Jet shar­ing spreads its wings; plane sales stall

Baltimore Sun - - DEADLY BUS CRASH - By Thomas Black

Thanks to new tech­nol­ogy, fly­ing in a pri­vate jet is no longer just for busi­ness ti­tans and the su­per­wealthy.

But in a para­dox, that means air­craft man­u­fac­tur­ers like Cessna and Bom­bardier are sell­ing fewer planes.

The gen­eral avi­a­tion in­dus­try is un­der­go­ing a ma­jor shake-up as new busi­ness mod­els at­tempt to match idle air­craft with pas­sen­gers, many of whom now can’t af­ford their own plane. Mem­ber­ship com­pa­nies, ride-shar­ing pro­grams, on-de­mand char­ter providers and star­tups claim­ing to be the Uber of pri­vate avi­a­tion are all look­ing to in­tro­duce more peo­ple to the con­ve­nience of fly­ing with­out the has­sle of com­mer­cial air­ports.

“Un­for­tu­nately for air­plane man­u­fac­tur­ers, th­ese new pro­grams aren’t out buy­ing a lot of new jets,” said Brian Fo­ley, a busi­ness-air­craft con­sul­tant who spent 20 years as di­rec­tor of mar­ket­ing for the North Amer­i­can jet unit of France’s Das­sault Avi­a­tion. “They’re just try­ing to use ex­ist­ing as­sets out there and get more uti­liza­tion out of those parked air­planes.”

Man­u­fac­tur­ers have throt­tled back pro­duc­tion of some mod­els to ad­just to weaker de­mand. New jet de­liv­er­ies are ex­pected to drop 6.4 per­cent this year to 645 and slip an ad­di­tional 3.7 per­cent to 625 next year, ac­cord­ing to JPMor­gan Chase.

Those de­clines con­trast with an in­crease of more than 5 per­cent for flight hours for the char­ter mar­ket in the Oc­to­ber-to-Septem­ber pe­riod for the past three years, ac­cord­ing to Ar­gus In­ter­na­tional.

The in­crease in char­ter ac­tiv­ity is partly be­cause of the new op­tions that have opened up the mar­ket be­yond su­per-wealthy cus­tomers, said Brad Ste­wart, chief ex­ec­u­tive of XOJet, which op­er­ates a fleet of 41 used air­craft for hire.

“The de­moc­ra­ti­za­tion of pri­vate avi­a­tion is a huge theme, and it’s here to stay,” he said. “That’s re­ally tak- ing an ac­cess point of pri­vate avi­a­tion and bring­ing it from the top 10 per­cent of the 1 per­cent down to the merely rich.”

XOJet has part­nered with JetS­marter, a com­pany that charges mem­bers an an­nual fee with no ex­tra cost if they hitch a ride on a pri­vate plane al­ready sched­uled by an­other mem­ber. JetS­marter, which owns no planes, buys flight hours from XOJet and other op­er­a­tors, which en­ables it to guar­an­tee flights for its users.

But Sergey Pet­rossov, the founder and CEO of JetS­marter, doesn’t see an air­line-like reser­va­tion sys­tem tak­ing off in the pri­vate-jet mar­ket. Cus­tomers will choose brands that make it easy to book a flight while hav­ing the back­ing of a com­pany that takes the risk of pro­vid­ing qual­ity planes and crews, he said.

“By giv­ing con­sumers more op­tions, we keep them in the pri­vate avi­a­tion ecosys­tem and keep them away from the dreaded com­mer­cial air­port,” he said. “That’s what this is re­ally all about.”

JASPER JUINEN/BLOOMBERG NEWS 2015

Lux­ury seat­ing and in-flight en­ter­tain­ment screens are fea­tured aboard a Pi­ag­gio Aero Avanti Evo busi­ness jet. Jet shar­ing’s pop­u­lar­ity is putting pres­sure on air­craft sales.

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