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Perhaps it was bad timing or a combi-nation of circumstances and hubris, butthe past year has not been kind to thecharter industry. Some notable partici-pants have belly flopped in a big way, butthe result is not so much a severe declinein the number of charter operators, morea far lower level of activity that reflectsthe malaise affecting the global economy.
The demise of pioneering air-taxi oper-ator DayJet last September didn’t appear toindicate problems in the charter industry ingeneral, because DayJet was trying tobring a new charter business model to life.The idea was to sell individual seats on afleet of Eclipse 500 very light jets, withprices varying depending on how muchflexibility the traveler had on departuretime. Passengers who could accommodatea bigger window on departure time paidless than passengers who requested asmaller window. DayJet’s area of opera-tions in the Southeast U.S. was designed tofill a niche not served by the airlines, offer-ing transportation to airports that wouldsave hours of driving time and that wouldbe almost impossible to reach via airlines.
DayJet’s demise did not stem from thechoice of airplane, according to founder EdIacobucci. While the Eclipse 500 hadteething problems, the fundamental prob-lem that caused DayJet to fail at its attemptto create a viable per-seat charter marketwas the company’s inability to raise enoughcapital. At the time of DayJet’s shutdown, itwas selling less than half the daily ticketsneeded to survive, Iacobucci told AIN lastyear. The business model “was a thing ofbeauty when it was running,” he said.
As DayJet was winding down its opera-tions, another grand attempt to upend thetraditional charter and aircraft management
business model was suffering its own set oftroubles. The combination of two majorplayers–Sentient Jet and JetDirect Avia-tion–was supposed to result in the creationof a massive charter/management firm thatwould realize greater operational efficien-cies and serve a national base of customersin the U.S. charter market.
Sentient Jet was a jet card seller andcharter brokerage and JetDirect Aviationwas a growing charter/management firmwhen the two companies merged in April2007, adopting the name Sentient JetHoldings. The combined companies endedup owning 13 Part 135 certificates–with200 charter aircraft and 300 aircraft totalaircraft under management–which provedtoo unwieldy to manage effectively. Theresult was that the companies split, leavingSentient Jet with its jet card and brokeragebusinesses but now owned by MacquarieGlobal Opportunity Partners and JetDirectceasing operations and eventually goingbankrupt in April this year.
The shutdown of JetDirect left hun-dreds of former employees with unpaidpayroll and benefits, management clientsowed money for services they hadalready paid for and charter vendors notcompensated for trips they had flown.The employees filed a lawsuit against theowners and managers of JetDirect, andthat lawsuit has yet to be resolved,although a judge has dismissed somemotions of the original complaint.
Besides Sentient Flight Group, all thatis left of the JetDirect experiment is a
new company called Wayfarer Aviation,backed by the buyer of JetDirect’s assets,investment firm Brantley Partners ofBeachwood, Ohio. Wayfarer is repayingformer JetDirect management clients whosigned up with the new company, and thenew company’s fleet was up to 26 aircraftas of early last month. To help prevent thesituation that led to JetDirect’s allegedmisappropriation of customer funds,Wayfarer set up management clients withsegregated bank accounts.
There are only a few survivorsremaining after the failure of JetDirect.Solairus Aviation is a new charter opera-tor formed by Dan Drohan, who had soldhis company, Sunset Aviation, to JetDi-rect, only to see Sunset shut down asJetDirect’s financial problems mounted.Solairus, based in the San Francisco BayArea, recently earned 10-seat-or-moreauthorization from the FAA.
Presidential Aviation, based in FortLauderdale, Fla., was another company
sold to JetDirect that managed to extricateitself from the JetDirect meltdown. Andformer JetDirect maintenance companyJetCorp of St. Louis was sold to Canada-based Flying Colours just before JetDirectshut down. The roster of famous and no-longer-operating companies that werepart of JetDirect also includes Tag Avia-tion USA (assets of which were sold, notthe entire company), Atlantic AviationFlight Services, Summit Jet, Regal Avia-tion, Spirit Aviation, Hawker BeechcraftCharter Management, The Air Group and
Southwest Jet Aviation.Recently, charter industry veteran Bill
Koch was named CEO of Wayfarer Avia-tion. One of his goals is to “expand thefleet of Wayfarer-managed jets availablefor charter service and in more and moremajor markets around the globe.” Whatattracted Koch to Wayfarer was the com-pany’s infrastructure, which includes asafety management system and one ofthe few managed by an FAA certificatemanagement office. Wayfarer can con-duct its own conforming inspections forincoming aircraft.
“The charter business is slow today,”Koch told AIN, “but we’ve seen positivetrends in the last 60 days. Part of it is sea-sonal, but much of it is an indication ofan improving economy.”
Wayfarer started on April 17, about thesame time the charter market reached bot-tom, according to Koch. “I think it’s onlygoing to get better. In an improving econ-omy executive charter is going to be thefirst part of the market experiencing anuptick. The business need for our servicesis still there and will continue to grow.People are going to charter first beforethey buy a fractional share or an airplane.”
The charter industry is always growingand changing, and like other segments ofthe aviation industry such as manufactur-ing and fractional shares, the economyhas brought about changes that ultimatelylevel the playing field to what might be anew and lower level of business activity.
Right now, most charter companies arestruggling to remain profitable and safe.Strong players are doing relatively well,and according to charter operators inter-viewed for this report, weaker operatorsare cutting prices in a desperate attempt togenerate some business and cash flow.
As is always the case when times aretough, speculation abounds and anony-mous sources try to provide informationthat purports to show companies in somesort of trouble.
XOJet has been a frequent target ofscuttlebutt within the industry, and one
20aaAviation International News • November 2009 • www.ainonline.com
Recession dealsindustry a serious blow
Recession deals industry a serious blow page 20
Usage, pricing down as operators feel the pinch page 21
Wholesale versus retail operations page 21
Charter trends page 22
A guide for charter safety page 22
European charter page 26
chartermeltdown
SPECIAL REPORT
TABLE OF CONTENTS:
by Matt Thurber, James Wynbrandt & Jennifer Harrington-Snell
Continues on page 22 u
DayJet proposed a per-seat, on-demand charter service using a fleet of Eclipses. The company struggled to find enough customers to achieve profitability and went out of business nearly a year after it started operations.
by Matt Thurber
www.ainonline.com • November 2009 • Aviation International Newsaa21
by James Wynbrandt
The downturn of the last year haswounded most operators but felled few(the high-profile demise of JetDirectnotwithstanding). As of this September,2,233 active Part 135 certificates were onfile with the FAA (17 were dual Part121/135 certificates) versus 2,240 certifi-cates a year ago. (Operators aren’trequired to surrender certificates immedi-ately if they cease operations, but there isno indication these totals include largenumbers of defunct businesses.)
The registered fleet size has alsochanged little over the past year, compris-ing 8,224 aircraft at the beginning of thisSeptember compared with 8,202 at thesame time last year. A significant per-centage of this fleet racks up little or nocharter time. Nearly 900 (890) Part 135operators have just one aircraft on theircertificates, which are likely used prima-rily by their owners. Tracking dataindicates several hundred additional air-craft in the charter fleet are not beingflown at all currently. And some managedaircraft on charter certificates are neverhired out, according to operators.Nonetheless, there is no shortage ofcapacity in the fleet.
“There is a glut of Part 135 aircraft atthe moment, and that’s one of the reasonsthere’s so much pricing pressure,” saidJoe Moeggenberg, president of ARG/US,an aviation consultancy and data servicein Cincinnati.
The Decline in CharterHow badly is the charter industry hurt-
ing? It depends on who you ask, what theytrack and how they crunch their numbers.AIN requested data on charter operationsfrom CharterX Wyvern, OneSky Jets andARG/US. CharterX Wyvern uses data onPart 135 operations it receives directlyfrom the FAA. OneSky Jets tracks a dis-crete fleet of 2,623 charter aircraft usingdata from the FAA. And ARG/US collectsand corrects data from the FAA. All threedata providers show charter activity isdown, but their figures vary substantiallyas a result of these differences in data col-lection. (As an example cited by ARG/US,if a charter crew cancels IFR before land-ing at its destination, the FAA may notshow that flight as having occurred.)
Here’s a thumbnail picture for August2009 compared with August 2008: Char-terX reports that charter activity in light,midsize and heavy jets is down 26.4 per-cent. OneSky finds the number of flights ofits tracked fleet declined from 30,589 to26,113 (-17.1 percent) and the number offlight hours dropped from 28,000 to20,817 (-34.5 percent). ARG/US, however,finds overall charter trips during the sameperiod, including all Part 135 jets and
Decline in flyingintensifies price pressures
Charter operators may sell wholesale,retail or both. Wholesale operators markettheir fleets to charter brokers, who act astheir retail sales arms. The Travel Manage-ment Company for example, is a wholesaleoperator, and takes pride in the fact that itsfleet has no identifiable branding. A retailcharter operation deals directly with the pub-lic. It often creates a brand, with messagingtypically focused on service, convenienceand quality rather than price. And someoperators sell to both markets. Priester Avia-tion, for example, has a wholesale and aretail sales force.
“The wholesale market is quite a bitsmaller, and there’s a tremendous amount ofrelationship marketing: constant communi-cations, updates of availability, working tofind a mutual solution and things along thoselines,” said president and COO AndrewPriester. “The retail marketplace is reallyabout developing long-term relationshipswith executives, high-net-worth individuals,people along those lines. Managing the rela-tionships is different.”
Point-to-Point and the Floating Fleet
Over the past year point-to-point, or one-way pricing, has made a case for its viability,arriving aboard the “floating fleet” businessmodel. The floating fleet operates on theprinciple that a pool of aircraft can be lever-aged more efficiently and profitably throughsales of one-way fares using an itinerantfleet, rather than basing aircraft at one loca-tion and selling on a standard round-trippricing model.
Charter customers have traditionallypaid round-trip rates, even when travelingonly one way, because the aircraft incurs theflight costs of returning to its base. Thatpricing structure is thought to dissuademany potential one-way charter customers.Under the floating fleet model, the operator’sgoal is to sell a one-way trip for perhaps 1.5times what it would cost for each leg at a round-trip rate, creating the potential toboost charter revenues by an equal percent-age. But the downside risk has stymiedproviders in the past.
“The big issue is repositioning risk, andhaving to move the airplane to a new loca-tion to pick up a customer,” said DavidSiegel, CEO of charter operator XOJet in SanCarlos, Calif., one of a handful of floatingfleet operators. “We’re willing to take therepositioning risk because we know that byoffering fixed prices we’re likely to pick upanother trip. We can have aircraft floataround these high-demand markets.”
XOJet began offering one-way pricingon select routes in its fleet of new CitationXs in August 2008, subsequently expandingthe rates to more than 4,000 city pairs.Charter wholesaler Segrave Aviation iscredited with creating the floating fleetmodel earlier this decade.
“We found out when we first startedthis seven or eight years ago, we can runthese jets up and down the East Coast andmake money,” said Richard Brennan, vice
president of sales at Segrave Aviation. “Ifwe were aggressive enough on the NBAA[flight posting] boards and hit the phoneshard enough, there was business there,and consumers liked it.”
But Segrave found the traditional 85-15revenue-sharing management agreementbetween aircraft owner and charter operatorwasn’t suited to its point-to-point model.
“With the traditional 85-15 deal with theowner, you’re only rewarded so much forbusiness savvy,” Brennan noted, becausealthough the operator makes money onevery flight, even if the aircraft is charteredout for less than the direct operating cost,the upside is limited by the operator’s 15-percent share. (Conversely, this arrangementcan lead owners to question whether themanager is low-balling quote requests orbeing diligent about securing the lowestprices on the costs of services passed alongto the owner.)
Thus, Segrave rewrote all its manage-ment contracts as lease-rate agreements.Segrave now foots fixed costs such as crewsand insurance, and pays the owner a fixedamount per hour for use of the aircraft.
“When we took that on, it became a dif-ferent model. It made us the best stewardsof the aircraft,” Brennan said. “Now it’s up tous to get the best price on fuel and hotels.”
The aircraft owner pays an identicalhourly aircraft fee and pro-rated fixed costs. “So if it’s $50,000 per month in fixed costs, and the owner uses the aircraftfor three days, we divide that into 50, andthey pay that portion. It makes it simple.”
The Travel Management Company (TMC)in Elkhart, Ind., a wholesale operator, wasfounded in 2006 specifically to profit fromthe point-to-point market. “From the get-go,we thought a floating fleet was the bestoption,” said general manager Scott Weiss.“The goal is to keep the airplanes in the high-demand markets; there are several acrossthe country. New York-Florida is a big marketin the fall and winter. If an airplane leaves amarket, say from New York it goes toBillings, Montana, our goal is to price it backinto the [high-demand] market.”
TMC operates a fleet of wholly ownedHawker 800/850XPs, 400XPs, Beechjet 400sand Cessna Citation S/IIs. Weiss credits thelimited number of aircraft types as part of thereason for TMC’s success.
“The crews and maintenance are all thesame,” Weiss noted. “Other [operators]are using a whole hodgepodge fleet, andthat makes it tough to manage crews and maintenance.”
Operators also say a critical mass of air-craft is required to make the floating fleetmodel work. “It gets easier as you hit 15 air-craft to quote [a price for a flight],” saidWeiss. “I can quote anything a broker throwsat me; sometimes I’m not the best price, butif you have only one or two [airplanes] it’stough to quote.”
“Once you get to 20 airplanes, you’ve gota critical mass in a fleet,” said XOJet’s Siegel.“We’ve got 25 Citation Xs right now.”
Operators Weigh Value of Wholesale versus Retail Sales
Continues on page 24 u
Continues on page 24 u
Los Angeles
San Francisco
Las Vegas
Miami
New York
Philadelphia
Boston
Orlando
Los Angeles
San Francisco
Las Vegas
Miami
New YorkPhiladelphia
Boston
Orlando
’
Los Angeles
San Francisco
Las Vegas
Miami
New YorkPhiladelphia
Boston
Orlando
’ 454
143
106
Las Vegas-New York 98 trips
298
102
New York-M
iami 386 trips
Los Angeles-New York 384 trips
‘
‘
‘
‘
‘
‘
‘
‘‘
‘
‘
‘
‘‘
‘
‘
‘
‘
‘
‘
’July 2008July 2009
’
’
’
’
454 trips
106 trips
143 trips
231 trips
’
267 trips
337 trips
195 trips
98 trips
298 trips
102 trips
322 trips
85 trips270 trips
402 trips
79 trips
386 trips
317 trips
103 t
rips
384 trips
103 trips
’
’
’
’
’
’
’
’
’
‘
’
’
’
’
July 2008July 2009
’
’
’
’
454 trips
106 trips
143 trips
231 trips
’
267 trips
337 trips
195 trips
98 trips
298 trips
102 trips
322 trips
85 trips270 trips
402 trips
79 trips
386 trips
317 trips
103 t
rips
384 trips
103 trips
’
’
’
’
’
’
’
’
’
‘
’
’
’
’
July 2008July 2009
New York-Las Vegas 195 trips
New
York
-Bos
ton
103
trips
Los Angeles-New York 337 trips
New York-Los Angeles 322 trips
New York-Las Vegas 231 trips
New York-Los Angeles 317 trips
Miami-Los Angeles 103 trips
Miam
i- New York 267 trips
Philadelphia-Miam
i 85 trips
Orlando-New York 79 trips
New York-M
iami 402 trips
Miam
i-New York 270 trips
Top Charter Routes–U.S.(2008 and 2009)
San Jose
ParisGeneva
NiceMadrid
Barcelona
New York
London-Paris
58 trips
Toronto-New York72 trips
Toronto-New York45 trips
Chicago-Bahamas72 trips New York-Bahamas
79 trips
New York-Bahamas65 trips
Miami-Bahamas122 trips
Miami-Bahamas251 trips
London-Nice
56 trips
Madrid-Barcelo
na
43 trips
TorontoChicago
Los AngelesLas Vegas
Miami Bahamas
London
‘
‘
‘ ‘‘
‘
‘
‘
‘
‘‘
‘
‘
‘
‘
‘ ‘
‘
‘
Los Angeles-San Jose 38 trips
Miami-Nice 47 trips
New York-London 95 trips
London-New York 64 trips
New York-London 117 trips
Geneva-New York 60 trips
New York-Paris 51 trips
London-New York 127 trips
Los Angeles-London 55 trips
Toronto-Las Vegas 36 trips
July 2008July 2009
Source: CharterX Wyvern
Top Charter Routes–Non U.S.(2008 and 2009)
Source: CharterX Wyvern
22aaAviation International News • November 2009 • www.ainonline.com
recent report suggested that the companywas selling off its Citation X fleet. Themisinformation likely stemmed from thefact that six Citation Xs the firm was leas-ing recently changed hands and fromXOJet’s assistance to “other parties to selltheir Citation Xs,” according to XOJet vicepresident of marketing Tony Kavanagh.“There are no current plans to sell anyCitation Xs from the XOJet fleet.”
XOJet had 30 Citation Xs on order andas of early last month had taken delivery of25 of them. “As with all operators,”Kavanagh said, “we have adjusted our sky-line to respond to the macro environmentin private aviation. However, unlike most,we feel fortunate to have an active line ofcredit to buy both new and used airplanesand intend to use this downturn as anopportunity to acquire a superior fleet atcyclical low prices. We have, in fact, bothupgraded and added products over the last12 months.” XOJet has also taken deliveryof three Bombardier Challenger 300s sofar out of its 80-aircraft order announced atthe NBAA Convention in 2007.
There has also been speculation recentlythat charter/management firm Segrave Avi-ation was about to run out of money.Segrave president Jim Segrave explainedthat Pegasus Elite Aviation, which Segravehelped launch in August 2007, has closed.“However, Pegasus paid every invoice, billand debt it owed to every vendor withoutany exceptions,” he told AIN. “SegraveAviation is well capitalized with signifi-cant cash reserves as well as financiallystrong owners and not going anywhere.There is a group of disgruntled pilots who
were laid off by Pegasus intent on slander-ing Segrave due to the close connection ofthe two companies.”
Some bold entrepreneurs still seeopportunity in the charter market andhave opened new companies. Drohan andSolairus Aviation are a good example, notonly surviving the JetDirect debacle byobtaining a new charter operating certifi-cate but also by expanding the company.Drohan’s original company, Sunset Avia-tion, which he sold to JetDirect (and forwhich he was never fully paid), focusedon Northern California charter usingsmaller jets and turboprops. By obtainingnew 10-seat-or-more approval and hiring
former Tag Aviation executives such asJake Cartwright and Gil Wolin, Solairusis placing itself into the market for largerjets located around the U.S.
Another group of former Tag executivesled by COO Larry Edeal launched char-ter/management operation Y2K Aviation inSeptember. Currently Y2K has just one air-craft, a Global Express based in Hillsboro,Ore., but the company is offering aircraftand charter management as well as Part135 charters throughout the U.S.
Edeal spent 10 years at Tag Aviation andmanaged the Global Express. He stayedwith the airplane after its owners left Tag(when the FAA revoked Tag sister companyAMI Jet Charter’s Part 135 certificate inlate 2007 for reasons that the agency hasnever fully explained). Edeal and his teamapplied for and received a Part 135 certifi-cate for Y2K Aviation earlier this year, andthey plan to employ the Tag model of hav-ing the aircraft’s primary team located withthe aircraft and supervised by Y2K head-quarters. “They run the operation inaccordance with what’s in the manual, andwe supervise the managers,” Edeal said.
The plan for Y2K is to help compa-nies that are considering downsizing theirflight departments earn 50 to 100 hoursof annual charter revenue so they cankeep their aircraft.
“There’s a lot of activity out there,”Edeal said. “I’ve been quoting trips forthe last six or seven months. We’re doingOK. I think one of the other reasons isthat we’re building a foundation here;when the market does turn, I think peoplewho have the Part 135 certificate andquality aircraft and service will just startshooting up. We need that foundationbefore we can take off. Our investorsunderstand that; they want to do it right.Most of us came from the Tag culture of‘Let’s do it right.’ That model has beeningrained in us; it can be done and it canbe done well, and that’s what we live by.”
ACP Jet Charters of West Palm Beach,Fla., sees an untapped market for jet cardsand launched retail jet card service InJet inlate September. One might think that thereare plenty of jet card programs available tosatisfy the marketplace, with fractional-share operators, brokers and block-charterprograms, but InJet promises “to be themost innovative in the industry” and to“offer unmatched flexibility to its mem-bers.” InJet’s program includes the InJet25 jet card with guaranteed rates in 25-,50- and 100-hour blocks; Touch 10, forcharter buyers who want to sample theservice without a large outlay of capital;and InJet One, traditional pay-as-you-gocharter. InJet 25 owners can earn a dis-count by flying a round trip on the sameaircraft instead of just one occupied leg.
Another example of an operator tak-ing advantage of opportunities during therecession is charter/management com-pany TWC Aviation, which is celebratingits one-year anniversary at Van Nuys Air-port in Southern California, having
moved there from nearby Burbank Glen-dale Pasadena Airport in August 2008.During the past year, according to ScottCutshall, director of sales and manage-ment services, TWC has added sevennew management clients that were for-mer JetDirect customers as well as newclients. The company’s Van Nuys hangaris full and its maintenance shop is busy.“The only down segment is charter andaircraft sales,” Cutshall said, “althoughwe [sold] two airplanes this year.”
Aircraft owners are aware that charterflying is down, he acknowledged, butthey are more interested in working witha high-quality management companythan trying to get every possible charterhour for their aircraft.
The latest JPMorgan Business JetMonthly report underscores the effect the
recession has had on flight operations inthe business aviation marketplace. U.S.takeoffs and landings were down slightlyin August, to 303,000, about 1 percentlower than in July. Compared with lastAugust, flight operations dropped 12 per-cent, “the smallest drop since July 2008,”according to JPMorgan, but still histori-cally lower than the 360,000 per monthaverage since 2000.
The Aviation Research Group/U.S.business aircraft activity report showscharter flying down 11.8 percent forAugust 2009 versus August 2008. Thelargest drop was in the turboprop seg-ment at 12.8 percent, while large-cabinjets suffered the least, with a drop of 8.2percent. More details about the state ofthe charter market are available in thefollowing section of this report. o
Recession deals industry a serious blowuContinued from page 20
charter report Several developments shaped the charterworld over the past year. Here are three thatbear noting:
Pricing TransparencyXOJet’s one-way fixed-price fares have
brought a new level of transparency to chartercosts. “This is an industry that’s been opaquein terms of pricing,” said David Siegel, XOJet’sCEO. “It’s difficult to compare prices on tripsand get good information. And there are oper-ators and brokers that have profited from thisopaqueness, but the customer always loseswith that. We just think transparency and fullinformation is always best for the consumer.”
The low rates themselves–$19,000 transconin a Citation X or New York to south Florida for$12,000–have also stirred the industry. “We’reable to offer this pricing because we have amore efficient model,” Siegel said. “We have 50percent more revenue per airplane than ourcompetitors’ business models. We get paidmore of the time we’re flying.”
Siegel also noted that these rates arebelow XOJet’s average fares. “I wouldn’t saythat they’re particularly profitable [flights] forus, but this program is really to stimulate trialand awareness of our product,” he said. “Sopart of our view is it’s a marketing expense.”
The Operator-Broker HybridScott Phillips, president and founder of
Jet 1, a charter operator in Naples, Fla., hascreated a hybrid model by establishing anindependent brokerage arm, Charter Logic,run by CEO Jordan Brown. “One feeds theother,” Phillips said. “Somebody calls for aone-way, we’ll give them to Charter Logic;they can beat our price all day long. The samething if they call Charter Logic for a round
trip, [Charter Logic] will give it to us.”Phillips isn’t hesitant to use his broker arm
for a round trip, either, if it makes more sensefor the customer. “Today, we’re trying to opti-mize. We won’t send our airplane just becauseit’s our airplane. By knowing every modelavailable, we’ll create a lot more options for[the customer] and we won’t have to go out-side our business to do that any more.”
Phillips, a charter industry veteran, issold on the hybrid concept. “I think you’vegot to have both,” he said. “They’re good foreach other. We’ve been in this over a year. Ithink there’s a huge advantage to the modelwe developed.”
Charter AuctionOnline charter auction, which enabled
retail customers to post and providers to bidon prospective charter flights, had a bad year.Jets.com, the progenitor of the online charterauction concept and creator of the enablingonline platform, ceased operations this year.OneSky Jets acquired the company’s assets,but OneSky CEO Greg Johnson does notsound bullish on the charter auction concept.
“I fundamentally believe that this is a rela-tionship-based business,” Johnson said.“Those fliers who do feel comfortable shop-ping like to do so within a defined set ofoperators or a broker performing due dili-gence. It takes more than just a good price onan Internet Web site to win business. Thiseconomy hasn’t changed that.”
Johnson said that OneSky was interestedprimarily in the Jets.com database, andwhile his company will host an auction func-tion on its site, he doesn’t see it as a majorbusiness driver. –J.W.
Trends that Made News
Newly launched management services providerY2K Aviation offers this Global Express for charter.
Charter Best Practices Guide Available
NBAA in September released best-practices guidelinesfor charter brokers that outline the regulatory environmentin which air-charter brokers work, along with business-practice recommendations to benefit air-charterconsumers, operators and brokers alike. In the course oftheir work, brokers encounter a number of federal andstate agencies that may have jurisdiction over their busi-nesses, and NBAA’s guidelines help brokers navigateregulatory requirements and develop best practices. n
24aaAviation International News • November 2009 • www.ainonline.com
turboprops, declined only 11.7 percent,from a total of 58,969 to 52,013. TheARG/US data also shows the aircraft flyinglonger flights than does the OneSky data,averaging 80 minutes per flight (up from78 minutes in August 2008).
Other factors also skew data. Forexample, every time a Part 135-registeredaircraft flies, even when carrying its own-ers rather than on charter, it appears onrecords as a charter flight. Meanwhile,data on the use of Part 91 (not-for-hire)turboprops and jets over the past yearindicates private owners cut back less onflying than have charter customers. AsGreg Johnson, president and CEO ofOneSky Jets, explained, “What thismeans is that the drop in hours beingreported here is probably understated [forthe drop in charter hours] because it can-not account for and filter out the ownerflying on charter aircraft.”
Several anecdotal reports present ableaker picture.
“I don’t believe it’s a secret: the lastyear has been very difficult for all charteroperators,” said Andrew Priester, president
and COO of Chicago-based Priester Avia-tion. “We’re down 30 to 35 percent on a12-month average.”
The Price of CharterExcess capacity and decreased demand
have made a buyer’s market for charterover the past year. In addition to loweringhourly rates, many operators have waivedstandard two-hour minimums.
“The reduction in demand has createdprice pressure across the board,” saidOneSky’s Johnson. “On some of the mostpopular routes the prices are down asmuch as 20 percent.”
Asked for comparative costs on popu-lar routes over the past year, Jim Betlyon,president of Trenton, New Jersey-basedCharterX Wyvern, said, “It is difficult todemonstrate; anecdotally prices are atbreakeven or less. Some operators arequoting at less than DOC [direct operat-ing cost] to keep the airplane moving andhave some revenue going to the ownerand themselves.”
Wayne Rizzi, president of broker AirRoyale International, said that a NewYork to London round trip aboard a GIVis now about $83,100, compared with$92,900 a year ago, an 11-percent drop.
The most aggressive pricing has beenbetween the Northeast and Florida and
on transcontinental routes. And some ofthe greatest price pressure came notfrom desperation but by design. SanCarlos, Calif.-based XOJet introducedone-way fixed prices in August 2008
aboard a fleet of new Citation Xs andnow offers all-inclusive coast-to-coastfares of $19,000 and New York-SouthFlorida flights for $12,000.
Decline in flying intensifies price pressure
Los Angeles
San Francisco
Las Vegas
Dallas
Miami
New YorkPhiladelphiaWashington, D.C.
Chicago
Boston
Orlando
5,832 trips
3,477 trips
1,928 trips
4,352 trips
1,277 trips
7,627 trips
5,104 trips
7,854 trips
1,530 trips
1,832 trips
1,996 trips
1,327 trips
July 2008July 2009
3,916 trips
2,527 trips
2,019 trips
1,586 trips
1,574 trips
1,162 trips
1,276 trips
1,367 trips
Top Charter Destinations–U.S.(2008 and 2009)
Paris Geneva
Moscow
Nice RomeMadrid
1,718 trips
624 trips
460 trips
311 trips 315 trips
814 trips
314 trips
801 trips353 trips
389 trips
1,314 trips
435 trips
300 trips300 trips721 trips
958 trips
683 trips
270 trips
474 trips
389 trips Toronto MontrealVancouver
San Juan
Bahamas
London
July 2008July 2009
Top Charter Destinations–Non U.S.(2008 and 2009)
Source: CharterX Wyvern
Source: CharterX Wyvern
A larger fleet can also absorb a biggersupport staff and greater investment in thebusiness, both advantages in this relation-ship-centered, high-dollar arena. Segrave hasfour programmers on staff who work solelyon the company’s proprietary software, capa-ble of generating automated, contract-readyresponses to requests for quotes 24/7.“Today alone we sent out 192 quotes for $5.7million,” Brennan reported on a recent lateafternoon. Segrave uses CharterX’s business-to-business charter market portal for itsonline booking.
“We continue to think technology is theway to go,” said Brennan. And it doesn’t haveto be proprietary. “Every pilot has a Black-Berry and inputs fuel burn,” he continued.“We’re tracking fuel burn during flight to seehow we’re flying these airplanes: are we fly-ing efficiently and using long-range cruise? Ifone pilot is continuously burning more fuelthan another pilot, he’ll hear from the chiefpilot: ‘How are you flying this?’ or ‘Is there anissue with the jet?’ We’re really aware ofthese things.”
Operational costs are different for a float-ing versus a fixed fleet. With no home, afloating fleet doesn’t need a base hangar.“Our 50,000-square-foot hangar is alwaysempty,” said Weiss of TMC. But road costsare high. “We’ve got a lot of airline tickets tobuy” for commuting flight crews, he said. Interms of expenses, he said, “I think the float-ing fleet is kind of a wash.”
But any money operators can save on theroad is money earned. TMC’s pilots maintaina 15-days-on/13-off work schedule, ratherthan the more common eight-on/six-off crewcycle to reduce travel expenses. Weiss andthe rest of TMC’s management are formercharter pilots themselves, and they believethat provides invaluable experience for run-ning a charter company.
Fortunately for these and all operatorstoday, FBOs that just over a year ago werepreoccupied with fractional and jet card
customers are now receptive to making dealson fees, services and fuel. That’s especiallyimportant to floating fleets, which are foreveron the road. Segrave has recently establishedpreferred relationships with Signature,SheltAir and Landmark.
“Before, Signature wouldn’t even thinkabout talking to a [charter] operator,” saidBrennan. “Now it’s working deals with Seg-rave and it’s happy with how much fuel we’rebuying. That’s part of our model; we’ve hadto be aggressive on travel costs.”
Operators don’t need floating fleets toplay in the point-to-point market space.Online portals such as CharterX and acompany’s internal databases of customersand their travel preferences simplify mar-keting one-way trips. “We’ve really adaptedto the point-to-point market,” said Priesterof Priester Aviation, which operates aircraftfrom more than half a dozen locationsaround the mid-continent region. “We’vedefinitely had more people requestingpoint-to-point service. So with reallyaggressive marketing of one-way trips, let-ting people know where they’re available,we’re able to take advantage of that. It hasbecome an important part of the chartermarketplace.”
(Should an empty leg of a paid round-tripflight be sold, it is customary to return a por-tion of the initial charter customer’spayment.)
Is this growing point-to-point marketjust another form of bubble? The fact is, notall charter operators have much demand forone-ways. “Seventy-five to 80 percent ofour business is companies booking an air-craft for the duration of the trip, withmultiple cities,” said Batchelder of ElliottAviation. But Batchelder allows that someregular clients will make seasonal one-waytrips to vacation homes, for example. Andwhat happens then? “In that case, we’ll contact local charter operators, nationalbrokers, and let them know we have an air-plane flying back to Minnesota.” –J.W.
uContinued from page 21
Operators Weigh Value of Wholesale versus Retail Sales
uContinued from page 21
charter report
Elkhart, Ind.-based Travel Management company owns its fleet–rather than managing aircraft forowners–a business model to which it attributes its profitability.
Continues on page 68 u
26aaAviation International News • November 2009 • www.ainonline.com
Predictably enough, the economicdownturn and its impact on business avi-ation has been by far the biggest issue onthe minds of European operators over thepast year. As one operator explained, inthe past 12 months “business aviation felloff a cliff.” But the economy is not theonly weighty issue; the downturn hasbrought to light a number of other concerns, including price undercutting,black-market operations and strainedbusiness relations with U.S. operators.
Above all, however, the recession isstill the key issue on which operators arefocused. “The economy has been a majordump for us,” said Edgar van Schaik, vicepresident of charter sales for Geneva-based PrivatAir. “Any operator that tellsyou that business has beenfantastic is lying. I don’t knowone single operator that’s notsuffering.”
Figures vary widely, butmost operators and organiza-tions agree that business hasdropped 20 to 40 percent over-all. According to PedroVicente Azua, COO of theEuropean Business AviationAssociation (EBAA), businessmight be even worse were itnot for the large number of aircraft ownersin Europe. “Most owners have their air-craft with a charter operator,” he said.“That’s why most of the operators stillhave business. Owners are still flying. Thereal charter part of the business is suffer-ing, however, because there aren’t thatmany people coming in from the streetand chartering an aircraft.”
There is also some indication that oper-ators of large business jets have been lessaffected by the downturn than operators ofsmaller jets. “I can’t categorize it easilyand say that it has impacted one sectionworse than another, but it seems that theheavy-iron end was less affected than thelighter iron,” according to Guy Lachlan,CEO of the British Business & GeneralAviation Association (BBGA). “Beyondthat, it’s very hard to form a conclusion.”
Among the operators that confirmedthat assessment was London ExecutiveAviation (LEA), which saw a 20-percentdrop in flight hours among its medium-size jets and a 40- to 50-percent dropamong the entry-level airplanes, such asits King Air 200s and VLJs, according toLEA chief executive Patrick Margetson-Rushmore. “It’s nearly business as usualon the larger aircraft,” he said.
Lachlan said the discrepancy could be
related to the types of customer who gen-erally fly on large aircraft. “It’s probablybecause there’s a disproportionate amountof chartering done by governments at thatend of the market,” he said. “Govern-ments aren’t immediately impacted bythis crisis.”
Another discrepancy lies in the size ofoperations that have been most affected.Large operators, with more overhead,appear to have been affected to a greaterdegree than smaller operators. Cardiff,Wales-based Dragonfly Air Charter, whichoperates three King Air 200s, has made itthrough the recession relatively unscathed,according to founder and CEO HowardPalser. “We’re a small company,” he said.“We were able to sustain this downturnrather better than large operations that havelarge numbers of pilots and expensive air-planes, where the costs can rapidly escalate.If you have a small operation, fewer staffand fewer aircraft, you tend to keep thoseaircraft flying and keep the business jog-ging along, pending the upturn.”
The large operators have also notedthe discrepancy. And in some cases, thediscrepancy has resulted in resentment,
especially in cases where ques-tionable aviation companies havefared better than reputable opera-tors. According to van Schaik,“The people who actually con-tribute something and have addedvalue are the ones who are suffer-ing the most because we have theheavy overhead,” he explained.“Good operators are strugglingfor survival, while little brokerswho have no overhead, no addi-tional value, are surviving.”
Pricing WarsOperators who act as brokers have
taken the largest hit, van Schaik said.“Business itself has not dropped off thatmuch. There’s still a fair amount of air-craft movement. However, the number ofpeople who actually made money on thosetransactions has dropped dramatically.”
At one time, there might have beentwo or three brokers involved in onetransaction, van Schaik explained. “Inprevious years, the sky was the limit.What you saw happening was double ortriple brokerage. There were two or threebrokers involved in one deal.”
Now, customers either go directly tothe operator or use a questionable brokerwho quotes the lowest price.
According to the most recent figuresfrom Eurocontrol, the year-to-datedecline in the number of business jetflights throughout the EU was 18.4 per-cent, less than the 20 to 40 percent figuremost operators are quoting.
One of the biggest problems operatorsare facing as a direct result of the down-turn is pressure on pricing. “There areorganizations out there that are undercut-ting prices,” Dragonfly’s Palser said.“You see jets flying for considerably less
than what we charge for a turboprop.” The problem, according to LEA’s
Margetson-Rushmore, is that some oper-ators believe they should lower prices ina recession. “Actually, the opposite istrue,” he said. “You have the same costbase in overhead and less volume goingthrough. You actually need to chargemore, increase revenue.”
Operators who charge less are notalways the safest ones, according toDavid Macdonald, sales director of char-ter broker Air Partner. “The thing aboutprice is interesting,” Macdonald said. “Ina recession, everything is about price.And price is a factor for lazy operators,people who have nothing [else] to offer.”
Although brokers and operators alikecomplain about low prices, some compa-nies insist low prices are good for business.UK charter broker EMTjets advertisesitself as an online “charter marketplace,”where operators can bid for business. Thecompany claims to provide the most com-petitive rates to customers and advertisesempty-leg flights at 25 to 50 percent lessthan the cost of average trips.
EMTjet manager Jonathan Lloydinsists that the business model is goodfor both operators and customers, froman environmental and a financial stand-point. “Operators make a profit fromeach empty leg that is sold,” he said.“The charter has already been paid for,and if we can fill the aircraft comingback, they’re much happier.”
Approximately 1,700 operators, about80 percent European, have signed on tothe EMTjets Web site, with an additionalseven to 10 more signing up each week,Lloyd said, adding that empty-leg regula-tions in Europe are not quite as stringentas those in the U.S.
Another problem, according to vanSchaik, is an increase in the number ofquestionable operators from areas suchas Eastern Europe and Russia whocharge lower prices than their Europeancounterparts. And because of the reces-sion, clients are more willing to choose aflight based on the cost.
“Even though it might appear thesame on paper, a Swiss-registered Gulf-stream might not be the same as aGulfstream from another area,” vanSchaik said.
Due in part to issues such as these, Pri-vatAir has its own in-house auditor toevaluate the safety standards of each of itsoperator partners. “One thing is for sure:safety is absolutely our utmost concern,
and if that means we lose business becausesome monkey operator charges less, so beit. We will never lower our standards.”
In addition to price undercutting, therehas also been an increase in black-marketcharter activity, which takes two forms:private users chartering out their aircraftto friends and family, and illegal opera-tions from non-European operators.
The UK Civil Aviation Authority(CAA) recently launched a publicitycampaign to educate end users about theproblem. “Most companies planning toundertake work that legally requires anAOC abide by the law and hold the cer-tificate,” said David Chapman, a memberof the CAA Safety Regulation Group.“However, as in all walks of life, somecompanies and individuals choose toignore the requirements and operate ille-gal public-transport flights.”
The CAA has published information,including a list of authorized AOC hold-ers and a special leaflet to customers, onthe organization’s Web site. It will also“continue to investigate and, if necessary,prosecute companies and individuals thatfail to follow the requirements.”
The organization said it is difficult todetermine how often this actually occurs,but agents routinely conduct random spotchecks at various airports and urge oper-ators and users to report illegal activity.Punishment can include up to two yearsin prison and/or unlimited fines.
Illegal charter activity has alwaysbeen an issue, Air Partner’s Macdonaldsaid. The problem has simply gottenworse over the past year or so. “Becauseof the economy, more aircraft are beingpushed illegally. You have owners outthere who are feeling the pinch, andbecause of the pressure they’re underthere is a much bigger temptation forthem to charter the aircraft illegally.”
The only way to address the issue isfor the industry to police itself, Macdon-ald said. “It is a problem, but the industryhas become much more aware of it. Ithink you’re going to see a lot more ille-gal operators being reported; if we don’ttell the authorities what’s going on, theauthorities can’t do anything about it.”
International RelationsA large segment of the black-market
operations involve charter companiesfrom non-European countries, namelyNorth America, who operate illegallywith the EU. Some operators are well
The Europeancharter market
charter report
by Jennifer Harrington-Snell
SLOWING BUSINESS SHINES A LIGHT
ON THE SECTOR’S OTHER CHALLENGES London Executive Aviationreported a 20-percent drop incharter for its larger aircraft,such as the Falcon 900EX.
David Macdonald,Air Partner
Continues on page 69 u
“It just demystifies the whole processfor everybody,” said XOJet CEO DavidSiegel about fixed pricing. “It really forceseverybody in the whole value chain,whether a broker or operator or somebodyelse, to demonstrate what [they are] actu-ally doing for the customer.”
Some operators, while not cuttingrates, have forgone customary increases.“Historically, Elliott [Aviation]will raise charter rates for CPI[consumer price index],” saidToby Batchelder, sales man-ager of the Minneapolis-basedoperator. “In 2009 we did nothave a price increase on hourlyrates, mainly because fuel ischeaper today. In that senseprices have come down.”
Other operators have held faston rate cards. “The charter mar-ket did not slow down because the pricesof charter were too high,” said Priester.“It slowed because the purchasing habitsof charter customers changed. We havebeen resisting lowering the charter rates.We really believe people who are flyingon the airplanes are willing to spendmoney on the quality of the operation.”
Scott Weiss, general manager of theTravel Management Company (TMC) in Elkhart, Ind., a wholesale operator,sounded a similar note. “We stuck to ourguns on pricing, and stuck to a serviceeverybody needed. We’ve had a lot ofgood brokers out there say, ‘Even though[the trip quote] may be $1,000 more, anew [Hawker] 400XP will show up, and ifit breaks, they’ll get a replacement there.’”
“We’re actually raising prices,” saidRichard Brennan, vice president for salesat Segrave Aviation, a wholesale operatorbased in Kinston, N.C. “You can’t get toprofitability with every jet flying at a loss.It’s just not going to work.’”
Owned Versus Managed Fleets
The past year has brought into focusdifferences in operational philosophiesbetween the owned- versus managed-fleetmodel. When business was brisk andmoney was cheap, shortcomings of opera-tors trying to execute on either modelweren’t so apparent. Many charter opera-tors have aircraft they own as well asaircraft they manage and charter for privateowners. Other operators have either ownedor managed fleets, and rarely have opinionsabout the models been so sharply drawn.
“You can’t be an owner and chargeenough for charter to break even; you’redead in the water,” said Scott Phillips, pres-ident and founder of Jet 1 in Naples, Fla. “Iused to own more than half my airplanes.In 2006, I sold my airplanes and said, ‘I’mgoing strictly into management.’”
Those opposed to ownership cite thecost of paying for and maintaining theaircraft, which can leave owners exposedin a down market. And the fact that mostaircraft used for charter are under man-agement may be what’s keeping manyoperators afloat.
“If the charter companies were alldependent on charter revenue, the realityis, some companies might have ceasedbusiness,” said OneSky’s Johnson. “Butthe fact there hasn’t been carnage meansaircraft owners are lowering rates orlowering expectations [on charter rev-
enue], and continuing to paymanagement fees.”
But successful operators thatown their fleets can be equallyadamant.
“We own everything; wedon’t manage any airplanes,so that’s a huge benefit to us,”said TMC’s Weiss. “[The aircraft] never have to besomewhere because an ownerneeds them, and there are no
problems with owner approvals [of indi-vidual charter flights].”
An important element in the TMCmodel, unusual for fleet owners, is thatthe aircraft were purchased outright,bought with proceeds from companyowner Peter Liegl’s sale of his ForestRiver RV business to Warren Buffett’sBerkshire Hathaway holding company.“We don’t have any debt; everything ispaid for. I can see if you went into thiswith a lot of debt, it would be tough,”Weiss conceded.
But a managed fleet is no panacea tocash-flow problems. During the recentboom times operators hungry for liftoffered attractive management contractsto owners, with low fees and assurancesof strong charter revenue. But those
arrangements have proved painful foroperators taking a hit on managementfees and owners feeling shortchanged onpromised revenue. These disillusionedowners make this an operator’s market interms of having a pick of aircraft to man-age, but operators are being cautiousabout whose aircraft they agree to handle.
“There’s plenty of management oppor-tunity,” said Brennan of Segrave, whichhas both owned and managed aircraft in itsfleet. “The question is, is there enoughcharter out there for it? We’ve been realis-tic with our owners on what the market isdoing. You can’t have an owner who wantsto fly 30, 35 [charter] hours per month.” o
charter report
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2,000,000
Light Midsize Super-midsize Heavy Turboprop
Nautical Miles Flown per Week by Aircraft Class
8/29/09
8/15/09
8/1/09
7/18/09
7/4/09
6/20/09
6/6/09
5/23/09
5/9/09
4/25/09
4/11/09
3/28/09
3/14/09
2/28/09
2/14/09
1/31/09
1/17/09
1/3/09
12/20/08
12/6/08
11/22/08
11/8/08
10/25/08
10/11/08
9/27/08
9/13/08
8/30/08
8/16/08
8/2/08
7/19/08
7/5/08
AIN Monthly/Illustrator Stuff/026_Charter_nmflown.eps
Naut
ical
Mile
s Fl
own
Sour
ce: O
neSk
y
Total Charter Flight Activity(2006-2009 YTD)
AIN Monthly/Illustrator Stuff/026_FlightActivity.eps
Num
ber o
f Trip
s
Sour
ce: A
RG/U
S30,000
40,000
50,000
60,000
70,000
80,000
January February March April May June July August September October November December
2009200820072006
Decline in flying intensifies price pressure uContinued from page 24
Total Flight Hours versus S&P 500(one year)
AIN Monthly/Illustrator Stuff/026_FltHrsS&POneYr.eps
Tota
l Flig
ht H
ours
Source: Charter X
0
5,000
10,000
15,000
20,000
25,000
S&P
Poin
ts
Light Midsize Heavy S&PLight Midsize Heavy S&P
Total Flight Hours versus S&P 500(one year)
AIN Monthly/Illustrator Stuff/026_FltHrsS&POneYr.eps
Tota
l Flig
ht H
ours
Source: Charter X
700
800
900
1,000
1,100
1,200
1,300
1,400
Aug. ’08 Sept. ’08 Oct. ’08 Nov. ’08 Dec. ’08 Jan. ’09 Feb. ’09 March ’09 Apr. ’09 May ’09 June ’09 July ’09
S&P
Poin
ts
Light Midsize Heavy S&PLight Midsize Heavy S&P
Total Flight Hours versus S&P 500(five years)
AIN Monthly/Illustrator Stuff/026_FltHrsS&PFiveYr.eps
Tota
l Flig
ht H
ours
Source: Charter X
0
5,000
10,000
15,000
20,000
25,000
30,000
S&P
Poin
ts
Light Midsize Heavy S&P
Total Flight Hours versus S&P 500(five years)
AIN Monthly/Illustrator Stuff/026_FltHrsS&PFiveYr.eps
Tota
l Flig
ht H
ours
Source: Charter X
700
800
900
1,000
1,100
1,200
1,300
1,400
1,500
1,600
S&P
Poin
ts
July
’04
Sept
. ’04
Nov.
’04
Jan.
’05
Mar
ch ’0
5
May
’05
July
’05
Sept
. ’05
Nov.
’05
Jan.
’06
Mar
ch ’0
6
May
’06
July
’06
Sept
. ’06
Nov.
’06
Jan.
’07
Mar
ch ’0
7
May
’07
July
’07
Sept
. ’07
Nov.
’07
Jan.
’08
Mar
ch ’0
8
May
’08
July
’08
Sept
. ’08
Nov.
’08
Jan.
’09
Mar
ch ’0
9
May
’09
July
’09
Light Midsize Heavy S&P
68aaAviation International News • November 2009 • www.ainonline.com
Charter aircraft such as a Priester Challenger 601are not sitting on the ramp because the price ofcharter is too high, Priester maintains.
Scott Phillips, Jet 1 president
www.ainonline.com • November 2009 • Aviation International Newsaa69
aware that the flights they conduct areillegal. Unfortunately, there are no hardand fast numbers as to how often thisoccurs, according to the UK Departmentfor Transport. “These are illegal opera-tions; therefore, they go undetected,” aspokesman said. However, when an illegal operation is uncovered, the UKgovernment has the authority to detainthe aircraft by order of the Secretary ofState and impose fines and jail time.
In other cases, operators are simplynot aware of the rules. “One issue hasbeen the lack of understanding by Ameri-can operators about what they can andcan’t do here in Europe,” Macdonaldsaid. “The Open Skies agreement allowsthem to come over here and have free-dom of movement with their passengers,as long as the flight originates and endsin the U.S. But some carriers think theycan come over here and look for business[from European customers]. They can’t.”
He added, “If they think they can comeinto Europe, and the Europeans are goingto stand by and watch them take their busi-ness, it’s not going to happen. If a Europeanoperator wanted to conduct a flight fromNew York to Boston, would Americanoperators object? Of course they would.”
American charter operators, espe-cially those whose permits and traffic
rights have been denied, need to be bettereducated about the Open Skies agree-ment, according to Macdonald.
The TSA’s security rules for Europeanoperators have also been a contentiousissue. BBGA’s Lachlan said the TSA’s“onerous procedures” have made it diffi-cult to operate foreign business jets in theU.S. However, a recent meeting betweenU.S. and European officials “has gone along way to answering the concerns ofEuropean operators,” Lachlan said.
According to Steve Brown, NBAA’ssenior vice president of operations andadministration, the key difficulty for for-eign operators is a lack of standardizationin applying the principles and policiesthat already exist. As a result of the meet-ing, however, the various U.S. agenciespledged to revise their forms to make iteasier for foreign operators.
There was also some discussion aboutthe Electronic Advance PassengerInformation System, or eApis. “It’s anelectronic, online system that has beencreated for U.S. Customs and the TSA,”
Brown said. “We’ve had about fourmonths of experience with it, and bothU.S. and European operators believe it is amuch more efficient, user-friendly system.There are some software issues that needto be worked out, but the government indi-cated that once that’s accomplished itwants to stop all paper applications anduse this system.”
Perceptions and OutlookAlthough the European business avia-
tion industry hasn’t suffered quite asmuch as its U.S. counterpart, perceptionis still a problem. Stuttgart, Germany-based DC Aviation is just one of manycompanies that have experienced thefallout. “All in all, our branch is suffer-ing, especially since the managers of [thethree major domestic car manufacturers]appeared before Congress in the U.S.,”said CEO Steffen Fries. “That really hurtus, as some [clients] then decided to stopflying, not only due to cost factors, butalso for socio-political reasons.”
Customers don’t want to be perceived
as wasting money, said LEA’s Marget-son-Rushmore. “A number of peoplewho fly, who still have a need to fly, are actually flying scheduled [airlines]because they don’t want to be seen asbeing wasteful, spending excessively orcausing carbon emissions. We’re the sac-rificial lamb, the scapegoat.”
And the sad fact remains that businessaviation still has a negative connotationfor most people, said Dragonfly’s Palser.The good news, however, is that in spite ofbusiness aviation’s perceptions problems,the economy–and business–appear to bepicking up slowly.
“Luckily we have noticed a change intrend over the past few months,” Friessaid. “People are once again flying more.In July, we at DC Aviation again had justas many flights as at the same time theprevious year.” There has also been anincrease in requests for larger aircraft.The company has responded by focusingon managing Challengers, Globals, Gulf-streams, the Legacy and Airbuses.
Likewise, Margetson-Rushmore saidhe is also seeing an increase in inquiries.“If you spoke to me a month ago, I wouldhave said we were just bouncing alongthe bottom. But we’ve seen the level ofinquiries go up. We were down to 30 or40 inquiries a day; and now we’re up tomore than 100 a day. It’s a good sign, butit will be a really good sign wheninquiries convert to bookings.” o
King Air operator Dragonfly has seen littlechange in business because of its low overhead.European charter
uContinued from page 26
