Charter Market Report Charter Market Report

CHARTER MARKET REPORT CHARTER MARKET REPORT

Linear Air

on-demand activity held its own amidst the (614,999/619,013 hours). Taken together, What it takes collapse of commodity prices and geopo- combined flight activity rose 2.7 percent, litical uncertainties. Part 135 flight activ- or more than 50,000 hours, to 2,058,632 to run a charter ity in the U.S. rose 3.4 percent during the from 2,005,070. Argus estimates third- first six months of this year compared quarter flight activity will be up 3.9 per- provider today with the same period last year, according cent over the comparable figures for to Argus International. Five of the first last year. by James Wynbrandt six months of 2016 (April the exception) registered higher year-over-year Part 135 Operators’ Log: www.ainonline.com Belying the relatively static activity metrics, flight activity, with June the greatest (6.7 Bolstering Charter Fleets the air charter market has seen—and insti- percent); April dropped 0.5 percent year gated—significant change in the past year. over year. During the past year many operators Charter fleets are being bolstered, opera- “We still have not reached the flight have expanded their fleets to meet charter tors are consolidating and upstart access activity of 2006/ 2007, so the business avi- demand, which has been strong enough to providers are offering non-traditional lift, ation recovery in general has been slow,” support entering charter revenue agree- from per-seat offerings to new jet card pro- said Joe Moeggenberg, president and CEO ments with the growing ranks of owners grams—all while under the pressure of low of Argus. eager for income to offset their operat- margins that show no signs of lifting. Here By category, combined with Part 91 ing costs. are some of the companies and develop- activity, large-cabin aircraft saw the Some operators, in fact, have established ments that helped reshape the industry over largest growth in flight hours, advanc- or are establishing financing programs to the past year. ing 2.7 percent (410,166/430,532 hours). assist their charter clients buy jets to place Turboprops saw a 3.6-percent increase in the operator’s fleet. U.S. Charter by the Numbers (528,151/546,954 hours), followed “We’ve made a strong push to recruit and by small-cabin at 2.3-percent growth attract airplanes that are really charter hun- The U.S. charter market saw slow growth (451,754/462,133 hours), with mid- gry,” said Andy Priester, president and CEO

in the first half of this year while global size cabins showing a 0.7-percent gain of Priester Aviation in Wheeling, Ill. Priester © 2016 AIN Publications. All Rights Reserved. For Reprints go to CHARTER MARKET REPORT

Priester Aviation

has added 18 aircraft to its fleet this year, said. “Charter users in my opinion are not Aviation Flight Services vice president and several owned by former charter custom- likely to become by-the-seat customers, but general manager Don Haloburdo. He main- ers who’ve bought jets, taking advantage of I think by-the-seat customers could become tained that customers now benefit from charter revenue arrangements Priester can charter users and then aircraft owners.” greater choice and availability of aircraft, offer, combined with declining preowned One of the biggest developments in the as well as having access to Jet Aviation’s full aircraft prices. “It creates a perfect storm U.S. charter market this year was Jet Avia- portfolio of services (including maintenance for people who have been on the sidelines,” tion’s acquisition of California-based Avjet. and completions/refurbishment). The econ- said Priester. One customer bought several This deal has added almost 50 aircraft to omies of scale have also made the respective aircraft dedicated to charter for the com- the Jet Aviation group’s managed fleet (and charter operations more competitive. pany’s fleet and intends to sell them indi- around 60 of the 153 jets are available for “Of late, charter demand has been very vidually with their flexible charter revenue charter). Most of the fleet is in the super- consistent, but it remains very dependent agreements in place in turnkey sales. midsize to large category. on the overall state of the global economy,” Priester is also among operators provid- “When we acquired Avjet we knew that concluded Haloburdo. He said that having ing aircraft for JetSmarter’s per-seat shut- it was a well-recognized brand that is work- capacity at both ends of the busy New York tle flights, and the load factors “are higher ing very well so we don’t want to disrupt that to Los Angeles corridor has been a great than I ever thought they would be,” Priester while integrating it into the group,” said Jet competitive advantage.

Total Flight Activity by Meridian Air Charter Operational Category Jan-Jun 2015 vs Jan-Jun 2016 www.ainonline.com 900K

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Part 91 & Part 135 flight activity each rose 3.4% during the first 6 months of 2016, when compared to the same period in 2015.

Fractional flight activity was up 0.5% during the same period. © 2016 AIN Publications. All Rights Reserved. For Reprints go to Executive JetManagement Aviation Clay Lacy Pentastar Aviation CHARTER MARKET REPORT aircraft itmanages onitschartercertificate, yet ithaslong sincewefleet now have aircraft basedonbothcoasts.” longer tripsandlarger cabins, which complementsour managed aircraft. Thetrend for of ushasbeen ing fleet ourexpanded client base andgrow cess is a reflection of salesChrisBattaglia. “Thesuc- commented director of a Citation XLS. Falconifornia already fleet 2000sand includesapairof three more G450sandaBombardier Learjet75.TheCal midSeptember, Asof itwasits fleet. preparing toadd Falcon 7X, aFalcon 2000 andaGulfstream GIV-SP to technology sectors. ter demand,largely driven by thedynamic financialand San Francisco growing Bay char area asahotspotof open itsnew FBOat nearby Hayward Airport.Itseesthe ing base in the San Jose area and during October will York area-based operator has added aircraft to its grow- westward into the vibrant Californian market. The New than simple retail charter.” relationship,a longer-term withbiggerandbetter benefits programs are finding resonance with“customerswho seek flat-rate citypaircharters are popular, anditsblock charter tomer experience. Beyond ad hoccharter, Dubay saidEJM’s said Ty Dubay, chartersalesandcus seniorvicepresident of thisyear,able of for charterintheregion by thesecondhalf Coast presence andwillhave 10percent more aircraft avail- vice andvalue.” experts onbothcoastsfocused onproviding safety, ser dent BrianKirkdoffer, adding, “Now we have teamsof our EastCoastservices,” saidClay LacyAviation presi- than 75aircraft at 15locations inNorthAmerica. Clay Lacy Aviation and is expected to represent more expected by year-end, thenew company willcontinue as management specialist. After approval from authorities, merger with Key Air, an Oxford, Conn.-based charter- marketing. dent of annually onanaircraft, saidScottCutchall,vicepresi requirements” for charter, bookingasmany as500hours “We’ve but met orexceededagreements, every owners’ otheroperators when itsown aircraftof are unavailable. targets, ClassnotedSolairusactively brokers vetted fleets West,” Classsaid.Attesting toitsability tomeetcharter on theEasternSeaboard aswe dointheNorthwest and as many large-cabin and super-midsize and midsize jets ically diverse, which makes itmore marketable. “We’ve got and large-cabin—have more alsomadethefleet geograph charterannually.of Theadded jets—mostly super-midsize ter sales. Thesecustomersare lookingfor 100to250hours for Solairus,” said Paul Class, senior vicepresident, char charter driven than ever in the past,and that’s a change “The aircraft we have added in thelast 12months are more managementemphasized over charter—untilthelastyear. of Petaluma, Calif., has 45 of the 105 the105 Petaluma, Calif.,Solairus Aviation has45of of “2016 hasbeenastrong year for usinchartersales,” Since January 2016, Meridian has added a Dassault This year hasalsoseenMeridianAirCharterexpand Executive Jet Management (EJM) is expanding its West several strategic stepstoexpand “This isthefirstof lastmonth,Clay Lacyannounceda In themiddle of Clay LacyAviation offers noformal charterrevenue ------

© 2016 AIN Publications. All Rights Reserved. For Reprints go to www.ainonline.com Angelo Fiataruolo. He’d like toexpand charter performance, said general manager is closetotopping lastyear’s record-setting Citation Encores, MustangsandCJ3s— of PC-12s and a pair each a dozen ating half our charterbusiness model.” owned by people who are enthusiastic about Hawkers andoneFalcon 2000LXS—are newest additions toourcharterfleet—two Davis, customersupport.“The manager of their aircraft’s charteravailability,” saidJim increasingly engaged and eager to maximize owners, whom “are severalter goalsof of Waterford, Mich.,hasalsometthechar Oakland County International Airport in the region’s economy. low oil prices,the effects which of has hurt client base, hesaid,hasshieldedWing from recent chartergrowth. Meanwhile, adiverse ity that Riddle credits with helping drive and 900XPs, providing arecovery capabil - themare Hawker to25.Sixof fleet 800XPs expects two more by year-end, bringingits headquarters, hasadded three jetsand Conroe and its Houston Hobby Airport dle. Wing, withbasesinDallas, Austin, have,” saidpresident andCEODavid Rid- town feel,thefamily touchthey usedto larger companies that are losing the home aircraft whose owners are “fedupwiththe Texas, hasadded thisyear toitscertificate Wing Aviation , aregional operator based in national canhave charterfleets theirlimits. KCAC Aviation inOlathe, Kan.—oper Pentastar Aviation, from itsonebaseat But thesavings large, andefficiencies of remote locations.” help toopennewlow-densityroutes,“improvingthelivesofpeoplelivingin throughout the world.” It adds that it will for safe operationsin this category that Europeancommercial SET-IMC operationswillbethestandard-bearer safety concerns]andproposesappropriatemitigationmeasures,ensuring ciation (EBAA). tion paperpublishedinMay2016bytheEuropeanBusinessAviation Asso- currently usedforcommercial operationsinEurope,”accordingtoaposi- are inlinewiththesafetyratesofaircraft, suchastwin-engineturboprops, lion hoursofSETflightdataandfoundthatit“pointedtosafetyrates particular fromAustraliaandNorthAmerica);theagencyanalyzed24mil- on theconsiderablebodyofresearch alreadyavailablearoundtheworld(in for suchoperations. er thisyearthatwillallchangeandblanketEASAlegislationpavetheway commercial single-engineturbineflightinIMC(so-calledSET-IMC). Butlat- tions underspecificconditionssince2005. and inIMC.InternationalrulesunderICAOAnnex6haveallowedsuchopera- cumstances andrelativelyrecently, suchusehasnotbeenpermittedatnight cial operations,butinEurope,apartfromahandfulofoperatorslimitedcir Single-engine turbopropshaveprovedpopulararoundtheworldforcommer To date the only countries where commercial SET-IMC operations have EBAA is“confidentthatEASA’s opinioncomprehensivelyaddresses[any The EASApublishedaformalopinioninthemiddleoflastyear, building For someyearstherewerecallsforanewapproachtorulesgoverning Industry PreparesforEuropeanSET-IMC Rules - - - Solairus Aviation - - allow themtotakeadvantagestraightaway. pare fortheexpectedapplicationofnewrules,likelynextmonth.Thiswill ready saiditwouldbehappyforoperatorstostarttheapprovalprocesspre- the EUregulationwhenitcomesintoforce. TheUKCAA,forexample,hasal- andLiechtenstein),there willbedifferentapplicationsof Switzerland, Norway terest grow. InthevariousEASAnations(theEuropean Unionmemberstates, that itgivesanoperatorthegreatestpossiblerangeofoptionsforclients. Aviation Association)conferencethathavingsuchaircraft wouldmakesensein based Saxonaircommentedatthisyear’s BBGA(BritishBusinessandGeneral petitive one. unveiled newsingle-engineturbopropdesigns,sothismarketwillbeacom- facturers areexcitedaboutsalesprospects.CompaniessuchasTextron have from 30in2006to132013,soitisoflittlesurprisethatturbopropmanu- is permitted.” operators coming from countries where commercial[third-country] SET-IMC tions. Theassociationalsosaid“someEUoperatorsfacecompetitionfrom rope,” andwelcomedrelieffromtheadministrativeburdenofsuchexemp- has clearlycreatedalackofharmonizationandmarketdistortionsacrossEu- tic operationswithspecificconditions.EBAArecognizedthat“thesituation den—all underexemptionsfromcurrentregulationsandlimitedtodomes- taken placeinEuropeareFinland,France,Greece,Norway, SpainandSwe- As thefallarrivesinEuropeitseemslikelythatmanufacturerswillsee- In termsofoperators’ adopting suchaircraft, UK- ChrisMaceofNorwich, commercialThe SETfleetperforming operationshasdeclinedinEurope

KCAC Aviation —IanSheppard

© 2016 AIN Publications. All Rights Reserved. For Reprints go to www.ainonline.com 100K 150K 200K 20K KCAC alsohasabaseat Spirit business comesfrom sales.)of ate. (APilatus dealer, thebulk ment the company can oper 4,100 feet,limitingtheequip the runway at Olathe is only thebusiness, but noted cent of represents about 15to20per KCAC’s charteractivity, which 25K 30K 35K 40K Wing Aviation CHARTER MARKET Aug Non-Chartered Aug Part REPORT (Eurocontrol data) Aug 2014–July2015 Aug 2015–Jul 135 Flights U.S. 135 FlightsU.S. (FAA data) Ja Ja Flights inEurope n n y 2016 - - - didn’t want tobethepioneer,” JetSmarter box atright).“We that’s suddenly in vogue. (See long-dismissed chartermodel per-seat charteroperators,of a to create a nationwide network Jets, anew company that aims just signedonwithMember St. Louis Airport and has of

July July

SOURCE: AVINODE logy, butalsotheriskofphishing attacks that aircraft throughin-flightconnectivitytechno - the securityofinformationplaced on boardthe Business Jets.Thisconcernembraces notonly chairman, andCEOofcharterbrokerParamount security topsthelist,saidRichardZaher, Acana many bedroombrokers.” stronger, anditseemsas thoughtherearen’tas He added,“Bigger, stronger brokersaregetting say yestoasmanyqualitybrokerspossible.” we continuewithourfleetgrowth,wantto Aviation, voicedanoperator’s perspective:“As Part 135.” national. “That’s startingtohaveanimpacton Moeggenberg, presidentandCEOofArgusInter entire fleetstothesebrokers market,” said Joe ment orevenreplacein-housesalesteams. more operatorshavecometorelyonthemaug- andpricing, and ed byreal-timeonlineinventory evolved intosophisticatedsalesorganizationsaid- between operatorsandbrokers,asbrokershave ly dissipated.Sotoohaslongstandingantipathy NPRM onregulatingcharterbrokershavelarge- America) in 2007 and the DOT to publish its 2013 form Acana(theAirCharterAssociationofNorth pulous charterprovidersthatpromptedbrokersto Concerns aboutgray-marketcharterandunscru- Acana, meanwhile,hasnewconcerns.Cyber Andy Priester, president and CEO of Priester “Many Part135operatorsnowturnovertheir Changing Operator/Broker Dynamics 1,500 Part 135pistonaircraft charters on the web, accessing andbrokersCirrus fleet piston operator. Linearoperates a originally anEclipsefractional the company,and co-founder of William Herp, president, CEO “grown dramatically,” said piston air-taxi demandhas either. Single-andtwin-engine craft aren’t necessarily needed, Air demonstrates turbine air Bedford, Mass.-based Linear jets,a nationwide network of charter successdoesn’t require hope itdoesn’t gettoocrowded.” activity; Ijust fair amount of market. “Itlookslike there’s a theper-seat Fiataruolo saidof If suchoperators proveIf - pe arenowmarketedbyagent. ctor at Avinode, 15 percent ofchartersinEuro- sales. AccordingtoOliverKing,managing dire- small charterfleetprefertooutsource charter from therestoffleet,orifoperatorsa client whoseaircraft issubstantiallydifferent be helpfulif,forexample,anoperatorlandsa several operators.Sucharrangementsmight presentation ofaselectionaircraft from ged, whichgivesasingleagentexclusivere- model called “marketed by agent” has emer provided noupdatedschedule. rule slatedforpublicationinJuly. TheDOThas Agenda,issuedthispastspring,hadthefinal tory being toolax:theagency’s Semi-AnnualRegula- criticized by Acana members when published as tions on air charter brokers,which were roundly Acana ispreparingapositionpaperontheissue. passengers notapprovedforcommoncarriage. aircraft—those withacapacityof20ormore might be offeringcharter flights using Part 125 fraud charterproviders. dresses andinvoicesthatappearintendedtode- reported attacksthatinvolvedclonedemailad- her. InthepastyearseveralAcanamembershave between [charter providers] and clients, said Za- compromise thesecurityofinformationshared Meanwhile, inEuropeanewchartersales As fortheDOT’s NPRMonimposingregula- Another areaofconcern:someproviders - for this end of themarket. for thisendof sure andbookingconnectivity to Kayak, providing more expo charters. Linearisnow linked brokers sellspiston no army of in theturbinecharterworld, capital so far.”dollars of Unlike and deployed several million “and that’s where we’ve raised is findingcustomers,” saidHerp, is withinbudget. “Thehard part eca orBonanzaCessna182” tering ajet,but aCirrusorSen who would never consider char charter customers new set of enues doubled inthelastyear. and revis $2,500,andflights - the average tripLinearbooks across theU.S. Theprice of “We’re developing anentirely n

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Zetta Jet

Owned and Operated Fleets Charter management companies have long questioned the business model of owned & expanded its U.S. headquarters in New York, established a foothold in Los Angeles operated (O&O) charter fleets, arguing that the capital required to buy and own airplanes and expanded its presence in Beijing and Shanghai. Its 65 large and super-midsize makes profitability impossible. O&Os counter that eliminating owner approvals and lim- Bombardiers fly an average of 100 flights per day. Half the fleet are Globals; the re- its on aircraft availability allows much higher utilization of aircraft. mainder Challenger 350s, 605s and 850s, and they’re registered in the U.S. and Mal- Whether the higher usage yields profits, flight activity proves the O&Os are right. ta, save for one B-registered CL850 based in Hong Kong. Three of the 25 largest U.S. charter operators that had the highest aircraft utilization Moore credits growth in part to a shift away from owning assets. “The decision ev- rates in the first half of this year—and last year—were all O&Os. XOJet chartered its eryone’s making is, ‘I can’t afford or justify owning an aircraft,’” he said. But they’re 19 jets for an annually adjusted average of 1,060 hours each, followed by JetSuite, bill- willing to pay for quality. VistaJet emphasizes customer service, catering menus from ing 750 hours, and Travel Management (TMC Jets), whose jets are on pace to gener- renowned restaurants and partnerships with luxury brands featured on board. The ate an average of 662 hours of charter revenue. As for profitability, it bears noting that company also offers its aircraft to the ad hoc market when available. VistaJet owner earlier this year investment firm TPG Growth of San Francisco, which owns a stake in Thomas Flohr has delivery positions for the in-development Global 7000. XOJet, bought TMC Jets, of Elkhart, Ind. for an undisclosed sum. XOJet and TMC Jets Year-old upstart O&O Zetta Jet, based in Singapore, is following much the same have had a partnership since 2013. playbook in building its N-registered, all-Bombardier Global floating fleet, tailored to Charter management companies on the Top 25 operators list put on substantially few- the trans-Pacific market. Zetta Jet has FAA approval for flight through areas of mag- er hours. Gama’s fleet will average out at about 550 hours per jet, EJM’s less than 400 netic unreliability—that is, the polar regions—which enables it to offer the shortest and Jet Linx about 300. The highest fleet usage among listed companies is Redwing Aero- route for many flights between the U.S. and Asia, said Geoffery Cassidy, co-found- plane, at #24, whose 11 aircraft are each on track to ring up 614 charter hours this year. er and managing director. To further distinguish itself, the company has outfitted ev- JetSuite complemented its ad hoc/membership charter service with the launch in ery Global in its fleet with a different interior. “Some customers want a double divan in April of JetSuiteX, a scheduled Part 380 per-seat service linking several major West back, some want a huge bed,” said Cassidy. Zetta Jet currently has eight Globals, ex- Coast markets, on luminously appointed 30-passenger Embraer ERJ-135s. pects to have 16 by the end of next year, and is in discussion with Bombardier about O&Os outside the U.S. also report success. “Owning your own fleet, you can con- Global 7000 purchases, Cassidy said. trol availability, and can save more and more time,” said Ian Moore, chief commer- On the small-cabin side of the business, Austria’s GlobeAir has found success cial officer at Malta-based VistaJet. From January through June, VistaJet’s flight in Europe with its O&O fleet of 14 Citation Mustangs and anticipates seeing revenue activity was up 23 percent and passenger count up 20 percent, and in the second climb to €23 million ($25.66 million) this year from €18.6 million ($20.75 million) www.ainonline.com quarter the company had its biggest quarter ever, with the average number of new last year. In May, GlobeAir and JetSuite announced partnering to offer each other’s contractual flight hours per customer up to 120. Over the past year the company transatlantic customers “last mile” service. n

Card Programs Like ad hoc providers, card programs—whether Last month DPJ announced an exclusive operating from its own private terminals at 14 offered by operators or brokers—have been pay- partnership with American Express pro- locations, serving about 1,100 members, 300 ing attention to their fleets and customer service. viding, among other benefits, jet cards at of them added over the past year. “We believe Charter broker Sentient expects to add a reduced minimum price for select Amex there’s easily, from our recipe, another 20 mar- 1,000 card members this year, bringing its members. DPJ would like its ad hoc charter kets across the United States we could serve,” active membership to 6,000 by year-end, to match the card program’s success, and said Walker. said Andrew Collins, president and CEO of Sneed sees real-time pricing as key to that Jet Linx offers two programs: the Executive the Braintree, Mass. company. Over the past goal. “You need to be relevant in the mar- Jet Card and Club Card. Both are pay-as-you- year Sentient has emphasized its exclusive ket every day—I’d say even hourly,” Sneed go, guaranteed-access plans requiring a one- member benefits package, which includes said. “Dynamic pricing is critical for DPJ time membership fee. The hourly rates are the complimentary resort nights, luxury mer- to build.” With its fleet constantly moving same for each, though program benefits dif- chandise offerings and now exclusive events across North America and Europe, that’s a fer. The Executive ($17,500) is aimed at fre- such as the gathering it hosted in Lexington, challenge, Sneed acknowledged. quent fliers, while the Club Card ($12,500) is Ky., this year as official aviation provider of In next year’s first quarter DPJ will begin for more casual users. (Jet Linx also offers its the Kentucky Derby. Meanwhile, Sentient, a installing Gogo Biz 4G broadband through- fleet for ad hoc charter through brokers, but Directional Aviation company, is undergo- out its fleet (assuming certification is com- not directly to retail customers.) ing a rebranding under the tagline “A more plete). DPJ will be an authorized dealer and Last month Jet Linx announced an alli- thoughtful way to fly,” highlighting the “mis- provide installation service, for which no ance with ProJet Aviation of Leesburg Exec- sion of quality we’re on,” Collins said. In Sep- STCs will be required. utive Airport in Virginia, assuming the latter’s tember Sentient released a mobile app for iOS Nicholas Air distinguished itself this year aircraft management and charter business. and Android devices providing real-time price with the addition of a Citation Latitude to its The alliance adds a Challenger 604, Hawk- quoting and digital booking. fleet, becoming the only operator to offer the er 800XP and 400XP and Avanti to the Jet The two-tiered 25-hour card remains Sen- new jet in a membership-based program, said Linx charter certificate. ProJet will focus on tient’s mainstay. The lowest price light jet NJ Correnti, president and CEO of the Colum- its FBO business and will operate a private card is $125,000, and the average card sale bus, Miss.-based company. Nicholas also op- terminal at Leesburg for Jet Linx, which al- is $140,000, the hours expended in nine erates PC-12s and Phenom 100s and 300s, ready has a base at Dulles Airport. No finan- months. Cards are also available in 50-, 75- none older than five years. The company re- cial terms were disclosed. and 100-hour increments, which offer ad- cently supplemented its pre-purchased Blue It’s understandable why operators like Jet ditional features; hourly pricing remains Jet Card (sold in 15-, 30- and 60-hour de- Linx, DPJ and others would help finance pur- constant. Collins said Sentient draws its lift nominations) with the Rise Card, a deposit- chases; they’re not losing a charter client as www.ainonline.com from “the top 25 percent” of operators, who based program offering enhanced fleet access much as gaining an aircraft. But Houston-based control about 1,000 jets, and over the course flexibility, and the Smart Card, a pay-as-you- brokerage Horizon Air Group has also added of a year will use 300 different aircraft. go plan that’s “growing in popularity,” Corren- a sales/acquisition arm to its services. Found- Operator Delta Private Jets (DPJ) offers jet ti said. Nicholas might be the first to provide er and CEO Luis Barros says the commissions cards and ad hoc charter, and revenue for both member access to another new model. “The make up for loss of charter clients, and that Ho- is up “substantially,” said David Sneed, execu- Cessna Denali has caught our attention,” Cor- rizon might get “preferential treatment” on char- tive vice president and COO. DPJ bolstered its renti said, “and we look forward to continuing ter rates and availability from charter operators fleet of 75 aircraft through its Ownership Assist our fleet growth with this new aircraft.” that manage the new purchase. Meanwhile, Ho- program, which provided offset revenue guar- Jet Linx Aviation has added 26 aircraft to rizon’s “cash back” jet card (one percent cash antees of 80 to 100 percent of operating costs its charter rolls this year and expects to add or 1.5 percent back in flight credit) has gained for qualified aircraft purchased for charter use. another 22 to 24 (mostly midsize cabins) by popularity with big-spending corporate clients. With the fleet now at the correct size, DPJ has year-end, said Jamie Walker, president of the But bowing to slack demand, the company has scaled back the program and is “focused on Omaha, Neb.-based card program operator. reduced the buy-in costs for its no-deposit Fly- utilization for the rest of the year,” Sneed said. That will bring the fleet total to about 95 jets, Corp card to $6,000 from $10,000. n © 2016 AIN Publications. All Rights Reserved. For Reprints go to its app and website to align service with anticipated demand. The company can withanticipated demand.Thecompanycan its appandwebsitetoalignservice to SouthFlorida. ing for only a single seat, for example $1,990 on a light jet from New York up theirownShuttlesonthoseroutesandinviteotherstojoin,eachpay- ed numberofscheduledShuttleflightsarefree,butmemberscanalsoset gey Petrossov, JetSmarter’s founder, presidentandCEO;seatsonthelimit- major incentivefordrawingnewmembers,andarevenuesource, saidSer rope andMiddleEastfromameretwo.Theper-seat Part380flightsarea while itsper-seat Shuttlerouteswillhaveexpandedto42intheU.S.,Eu- have 5,000membersbythisfall,10timesthenumberofoneyearago, members in8760byyear-end. initiation feeand$5,950annualmembership,Dichterexpectstohave1,000 Dichter said,“valueexperiencemorethanhardgoods.”Theprogramhasa$5,950 events. Theevents“createsomethingthatwillresonatewithmillennials,”who, bership alsoopensaccesstotheWheelsUpride-sharingprogramandselect and non-guaranteedaccesstotheWheelsUpfleetathigherhourlycosts.Mem- months,” Dichtersaid.“8760”providesliftthroughbrokerpartnerApolloJets, ness—a $100million-plusbusiness—andwethinkcangettherein24 through anetworkofvettedoperators.“We believeitwillbenine-figurebusi- King Air350isand15CitationExcel/XLSes. Kenny Dichter. Thefleet(operatedbyGamaAviation) willthenconsistof55 75 aircraft andannualrevenueof$200million,accordingtofounderCEO charter fleet.Byyear-end WheelsUpexpects to have3,000members,70 while maintaininggrowthplansforitsfull-pricemembershiprollsandowned level membership program (called “8760”), (Flight Deck) and an introductory New York-based Wheels Up this yearintroduced a charterbrokerage arm Upstart providersarefindingsuccessinre Wheels Up After entering a new market, JetSmarter can analyze customer interaction with After entering anew market, JetSmarter can analyze customer interaction with Charter brokerJetSmarterofFortLauderdale,Fla.,anticipatesitwill Flight Deck,thenewin-housebrokerage,arrangescharterformembers Membership Clubs,Per-Seat CharterandPrivateAirlines imagined charteraccessprograms. - quietly foldedearlythisyear. Boston andNewYork City(viaWestchester CountyAirport),butthecompany Airco-founderWade Eyerly,con, createdbySurf between launchedservice will beaddednextyear. Monthlymembershipswillbe£2,500($3,235). between London,GenevaandZurich;Paris,Amsterdam,Dublinothers new jets (type undisclosed) operated by TAG Aviation (UK), with daily flights toEurope,using Airwillbringitsall-you-can-flycharterservice This fall,Surf by conventional airlines. scription fee on high-demand routes poorly served continue togrow, foramonthlysub- offeringmembersall-you-can-flyservice whichcosts$40,000annuallyplusaone-time$5,000initiationfee. services,” sengers. JetSmarteralsooffersSophisticatedmembership,delivering“elevated some35,000uniquepas- Petrossov said.Thisyearthecompanyexpectstocarry $70,000 peryearwithJetSmarter, whileSmartmembersaverageabout$30,000, though fewactuallybookthem.)TheaverageAccessmemberspends$60,000to daily asfreeflights,a feature Petrossovsaidmanymembers often checkon, set prices.(JetSmarterbuysempty-legavailabilityfromoperatorsthatitposts cess is$6,000/$4,000andprovidesguaranteedaccesstocharteraircraft atpre- membership costs$15,000forthefirstyearand$10,000annuallythereafter;Ac- cess totheShuttles;andAccess,forthoseseekingonlyadhoccharter. Smart JetSmarter hastwomembership programs: Smart, for members who wantac- tle lift.However, astheShuttlesareavailableonlyinsomemajormarkets, ‘When I’mflyingbymyselfandseethosesevenemptychairs,Igetheartburn.’” bers. Petrossovsaidevenaircraft ownersflyonShuttlessometimes.“Theytellme, on oneroute(NewYork toSouthFlorida),allbutfouroftheminitiatedbymem- Petrossov said.Recentlythecompanybrokeredarecord25flightsinoneweek ing downtime,andifcustomerscanbeflexibletheysavealotofmoney,” “buy upidletime[fromoperators]forlow-costwholesalerates,anduseitdur But theprivateairlinemodelhasn’tbeenentirelysuccessful.LastfallBea- Part 380 “private airlines” such as California’s About three-dozenoperators(identifiedonJetSmarter’s site)supplyShut- Surf Air and Surf Air Rise in Texas n -

Business Jets Charter Report ASG general manager Jeffrey Charter demand 2016, from Hong Kong-based Lowe, with the rest placed on bizav consultancy Asian Sky AOCs for accounting or other mixed by region Group, might help clarify the non-revenue purposes. Asian picture. The 14 nations India’s fleet of 57 leads Though charter demand in gather statistically valid infor- in the region have 256 busi- the pack, followed by Austra- Southeast Asia (excluding mation makes tracking the mar- ness jets on charter certificates, lia and China, with 55 and 53, China) appears “pretty mixed,” ket difficult, said Oliver King, according to the report. How- respectively. Eight percent of lack of official data and insuffi- Avinode’s managing partner. ever, only about half are avail- responding business aviation cient penetration by Avinode to The release last month of the able for on-demand service, said users in the Asia-Pacific region fly charter exclusively, while 48 TOP 25 US PART 135 OPERATORS IN 2016 percent use both charter and their own aircraft; 73 percent 2015 2016 2015 Rank Operator Name 2016 Hours book through operators, while Hours Fleet Size Fleet Size 27 percent use charter brokers. 1 Executive Jet Management 27,612 29,360 139 138 Lowe said regional operators 2 Gama Aviation 23,874 15,854 86 33 are reluctant to provide infor- mation on flight activity, but 3 XOJet 21,829 21,946 41 42 he believes the Chinese market 4 Travel Management Company 21,186 21,760 64 68 is “starting to creep back up” 5 Delta Private Jets 18,781 16,751 69 65 from the lows wrought by the 6 Solairus Aviation 11,046 9,587 47 39 government’s austerity cam- 7 Jet Linx Aviation 10,707 10,461 71 51 paign and regional economic weakness. 8 Jet Edge 8,920 8,328 45 37 In August Deer Jet subsid- 9 Jet Aviation 7,474 7,014 33 29 iary Hong Kong Airlines Cor- 10 JetSuite Air 7,173 8,306 19 19 porate Jet (Hong Kong Jet), 11 Clay Lacy Aviation 6,558 6,503 43 48 seeking to expand its charter footprint in Hong Kong, 12 Sterling Aviation 5,984 5,798 33 22 completed acquiring Asia Jet 13 Jet Select 5,192 5,165 27 24 Partners, a deal announced at www.ainonline.com 14 Aero Air 5,019 4,539 22 21 ABACE in April. The com- 15 Corporate Flight Management 4,897 2,746 24 20 bined fleets comprise some 16 Priester Aviation 4,472 3,357 31 27 three dozen aircraft, not all available for charter. 17 Talon Air 4,295 4,302 23 19 Latin America is a tale of 18 Meridian Air Charter 4,044 5,031 23 22 two regions: Northern Mex- 19 Mountain Aviation Inc. 3,937 2,984 20 17 ico is matching U.S. char- 20 Avjet Corporation 3,881 3,894 24 24 ter growth, while areas to the south through South America 21 Lyon Aviation 3,866 2,797 20 14 are flat or declining. Thanks 22 Advanced Air Management 3,658 1,695 15 8 to the Olympics, a 1,000-per- 23 LJ Associates 3,654 3,558 25 23 cent spike in flight requests 24 Red Wing Aeroplane 3,387 3,761 11 10 to Brazil came through the 25 Superior Transportation Associates 3,195 2,350 21 17 Avinode system in the lead- up to the Games compared *Note- 2016 fleet size based on DO85 dated July 5, 2016 *Note- 2015 fleet size based on DO85 dated July 15, 2015 to the same period the previ-

the Brazilian charter market otherwise as of Luxaviation UK (LUK; formerly London through the end of 2017, while consoli- “on its knees.” Executive Aviation). dating in the charter sector where it sees The Middle East, which had been Indeed, charter rates seem divorced excess capacity. The company operates five growing by 3 to 5 percent in recent years, from supply. In mid-July Avinode aircraft in the charter market and man- has flattened. It’s “not in contraction, reported year-over-year gains in its char- ages three others. but it’s not a growing market at this ter demand index for Europe of 43.4 per- As many of 90 percent of Nomad’s cli- stage,” said King. Charter demand in cent, and the U.S. of 5.4 percent, yet its ents are from Russia and the former Soviet Africa has been mixed according to the price index (average per hour rental cost) republics and, given that region’s economic limited data available. for the period slid by 0.41 percent and problems, the company recognizes the need 0.02 percent, respectively. to diversify geographically through expan- European Charter Market Focused providers, however, are find- sion in to emerging markets such as Africa, ing ways to succeed in Europe as else- China, India and even Iran. Nomad also Europe’s charter market remains in neg- where. LUK, in the midst of rebranding has expanded its product portfolio with ative territory, according to Avinode. “It two years after its acquisition by the Lux- new services such as helping European pri- continues to decline a percentage point per aviation Group, reported a 9 percent vate operators comply with the European year,” said King. King cites weak economic year-over-year bump in second-quarter Union’s new Part NCC rules. growth in the Eurozone and cratered Rus- charter revenue following a “difficult” 2015. In August, Flexjet Ltd., the UK sub- sian charter demand among the culprits. Margetson-Rushmore said the company is sidiary of U.S.-based fractional provider But charter doesn’t necessarily reflect the benefitting in part from its fleet of Embraer Flexjet, acquired charter management overall bizav market. From mid-March to Legacys, which are less costly but carry the company FlairJet from Marshall Aero- www.ainonline.com mid-April, for example, the 30,391 business same passenger loads as Gulfstreams; their space. FlairJet’s seven managed jets will jet flights in Europe reported by the FAA/ more limited range is no impediment for join Flexjet Ltd.’s eight Nextant 400XTis. Eurocontrol represented a 0.7-percent year- regional travel, and they have been popu- In the aftermath of the Brexit vote for over-year uptick, while Avinode reported lar for band and movie release tours. LUK the UK to leave the European Union, a 13.3-percent year-over-year decline in operates six Legacy 600s and two Legacy charter professionals are taking a “wait its charter demand index (average daily 650s among its 23 charter aircraft, making and see” stance toward its impact, but value of all requested trips) during the this Europe’s largest Embraer fleet, accord- one immediate effect has been an increase same period. But with recent strength in ing to the company. charter activity among UK operators, the European stock market, the near term Margetson-Rushmore believes synergies according to several providers; the low- could see “flat to small growth” in charter within the Luxaviation Group, which has a ered value of the British pound has made activity, King believes. charter fleet of some 250 aircraft, will lower UK charter less expensive than compet- But more activity might not spell greater its costs and help the needs of an increas- itors’ flights priced in euros. The poten- profitability. “One of the realities at the ingly global customer base. tial black cloud on the horizon for British moment, even though the volume of fly- Nomad Aviation, headquartered in opearators is that their AOCs may no lon- ing is up in some months, [is that] the pric- Zurich, Switzerland (but with a European ger give them cabotage right access to ing has dropped, so margins are tight,” said Union AOC based in Malta), expects to European Union markets once the exit

Patrick Margetson-Rushmore, chief executive see further expansion of its managed fleet process is complete. –J.W. © 2016 AIN Publications. All Rights Reserved. For Reprints go to CHARTER MARKET tors adoptingthesystem, JetLinxAviation and Landmark Aviation amongthem. owners orsmallflightdepartments. president andCEOPaulTouw. Afree versionwillbeavailableforindividual ly. Thetwocompanieswill share development costsandrevenue,saidStellar tomers, comprising500operatorsand flightdepartments,andpricedsimilar dynamic pricing features, will be available in March to all current FOS cus- eration FOS.Thenext-genversion, incorporatingStellar’s instantquotesand Collins’s FOS(Flight Operations System) to create anintegrated, next-gen- with itsdigitalmarketplace,announcedinAugustpartneringRockwell which chargeshighersubscriptionfees. $350. PricingissettoappealbrokerslookingforanalternativeAvinode, users get50freesearches permonth,andunlimitedmonthlysearching costs ReturnJet aviationdirector. Thesystemissupportedprimarilybyadvertisers; searches haveclimbedto400perdayfrom50,accordingSteveWestlake, Four hundredbrokersintheU.S.areusingsystem,andoverpast year sites abrandedcharterquotesearch enginelinkedtotheReturnJetdatabase. whichletsbrokershost ontheirWeb- (Application ProgrammingInterface), can track charters from quote request through completion. can trackchartersfromquoterequestthroughcompletion. system, addingfeatureslikeTrip, whichcreatesasharedfilewhereallparties years toreachitsfirstsevenmillionrequests.Avinode continues“evolving”the year, saidmanagingdirectorOliverKing,notingthatittookthecompany10 crease. Avinode hashandledthreemillionrequestsforcharteroverthepast from 2,000 operators worldwide, a 10-percentwhich lists inventory annual in- year—primarily intheU.S.—nowhas5,500activebrokersusingsystem, data gatheringanddissemination. and buildtheirbusinessesthroughdrawingontheimmensepowerofdigital Online bookingplatformscontinuetheirquesttoexpandthechartermarket Preparations forrolling outStellar’s B2Cproductcontinue, with35opera- Stellar, theSiliconValley start-up thataimstotransformretailcharter UK-based brokerageReturnJet Sweden’s Avinode, whosesubscriptionbasegrew20percent overthepast REPORT recently introduced its “widget box” API recently introducedits“widgetbox”API Charter AccessPlatforms - ey thantheyever thought.” to acquireenough customersandhold onto them is going totakemoremon- that have entered the arena Victor helped pioneer, Jackson said, “Their ability tance requiredfromitsbrokerstoarrange aflight.Asforthecharterplatforms Victor’sdown the cost of service.” commission varies with the level of assis- us entirelyinthedigitalchannel,” Jackson said,atrend“thathelpsusdrive clined by40 percent while “an increasing numberoffliersareinteractingwith flights inasinglemonth.Meanwhile, thecostofcustomeracquisitionhasde- revenue lastyear, saidfounder andCEOCliveJackson,hasbooked350 with theflight.” phone us to find out what times he’s is OK landing and seethateverything he usessocialmediatosaythankyouuswhenflying.[But]hismother can us onInstagram,hecompareshisoptionstheappandpaysonline, and a youngmodelwhoflies“betweenL.A.andEurope.Hecommunicates with and onlinesupport,isfindingfavoramongmillennialcustomers.Twidell cites good-fitting firms.PrivateFly’s mobileapp,whichsupplementsitstelephone the companyis“lookingtoacquireoneormorebrokerages”partner with early thisyearandiseyingaWest Coastlocation.To speedU.S.expansion, tions averaging$18,000.PrivateFlyopenedanofficeinFortLauderdale,Fla., year growthin bookings, said founder and CEO Adam Twidell, with transac- launched intheU.S.lastmonth.(Seearticleonpage31.) partnerships withFBOs(TAG, forexample)andothercompanies.Thecompany ed “withouttheaircraft operatorshavingtoliftafinger.” Stratajetisalsocreating ers registeredbytheendofAugust,andfourmillioncharterflightquotesgenerat- Growth isaheadoftargets,saidfounderandCEOJonnyNicol,with4,750us- booking, isnowliveinEurope,havinglaunchedtothepublicthereApril. ment in“themanytensofmillions”dollars,Touw said. Stellar hasraised$14.7millioninfundingandisabouttocloseonanewinvest- Now fiveyearsold,UKonlinecharterbrokerVictorgenerated$25million PrivateFly, anotherUK-basedonlinebroker, saw50-percent year-over- The UK’s Stratajet,whichprovidesreal-time,automatedpricequotingand n Victor