJets?
and broad-minded than it has                  able entry to the fractional world.         give specifics as to the compa-        tenance, catering and new air-            We think the Chinese market
seemed in the past. She explained                 Light and midsize jets are              ny’s client renewal rate, but did      craft,” explained Williams. “We           over time will be a robust one.
to AIN how it has responded to                now typically kept in the fleet             say that generally there is more       are more focused now on what              As with all emerging markets,
shifting customer needs by pro-               for eight years and the average             churn with card clients than with      really matters to our customers.”         it’s got some distance it needs
viding a more varied mix of frac-             age for these is now nearly six             shareowners.                               This customer base now                to go from an infrastructure
tional share and block charter                years. Larger-cabin aircraft now               “We now have a dedicated            extends to first-class frequent           standpoint, from an operation-
card options.                                 are being retained for 10 to 12             team focused on retaining cus-         fliers with German airline                al maturity standpoint, but [it]
   On the fractional side of the              years. In both cases, NetJets says          tomers and we also have a dedi-        Lufthansa. NetJets Europe is              is and will be a large market
                                                                                          cated commercial team to help          once again providing lift for the         and we think a large market
                                                                                          customers look at the different        carrier’s Lufthansa Private Jets          for private aviation in partic-
                                                                                          options,” she explained. “Overall,     service, through which clients            ular. So we’re building now
                                                                                          we’re fairly happy with our renewal    can book flights as if they were          what we hope will be the infra-
                                                                                                                                                                           structure that will allow us to
                                                                                          rates.” According to Williams, the     scheduled services with regular
                                                                                                                                                                           take advantage of that over the
                                                                                          NetJets sales pitch is now a far       tickets and billing.
                                                                                                                                                                           longer term, much as we did
                                                                                          more consultative process.                 NetJets Europe has been tap-
                                                                                                                                                                           in Europe several years ago.
                                                                                             Another widely held objec-          ping expansion of business avi-
                                                                                          tion to fractional ownership is        ation demand in Russia and its            What steps would NetJets
                                                                                          the uncertainty over how aircraft      program also now extends into             have to take?
                                                                                          shares will retain value–or more       North Africa and Lebanon.                 The first step, one must ob-
                                                                                                                                 Close by, it still has a joint-ven-       tain the certificate to operate,
                                                                                                                                 ture interest in the NetJets Mid-         have the proper personnel on
                                                                                                                                 dle East franchise, which is based        the ground, train folks in the
                                                                                                                                                                           private aviation market and the
                                                                                                                                 in Saudi Arabia.
                                                                                                                                                                           nature of our business, and be
                                                                                                                                     The company–headquartered
                                                                                                                                                                           prepared to provide the lev-
                                                                                                                                 in London and with an operating
                                                                                                                                                                           el of service that we do else-
                                                                                                                                 base in Portugal–has a “ventures          where. We’ll be developing
                                                                                                                                 unit” looking into establishing           that market much as anyone
                                                                                                                                 a more permanent presence in              would at this point.
                                                                                                                                 Russia and India. Separately, the
                                                                                                                                 NetJets team in the U.S. is prob-         What about a timeline?
                                                                                                                                 ing prospects for bedding down            I do have a timeline but I don’t
                                                                                                                                 fractional ownership in China–            want to share it.
                                                                                                                                 almost certainly via a bridge-            Have you moved assets
                                                                                                                                 head in Hong Kong that could              into China?
                                                                                                                                 be established in 12 to 24 months         We do have people in China
                                                                                                                                 from now.                          o      and we have people going back
                                                                                                                                                                           and forth on a regular basis.
                                                                                                                                                                           Will NetJets be ready if
                                                                                                                                                                           things happen faster than we
                                                                                                                                                                           expect in China?
    NetJets keeps its large-cabin aircraft, such as the Falcon 2000, in its fleet for                                                                                      I hope you’re right, and I think
    10 to 12 years, but it refreshes the cabin interior (Falcon 7X shown) periodically.                                                                                    we will. –M.T.
                                                                                                                                   Special report continues on page 34 u


32 Aviation International News • October 2011 • www.ainonline.comw
    FRACTIONAL                                                                        businesses. Priester Aviation has                          Part 135 Certificate Holders at a Glance

    & CHARTER                                                                         expanded its fleet into the New
                                                                                      York area, and opened a sales
                                                                                      and marketing office in New
                                                                                                                                  Certificate Type
                                                                                                                                  Air Carrier
                                                                                                                                                                 Total
                                                                                                                                                             1,733             Part 135 Operations            Total
                                                                                      York City. Also looking to the              Operating                       188          Commuter                          48
                                                                                      Northeast for more business are
                                                                                                                                  (blank)                         204          On-Demand                      2,124
                                                                                      Solairus Aviation and JetFlite
    uSpecial report continued from page 32
                                                                                      International, a Long Beach,                Grand Total                2,125             Grand Total                    2,172




                                                                                                                                                                                                                           Source: FAA Operations Safety System
                                                                                      Calif.-based operator with a
Firms find traction in a flat market                                                  fleet of 13 aircraft. Both, like            Part 135 Basic and Single Pilot Operators                                     Total
                                                                                      Priester, have opened sales and             Basic 14 CFR Part 135 Operator - Commuter and On-Demand Operations (A037)           3
by James Wynbrandt                                                                    business development offices in             Basic 14 CFR Part 135 Operator - On-Demand Operations Only (A038)               375
                                                                                      New York City.
                                                                                                                                  Single Pilot-in-Command Operator (A039)                                             59
   Air charter in the U.S. has          for customers anywhere in the                     “Most of the operators are in
been relatively flat over the           world, vetting the aircraft and               the LA area, and most [charter]             Single Pilot Operator (A040)                                                    631
past year, according to indus-          crews and delivering the qual-                brokers are in New York City,”              Grand Total                                                                   1,068
try data. But it takes both win-        ity and safety our customers                  said JetFlite International CEO
ners and losers to get that nice,       count on us for.” To support its              Bill Cripe. “We aim to bridge              overseas. In April TAG Avi-                      Weymouth, Mass.-based Sen-
even line. Numerous charter pro-        domestic charter business, Pries-             that gap.”                                 ation Asia chose Priester as                 tient Jet, which does not operate
viders report stellar growth in         ter has also opened a new opera-                  A foothold in the North-               its U.S. operating partner,                  its own fleet, acting instead as an
bookings, flight hours and rev-         tions center in Chicago.                      east also gives these companies            enabling TAG to offer N-reg-                 uber-broker, continues to experi-
enues (though not in profits in            Vetting jet owners properly–               access to international markets            istered aircraft to its clients in           ence “well over 20 percent year-
this thin-margin environment) in        not just their jets–is critical,              where charter demand is more               Asia. Europe, the Middle East                over-year growth” in its jet card
2011. And while their fleet mix         according to Andre Beringer,                  robust than in the U.S. JetFlite           and South America are other                  and ad hoc charter business, said
and size, service models, loca-         executive vice president at Stu-              International, which reports               regions where Priester sees inter-           CEO Marty Guinoo. “We’re the
tions and much else may vary,           art, Florida-based Fair Wind                  10-percent growth in charter,              national growth opportunities.               single largest buyer of charter
those on the plus side have pur-        Air Charter. “When we look                    has also established an office             To help manage the business,                 in the industry.” Guinoo cred-
sued focused strategies that point      at an aircraft coming on [our                 in Moscow this year, and Cripe             Priester has brought an interna-             its the increase in part to “strong
to keys to growth in today’s chal-      charter certificate], as much                 said that 54 percent of Jet-               tional flight-handling specialist            growth in the business segment”
lenging charter market.                 as they’re interviewing us, I’m               Flite’s business is now overseas.          employed by one of the major                 returning to the skies, the sim-
                                        interviewing them. During the                 For the fall season, the com-              flight handlers (Priester declined           plicity and flexibility of its card
        Managed Fleets                  conversation I can say, ‘This is              pany moved a GV, “a number                 to name the company) in house.               product, and Sentient’s focus on
   Managed aircraft make up             a good fit,’ or ‘You should go                of GIVs” and a Challenger 601                                                           safety, with a chief safety offi-
the bulk of the charter fleet,          someplace else.’” The approach                to Moscow, according to Cripe.                   Point-to-Point Charter                 cer on staff guided by an inde-
operated by the charter arms of         helped the company, with a fleet              The company has also brought                   The floating fleet, point-to-            pendent safety advisory board.
aircraft management compa-              of 18 aircraft, have a record year            dispatch and handling of its               point model, which eliminates                Guinoo also sees Sentient bene-
nies. A successful charter oper-        in 2010, and “right now we’re on              international flights in house.            the traditional round-trip pric-             fitting from larger trends. “Cus-
ation starts with good aircraft         track to break those numbers,”                “This gives us better relation-            ing that gave many one-way                   tomers are moving away from
management, with the aircraft           Beringer said.                                ships ourselves with handlers,             travelers sticker shock, contin-             the aircraft ownership model,
owner’s needs kept paramount.                                                         brokers, and different people              ues to find favor in the mar-                and they’re really migrating to
But paying close attention                      New Locations                         on the ground in different coun-           ketplace as practitioners hone               charter-based solutions.”
to charter clients can be just             Extending their footprints is              tries. More important than the             their operations.                                Sentient’s 2010 purchase of
as important.                           another route successful opera-               savings is the control.”                       Delta Private Jets (DPJ)                 online charter broker OneSky
   “We value charter clients            tors have pursued over the past                   Priester Aviation also reports         president Jim Segrave reports                has paid dividends in addition
as much as we value airplane            year in building their charter                a significant increase in charters         50-percent revenue growth this               to the site’s efficiency in “gen-
owners,” said John King, pres-                                                                                                   year for the Cincinnati-based                erating leads and closing leads,”
ident of three-year-old charter                                                                                                  operator, owned by Delta Air                 Guinoo said. “We see more
management company Solairus                                      Charter Activity by the Numbers                                 Lines. Segrave, who pioneered                quotes, so we’ve been really
Aviation in Petaluma, Calif.                 If you’re looking for comfort in the past year’s U.S. charter metrics, just         the floating fleet (so named                 able to have a deep understand-
Solairus also doubled its sales              remember there are lies, damn lies and statistics. But as one veteran industry      because the aircraft have no                 ing of what flying trends are
staff and created a marketing                insider said of the charter business, “Don’t quote me, but it sucks.” Added         “home” base), joined DPJ (then               going to be, and what custom-
arm over the past year, help-                Joe Moeggenberg, president and CEO of Argus, the aviation data and safety           Delta Elite) when the com-                   ers are asking for. It’s a huge
ing build the company’s charter              auditing company, “We have not had a positive month increase [year over             pany bought Segrave Aviation                 competitive advantage.”
fleet, dominated by large-cabin              year] in the charter market in the last ten months.” As of July, Part 135 (on       in early 2010. Since then, DPJ’s
aircraft, from 16 to 26 aircraft.                                                                                                empty repositioning flights have               Owned and Operated Fleets
                                             demand air taxi) activity was down more than 9 percent over the previous
   TWC Aviation’s 25-percent                 year. So when will things turn around? Even the experts admit ignorance.
                                                                                                                                 declined to between 24 and 30                    Most U.S. operators brand
revenue growth over the past                                                                                                     percent of all legs versus 40 to             owned-and-operated (O&O) char-
                                             “I was anticipating frankly that by this time last year we would have been in
year was also driven by “a large                                                                                                 45 percent before the acquisi-               ter fleets an unprofitable proposi-
                                             double-digit increase, and it’s just not happened,” said Moeggenberg. Is there
sales staff,” according to Paul                                                                                                  tion. DPJ’s new $100,000 jet                 tion, but upstart O&Os have been
                                             a bright spot? There are many of them. International air charter is showing
Class, vice president for char-                                                                                                  card, featuring set hourly all-              challenging that assumption.
                                             signs of recovery. The Air Charter Guide reports a 10-percent increase in
ters. The growth comes atop the                                                                                                  inclusive rates locked in for two                XOJet of Carlsbad, Calif.,
increase from TWC’s acquisi-                 its site traffic, an indicator of intent to charter. And as the Charter Market      years, choice of aircraft cate-              with its O&O fleet of 30 Citation
tion of ACM Aviation this past               Report finds, even in this down market a number of charter providers are            gory for each flight and perks               Xs and Challenger 300s–and its
year, which practically doubled              finding ways to build their business and position themselves for spectacular        including Delta Air Lines Dia-               highly promoted transcon rates
the company’s mostly large-                  increases in profitability when–not if–the long awaited turnaround arrives.	n       mond Medallion status, has                   as low as $19,000–reports its
cabin charter fleet to 61 aircraft.                                                                                              doubled card membership since                flight hours, charter bookings
Based in Van Nuys, Calif., TWC                  Active U.S.-registered                      2011 Charter Aircraft                its introduction last summer.                and revenues all increased by
has a dedicated sales staff of 18                  Charter Aircraft                               by Type                            Underpinning DPJ’s opera-                more than 40 percent in the first
                                                                                               Bizliners       Very light jets
across the country, five of them                                     2011     2010                                               tion is “an innovative manage-               half of the year versus the same
focused solely on developing                                                                                                     ment contract,” Segrave said,                period last year. And while other
                                              Very light jets          60      37
new business.                                                                                                                    that pays owners a flat hourly               operators have trimmed payrolls
   Priester Aviation, based in                Light jets             830      883              Heavy jets                        rate and gives DPJ greater con-              and crew costs to maneuver
Wheeling, Ill., has expanded                  Midsize jets           733      749                              Light jets        trol over its 52-aircraft charter            through the downturn, XOJet
its charter fleet to 38 aircraft              Heavy jets             521      534                                                fleet. (Traditional management               has increased its pilot pay.
while bolstering charter reve-                                                                                                   contracts give owners between                    “We’ve      upgraded      their
nue by developing an in-house                 Bizliners                26        9              Midsize jets                     10 and 15 percent of char-                   hotels, rental cars and per
brokering capability, accord-                 Total                 2,170     2,212                                              ter revenues.) DPJ wants to                  diems,” said CEO Blair
ing to president and COO Andy                 Source: The Air Charter Guide                                                      add newer Citation XLs and                   LaCorte. “We felt like that was
Priester. “We arrange charter                                                                                                    Beechjets to its fleet.                                       Continues on page 36 u


34 Aviation International News • October 2011 • www.ainonline.com
                                       FRACTIONAL                                                                             Van Nuys and Las Vegas), to a
                                                                                                                                                                                                  Avinode’s Take on Charter Demand and Prices
                                       & CHARTER                                                                              peak ad hoc rate of $4,000 per
                                                                                                                              hour. Wilcox notes the Phe-
                                                                                                                              nom’s economics keep JetSuite’s
                                                                                                                                                                                                102
                                                                                                                                                                                                100
                                                                                                                                                                                                                                          Avinode Price Index
                                                                                                                              costs low, giving it more pricing
                                                                                                                              latitude than competitors enjoy.                                   98
                                                                                                                              (Last fall JetBlue founder David                                   96
                                       uContinued from page 34
                                                                                                                              Neeleman and Acadia Partners
                                                                                                                              bought JetSuite.)                                                  94
                              the right investment. We expect                      stronghold into the Texas mar-                 Wholesale charter opera-                                       92
                              a higher level of service from                       ket, its efficiency aided by Astro         tor the Travel Management                                          90
                              our pilots, and the way you get                      scheduling software from DayJet            Company (TMC) reports flight                                                                                                          Global
                                                                                                                                                                                                 88                                                                 Europe
                              that is mutual respect.”                             Technology. Yes, that DayJet, the          hours on its O&O fleet of 24 air-
                                  XOJet has also issued iPads                      IT division spinoff of the bank-           craft, primarily Hawker 400XPs                                     86                                                                 U.S.
                              to all its pilots. “We can do                        rupted, would-be air-taxi com-             and 800XPs are “way up, and                                        84
                              conferences face-to-face on the                      pany. “We’re their first jet clients,”     it’s across the fleet,” according                                       Jan Mar   May   Jul     Sep     Nov Jan Mar      May    Jul   Sep    Nov Jan Mar     May   Jul   Sep

                              road [with pilots],” LaCorte                         said CEO Alex Wilcox. The                  to general manager Scott Wise.                                                     2009                                    2010
                              said. “If they can communicate                       software optimizes transporta-             TMC plans to add at least four
                              more effectively and efficiently,                    tion scheduling for fluid market           800XPs by year-end, yet has                                         Avinode keeps tabs on the state of the market by generating forward-looking
                              it makes things better for our                       capacity dynamics, and though              reduced its pilot ranks. “We                                        indices showing projected demand and prices over the coming 30-day
                              customers.”                                          designed for a per-seat air-taxi           grew so fast, we were worried                                       period, calculated from between 80,000 and 150,000 flight requests for up
                                  XOJet has introduced two                         charter, has proved adaptable to           about keeping enough crews,”
                                                                                                                                                                                                  to 3,000 aircraft processed through its online portal, www.avinode.com, each
                              new membership programs this                         JetSuite’s model. In August Jet-           Wise said. “So we’ve taken a big
                                                                                                                                                                                                  month. Figures produced for AIN in early September showed the demand
                              year: Coast2Coast, providing                         Suite announced a partnership              step back and leaned that out.”
                              guaranteed fleet access for trans-                   to provide Singapore Airlines’             TMC determined it didn’t need                                       index averaging 15 to 25 points higher than in the equivalent periods in 2010.
                              continental fliers; and Preferred                    passengers with seamless trans-            a full complement of crews for                                      Meanwhile, flight hour prices are still below levels charged before the 2008
                              Access, which offers a menu of                       portation to and from the air-             all its aircraft since at least one                                 financial crisis and, while they have generally recovered over the past 12
                              money-saving options for each                        line’s gateways in Los Angeles,            jet is typically down for mainte-                                   months, these gains are being undermined by rising operating costs.
                              flight. XOJet plans to add four                      San Francisco and Houston on               nance at any time.
                              new Challenger 300s in coming                        discounted JetSuite flights.                   Noting that the 400XP can                                                                          Avinode Demand Index
                                                                                                                                                                                                 300
                              months, and has just completed                          A year ago Wilcox, a Jet-               be outfitted with new engines by
                              a new operations center.                             Blue Airways veteran, expressed            Nextant and Hawker Beechcraft                                      250
                                  JetSuite, with an O&O fleet                      befuddlement that the air charter          (as can the 800XP through                                                                      2009
                              of 11 Embraer Phenom 100s,                           industry did not practice airline-         Hawker), Wise said, “We’re                                         200                         2010
                              reports 5-percent month-over-                        style yield management (con-               about one-and-a-half years                                                                     2011
                              month revenue growth over                            stantly tweaking fares to reflect          from our first engine overhauls,                                   150
                              the past year. Based in Irvine,                      changing market demand). Jet-              so we’re now in the process of
                              Calif., JetSuite has added five air-                 Suite is moving toward such                deciding which direction we’ll                                     100
                              craft in that time and expanded                      pricing, with fares ranging from           go in.” Like the other O&Os
                                                                                                                                                                                                  50
                              beyond its Southern California                       a low set price of $999 (between           profiled here, TMC is primar-
                                                                                                                              ily a point-to-point provider, but                                    0     Jan   Feb         Mar     Apr    May   Jun         Jul     Aug    Sep      Oct           Dec
                                                                                                                              has “gotten aggressive in round                                                                                                                              Nov
                                                    Average Flight Time Part 135, 91, 91K                                     trips,” and its percentage of such
                                                                 (August 2010 - July 2011)                                    bookings has increased.                                          are factored in. Whatever their                           that are on charter certificates
                                       3                                                                                          O&Os say their ability to                                    future, the O&Os are bringing                             for sale, their values keep drop-
                                                                                                                              completely control jets with-                                    innovations to the charter mar-                           ping, and [the owners] are ask-
                                      2.5                                                                                     out concern for an owner’s                                       ket that are having an impact far                         ing for charter rates that are
                                                                                                                              needs is the key to their suc-                                   beyond their own customer base.                           basically just covering costs,”
                                       2
                                                                                                                              cess. Despite the revenue growth,                                                                                          said Joe Moeggenberg, presi-
                                                                                                                              some traditional operators ques-                                      The Price of Charter                                 dent and CEO of aviation data
                              Hours




                                      1.5
                                                                                                                              tion whether O&Os are profit-                                      Charter pricing remains                                 and safety auditing company
                                       1                                                                                      able when declines in the value                                  under downward pressure.                                  Argus. Rising fuel costs have
Source: Argus International




                                                                                                                              of their aircraft, bought new,                                   “There are so many airplanes                              also kept charter rates down.
                                                              Turbprop                     Midsize                                                                                                                                                       Operators are assessing fuel sur-
                                       .5
                                                              Light                        Large                                                                                                                                                         charges, and in this price-sen-
                                                                                                                                                                                                                                                         sitive environment, that added
                                            Aug   Sep   Oct     Nov    Dec   Jan     Feb     Mar     Apr   May   Jun   Jul                                                                                                                               cost has kept them from raising
                                                                                                                                                                                                                                                         base rates.
                                                                                                                                                                                                                Boston                                       Minneapolis-based aircraft
                                                        Top 10 Part 135 Routes – U.S.                                                                                                                                                                    management and charter oper-
                                                                                                                                                                                                      2




                                                                                                                                                                                                                                                         ator Elliott Aviation checks
                                                                                                                                                                                                   43




                                                                   August 2010 - July 2011                                                                                                          1,
                                                                                                                                                                                                    Westchester County                                   fuel prices near its jets’ desti-
                                                                                                                                                                                                                   1,533 HPN-TEB                         nations. “If [customers] can
                                                                                                                                                                                             Teterboro           1,429 TEB-HPN                           fly into an airport a few miles
                                                                                                                                            4
                                                                                                                                                               8




                                                                                                                                          61                                                                                                             from their intended destina-
                                                                                                                                                           2,33
                                                                                                                                                             6




                                                                                                                                                71
                                                                                                                                                        2,32
                                                                                                                                       1,




                                                                                                                                                                                                                                                         tion, and can save two dollars
                                                                                                                                          1,6




                                                                                                                                                                                                                                                         a gallon, they don’t mind driv-
                                                                                                                                                                                                                                                         ing an extra ten minutes to get
                                                                                                                                                                                                                                                         where they need to be,” said
                                                                                                                                                                                                                                                         sales manager Toby Batchel-
                                                                                                                                                                                                                                                         der. Elliott, with 11 aircraft
                                                       89
                                                    1,6 16                                                                                                                                                                                               from twin turboprops to mid-
                                                          7            Las Vegas
                                                       1,                                                                                                                                                                                                size jets in its fleet, has seen
                                      Van Nuys
                                                                                                                                                               Source: Argus International




                                                                 406                                                                                                                                                                                     revenues grow 5 to 7 percent
                                                              1,
                                                                                                                       Palm Beach                                                                                                                        over the past year.
                                                                                                                                                                                                                                                             Yet operators also acknowl-
                                              Los Angeles                                                                                                                                                                                                edge a countervailing trend
                                                                                                                                                                                                                                                         that finds customers asking
                                                                                                                                                                                                                                                                                  Continues on page 38 u


                              36 Aviation International News • October 2011 • www.ainonline.com
    FRACTIONAL                                                             are worked out with operators                                                                                                                                                         “We’re converting a lot of our    capabilities for the flight crews,   the retrofit,” but that rate of     didn’t need it, more companies      30 days’ notice, so the com-

    & CHARTER
                                                                           and owners. Said Batchelder at                                                                                                                                                    manual systems into electronic        according to the company; the        conversion will not satisfy cur-    are now encouraging owners          pany is trying to find a way to
                                                                           Elliott, one of the operators that
                                                                                                                                                                       Total Part 135 Flight Activity                                                        systems and more efficient ways       free Wi-Fi for customers was an      rent market demand.                 to get Wi-Fi on board. DPJ is       ensure it gets repaid for the
                                                                           provides lift for Sentient, “All                                                                                                                                                  of doing business to help keep        added benefit. “We’ve been able         The challenge for managed        having discussions with owners      equipment if an aircraft owner
                                                                           three partners sit down and dis-                                         90                                                                                                       costs down,” said Priester.           to reduce maintenance costs          fleets is that if owners don’t      about sharing the cost of Wi-Fi     cancels the management con-
                                                                           cuss what the expectations are” in                                                                                                                                                    DPJ has doubled the staff of      by 3 percent,” said LaCorte.         need the Wi-Fi themselves, any      installation. Segrave notes that    tract before DPJ recoups




                                                                                                                 Number of flights (in thousands)
                                                                           terms of pricing, scheduling and                                                                                                                                                  its already formidable IT depart-     “We’ve made the airplane an          resulting increase in charter       with Delta Air Lines’ deal with     its investment in the owner’s
    uContinued from page 36                                                hours guaranteed. Elliott itself                                                                                                                                                  ment, acquired with Segrave Avi-      intelligent airplane.”               revenue will not justify the cur-   Aircell to install its Gogo Wi-Fi   Wi-Fi system.                o
                                                                           is seeking more aircraft for its                                                                                                                                                  ation, which is the tactical driver      Priester notes that new           rent $140,000 to $180,000 cost      aboard Delta airliners, DPJ can
for newer (2000 model year          we’re attracting clients that are      charter fleet, and owners would                                          80                                                                                                       of the floating fleet model. “It      owners upgrading pre-owned           of an installed system. Whereas     get attractive rates on the Wi-Fi
and later) aircraft, despite the    frustrated with the airlines.”         likely benefit from the company’s                                                                                                                                                 remains an incredibly important       aircraft are “almost always          previously management com-          systems and installations. But
premium. “The more sophis-                                                 arrangement with Sentient.                                                                                                                                                        part of how we buy fuel, plan         installing satellite tv and Wi-Fi    panies did not push owners to       DPJ’s aircraft management con-
ticated end users are seeing               Guaranteeing Hours                  Priester Aviation will guaran-                                                                                                                                                better and optimize operations,”      technology as they go through        install Wi-Fi if they otherwise     tracts allow cancellation with




                                                                                                                                                                                                                               Source: Argus International
it can’t all be about price,                    for Owners                 tee hours on Challenger 300s, late-                                                                                                                                               said Segrave. DPJ is also imple-
that not all airplanes and oper-        In a sign of market stabil-        model Cessna Citation XLs and                                                                                                                                                     menting a new phone system that
ators and crews and customer        ity, operators are again offer-        Sovereigns, and it provides lim-                                         70                                                                                                       will provide individualized num-
                                                                                                                                                         Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
service are created equal,”         ing guaranteed hours of charter        ited guarantees on Encores and                                                                                                                                                    bers for customers, and will rec-
said David Rimmer, president        flight time, and thus revenue, to      Embraer Phenom 100s “primar-                                                        August 2010-July 2011         August 2009-July 2010                                           ognize the caller and provide all
of ExcelAire, in Ronkonkoma,        aircraft owners–for the right jet      ily in Chicago-land Midwest and                                                                                                                                                   his details to the customer service
N.Y. ExcelAire has kept its         in the right location–a practice       northeast markets,” Priester said.                                                                                                                                                rep who answers the phone. The
fleet size to 15 aircraft–most      most operators suspended dur-                                                                                                                                                                                            system “takes huge programming
of them large-cabin jets–over       ing the market downturn. Such                  Business Basics:                                                                      Top 10 Part 135 Airports                                                            and investment,” Segrave said.
the past year but has replaced      guarantees extend across all              Back Office and Marketing                                                                     August 2010 - July 2011
a trio of older models on
its charter certificate with
                                    cabin sizes of later-model jets.
                                        JetFlite International is “abso-
                                                                              When the charter market cra-
                                                                           tered in the aftermath of the eco-
                                                                                                                                                    50                                                                                                               Social Media Efforts
                                                                                                                                                                                                                                                                 Social media are also playing




                                                                                                                 Number of flights (in thousands)
newer aircraft.
   A focus on value continues
                                    lutely guaranteeing hours,” said
                                    Cripe. He noted the company’s
                                                                           nomic downturn, operators took
                                                                           an axe to expenses, grounding
                                                                                                                                                    40                                                                                                       a larger role in marketing efforts.
                                                                                                                                                                                                                                                             JetSuite posts a Suite Deal every
to keep per-seat charter alive.     G200 flew 100 hours in July, nor-      older aircraft, cutting payrolls                                                                                                                                                  afternoon on Facebook, alert-
While some start-ups have           mally a slow month. “A Hawker          and curbing expenditures. With                                           30                                                                                                       ing its 7,000 Facebook friends of
folded, per-seat broker pioneer     850XP in nice condition would          those costs under control, pro-                                                                                                                                                   empty-leg flights for $499 the fol-
Greenjets of West Palm Beach,       guarantee 40 hours,” Cripe said.       viders are focusing on business                                          20                                                                                                       lowing day. “Most days we have




                                                                                                                                                                                                                               Source: Argus International
Fla., now offers its shared char-       Sentient is guaranteeing any-      basics: investing in back-office                                                                                                                                                  two or three” Suite Deals, Wil-
ter service in eight markets and
arranges 200 flights per month,
                                    where from 150 to more than
                                    600 hours per year “primarily in
                                                                           upgrades and new marketing
                                                                           efforts. The goal: deliver long-
                                                                                                                                                    10                                                                                                       cox said. “People try it for the
                                                                                                                                                                                                                                                             first time and come back again.”
said CEO and founder Dean           the light and midsize categories,”     term cost benefits via reduced                                                                                                                                                        Los Angeles-based charter
Rochin. “I don’t think we’re        said Guinoo. The arrangements          operating costs, increased effi-                                              TEB     MIA     HPN HOU       APA     VNY     IAD    PBI    DAL MDW                                 broker Air Royale International,
cannibalizing charter; I think      to join the “Preferred network”        ciencies and increased revenues.                                                                                                                                                  which reports a 22-percent
                                                                                                                                                                                                                                                             increase in charter activity, has
                                                                                                                                                                                                                                                             also gone to social media to pro-
                                                                                                                                                                                                                                                             mote one-way availabilities.
                                                                                                                                                                                                                                                                 “We’ve been aggressive using
                                                                                                                                                                                                                                                             social media tactics to educate
                                                                                                                                                                                                                                                             consumers about the benefits of
                                                                                                                                                                                                                                                             empty legs,” said president and
                                                                                                                                                                                                                                                             CEO Wayne Rizzi, who notes a
                                                                                                                                                                                                                                                             large increase in its U.S. trans-
                                                                                                                                                                                                                                                             con bookings. “We have several
                                                                                                                                                                                                                                                             Twitter accounts and use other
                                                                                                                                                                                                                                                             various social media tactics,
                                                                                                                                                                                                                                                             including having a new blog, an
                                                                                                                                                                                                                                                             overhaul of our website and hir-
                                                                                                                                                                                                                                                             ing two online flight planners.”

                                                                                                                                                                                                                                                                       Wi-Fi Onboard
                                                                                                                                                                                                                                                                 Business aircraft are touted
                                                                                                                                                                                                                                                             as the ultimate productivity tool,
                                                                                                                                                                                                                                                             and Wi-Fi is essential to pro-
                                                                                                                                                                                                                                                             ductivity in the air. Demand for
                                                                                                                                                                                                                                                             onboard Wi-Fi continues to grow,
                                                                                                                                                                                                                                                             particularly now that travelers
                                                                                                                                                                                                                                                             can access the Internet on airlin-
                                                                                                                                                                                                                                                             ers. In the charter market, XOJet
                                                                                                                                                                                                                                                             has promoted its all-Wi-Fi-
                                                                                                                                                                                                                                                             enabled fleet heavily. Moreover,
                                                                                                                                                                                                                                                             the XOJet fleet is also accessi-
                                                                                                                                                                                                                                                             ble to charter brokers, some of
                                                                                                                                                                                                                                                             whom have marketing partner-
                                                                                                                                                                                                                                                             ships with XOJet that allow them
                                                                                                                                                                                                                                                             to advertise Wi-Fi-enabled fleets,
                                                                                                                                                                                                                                                             further pushing requests.
                                                                                                                                                                                                                                                                 “Wi-Fi plays a huge part in
                                                                                                                                                                                                                                                             aircraft demand,” said Class
                                                                                                                                                                                                                                                             of TWC Aviation. “Airplanes
                                                                                                                                                                                                                                                             with Wi-Fi are highly sought
                                                                                                                                                                                                                                                             after, and they are not in great
                                                                                                                                                                                                                                                             abundance.”
                                                                                                                                                                                                                                                                 XOJet equipped its fleet with
                                                                                                                                                                                                                                                             Wi-Fi to enhance operational
                                                                                                                                                                                                                                                             efficiencies and communication


38 Aviation International News • October 2011 • www.ainonline.com                                                                                                                                                                                                                                                                                                www.ainonline.com • October 2011 • Aviation International News 39

				
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