12-31-2019, 06:56 AM
(This post was last modified: 12-31-2019, 06:58 AM by thorn bird.)
From Forbes magazine.
Issues facing US general aviation.
We should be so Lucky!
5 Private Jet Charter Issues In The Forefront For 2020
In many ways, general media stories about private jets in 2019 were the same as in past years. Only the names changed. So as we say goodbye to Prince Harry, the Duchess of Sussex, Jeffrey Epstein, and Britain’s Labour Party, which toyed with endorsing a ban on business aircraft, it’s time to look at issues that will impact users, not just headline writers hunting for clicks.
5. Green Leadership
OEMs like Gulfstream Aersopace have been working on sustainability for nearly a decade. Each new model from Bombardier, Dassault, Embraer, Textron, and others come with lengthy explanations about how they are reducing noise, carbon, and industrial emissions.
During its annual conference in Las Vegas this past October, the National Business Aviation Association (NBAA) announced what it described as an “unprecedented” industry Global Sustainability Summit, scheduled to take place in March 2020.
The next step will be to see if any of the major operators of owned, managed and fractionally owned fleets perhaps use the NBAA’s confab as a launching pad to step out on an issue that is only going to get hotter.
4. Image Enhancement
I expect to see the industry get more aggressive and creative in promoting a positive image to help foster growth.
Its work as first responders to natural disasters, as a lifeline in medical emergencies and economic pipeline for communities that lack good or any scheduled airline service goes largely unnoticed for the sake of stories about Kim Kardashian’s flight on a private 747.
Recently No Plane No Gain launched a grass roots presentation to spread the word about the many positives. That said, during Corporate Jet Investor’s annual conference in November, Pat Gallagher, the president of NetJets, citing YouGov data, told the audience that industry growth isn’t keeping up with the rise in the UHNW population.
In other words, the market isn’t growing as fast as it could or should. When Uber was initially raising funds, it used NetJets’ fractional share approach as a model for what it wanted to create. Ride sharing has grown from $11 billion to over $200 billion.
If you want to think about the NetJets’ model another way, as many as 16 different owners together buy a single aircraft. They then share the asset and access to the fleet, and that fleet is utilized 500% more than the typical private jet.
It means each jet that goes into the sharing economy of fleet operators creates a significant reduction in manufacturing resources against utilization.
According to the Federal Aviation Administration, there are over 11,000 private jets, turboprops, and helicopters in the U.S. that are certified to operate for commercial charter, including fractional ownership.
What gets little ink is many owners allow their management companies to rent their planes under Part 135 when they aren’t using them. And it’s not just small jets. If you look at the websites of Jet Edge, Clay Lacy, Priester Aviation, and others, their charter (jet sharing) fleets are filled with large cabin, long-haul jets Gulfstream’s G550 and Bombardier’s Global Express.
A better image built around business aviation’s pioneering role in the sharing economy might also unlock growth potential by making private flights less of a bullseye for users.
3. Membership Has Its Privileges
While fractional ownership was the big driver of broader access to private aviation until the Great Recession, since 2009, that part of the market has consolidated. NetJets and Flexjet dominate, controlling 80% share U.S. of flights.
However, jet cards continue to grow with the number of providers more than doubling. There are over 60 jet card sellers in the U.S. alone.
Why the growth? Jet cards are a more convenient form of charter, often providing guaranteed rates and availability, meaning you know approximate costs ahead of time instead of pricing is trip-by-trip. In some cases, you can get those rates with as little as eight or 10 hours notice, although 24 hours is typical.
In other words, if you are in Ames, Iowa, and tomorrow you want to fly to Reno, Nevada, with one call or even a text, you can do so with a jet card. You also don’t pay for repositioning flights and save as much as six hours over flying commercially.
Best of all, these memberships, which often operate like debit cards, have minimal commitments, with some programs starting at just 10 hours. Some are even refundable, so in six months, if your travel needs change, you aren’t tied to a long-term agreement or having to sell your plane.
2. Pilot Shortage
To make it all work, you need somebody to fly the plane. And private jet operators and owners are paying the price for the antics of airline executives. Until recently they spent decades cutting salaries and benefits, and in many ways, made it a professional that wasn’t very attractive.
With 800,000 new pilots needed in the next 20 years, former Boeing CEO Dennis Muilenberg told CNBC the lack of a sufficient pipeline represents for the industry “one of the biggest challenges we have.”
While an owner of an expensive large-cabin jet can often solve the problem by throwing extra money at it, pay is typically based on aircraft size. In other words, you earn more not only by moving from one side of the cockpit to the other, but by transitioning up to a larger type. Bigger aircraft equal higher charter rates, meaning more money for pilot salaries.
Earlier this year Jet Linx and XOJET Aviation formed an interesting three-way partnership with Southwest Airlines and CAE, a training school. For pilots, it means opportunities to start flying commercially upon graduation, and then between the private jet operators and Southwest, a two-way flow. Pilots who want to fly for a big airline, now have a clear path. At the same time, pilots who prefer business aviation, now have an entry point as well.
It also means in choosing private aviation providers, either an operator or via a broker, consumers need to focus more on the pilot requirements that provider mandates, and what type of backup they guarantee if a pilot gets sick or your aircraft is delayed upstream.
1. Illegal Charter
As increased costs for pilots and insurance put pricing pressure on legitimate charter operators, if you shop charters and jet cards focused only price, you could end up on an illegal charter.
Some industry experts believe part of the reason is more first-time aircraft buyers, induced by the Trump tax benefits, who don’t understand the FAA’s rules. If you own a plane, but use it exclusively for personal and company flights, you probably operate under Part 91. Charter aircraft fly under Part 135, which has more stringent requirements for pilots, maintenance and operations.
The FAA recently issued a warning to both pilots and consumers, outlining red flags. The death of soccer star Sala last January and other scams highlighted the need for due diligence before you fly.
Issues facing US general aviation.
We should be so Lucky!
5 Private Jet Charter Issues In The Forefront For 2020
In many ways, general media stories about private jets in 2019 were the same as in past years. Only the names changed. So as we say goodbye to Prince Harry, the Duchess of Sussex, Jeffrey Epstein, and Britain’s Labour Party, which toyed with endorsing a ban on business aircraft, it’s time to look at issues that will impact users, not just headline writers hunting for clicks.
5. Green Leadership
OEMs like Gulfstream Aersopace have been working on sustainability for nearly a decade. Each new model from Bombardier, Dassault, Embraer, Textron, and others come with lengthy explanations about how they are reducing noise, carbon, and industrial emissions.
During its annual conference in Las Vegas this past October, the National Business Aviation Association (NBAA) announced what it described as an “unprecedented” industry Global Sustainability Summit, scheduled to take place in March 2020.
The next step will be to see if any of the major operators of owned, managed and fractionally owned fleets perhaps use the NBAA’s confab as a launching pad to step out on an issue that is only going to get hotter.
4. Image Enhancement
I expect to see the industry get more aggressive and creative in promoting a positive image to help foster growth.
Its work as first responders to natural disasters, as a lifeline in medical emergencies and economic pipeline for communities that lack good or any scheduled airline service goes largely unnoticed for the sake of stories about Kim Kardashian’s flight on a private 747.
Recently No Plane No Gain launched a grass roots presentation to spread the word about the many positives. That said, during Corporate Jet Investor’s annual conference in November, Pat Gallagher, the president of NetJets, citing YouGov data, told the audience that industry growth isn’t keeping up with the rise in the UHNW population.
In other words, the market isn’t growing as fast as it could or should. When Uber was initially raising funds, it used NetJets’ fractional share approach as a model for what it wanted to create. Ride sharing has grown from $11 billion to over $200 billion.
If you want to think about the NetJets’ model another way, as many as 16 different owners together buy a single aircraft. They then share the asset and access to the fleet, and that fleet is utilized 500% more than the typical private jet.
It means each jet that goes into the sharing economy of fleet operators creates a significant reduction in manufacturing resources against utilization.
According to the Federal Aviation Administration, there are over 11,000 private jets, turboprops, and helicopters in the U.S. that are certified to operate for commercial charter, including fractional ownership.
What gets little ink is many owners allow their management companies to rent their planes under Part 135 when they aren’t using them. And it’s not just small jets. If you look at the websites of Jet Edge, Clay Lacy, Priester Aviation, and others, their charter (jet sharing) fleets are filled with large cabin, long-haul jets Gulfstream’s G550 and Bombardier’s Global Express.
A better image built around business aviation’s pioneering role in the sharing economy might also unlock growth potential by making private flights less of a bullseye for users.
3. Membership Has Its Privileges
While fractional ownership was the big driver of broader access to private aviation until the Great Recession, since 2009, that part of the market has consolidated. NetJets and Flexjet dominate, controlling 80% share U.S. of flights.
However, jet cards continue to grow with the number of providers more than doubling. There are over 60 jet card sellers in the U.S. alone.
Why the growth? Jet cards are a more convenient form of charter, often providing guaranteed rates and availability, meaning you know approximate costs ahead of time instead of pricing is trip-by-trip. In some cases, you can get those rates with as little as eight or 10 hours notice, although 24 hours is typical.
In other words, if you are in Ames, Iowa, and tomorrow you want to fly to Reno, Nevada, with one call or even a text, you can do so with a jet card. You also don’t pay for repositioning flights and save as much as six hours over flying commercially.
Best of all, these memberships, which often operate like debit cards, have minimal commitments, with some programs starting at just 10 hours. Some are even refundable, so in six months, if your travel needs change, you aren’t tied to a long-term agreement or having to sell your plane.
2. Pilot Shortage
To make it all work, you need somebody to fly the plane. And private jet operators and owners are paying the price for the antics of airline executives. Until recently they spent decades cutting salaries and benefits, and in many ways, made it a professional that wasn’t very attractive.
With 800,000 new pilots needed in the next 20 years, former Boeing CEO Dennis Muilenberg told CNBC the lack of a sufficient pipeline represents for the industry “one of the biggest challenges we have.”
While an owner of an expensive large-cabin jet can often solve the problem by throwing extra money at it, pay is typically based on aircraft size. In other words, you earn more not only by moving from one side of the cockpit to the other, but by transitioning up to a larger type. Bigger aircraft equal higher charter rates, meaning more money for pilot salaries.
Earlier this year Jet Linx and XOJET Aviation formed an interesting three-way partnership with Southwest Airlines and CAE, a training school. For pilots, it means opportunities to start flying commercially upon graduation, and then between the private jet operators and Southwest, a two-way flow. Pilots who want to fly for a big airline, now have a clear path. At the same time, pilots who prefer business aviation, now have an entry point as well.
It also means in choosing private aviation providers, either an operator or via a broker, consumers need to focus more on the pilot requirements that provider mandates, and what type of backup they guarantee if a pilot gets sick or your aircraft is delayed upstream.
1. Illegal Charter
As increased costs for pilots and insurance put pricing pressure on legitimate charter operators, if you shop charters and jet cards focused only price, you could end up on an illegal charter.
Some industry experts believe part of the reason is more first-time aircraft buyers, induced by the Trump tax benefits, who don’t understand the FAA’s rules. If you own a plane, but use it exclusively for personal and company flights, you probably operate under Part 91. Charter aircraft fly under Part 135, which has more stringent requirements for pilots, maintenance and operations.
The FAA recently issued a warning to both pilots and consumers, outlining red flags. The death of soccer star Sala last January and other scams highlighted the need for due diligence before you fly.