Business Traveller (Asia-Pacific)
Jet set future
Private jets are the reserve of the elite – or are they? Tom Otley, Jenny Southan and Craig Bright report on companies making it easier and cheaper to book
There’s a tiny, twin-engine aircraft waiting for me on the tarmac. Inside, a luxury cream interior holds just four leather seats. I sit back, relax, and think:“So this is what it’s like to fly on a private jet.”
Except I’m not about to fly anywhere. I’m grounded in a hangar at Hong Kong International Airport for an inspection of the new 13-metre Honda Jet on its debut appearance in the city.
I bring out my smartphone and type “Honda Jet cost” into the search bar – US$4.5 million. And just like that, my dreams of VIP travel dissolve.
However, for many high-end business travellers, flying on a private jet is starting to get tantalisingly close to reality.
“Owning a business jet is more accessible now because of all the options business travellers now have: they can charter, become a fractional owner, or buy their own private jet,” says Luciano Froes, senior vice president of marketing for Embraer Executive Jets.“We believe the charter and fractional markets are very good for the advancement of business aviation, especially in Asia where the market is slowly maturing.”
APP IN THE AIR
If the price is right, chartering an aircraft can be a tempting proposition – not only do you get to feel like a VIP but you can also avoid long queues at check-in, depart when you want to and land in an airport that isn’t miles from your meetings. Put it like that and it actually makes business sense.
Chartering a jet can be as simple as picking up the phone, but in recent years advanced technology – including consumer-friendly apps – has made the business of finding the right aircraft much easier and, in many cases, considerably less expensive. Many of us have experience of using Uber, and private jet “disruptors” such as Stratajet (stratajet.com), Victor (flyvictor.com) and Privatefly (privatefly.com) have been quick to copy the idea in a bid to become the “Uber of private jets”.
Stratajet has quickly expanded in Europe and the US. It claims that it was set up “to address the major issues of inefficiency and wastage in private aviation”. That inefficiency comes about because at any moment there are thousands of jets waiting to be chartered, but they may be in the wrong place and need flying to the right one. These “empty legs” can be an answer for passengers seeking a cost-effective private flight.
According to the company, the average booking through its app, launched in April last year, is US$7,800. Bearing in mind that this could mean chartering an entire aircraft, it might perhaps demonstrate that there is scope for a wide range of people to have access to private jets. Coupled with the fact that one-third of flyers are first-time flyers, it suggests that there’s the possibility of this being a growth market.
Jonny Nicol, founder and chief executive of Stratajet, says: “When you download the app, the price you see is the price you pay. We spent over four years building the technology behind it so we could quote instantly and accurately, taking into account all the variables.”
He explains that when you charter a jet,“there are 15 different sets of fees, 14 of which are outside the operators’ control and change [depending] on the time of day, day of week and level of emissions, and those differences can be thousands of pounds.”
SUBSCRIPTION FEES
As well as new technology, there have also been new business models. Companies such as Jetsmarter (jetsmarter.com) and Surf Air (surfair.com) not only have an app but also a business model not unlike a gym membership. You pay a one-off “initiation” fee and then a monthly charge afterwards.
Seats are on a first-come, first-served basis and on some routes it is only a once-perweek service. Other routes are available, but might come at an extra cost (London to New York or Dubai), or are normal charters. Both the subscription model and the technology might be seen as democratising the private jet market by making it more accessible to a wider net of people.
Still, Neil Harvey, director of executive aviation at broker Hunt and Palmer (huntandpalmer.com), questions how many people will be prepared to pay an initiation fee. “They sell it as an advantage but with us there is no upfront payment needed at all – you can ring for advice, talk prices, and nothing is paid until just before the flight,”he says.
Patrick Margetson-Rushmore, chief executive of Luxaviation UK (luxaviation.com), which operates a fleet of more than 250 aircraft and deals with all the major brokers, welcomes the rise of these internet intermediaries. Nevertheless, he has concerns about targeting new segments.“There are questions over the volume of people who could potentially fly and the price they are prepared to pay, and that’s the crunch. Apart from empty legs, the price of private flying is not cheap.”
PRIVATE JET CARDS
In the US, if you fly more than 400 hours a year on a private jet, you’re better off buying your own aircraft. But if that’s not doable, a “jet card” may be the right alternative. These enable travellers to prepay for a block of hours or load up an account with credit to use as and when they like on a predetermined aircraft of their choice.
If you decide this is right for you, you’ll require a chunk of cash upfront (this is not for travellers who prefer a pay-as-you-go approach to jet charter). The benefits of a subscription will mean you get to lock in a fixed hourly rate (you only pay for scheduled flight time – not diversions, delays, fuel, landing fees, de-icing or aircraft positioning, for example). You also have guaranteed availability, there are no peak-hour restrictions and the booking process is speedy.
Private jet cards represent 20-25 per cent of charter revenue for boutique broker Skytime Jets, which launched in 2012. Some 60 per cent of its business comes from Europe, 30 per cent from the US and 10 per cent from the Middle East and Asia. James Shotton, its co-founder and director, says: “We work with individuals who appreciate that buying a private jet card is not the cheapest way to fly but who want very high-quality, personalised service. Customers can either negotiate on every single charter trip and have multiple conversations about price, or have a fixed price agreed at the beginning so they know exactly what they are getting.”
FIRST OFF THE BLOCKS
Sentient Jet claims to have been the inventor of the private jet card, with 100 per cent of its revenue coming from this model even after 20 years. Its president and CEO, Andrew Collins, says:“About 60 per cent of our flights are related to business and 40 per cent to leisure. Whether it’s a top executive looking to make an important board meeting, or a family member looking to get home in time for the holidays, flying private is a viable way to beat the clock.”
How quickly can you go from booking to boarding? Carol Cork, marketing director and co-founder of Privatefly, says: “We had a jet card customer go from enquiry to airborne in 31 minutes last week from Miami to Chicago. On
average, almost a third fly within 24 hours of booking, and 66 per cent within a week.
“In general, jet cards came about as a natural evolution of the private jet market. First, you could own your own private aircraft, then fractional ownership was created for those who wanted a share in a specific fleet, then a jet card became desirable, offering a block of flying time, but without the full or part-share financial investment of the aircraft asset.”
Journalist and jet expert Doug Gollan says doing your research is essential, which is why he founded privatejetcardcomparisons.com, a site designed to help you work out what suits you best. He says: “Do rich people really buy these programmes without reading the fine print? All the time. What happens? They get very upset after they see their first invoice.”
Embraer’s Froes is optimistic that these developments will help position business jets as a productivity tool rather than simply a luxury item.“The ride-share and membership-based models are an exciting development in business aviation, making the accessibility of business jets even greater,” he says. “With just a few clicks, the latest mobile apps enable users to book a flight on a private jet quickly, while giving the operators the opportunity to optimise the use of the private jets. We believe these models, which were introduced primarily in North America, have the potential to grow to other markets, of course, including Asia.”