Once the preserve of the super-rich and Hollywood movie stars, private aviation or, as it now likes to be known, “business jet travel” is open to more and more corporate travellers. A host of market disruptors and new business models, alongside lower oil prices, are lowering fares and making it more accessible than ever.
“Since the recession of 2008, the UK’s private aviation industry has been improving,” says Patrick Margetson-Rushmore, chief executive of London Executive Aviation (LEA). “The market as a whole has never returned to pre-recession levels, but last year LEA recorded its strongest-ever financial and operational performance, reflecting stronger charter demand and growth in our aircraft management revenues, as well as an increase in flown hours, number of sectors and employee numbers.”
However, over the past winter, since November 2014, LEA has seen a downturn in business again due to the exchange rate and market uncertainty about a possible Grexit by Greece from the eurozone and the UK general election, says Mr Margetson-Rushmore.
Downward pressure on travel budgets and the fear, in an age of austerity, of showing ostentatious wealth has affected the sector adversely, but innovation is rife with new players and business models entering the market.
One of the new disruptors is Victor, a price comparison website with a social media element. Victor members can buy single seats on a private jet that is already flying at a time and to a destination that fits with their schedule.
“The private jet market is alarmingly opaque due to the lack of regulation within the industry,” claims Victor’s commercial and operations director Mike Ryan. “The market is controlled by jet brokers who generally do not declare the name of the flight operators to their clients or their fee. Brokers also work with paper contracts so historically simple online or mobile booking has not been available.
“Victor wanted to create market transparency and, with its technology, customers have access to all the information about the specific aircraft, crew and costs upfront before making the booking.”
Another company challenging the traditional private aviation market is Jet Partner, which offers for sale the empty, return journeys on private aircraft.
“Empty legs have always been around, but it became increasingly clear in the last few years that sophisticated, experienced charter customers wanted to save money, and owners/operators wanted to maximise utilisation and revenue,” says co-founder Antony Rivolta. “The problem has always been, first, that operators do not market empty legs effectively and, second, it was not easy to find empty leg availability. All we’ve done is bring this all together in one neat platform.”
Mr Rivolta believes the image of private aviation as the exclusive preserve of billionaires and movie stars is misplaced. “The range of users of private aircraft has always been much wider than people imagine,” he says. “The growth of private aviation in the last ten to fifteen years has been phenomenal and on-demand charter has been at the forefront of this growth as the easiest and most economically viable way for users to enter the market.”
Other players, though, question whether the private jet market can be made so democratic and accessible. “Private aviation still needs the personal touch,” says James Leach, group marketing director at Air Charter Service, which has been in business for 25 years. He describes the apparently great deals offered by some of the new disruptors, especially those with a strong online presence, as “smoke and mirrors”.
Having explored the empty leg model, the founders of LunaJets rejected it in 2007 to focus on offering something more akin to the traditional private service, while bearing down on fares. “We adapted our business strategy, repositioning the company as the best price private jet charter company,” says chief executive Eymeric Segard. “This was unheard of at the time, before the economic crisis, when clients would fly private without worrying about price. When the crisis came, our business grew 30 per cent every year, as passengers were then looking to spend the right amount for their flights.”
Business aircraft can take travellers more efficiently and quickly to destinations worldwide, avoiding slot-restrictions at congested airports
The current market is generally healthy. “There is, however, a general growth curve across the industry, which can be attributed to the increasing availability of large cabins and long-range aircraft for spot-charter, as large corporations continue to sell their own aircraft and rely on this market,” says Victor’s Mr Ryan.
“The business aviation market is recovering and we are seeing an increased number of flights in the ultra-long-range sector,” says Graham Williamson, president aircraft management and charter services, TAG Aviation Europe. “Businessmen and women have ever-changing travel requirements and often have to be in places that commercial airlines do not serve. Business aircraft can take travellers more efficiently and quickly to destinations worldwide, avoiding slot-restrictions at congested airports.”
He points out that four or five first-class tickets with commercial airlines can often cost as much as a business jet charter. “Our expert team is available at all times to support clients no matter where they are in the world, offering personalised and high-value services with efficient operations at the highest quality and safety standards. Our clients can choose where, when and with whom they want to fly.”
Even at the very upper end of the market, among those who can afford to buy rather than just charter, value is increasingly important. “The part of the market that would buy at any price is gone – everyone wants ‘a deal’,” says Steve Varsano of The Jet Business, the first street-facing store retailing private jets. “That said, the activity level today is very strong in the super mid-size aircraft and up. There’s been an increased demand for large and ultra-long-range aircraft in a number of the emerging and frontier markets, but we have seen US demand recently start to increase.”
Overall Mr Varsano is optimistic. “As the bigger and longer-range aircraft have decreased in price since 2008, there are a lot more buyers coming into the market who can justify buying these assets at these more ‘reasonable’ prices. In addition, the US economy is strengthening and companies need to get their executives to and from business destinations quicker to remain competitive,” he says. “Time kills deals and businesses are seeing how the corporate jet adds time to the executive’s day.”