Inside this report: CitationAir has shifted its and TAG Aviation in 2000, and a share of Learjet 60 or Hawker focus during the past few years gradually acquired more 800XP to go from Texas to San • Providers surviving and growing …page 22 to offer whatever kind of sup- of the company over the years Francisco when a Phenom 300 Fractional Flight Activity • Major U.S. players gain confidence about plemental lift customers need, until finalizing the full pur- can do it for a lot less money?” growth in the hard-hit sector…page 22 rather than focusing solely on chase last year. Earlier this year, The successful adoption of the 40 August 2010 - July 2011 fractional shares. What cus- CitationAir recalled all of the Phenoms, he added, “reaffirmed August 2009 - July 2010 • International markets feel the squeeze, tomers want, he said, “is a pilots it had furloughed during the decisions we made several but still full of opportunity…page 26 combination of those product the recession, to handle growing years ago when we first ordered • NetJets holds the fort in Europe, elements with the best pricing. demand from new and existing the Phenom 100s and 300s.” looks eastward for expansion…page 32 They’re also looking for the least customers. AirShare’s Texas operation 35 amount of risk. The purchase For CitationAir, growth is not recently moved into a new facil- • Firms find traction in a flat market…page 34 of a share in this market has got reflected by changes in the num- ity at Dallas Love Field, where risk attached to it. For those for ber of fractional shares sold but the company also is a limited

whom tax depreciation is impor- in the total amount of business service center for the Number of flights (in thousands) Major U.S. players gain confidence tant, we still sell shares.” But not generated. CitationAir’s frac- Phenoms. The Buffalo facility tional sales “shrank a signals AirShare’s East Coast 30 about growth in the hard-hit sector bit,” Harford said, but expansion plans. “I think Buffalo Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul by Matt Thurber that’s been more than is our springboard for potential made up by customers growth in the Northeast,” he said. Argus International’s analysis of fractional flying activity during the past year shows that total flights remained stable through February, then from March FBOs at its Clearwater, Fla., head- joining the Jet Access “We continue to see growth in through July this year flights were ahead of last year’s numbers.

quarters and in Camarillo, Calif., program and taking adding owners and flying,” said Argus International Source: Avantair’s single aircraft type and Caldwell, N.J., those have advantage of other Plumb. “June was good, July CitationAir Sovereign strategy based on the Piaggio been refocused on handling inter- BILL BERNSTEIN CitationAir products. better, and August better than and we even did better in the sec- kind of a hybrid between jet Avanti twin turboprop is pay- nal Avantair customers, not retail all customers want to tie up their “We’ve had three times the num- July. I’m glad we stuck to our ond quarter in terms of new cards and fractional shares. “It’s ing off as the fractional operator transient operators. “We’re not money in an asset, especially ber of customers join us as have business plan.” growth.” The growth was a com- sort of a medium commitment,”

EXECUTJET continues to grow. Recent growth looking to build the FBO busi- one that suffered steep drops in left,” he added, a result of the bination of renewals from con- he said, “but it allows customers has led to hiring of an average ness,” Santo said. “We’re looking residual value during the reces- company’s ability to offer more tracts that ended recently and to fly their hours as fast as they of six pilots per month this year. to build our core business.” sion. Some shareowners realized than just fractional shares and Bombardier’s Flexjet flies an new shares sold. need to.” But more important, accord- One way of growing could as they came to the end of their also the company’s taking mar- all-Bombardier fleet Flight Options has a firm ing to CEO Steve Santo, is that be expanding outside the U.S. five-year share contract that ket share from competitors. of Learjets and Chal- Flexjet Challenger 605 order for 100 Phenom 300s sales and leases of frac- while they based their costs on lengers and the com- with options for an additional tional shares are key to an expected residual value of 80 Executive AirShare pany has already begun 50, and so far has taken deliv- FRACTIONAL the company’s high level percent of the price of the share, Executive AirShare is one of selling shares in the ery of eight. The Phenom 300 of activity, as opposed to the value had fallen to 40 or 50 what is now a rare breed, a pure new Learjet 85 all- offers performance that fits the jet cards. percent. “The price advantages fractional-share provider. Sub- composite jet. Begin- needs of light and midsize jet “We tried hard to are negated because the values sidiary Executive Flight Services ning in August, buyers owners, according to Silvestro, & CHARTER move people into longer- have shrunk so much,” he said. manages aircraft, but AirShare were offered an opportunity Some interest in new shares is and thus attracts former share- term programs,” he said. But on the other hand, while doesn’t charter the Embraer to purchase a share at a 5-per- attributable to bonus deprecia- owners of Beechjets, Citation “We’ve been focused on Avantair Avanti some customers want to fly a Phenom 100s and 300s in its cent discount, and this was tion benefits, according to Reid, Excels, Ultras and CJ3s and even shifting away from cards couple of times a year using a fractional fleet, and the Flight made available for the first four but he also sees buyers gaining Hawker 800s and Learjet 45s. and not [building] that A recent news report suggested , others want reliable lift Services-managed Phenoms are Learjet 85s, according to Flexjet more liquidity and thus the abil- By the end of this year, Flight business.” Avantair still sells 30 that Tata Group, part-owner of provided by a reputable operator not offered for charter. AirShare president Fred Reid. As of late ity to buy a fractional share of a Options expects to add four to 35 cards a month, but Santo Piaggio Aero, might be interested flying aircraft with a low average recently expanded to the North- August, Flexjet had sold a one- jet. These buyers want to belong Nextant Aerospace 400XTs to part one of a two-part wants to keep that business to in having a company like Avan- fleet age and a dedicated cadre east with a new facility in Buf- sixteenth Learjet 85 share. to a system like Flexjet’s that the fleet. Retrofitted with new by Charles Alcock, Ian Sheppard, about 15 percent of Avantair’s tair build a fractional program of pilots, Harford said. Citation- falo, N.Y., and a new Phenom Flexjet has diversified beyond provides redundancy and guar- Williams International FJ44- special report Matt Thurber, James Wynbrandt revenue because having too many in India. Although Santo said he Air’s Jet Access product isn’t a 300 began shareowner flights the core fractional share busi- anteed service. 3AP engines and Rockwell Col- cards that need to be serviced is can’t comment about any nego- jet card but offers access to the there in September. ness that it started with in 1995 Flexjet’s fleet should be add- lins Pro Line 21 avionics, these risky and isn’t a sustainable busi- tiations with Tata Group, he did CJ3, XLS, Sovereign or Citation By the end of this year, Air- and offers customers a variety of ing three to six new jets in the modified Beechjet 400s offer a focusing just on selling shares of aircraft but are ness model. “We like to keep that say, “We are exploring expanding X with a minimum annual com- Share will take delivery of two supplemental lift services, from coming year. “We’re measur- significant range improvement Providers surviving also offering to serve customers in whatever risk low,” he said. “It’s nice to get our brand globally and there are mitment of 50 hours. “It pro- to three more Phenom 100s and charter brokerage to jet cards to ing our retirements to remain and operating costs that are 20 way best suits their non- travel needs. If cash up front, but that’s not a some great opportunities.” vides a level of flexibility that one or two more Phenom 300s, whole-aircraft management and the fractional with the youngest percent lower than those of the and growing a potential customer doesn’t see the need to strong long-term business model. Another move that Avantair just does not exist in the frac- according to Keith Plumb, exec- fractional shares. While Flexjet fleet,” Reid said. “We’re now at original aircraft. The 400XT will If we make it a smaller part of the made this year was accelerat- tional program,” he said. utive v-p and COO. “We’ve offers whatever lift customers four years average age.” feature the same seven-passen- Like most of the general aviation industry, buy an asset that runs the risk of losing value, business, we can use it as an entry ing maintenance events such as Cessna Aircraft acquired the seen the trend shifting to more need, fractional shares remain ger cabin, but now with a divan the charter and fractional sectors have reported then jet cards or leases are an option. For those level into what you really want to aligning heavy checks with times final 8 percent of CitationAir demand for the capability of the core of the company’s busi- Flight Options and club arrangement. stable activity during the past year, with travelers who need the flight time available get people into, and that’s what we of slow activity, to prevent down- that it didn’t own last February. the Phenom 300,” he said, “and ness, Reid said. “We’re seeing Flight Options is “in the “We’re always looking for pockets of growth and decline although the by owning a whole airplane and the flexibility focus on.” time during peak travel peri- CitationAir (formerly Citation- our most recent sales have been much more relative strength in black,” according to CEO additional aircraft in the fleet,” number of charter hours flown so far this year offered by large flight operations with plenty of Card owners don’t have a ods. This increased maintenance Shares) was founded by Cessna Phenom 300 shares.” fractional shares. It’s our core Michael Silvestro, “and we have Silvestro said. Next up could be a is higher than the number of fractional hours. support, all of the big providers offer whole- long-term commitment and can costs in the short term but, Santo Plumb credits AirShare’s business that we do well at, so more people coming in than we new midsize or super-midsize jet. Some charter operators are reporting record aircraft management services. quickly exit aviation when finan- said, “that will come back to us Top Departure Airports– strategy of focusing on fractional we’re gratified to see renewed have leaving [the fractional pro- Meanwhile, Flight Options has North America (last 12 months) results, including high-flying monthly hours The landscape of charter and fractional cial problems occur. The sale of in reduced maintenance costs operations for the company’s suc- interest in fractionals, rela- gram]. During the ’08, ’09 time had several rounds of employee a fractional share comes with a and better uptime. It increased cess and recent growth. AirShare tive to our other product offer- frame it was the opposite. Things recalls during the past six to 12 logged or other encouraging statistics, but operations hasn’t changed that much from Rank Airport long-term commitment, usually dispatch reliability by about 8 was first to operate a fractional ings. There hasn’t been a major were really bad and people either months, putting pilots, mechan- overall, there are no magic economic bullets last year to this year. But compared to when at least five years. Avantair also percent. That will make a big dif- 1 Teterboro (KTEB) Phenom 100 and an early oper- shift from fractional into wholly couldn’t afford it or weren’t flying ics and administrative personnel for charter and fractional operators. As the fractionals were the fast-growing darlings of offers share leases, which are sim- ference on next year’s financials.” 2 McCarran International (KLAS) ator of the Phenom 300. “We’re owned, wholly owned into char- at nearly the level that they were back to work after furloughs dur- global economy limps along, especially in aviation, they have now matured and are much ilar to car leases, where the buyer Overall, he said, “It does appear getting inquiries from national ter, charter into fractional.” before. But we are now selling ing 2008 and 2009. “It’s no secret 3 Van Nuys (KVNY) regions where aviation has long been a strong more integrated with their charter operations doesn’t have to pay for the entire that things have gotten better for fractional customers who [appre- The fractional industry as a more than people are leaving.” that the whole industry was stag- part of some countries’ industrial output, and offer many more options to customers. share upfront or worry about everybody. For us, we’ve contin- 4 Miami International (KMIA) ciate] the capability of the whole has suffered from an out- Flight Options offers three nant during the last couple of growing economies in other parts of the In recognition of this transition, this year AIN residual value at the end of the ued to grow and add airplanes.” Los Angeles International Phenom 300,” he said. “Why own flow of customers leaving the fold main programs, including the years,” Silvestro said. “Every- term. “With our lease we’re less 5 that exceeded the influx JetPass 25-hour jet card, Jet body was quick to say the frac- world such as and India offer hope to is covering the charter and fractional segments (KLAX) expensive than a straight frac- CitationAir of new owners buying Club membership program and tional model was broken but I aircraft manufacturers and commercial aircraft 6 Dulles International (KIAD) together, in two parts. In the first part, the tional jet share from all the other “People are looking for value,” shares during the reces- traditional fractional shares. Jet don’t believe that. There are a operators of new avenues for growth. current landscape of charter and fractional [fractional providers] with the said Woody Harford, CitationAir 7 Westchester County (KHPN) sion, according to Reid. Club was introduced about three lot of factors that are positive One marked change has been that charter operators will be covered, including statistics cost of the asset included in the senior v-p and chief revenue officer, 8 Logan International (KBOS) For Flexjet, he said, months ago “and has been well for fractionals.” He said these and fractional-share segments of commercial showing activity levels around the globe. The price. That’s why leases are selling explaining why the company’s year- “that is starting to bal- received,” according to Silvestro. include the relative value of frac- operations have begun to merge. Companies second part, which will appear next month, so well,” Santo said. over-year Jet Access and fractional 9 Opa-Locka Executive (KOPF) ance out. Our first quar- Jet Club buyers commit to 75 tional shares, especially when Earlier this year, Avantair share business sold to new cus- Lester B. Pearson ter registered 64-percent hours in Flight Options Embraer needed for supplemental lift; the are not only surviving but growing, and part will explore issues affecting the charter and 10 International (CYYZ) of the reason is that these operators are not fractional segments. n opened a maintenance facility in tomers has grown by 63 percent. growth quarter over Phenom 300s over a three-year poor service available on ; Dallas. And while Avantair owns “Value is not the lowest price.” Source: Avinode Executive AirShare Phenom 100 quarter, 2011 over 2010, period, making the program Continues on next page u

22 Aviation International News • October 2011 • www.ainonline.com www.ainonline.com • October 2011 • Aviation International News 23 FRACTIONAL months of 2011 versus 2010, due Management subsidiary allow order for Globals will fill strong to cost increases passed on to the company to offer a full suite demand in that category. “We’re customers and “modest increases of services. “We can provide con- very tight in inventory for long- & CHARTER in fractional interests sold and sultative advice and we can ana- range aircraft,” Hansell said. revenue hours flown.” lyze [customers’] flying patterns “We’ve seen steady growth and their use of the program, PlaneSense year-over-year,” Hansell told and we can provide advice on Since its inception in 1996, uContinued from preceding page AIN, but that growth mirrors what makes sense for them on a Alpha Flying’s PlaneSense frac- the slow growth of the global service level and economic basis.” tional-share program has flown and growth in cost of jet cards $91 million loss in 2009. Shortly economy. NetJets also has oper- just one type of air- NetJets Citation Excel due to high financing costs for before leaving, Sokol announced ations in Europe and the Middle plane, the Pilatus aircraft driving more customers a purchase agreement for up to East, and business there, he said, PC-12 single-engine into fractional shares. “We’re feel- 120 Bombardier Global worth up “is bubbling along, much as [it turboprop. PlaneSense, ing pretty positive,” he said. to $6.7 billion. This followed an is] in the U.S., with flight hours from the Alpha Flying order for 125 Embraer Phenom increasing in conjunction with headquarters in Ports- NetJets 300s a year ago. NetJets also pur- overall economic trends.” mouth, N.H., flies with NetJets has undergone some chased jet card partner Marquis A new product introduced N et J ets two-pilot crews and major changes this year, includ- Jet late last year. during the past year is NetJets Fractional shares won’t grow offers the lowest minimum flight ing the departure of chairman In its latest financial state- Finance, which provides loans exponentially as they did after time requirement of any frac- David Sokol on March 28 and the ment, noted at 6 percent interest for share NetJets founded the market in tional operator, just 30 minutes. elevation of company president that NetJets’ second-quarter purchases of at least $100,000, 1986, he said. “But we think that PlaneSense hired 40 new pilots Jordan Hansell to chairman and earnings during 2011 declined amortized over 20 years (minus the corporate flight department this year. CEO. Sokol was credited by War- $11 million and for the first six the age of the aircraft). NetJets is an underserved market, not PlaneSense does not sell jet ren Buffett, chairman of NetJets months of 2011 were down $65 also offers a lease program, necessarily as replacements for cards or offer retail charter ser- parent Berkshire Hathaway, for million. These drops reflect neg- which allows customers access corporate fleets but as contin- vices, although Alpha Flying turning around the company, ative foreign-currency exchange to the NetJets fleet and services ued supplemental lift. Fractional did add a charter subsidiary driving it to pre-tax profits of for operations outside the U.S. without investing in an asset. is our foundational product. We called Cobalt last year. Cobalt $984 million during 2010 versus a and impairment charges for “the During the downturn, there was think the economic and service was launched, said president planned disposition of a natural reaction by potential case remains compelling for a and CEO George Antoniadis, aircraft later in 2011 and buyers to reductions in asset val- significant portion of the mar- “to increase flexibility to our fees incurred to cancel ues, Hansell said, and less inter- ket and we do not anticipate PlaneSense clients.” certain aircraft purchase est in owning shares. But values that basic relative foundation or This year, PlaneSense has bro- commitments.” Despite have stabilized and there is more structure changing significantly.” ken all the company’s records for these drops in earnings, interest in share ownership. NetJets has long offered large- hours flown each month. “The NetJets revenues were Hansell emphasized that cabin and long-range jets as year has been busy,” he said. Flight Options Phenom 300 up during the first six NetJets and its Executive Jet part of its product mix, and the Another positive indicator is that PlaneSense has no used frac- Fractional Operators’ Fleets (by make and model) tional shares for sale. “We have had used shares,” Antoniadis Manufacturer Model Avantair CitationAir Executive Flexjet Flight Options NetJets PlaneSense Airshare said, “but they do not stay around Bombardier Learjet 40XR 19 for a significant amount of time.” He attributes the strong interest 12 Learjet 45XR in PlaneSense shares to the low Learjet 60XR 10 cost of the PC-12, which “in these Challenger 300 31 choppy times is appreciated.” Challenger 604/605 12 While the strategy during the recession was to “remain stable Cessna 24 Citation CJ3 and not worry about growth,” Citation Excel/XLS/XLS+ 27 139 he said, PlaneSense continued Citation Sovereign 15 44 to grow “in small single-digit Citation X 7 14 72 PlaneSense PC-12 Citation Bravo 5* 17 Citation V Ultra 10 Citation Encore 29 2000EX/2000 54 Falcon 7X 2 Embraer Phenom 100 12** percentages in the number of Phenom 300 4 8 clients.” The fleet has been con- Legacy 600 6 stant at 32 PC-12s for a few years, Gulfstream G200 38 although older models have been G400/IV-SP 28 replaced with new ones. The PlaneSense fleet will grow, likely 17 G450 next year, and the team is con- GV 7 stantly evaluating areas to locate G550 15 new bases. PlaneSense now flies Hawker King Air 90B 5 as far west as Texas. Beechcraft While PlaneSense did place King Air 350 5 an order for the Grob SPn, that Hawker 400XP 47 program went bankrupt, and Hawker 750 12 PlaneSense is “still interested Hawker 800XP 12 61 in adding a complementary jet Hawker 900XP 10 to our fleet,” said Antoniadis. “We still believe there is a value 53 Beechjet proposition if we had a sensible, Piaggio Avanti 57 appropriate jet to complement Pilatus PC-12 32 the value of PlaneSense.” o *not flown actively but still used to fill busy days. ** seven fractional, five managed Special report continues on page 26 u

24 Aviation International News • October 2011 • www.ainonline.com FRACTIONAL charter flying than face a return to the dreaded airline service. There is even a willingness to & CHARTER use turboprops, rather than jets, according to the company. The Asian market is also see- ing price sensitivity, accord- uSpecial report continued from page 24 ing to Jet Aviation, but clients there generally prefer larger air- International markets feel the craft. “There is strong demand for quality charter aircraft, of squeeze, but still full of opportunity which the region is in short sup- ply,” said Bernegger. by Charles Alcock & Ian Sheppard But beyond the emerging markets of Asia, there remains, It’s hard to find a consistent and pricing, remains largely ABS Jets commercial director Antonia Tomkova estimates that the Czech Republic-based says Jet Aviation, gross over- company has been flying 12 percent more this year than in the same period last year. and objective view of the inter- optimistic. Despite recent eco- supply of aircraft to the point national charter market. AIN nomic setbacks in Europe “Some operators have dam- is when pricing tends to drop to of price-sapping saturation. In polled a selection of operators and the U.S., it maintains that aged the market by lowering levels that Gama deems “unreal- Switzerland alone, four opera- active in Europe, the Middle demand for charter services is prices to below what is sustain- istic.” It is also seeing operators tors have gone out of business East, Africa and Asia and a sum- still in recovery mode after the able and in some cases even in the U.S. flying for below cost. since the financial crisis and Ber- mary of their situation and per- last crisis around 2008-09. But below operating costs,” claimed From its mammoth global negger estimates that between 5 spective can be found below. But this hasn’t been fully reflected in ExecuJet Europe managing management fleet of almost 200 and 10 firms have disappeared for a clearer view we also asked a firming of flight-hour pricing, director Cedric Migeon. “Some aircraft, Jet Aviation has just in the rest of Europe, with more leading charter broker Hunt & as just about all of the operators smaller operators have made under a fifth of these active in consolidation still to come. Palmer and online charter por- below testified. this mistake to guarantee a cer- the charter market. It is outside In the Americas, Jet Aviation tal Avinode for their assessment tain charter volume [for the air- North and South America that reported a strong start to 2011 of the challenging conditions the Consolidation Efforts craft owner]. They have ended Switzerland-based Jet Aviation in terms of charter demand, market finds itself in. ExecuJet Aviation operates a up dropping rates to build vol- has seen the strongest growth, only for this to trail off as early According to Neil Harvey, fleet of almost 150 aircraft and, ume. This sets a precedent and adding 10 aircraft in Europe, as mid-February and remain Hunt & Palmer’s director of with bases in Europe, South it’s a vicious circle.” the Middle East and Africa relatively soft through May. executive aviation, this year’s sec- Africa, Mexico, the Middle Some relief from this cycle (EMEA), as well as in Asia, Activity then picked up again ond quarter saw healthy signs of East, Asia and Australasia, it is has come from a number of recovery, with long-suppressed certainly one of the most global smaller operators going out of charter rates starting to edge up. operators. On average, ExecuJet business, concentrating capac- Then July brought graphic evi- is currently adding one new air- ity more in the hands of big- dence of the threat of another craft to its managed fleet each ger operators. “The market has financial crisis and this softened month and at least two thirds of been cleaned by some compa- demand once again. “April to these are available for charter. nies going out of business, but June were very strong, with some According to Christophe there is always the risk that new levels of activity that we haven’t Gibert, ExecuJet’s charter direc- ones will pop up,” said Migeon. seen since 2008,” Harvey told tor for Europe, demand for char- Gama Aviation is one of the ExecuJet is adding an average of one new aircraft a month to its 150-aircraft-strong AIN, reporting growth as high ter is still rising. At the same time, few charter and management managed fleet to keep up with growing demand for charter around the world. as 20 percent during that period. however, pricing remains aggres- providers with feet on both sides over the past 12 months, with an in June and, according to Don Avinode, which produces for- sive and pressure has been partic- of the Atlantic Ocean. Col- expectation of doing the same Haloburdo, vice president and ward-looking indices of demand ularly acute in the light jet sector. lectively, its fleets in the U.S., again next year. Since last year, general manager of Jet Avia- Europe and the Middle East the company has added two tion Flight Services, demand now run to almost 50 aircraft, aircraft in the Americas, and it stayed strong over the summer, since the company added seven expects to add up to nine more with quoting activity about 15 since the middle of last year, and next year. percent up on the same period it has reported strengthening In the EMEA and Asia last year. demand for charter in all three regions, Jet Aviation reports In the U.S., midsize aircraft of the main markets it serves. charter demand is slightly higher have been in high demand in In the Middle East, bookings than it was 12 months ago. But recent years, with clients who have been “much stronger” this the cloud on this horizon is an formerly opted for large cabins year than they were last year, and overvalued Swiss Franc, which increasingly now willing to trade Gama reports continued popu- makes the company’s services down. Those still using large- larity for its larger aircraft. The expensive for customers outside cabin jets tend to be putting UK-based group estimates that Switzerland. more passengers on board to in the first half of this year its Over the past 12 months, boost the value from each trip. European charter business has reported Martin Bernegger, “Clients are definitely matching been approximately 7 percent up senior vice president and gen- aircraft choices to their needs on the same period in 2010, with eral manager of Jet Aviation and spending wisely,” the com- Dassault Falcon Service expects to be operating 10 aircraft by this time next year, as larger aircraft accounting for Business Jets, charter prices pany told AIN. clients continue to seek the comfort and productivity of business aviation. most of the growth. have decreased all over Europe. Charter bookings also But the weakness of both the Slow and Erratic Recovery increased in the U.S., at least U.S. dollar and euro against the TAG Aviation is another during the first six months of Swiss Franc means that non- global player with more than this year. Gama is also seeing Swiss operators have a pricing 100 aircraft under management increased interest in its services advantage of between 30 and 40 worldwide. At any given time, from prospective clients in South percent over Swiss operators. approximately half of the air- America and Hong Kong. Jet Aviation’s EMEA oper- craft are available for charter, Despite increased direct ation also reported a greater and the Geneva-based group operating costs, Gama has seen interest in somewhat smaller is in the process of establishing rivals cutting flight-hour rates and younger aircraft (not older a new joint-venture operation to levels “not seen since the late than three or four years). Evi- in China. 1990s.” Sometimes as much as dently this reflects a more prag- According to Walter Stark, 70 percent of the charter fleet matic approach in which clients TAG’s vice president for charter in Europe is available and this would rather economize in their Continues on page 28 u

26 Aviation International News • October 2011 • www.ainonline.com FRACTIONAL two or three aircraft in the extent to which charter demand Top Departure Airports– Malaysian capital Kuala Lum- picked up during the second Europe (last 12 months) pur to serve the Asian market. quarter of this year. The oper- & CHARTER Rank Airport These are largely flying north- ation made up for slower busi- wards to Hong Kong and China, ness recorded earlier in the year 1 Vnukovo (UUWW) where the company is find- by positioning an aircraft at the 2 Le Bourget (LFPB) ing operating conditions easier popular Italian resort of Olbia uContinued from page 26 now that it has more experience during the summer months. In 3 Cote d’Azur (LFMN) with the country’s potentially the belief that small is beautiful, 4 Luton (EGGW) services in Europe, demand for September, the VistaJet fleet arduous flight permit approval the group has no intention of charter has been improving– reached 30. New orders and process. Flohr’s next step is to expanding its three-strong fleet 5 Geneva Cointrin (LSGG) perhaps by around 5 to 7 per- the reactivation of previously establish a permanent and siz- to any more than five aircraft. 6 Zurich (LSZH0 cent–over the last year in Europe deferred deliveries from an over- able VistaJet presence in China. The fleet currently consists of 7 Farnborough (EGLF) itself. Nonetheless, he acknowl- all $2 billion backlog of com- In the Middle East, politi- an Embraer Legacy, a Hawker edged, “The recovery is still slow mitments are set to increase this cal upheaval has slowed charter 900XP and a Cessna CitationJet. 8 Pulkovo (ULLI) and at times erratic.” to more than 60 jets in the next market growth, as far as Flohr is Nonetheless, pricing has 9 Linate (LIML) Growing need for charter four years. concerned. But VistaJet is now been tight, even for the gen- flights in the emerging mar- VistaJet keeps its fleet on the seeing bookings in and out of erally higher-yield larger air- 10 Boryspil (UKBB) kets of Asia, Africa and Latin move to tap shifting demand the once promising Egyptian craft. Grossmann reported that Source: Avinode America is driving demand through Europe, the Middle market once again and continues her team has sometimes lost toward larger, longer-range East, Africa and Asia. It has to see rising demand from states out on a charter booking for be under tremendous pressure,” jets. Unusually among its chosen not to operate in North such as Saudi Arabia, Qatar and a trip price differential as slim he told AIN. peers, TAG believes that flight- America but provides service the United Arab Emirates. as $140. Grossmann told AIN Over the last 12 months, two hour rates have stabilized after there through an alliance with But Flohr clearly sees no room that aggressive pricing has never operators have gone out of busi- declining in 2010. But, on Flexjet, whose customers it car- for complacency, accepting that been shown to pay in the longer ness in Germany alone (Triple the other hand, added Stark: ries in other parts of the world. Western economies at least seem run, usually costing the oper- Alpha and Silver Bird). Bauer “There is still excess capac- The past 12 months have seen set for another rocky ride that ators who resort to this signifi- predicts that more German ity available and while charter VistaJet firmly shift the balance potentially could adversely affect cant hardship at some point. operators will be forced out of rates have stabilized there are of its fleet in favor of larger, lon- the executive and private charter Despite the charter sec- the market in the scramble to still some economically unvi- ger-range aircraft, having elim- sectors. In response to July’s tidal tor continuing to enjoy what pick up the business left by those able deals being offered.” inated the smaller Learjet 40 wave of bad news from finan- she described as “very uncer- recently departed. Ambitious VistaJet is well from its inventory. In the next cial markets, he instructed staff tain times,” Grossmann indi- and truly back in growth mode. 12 months, the Austria-based to cancel any summer vacation cated that some improvement Intense Competition in Paris Founder and chairman Thomas operator expects to add two or plans they might have during in trading conditions has been Dassault Falcon Service has Flohr doesn’t consider his com- three more aircraft to a fleet that August so that the entire team achieved through greater access increased its fleet from seven to pany to be a charter operation boasts an average age of less could focus on the prospect of a to the Asian market, recover- eight aircraft over the past 12 in the conventional sense of the than two years. Future deliveries struggle for dwindling business. ing demand from Russia and months and expects this num- term. Essentially what he offers will include the ultra-long-haul improved seasonal business dur- ber to reach 10 by this time next is a form of block charter in Global 6000 and 8000. Eastern Europe Operations ing the summer months. But year. Unsurprisingly, the French which individual clients’ travel VistaJet claims to have main- ABS Jets, headquartered in unsettled preowned aircraft val- airframer’s Paris-based char- needs are packaged into pro- tained 20-percent growth in the Czech Republic’s capital ues, in her view, continue to be ter/management arm operates grams giving them access to a demand for its services this year. Prague and with another base a destabilizing factor for many nothing but its own Falcons, uniform fleet of Bombardier jets Much of this demand is emanat- at Bratislava in neighboring Slo- owners and operators, espe- with the following mix of types: on assured terms and with a sim- ing from Brazil, Russia, India, vakia, operates a managed fleet cially with some charter clients one Falcon 50 (due for retire- ple three-page contract. These China and . The com- of 12 aircraft, having added two and brokers unwilling to book ment next year), a 50EX, a 2000, days, about 60 percent of Vista- pany recently established a part- since the middle of last year. The aircraft that they consider to a 900B and four 900EX EASys. Jet flying is for customers booked nership operation in the West fleet includes six Embraer Lega- be too old. “Really the time for Next year, it will get its first 7X, under one of its programs. African country and has about cys and a mix of Gulfstreams, making good money [from char- along with additional examples With the delivery of three four aircraft available there. Bombardier Learjet 60s and ter] is over and there is not much of the 2000 and 900. new Challenger 605s in early Similarly, VistaJet now bases Cessna Citation Bravos. The scope for reducing costs now,” According to Bertrand strongest demand is for larger she concluded. d’Yvoire, Dassault’s execu- jets, with the Legacy having Over the past 12 months, tive flights and FBO director, proved a popular option in the Aero-Dienst has seen its fleet demand has remained reason- Czech and Slovak markets. contract slightly from 11 to nine ably constant over the past 12 As of late August, ABS aircraft but it expects to be back months overall. However, the Jets estimated that its fleet has in double figures by year-end. latter part of 2010 saw “a sig- been flying some 12 percent Currently, the German com- nificant increase” in demand, more than it was in the first pany, which is active in both which was then stifled by the eight months of last year. In executive and air ambulance fallout from the so-called “Arab recent months, it has felt able to sectors, operates a Bombardier Spring” political upheaval in increase prices slightly, but rates Learjet 60, two Learjet 45XRs, , Tunisia, Bahrain, Syria are yet to recover to 2008 levels. a Learjet 35, a Cessna Citation and Libya. With private aircraft charters CJ3, a Dassault Falcon 900EX, Until recently, a combina- still relatively novel in Central a pair of Dornier 328Jets and a tion of the economic crisis and and Eastern Europe, the relatively Beechcraft King Air 350. the expansion of broker activity small number of operators trad- According to managing in resulted in aggressive ing there have arguably not felt director Martin Bauer, demand pricing for charters. According Qatar-based Rizon Jet is simultaneously developing the Middle Eastern and European the squeeze of reduced demand for charter is largely unchanged to d’Yvoire, prices have firmed markets, flying two Challenger 605s, to appeal to Middle Eastern travel preferences. seen in the west of the continent. since 2010, although it has been up somewhat due to increased “In our region the market is still doing about 10 percent fewer air fuel costs and the fact that at pretty new,” commented com- ambulance flights. He shares the least one Le Bourget-based mercial director Antonia Tom- view of many of his competitors competitor has disappeared kova. “There is still slow growth that there are simply too many from the market. and we expect to see some new aircraft chasing current levels D’Yvoire predicted that operators entering the market.” of demand for charter. “There at least one more Le Bour- Also based in the Czech has been an over-capacity of get-based operator could shut Republic, Grossmann Jet Ser- small aircraft for a long time, down by this time next year. vice CEO Dagmar Grossmann but also the number of midsize He said that foreign operators declared herself surprised by the and larger aircraft is starting to Continues on page 30 u

28 Aviation International News • October 2011 • www.ainonline.com FRACTIONAL that it is achieving economies be sold even to raise enough to Top Departure Airports– of scale resulting in savings of clear the debt on them, there Middle East (last 12 months) as much as 20 to 30 percent on would be some disappearing & CHARTER costs such as insurance, han- from the market,” he explained. Rank Airport dling and maintenance. In some cases, aircraft have been 1 Dubai International (OMDB) Hangar 8 expects to be in repossessed by banks, only to King Khalid International 2 acquisition mode over the next continue operating in the charter (OERK) uContinued from page 28 12 months. It is looking at sev- market on behalf of these banks. Beirut Rafic Hariri eral charter/management firms In his view, there isn’t much 3 International (OLBA) attempting to enter this highly had operated until 2010 having right now and could close deals that operators can do to change King Abdul Aziz International competitive local market by fallen out of favor. In Dhame- within the next few weeks. their situation, other than to 4 positioning aircraft in Paris cha’s view, the market is getting The past 12 months have wait for brighter days to arrive. (OEJN) have not had any success. more educated about the value seen London Executive Avia- “We simply have to wait for Abu Dhabi International 5 “Our market is threatened that midsize aircraft can deliver tion expanding its fleet by 25 demand to increase and wait for (OMAA) by financial aftershocks,” com- for charter clients who are over- percent, taking its tally to 24. some operators to come out of 6 Kuwait Interntional (OKBK) mented d’Yvoire. “Whether coming their fixation with large Embraer’s Legacy 600/650s now the cloud-cuckoo-land in which we like it our not, our level of and luxurious models. account for one third of this they are operating at a loss,” 7 Doha International (OTBD) activity is partially linked to According to Dhamecha, total, along with seven Cessna Galanopoulos concluded. 8 King Fahid International (OEDF) the performance of the stock profit margins remain tight, with Citation Excels and a mix of Putting aside the recent clo- 9 Marka (OJAM) market.” Most immediately, he operators who own their own Citation Bravos and Mustangs, sure of its German subsidiary believes any hope for a recov- aircraft especially keen to get plus a pair of Beechcraft King Triple Alpha, Ocean Sky has 10 Bahrain International (OBBI) ery to the higher levels of flight almost any income to cover own- Air twin turboprops. almost tripled the size of its Source: Avinode activity last seen in mid-2008 is ership costs. Several operators in According to managing managed fleet in recent years. dependent on European gov- the United Arab Emirates have director George Galanopou- The UK-based group now oper- told AIN. “But the market is ernments overcoming their gone out of business, just a cou- los, charter bookings are up 20 ates 19 jets, and about half of extremely competitive and mar- chronic debt problems. ple of years after a full-blown percent on 2010, with demand these are available for charter. gins are fierce. The drive for us boom period there. Empire has especially strong for the Lega- For the most part, they are large- is to be a quality operator. We’re Gulf Region Potential embarked on a plan to expand cys and Excels. But rates are still cabin aircraft such as Bombar- having to control our costs but Empire Aviation has emerged eastwards into the largely depressed. “Any increases [in dier’s Global XRS, Challenger we are not in the bargain bucket, as one of the more substantial untapped Indian market for pri- flight-hour rates] barely cover 601, 605 and 805, Dassault’s because there is no point doing operators in the Arabian Gulf vate charter and management. anything for a loss.” charter market and now fields a Ocean Sky has seen other fleet of 20 aircraft. These range in Aircraft Oversupply in UK operators bidding for flights at size from Cessna C208 amphibi- On the back of last year’s suc- rates that would give a profit ans to a selection of jets includ- cessful share flotation, Hangar 8 margin of barely $80. Factor- ing the Hawker 800XP, 850, 900 has increased the size of its man- ing in administration costs and and 4000, as well as the Bombar- aged fleet by almost 70 percent the time spent getting the book- dier Challenger 300 and Global since November 2010 to 32 air- ings, this effectively means that XRS, the Embraer Legacy and a craft, most of which are fewer the flights were made at a loss to new . than three years old. The UK- the operator. But despite the region’s based group operates these in the From its base in Qatar, and undoubted potential, the Mid- charter market under as many as with a new base at London Big- dle East has seen some of the 13 different national AOCs. gin Hill Airport, Rizon Jet is instability experienced to the Chief executive Dustin looking to develop the Middle north in Europe. Some air- Dryden estimates that charter Eastern and European markets Clients are taking a pragmatic approach to charter, according to Jet Aviation, which has craft have been sold by own- activity may have increased by seen an increase in clients requesting smaller aircraft such as the Phenom 300. in tandem. From its Doha head- ers needing to liquidate assets, as much as 10 to 12 percent since quarters it operates four air- but Dubai-based Empire also 2010 but, crucially, flight hour the extra cost of fuel,” he told Falcon 900EX, 2000EX and craft–a Global XRS, a pair of has had more aircraft placed rates have increased barely at all. AIN. “There is too much sup- 7X, and Gulfstream’s G450 and Challenger 605s and a Hawker under management contracts. The supply/demand balance var- ply [of aircraft] compared with G550. The company employs 900XP. The fleet has not grown “What’s strange is that the char- ies significantly between regions, three or four years ago. We still almost 70 pilots. over the past 12 months, but ter fleet has shrunk by about 40 he explained, with Europe def- see new people coming into According to Andrew Rizon Jet has hopes of add- percent,” said Empire executive initely suffering from an over- the market thinking they will Hughes, managing director of ing another two aircraft by this director Paras Dhamecha. “You supply of lift. Also in excessively change the world and all they do Ocean Sky’s aircraft manage- time next year. would think that owners would plentiful supply, from an oper- is spoil the market. There is no ment division, more private air- According to the company, want to make them available for ator/owner’s point of view, are point flying if you are not mak- craft in the UK are likely to the charter market continues charter [to cover costs].” light jets, which, in Dryden’s ing something from it.” gravitate onto commercial AOCs to fluctuate unpredictably. It In the first quarter of 2011, opinion, are simply not worth Perhaps surprisingly, only a to avoid VAT liability. This cre- shares the commonly held view Empire’s management team was moving around to get paid work. couple of operators have gone ates opportunity for those in among operators that flight optimistic about experiencing Hangar 8 has seen rivals, bust in the claustrophobic UK the management business, but hour rates have stayed low and an upswing in charter demand small and large, fall by the way- charter market, but Galanopou- it also runs the risk of flooding that, in the long term, these are but the second quarter brought side these past few years and los predicts a hard winter ahead, an already over-supplied charter unsustainable. a dip and the summer season Dryden expects there to be more not least because of the turmoil market with yet more capacity. In Germany, the fleet at has also been down, with fly- consolidation to come. Apart in financial markets. He sees lit- Nonetheless, Ocean Sky ACM –a mix of ing activity reduced by about 25 from poor profit margins, other tle scope for industry rationaliza- maintains that its focus on Bombardier, Dassault and to 30 percent overall, compared hazards for management com- tion in today’s unsettled trading larger aircraft is paying off, with Cessna models–is unchanged with recent years. Nonethe- panies, in his view, are unrealistic conditions, commenting: “There demand rising for the types it over the past year at seven air- less, Empire, which has a strong contracts with owners and a lack is stagnation in the market. Why operates. Conversely, the com- craft. All are managed and focus on aircraft management of stability and transparency in buy anybody [another operator]? pany claims that its Triple Alpha available for charter, with the and sales, has still been able to their financial management. What benefit would there be, subsidiary collapsed in July company expecting to add just increase both revenues and prof- Further muddying the waters unless you want to buy yourself because of weak demand for the one more long-range jet by the its by roughly a third. in the UK at the moment are into a bigger part of the market smaller and midsize aircraft that end of next year in response to Dhamecha told AIN that confusing changes to the way [in terms of aircraft size]?” it operated–coupled with some demand that it says has risen by in a market where demand for rules covering value added tax According to Galanopoulos, disadvantageous management 10 percent this year. It claims larger aircraft has been espe- (VAT) on aircraft are being inter- one of the reasons that so many contracts to which its previous to have improved profit mar- cially strong, charter clients now preted. According to Dryden, aircraft remain in the charter owners had committed. gins by 5 to 10 percent this year, appear to want to seem more these will further squeeze small inventory is that their values are “June and July [2011] were making it exceptional among discrete and pragmatic, with the operators with just one or two simply too low to make them the busiest months that Ocean charter operators in Europe. o larger Gulfstream G450 that it aircraft. Hangar 8 maintains worth selling. “If they could Sky has ever had,” Hughes Special report continues on page 32 u

30 Aviation International News • October 2011 • www.ainonline.com FRACTIONAL that it invests in refreshing cabin correctly in recent years, the interiors. almost complete certainty that & CHARTER Charter cards provide access to the values will tumble and stag- light jets, such as the Hawker 400 nate. NetJets claims that until and the Cessna Citation Bravo, 2008 light jets were generally starting at €141,000 ($197,000) depreciating annually at rates of for 25 hours. For the burgeon- between 5 and 7 percent, while u Special report continued from page 30 ing Russian market, NetJets larger aircraft were holding their Europe introduced a split card values. But in today’s more aus- NetJets holds the fort in Europe, option through which custom- tere market conditions, the com- ers can have 15 hours per year on pany concedes that at the end of looks eastward for expansion a and 15 its standard five-year contracts, Jordan Hansell hours on a Hawker 800. Another aircraft are generally selling for NetJets Firms Up Plans by Charles Alcock new take on the concept was the 50 percent of their value. for China Expansion 10-hour card that it launched But for Williams, this is a glass NetJets Europe remains the equation, clients can now start with for hold- that is more half full than half One of Jordan Hansell’s only example of the all-American out with a mere one-thirty-sec- ers of the Centurion card. empty. “You still have complete tasks when he was president of concept of fractional ownership ond share in an aircraft for as lit- Today, the NetJets Europe liquidity,” she argued. “Even if NetJets was to explore expan- sion plans in the growing but successfully transplanted outside tle as $125,000, giving them 25 fleet consists of some 150 jets, the worst comes to the worst, still tiny Chinese business avia- the U.S. on any meaningful scale. flight hours per year. On top of serving about 1,600 clients in you can sell your share and in 90 tion market. Bringing fractional While enduring the same tough this, clients pay management and Europe. This represents modest days get your money back.” She jets to China is part of NetJets’s times as its cousins in the charter flight costs that collectively run growth over the 140 aircraft it claimed that new share clients 10-year strategic plan, some- sector, the company is at last turn- from €4,000 to €10,000 ($5,600 to operated in April 2008, before the have included former whole-air- thing that former chairman and ing a modest operating profit and $14,000) per occupied flight hour, effects of the last financial crisis craft owners who find fractional CEO David Sokol implemented. still claims to be growing. And it depending on the aircraft type. were fully appreciated. But new ownership less of a risk than Hansell, who became chairman might be preparing to spread its NetJets also now markets aircraft are on their way, includ- being fully exposed to an uncer- and CEO after Sokol departed wings farther afield, with plans to shares in pre-owned aircraft– ing a batch of Embraer Phenom tain aircraft value. in March, is also a dedicated take the concept into more east- quite a turnaround from the 300 light jets, as well as Bombar- Another change at NetJets proponent of long-range plan- erly continents. days when it made a great play dier Global 5000s and 6000s. Europe since a wholesale man- ning and is moving ahead with of how it offered only the most agement reshuffle two years ago steps that could eventually Options Beyond Fractional youthful of jets. This last move Customer Retention is more rigorous planning and see NetJets opening an opera- The impression given by is grounded in making a virtue Charter operators in Europe closer attention to cost control. tion in China. AIN asked Han- NetJets Europe sales director of a necessity, with older air- are forever claiming to be win- “The next phase for us is stabili- sell how the plans for China are Emily Williams is that the com- craft proving harder to sell on the ning business from NetJets clients zation in which we focus on deliv- shaping up. pany is older, wiser and per- open market. Nonetheless, it pro- who do not wish to renew their ering the best value for customers Do you still see a future in haps somewhat more humble vides clients with a more afford- agreements. Williams wouldn’t in terms of factors such as main- China for NetJets? and broad-minded than it has able entry to the fractional world. give specifics as to the compa- tenance, catering and new air- We think the Chinese market seemed in the past. She explained Light and midsize jets are ny’s client renewal rate, but did craft,” explained Williams. “We over time will be a robust one. to AIN how it has responded to now typically kept in the fleet say that generally there is more are more focused now on what As with all emerging markets, shifting customer needs by pro- for eight years and the average churn with card clients than with really matters to our customers.” it’s got some distance it needs viding a more varied mix of frac- age for these is now nearly six shareowners. This customer base now to go from an infrastructure tional share and block charter years. Larger-cabin aircraft now “We now have a dedicated extends to first-class frequent standpoint, from an operation- card options. are being retained for 10 to 12 team focused on retaining cus- fliers with German airline al maturity standpoint, but [it] On the fractional side of the years. In both cases, NetJets says tomers and we also have a dedi- Lufthansa. NetJets Europe is is and will be a large market cated commercial team to help once again providing lift for the and we think a large market customers look at the different carrier’s Lufthansa Private Jets for private aviation in partic- options,” she explained. “Overall, service, through which clients ular. So we’re building now we’re fairly happy with our renewal can book flights as if they were what we hope will be the infra- rates.” According to Williams, the scheduled services with regular structure that will allow us to NetJets sales pitch is now a far tickets and billing. take advantage of that over the more consultative process. NetJets Europe has been tap- longer term, much as we did in Europe several years ago. Another widely held objec- ping expansion of business avi- tion to fractional ownership is ation demand in Russia and its What steps would NetJets the uncertainty over how aircraft program also now extends into have to take? shares will retain value–or more North Africa and Lebanon. The first step, one must ob- Close by, it still has a joint-ven- tain the certificate to operate, ture interest in the NetJets Mid- have the proper personnel on dle East franchise, which is based the ground, train folks in the in Saudi Arabia. private aviation market and the The company–headquartered nature of our business, and be in London and with an operating prepared to provide the lev- el of service that we do else- base in Portugal–has a “ventures where. We’ll be developing unit” looking into establishing that market much as anyone a more permanent presence in would at this point. Russia and India. Separately, the NetJets team in the U.S. is prob- What about a timeline? ing prospects for bedding down I do have a timeline but I don’t fractional ownership in China– want to share it. almost certainly via a bridge- Have you moved assets head in Hong Kong that could into China? be established in 12 to 24 months We do have people in China from now. o and we have people going back and forth on a regular basis. Will NetJets be ready if things happen faster than we expect in China? NetJets keeps its large-cabin aircraft, such as the Falcon 2000, in its fleet for I hope you’re right, and I think 10 to 12 years, but it refreshes the cabin interior (Falcon 7X shown) periodically. we will. –M.T. Special report continues on page 34 u

32 Aviation International News • October 2011 • www.ainonline.comw FRACTIONAL businesses. Priester Aviation has Part 135 Certificate Holders at a Glance expanded its fleet into the New & CHARTER York area, and opened a sales Certificate Type Total and marketing office in New Air Carrier 1,733 Part 135 Operations Total York City. Also looking to the Operating 188 Commuter 48 Northeast for more business are (blank) 204 Solairus Aviation and JetFlite On-Demand 2,124 uSpecial report continued from page 32 International, a Long Beach, Grand Total 2,125 Grand Total 2,172 Calif.-based operator with a Firms find traction in a flat market fleet of 13 aircraft. Both, like Part 135 Basic and Single Pilot Operators Total Priester, have opened sales and Basic 14 CFR Part 135 Operator - Commuter and On-Demand Operations (A037) 3 by James Wynbrandt business development offices in Basic 14 CFR Part 135 Operator - On-Demand Operations Only (A038) 375 . Single Pilot-in-Command Operator (A039) 59 Air charter in the U.S. has for customers anywhere in the “Most of the operators are in been relatively flat over the world, vetting the aircraft and the LA area, and most [charter] Single Pilot Operator (A040) 631 past year, according to indus- crews and delivering the qual- brokers are in New York City,” Grand Total 1,068 try data. But it takes both win- ity and safety our customers said JetFlite International CEO Operations Safety System FAA Source: ners and losers to get that nice, count on us for.” To support its Bill Cripe. “We aim to bridge overseas. In April TAG Avi- Weymouth, Mass.-based Sen- even line. Numerous charter pro- domestic charter business, Pries- that gap.” ation Asia chose Priester as tient Jet, which does not operate viders report stellar growth in ter has also opened a new opera- A foothold in the North- its U.S. operating partner, its own fleet, acting instead as an bookings, flight hours and rev- tions center in Chicago. east also gives these companies enabling TAG to offer N-reg- uber-broker, continues to experi- enues (though not in profits in Vetting jet owners properly– access to international markets istered aircraft to its clients in ence “well over 20 percent year- this thin-margin environment) in not just their jets–is critical, where charter demand is more Asia. Europe, the Middle East over-year growth” in its jet card 2011. And while their fleet mix according to Andre Beringer, robust than in the U.S. JetFlite and South America are other and ad hoc charter business, said and size, service models, loca- executive vice president at Stu- International, which reports regions where Priester sees inter- CEO Marty Guinoo. “We’re the tions and much else may vary, art, Florida-based Fair Wind 10-percent growth in charter, national growth opportunities. single largest buyer of charter those on the plus side have pur- Air Charter. “When we look has also established an office To help manage the business, in the industry.” Guinoo cred- sued focused strategies that point at an aircraft coming on [our in Moscow this year, and Cripe Priester has brought an interna- its the increase in part to “strong to keys to growth in today’s chal- charter certificate], as much said that 54 percent of Jet- tional flight-handling specialist growth in the business segment” lenging charter market. as they’re interviewing us, I’m Flite’s business is now overseas. employed by one of the major returning to the skies, the sim- interviewing them. During the For the fall season, the com- flight handlers (Priester declined plicity and flexibility of its card Managed Fleets conversation I can say, ‘This is pany moved a GV, “a number to name the company) in house. product, and Sentient’s focus on Managed aircraft make up a good fit,’ or ‘You should go of GIVs” and a Challenger 601 safety, with a chief safety offi- the bulk of the charter fleet, someplace else.’” The approach to Moscow, according to Cripe. Point-to-Point Charter cer on staff guided by an inde- operated by the charter arms of helped the company, with a fleet The company has also brought The floating fleet, point-to- pendent safety advisory board. aircraft management compa- of 18 aircraft, have a record year dispatch and handling of its point model, which eliminates Guinoo also sees Sentient bene- nies. A successful charter oper- in 2010, and “right now we’re on international flights in house. the traditional round-trip pric- fitting from larger trends. “Cus- ation starts with good aircraft track to break those numbers,” “This gives us better relation- ing that gave many one-way tomers are moving away from management, with the aircraft Beringer said. ships ourselves with handlers, travelers sticker shock, contin- the aircraft ownership model, owner’s needs kept paramount. brokers, and different people ues to find favor in the mar- and they’re really migrating to But paying close attention New Locations on the ground in different coun- ketplace as practitioners hone charter-based solutions.” to charter clients can be just Extending their footprints is tries. More important than the their operations. Sentient’s 2010 purchase of as important. another route successful opera- savings is the control.” (DPJ) online charter broker OneSky “We value charter clients tors have pursued over the past Priester Aviation also reports president Jim Segrave reports has paid dividends in addition as much as we value airplane year in building their charter a significant increase in charters 50-percent revenue growth this to the site’s efficiency in “gen- owners,” said John King, pres- year for the Cincinnati-based erating leads and closing leads,” ident of three-year-old charter operator, owned by Delta Air Guinoo said. “We see more management company Solairus Charter Activity by the Numbers Lines. Segrave, who pioneered quotes, so we’ve been really Aviation in Petaluma, Calif. If you’re looking for comfort in the past year’s U.S. charter metrics, just the floating fleet (so named able to have a deep understand- Solairus also doubled its sales remember there are lies, damn lies and statistics. But as one veteran industry because the aircraft have no ing of what flying trends are staff and created a marketing insider said of the charter business, “Don’t quote me, but it sucks.” Added “home” base), joined DPJ (then going to be, and what custom- arm over the past year, help- Joe Moeggenberg, president and CEO of Argus, the aviation data and safety Delta Elite) when the com- ers are asking for. It’s a huge ing build the company’s charter auditing company, “We have not had a positive month increase [year over pany bought Segrave Aviation competitive advantage.” fleet, dominated by large-cabin in early 2010. Since then, DPJ’s year] in the charter market in the last ten months.” As of July, Part 135 (on Owned and Operated Fleets aircraft, from 16 to 26 aircraft. demand air taxi) activity was down more than 9 percent over the previous empty repositioning flights have TWC Aviation’s 25-percent declined to between 24 and 30 Most U.S. operators brand year. So when will things turn around? Even the experts admit ignorance. revenue growth over the past percent of all legs versus 40 to owned-and-operated (O&O) char- “I was anticipating frankly that by this time last year we would have been in year was also driven by “a large 45 percent before the acquisi- ter fleets an unprofitable proposi- double-digit increase, and it’s just not happened,” said Moeggenberg. Is there sales staff,” according to Paul tion. DPJ’s new $100,000 jet tion, but upstart O&Os have been Class, vice president for char- a bright spot? There are many of them. International air charter is showing card, featuring set hourly all- challenging that assumption. ters. The growth comes atop the signs of recovery. The Air Charter Guide reports a 10-percent increase in inclusive rates locked in for two XOJet of Carlsbad, Calif., increase from TWC’s acquisi- its site traffic, an indicator of intent to charter. And as the Charter Market years, choice of aircraft cate- with its O&O fleet of 30 Citation tion of ACM Aviation this past Report finds, even in this down market a number of charter providers are gory for each flight and perks Xs and Challenger 300s–and its year, which practically doubled finding ways to build their business and position themselves for spectacular including Dia- highly promoted transcon rates the company’s mostly large- increases in profitability when–not if–the long awaited turnaround arrives. n mond Medallion status, has as low as $19,000–reports its cabin charter fleet to 61 aircraft. doubled card membership since flight hours, charter bookings Based in Van Nuys, Calif., TWC Active U.S.-registered 2011 Charter Aircraft its introduction last summer. and revenues all increased by has a dedicated sales staff of 18 Charter Aircraft by Type Underpinning DPJ’s opera- more than 40 percent in the first Bizliners Very light jets across the country, five of them 2011 2010 tion is “an innovative manage- half of the year versus the same focused solely on developing ment contract,” Segrave said, period last year. And while other new business. Very light jets 60 37 that pays owners a flat hourly operators have trimmed payrolls Priester Aviation, based in Light jets 830 883 Heavy jets rate and gives DPJ greater con- and crew costs to maneuver Wheeling, Ill., has expanded Midsize jets 733 749 Light jets trol over its 52-aircraft charter through the downturn, XOJet its charter fleet to 38 aircraft Heavy jets 521 534 fleet. (Traditional management has increased its pilot pay. while bolstering charter reve- contracts give owners between “We’ve upgraded their nue by developing an in-house Bizliners 26 9 Midsize jets 10 and 15 percent of char- hotels, rental cars and per brokering capability, accord- Total 2,170 2,212 ter revenues.) DPJ wants to diems,” said CEO Blair ing to president and COO Andy Source: The Air Charter Guide add newer Citation XLs and LaCorte. “We felt like that was Priester. “We arrange charter Beechjets to its fleet. Continues on page 36 u

34 Aviation International News • October 2011 • www.ainonline.com FRACTIONAL Van Nuys and Las Vegas), to a peak ad hoc rate of $4,000 per Avinode’s Take on Charter Demand and Prices hour. Wilcox notes the Phe- & CHARTER 102 Avinode Price Index nom’s economics keep JetSuite’s costs low, giving it more pricing 100 latitude than competitors enjoy. 98 (Last fall JetBlue founder David uContinued from page 34 96 Neeleman and Acadia Partners bought JetSuite.) 94 the right investment. We expect stronghold into the Texas mar- Wholesale charter opera- 92 a higher level of service from ket, its efficiency aided by Astro tor the Travel Management 90 Global our pilots, and the way you get scheduling software from DayJet Company (TMC) reports flight 88 that is mutual respect.” Technology. Yes, that DayJet, the hours on its O&O fleet of 24 air- Europe XOJet has also issued iPads IT division spinoff of the bank- craft, primarily Hawker 400XPs 86 U.S. to all its pilots. “We can do rupted, would-be air-taxi com- and 800XPs are “way up, and 84 conferences face-to-face on the pany. “We’re their first jet clients,” it’s across the fleet,” according Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep road [with pilots],” LaCorte said CEO Alex Wilcox. The to general manager Scott Wise. 2009 2010 said. “If they can communicate software optimizes transporta- TMC plans to add at least four more effectively and efficiently, tion scheduling for fluid market 800XPs by year-end, yet has Avinode keeps tabs on the state of the market by generating forward-looking it makes things better for our capacity dynamics, and though reduced its pilot ranks. “We indices showing projected demand and prices over the coming 30-day customers.” designed for a per-seat air-taxi grew so fast, we were worried period, calculated from between 80,000 and 150,000 flight requests for up XOJet has introduced two charter, has proved adaptable to about keeping enough crews,” to 3,000 aircraft processed through its online portal, www.avinode.com, each new membership programs this JetSuite’s model. In August Jet- Wise said. “So we’ve taken a big year: Coast2Coast, providing Suite announced a partnership step back and leaned that out.” month. Figures produced for AIN in early September showed the demand guaranteed fleet access for trans- to provide Singapore Airlines’ TMC determined it didn’t need index averaging 15 to 25 points higher than in the equivalent periods in 2010. continental fliers; and Preferred passengers with seamless trans- a full complement of crews for Meanwhile, flight hour prices are still below levels charged before the 2008 Access, which offers a menu of portation to and from the air- all its aircraft since at least one financial crisis and, while they have generally recovered over the past 12 money-saving options for each line’s gateways in Los Angeles, jet is typically down for mainte- months, these gains are being undermined by rising operating costs. flight. XOJet plans to add four San Francisco and Houston on nance at any time. new Challenger 300s in coming discounted JetSuite flights. Noting that the 400XP can 300 Avinode Demand Index months, and has just completed A year ago Wilcox, a Jet- be outfitted with new engines by a new operations center. Blue Airways veteran, expressed Nextant and 250 JetSuite, with an O&O fleet befuddlement that the air charter (as can the 800XP through 2009 of 11 Embraer Phenom 100s, industry did not practice airline- Hawker), Wise said, “We’re 200 2010 reports 5-percent month-over- style yield management (con- about one-and-a-half years 2011 month revenue growth over stantly tweaking fares to reflect from our first engine overhauls, 150 the past year. Based in Irvine, changing market demand). Jet- so we’re now in the process of Calif., JetSuite has added five air- Suite is moving toward such deciding which direction we’ll 100 craft in that time and expanded pricing, with fares ranging from go in.” Like the other O&Os 50 beyond its Southern California a low set price of $999 (between profiled here, TMC is primar- ily a point-to-point provider, but 0 has “gotten aggressive in round Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Flight Time Part 135, 91, 91K trips,” and its percentage of such (August 2010 - July 2011) bookings has increased. are factored in. Whatever their that are on charter certificates 3 O&Os say their ability to future, the O&Os are bringing for sale, their values keep drop- completely control jets with- innovations to the charter mar- ping, and [the owners] are ask- 2.5 out concern for an owner’s ket that are having an impact far ing for charter rates that are needs is the key to their suc- beyond their own customer base. basically just covering costs,” 2 cess. Despite the revenue growth, said Joe Moeggenberg, presi- The Price of Charter 1.5 some traditional operators ques- dent and CEO of aviation data

Hours tion whether O&Os are profit- Charter pricing remains and safety auditing company 1 able when declines in the value under downward pressure. Argus. Rising fuel costs have of their aircraft, bought new, “There are so many airplanes also kept charter rates down. .5 Turbprop Midsize Operators are assessing fuel sur- Light Large charges, and in this price-sen- sitive environment, that added Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul cost has kept them from raising

Source: Argus International Source: base rates. Boston Minneapolis-based aircraft 2 management and charter oper- Top 10 Part 135 Routes – U.S. 3 ,4 ator Elliott Aviation checks August 2010 - July 2011 1 Westchester County fuel prices near its jets’ desti- 1,533 HPN-TEB nations. “If [customers] can 1,429 TEB-HPN fly into an airport a few miles 8 Teterboro 4 3 1 3 6 , 6 from their intended destina- , 2 2 1 1 3 7 , 6 tion, and can save two dollars , 2 1 a gallon, they don’t mind driv- ing an extra ten minutes to get where they need to be,” said sales manager Toby Batchel- der. Elliott, with 11 aircraft 689 1, from twin turboprops to mid- ,716 1 Las Vegas size jets in its fleet, has seen Van Nuys 406 revenues grow 5 to 7 percent 1, Palm Beach over the past year. Yet operators also acknowl- Los Angeles edge a countervailing trend that finds customers asking Continues on page 38 u Source: Argus International Source:

36 Aviation International News • October 2011 • www.ainonline.com FRACTIONAL are worked out with operators “We’re converting a lot of our capabilities for the flight crews, the retrofit,” but that rate of didn’t need it, more companies 30 days’ notice, so the com- and owners. Said Batchelder at manual systems into electronic according to the company; the conversion will not satisfy cur- are now encouraging owners pany is trying to find a way to Elliott, one of the operators that Total Part 135 Flight Activity systems and more efficient ways free Wi-Fi for customers was an rent market demand. to get Wi-Fi on board. DPJ is ensure it gets repaid for the & CHARTER provides lift for Sentient, “All of doing business to help keep added benefit. “We’ve been able The challenge for managed having discussions with owners equipment if an aircraft owner three partners sit down and dis- 90 costs down,” said Priester. to reduce maintenance costs fleets is that if owners don’t about sharing the cost of Wi-Fi cancels the management con- cuss what the expectations are” in DPJ has doubled the staff of by 3 percent,” said LaCorte. need the Wi-Fi themselves, any installation. Segrave notes that tract before DPJ recoups terms of pricing, scheduling and its already formidable IT depart- “We’ve made the airplane an resulting increase in charter with Delta Air Lines’ deal with its investment in the owner’s uContinued from page 36 hours guaranteed. Elliott itself ment, acquired with Segrave Avi- intelligent airplane.” ­revenue will not justify the cur- Aircell to install its Gogo Wi-Fi Wi-Fi system. o is seeking more aircraft for its ation, which is the tactical driver Priester notes that new rent $140,000 to $180,000 cost aboard Delta airliners, DPJ can for newer (2000 model year we’re attracting clients that are charter fleet, and owners would 80 of the floating fleet model. “It owners upgrading pre-owned of an installed system. Whereas get attractive rates on the Wi-Fi and later) aircraft, despite the frustrated with the airlines.” likely benefit from the company’s remains an incredibly important ­aircraft are “almost always previously management com- systems and installations. But premium. “The more sophis- arrangement with Sentient. part of how we buy fuel, plan installing satellite tv and Wi-Fi panies did not push owners to DPJ’s aircraft management con- ticated end users are seeing Guaranteeing Hours Priester Aviation will guaran- better and optimize operations,” technology as they go through install Wi-Fi if they otherwise tracts allow cancellation with it can’t all be about price, for Owners tee hours on Challenger 300s, late- said Segrave. DPJ is also imple- that not all airplanes and oper- In a sign of market stabil- model Cessna Citation XLs and Number of flights (in thousands) menting a new phone system that ators and crews and customer ity, operators are again offer- Sovereigns, and it provides lim- 70 will provide individualized num- Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul service are ­created equal,” ing guaranteed hours of charter ited guarantees on Encores and bers for customers, and will rec- said David Rimmer, president flight time, and thus revenue, to Embraer Phenom 100s “primar- August 2010-July 2011 August 2009-July 2010 ognize the caller and provide all

of ExcelAire, in Ronkonkoma,­ aircraft owners–for the right jet ily in Chicago-land Midwest and Argus International Source: his details to the customer service N.Y. ExcelAire has kept its in the right location–a practice northeast markets,” Priester said. rep who answers the phone. The fleet size to 15 aircraft–most most operators suspended dur- system “takes huge programming of them large-cabin jets–over ing the market downturn. Such Business Basics: Top 10 Part 135 Airports and investment,” Segrave said. the past year but has replaced guarantees extend across all Back Office and Marketing August 2010 - July 2011 a trio of older models on cabin sizes of later-model jets. When the charter market cra- 50 Social Media Efforts its charter certificate with JetFlite International is “abso- tered in the aftermath of the eco- Social media are also playing newer aircraft. lutely guaranteeing hours,” said nomic downturn, operators took a larger role in marketing efforts. A focus on value continues Cripe. He noted the company’s an axe to expenses, grounding 40 JetSuite posts a Suite Deal every to keep per-seat charter alive. G200 flew 100 hours in July, nor- older aircraft, cutting payrolls afternoon on Facebook, alert- While some start-ups have mally a slow month. “A Hawker and curbing expenditures. With 30 ing its 7,000 Facebook friends of folded, per-seat broker pioneer 850XP in nice condition would those costs under control, pro- empty-leg flights for $499 the fol- Greenjets of West Palm Beach, guarantee 40 hours,” Cripe said. viders are focusing on business 20 lowing day. “Most days we have Fla., now offers its shared char- Sentient is guaranteeing any- basics: investing in back-office two or three” Suite Deals, Wil- ter service in eight markets and where from 150 to more than upgrades and new marketing 10 cox said. “People try it for the arranges 200 flights per month, 600 hours per year “primarily in efforts. The goal: deliver long- Number of flights (in thousands) first time and come back again.” said CEO and founder Dean the light and midsize categories,” term cost benefits via reduced Los Angeles-based charter Rochin. “I don’t think we’re said Guinoo. The arrangements operating costs, increased effi- TEB MIA HPN HOU APA VNY IAD PBI DAL MDW broker Air Royale International,

cannibalizing charter; I think to join the “Preferred network” ciencies and increased revenues. Argus International Source: which reports a 22-percent increase in charter activity, has also gone to social media to pro- mote one-way availabilities. “We’ve been aggressive using social media tactics to educate consumers about the benefits of empty legs,” said president and CEO Wayne Rizzi, who notes a large increase in its U.S. trans- con bookings. “We have several Twitter accounts and use other various social media tactics, including having a new blog, an overhaul of our website and hir- ing two online flight planners.”

Wi-Fi Onboard Business aircraft are touted as the ultimate productivity tool, and Wi-Fi is essential to pro- ductivity in the air. Demand for onboard Wi-Fi continues to grow, particularly now that travelers can access the Internet on airlin- ers. In the charter market, XOJet has promoted its all-Wi-Fi- enabled fleet heavily. Moreover, the XOJet fleet is also accessi- ble to charter brokers, some of whom have marketing partner- ships with XOJet that allow them to advertise Wi-Fi-enabled fleets, further pushing requests. “Wi-Fi plays a huge part in aircraft demand,” said Class of TWC Aviation. “Airplanes with Wi-Fi are highly sought after, and they are not in great abundance.” XOJet equipped its fleet with Wi-Fi to enhance operational efficiencies and communication

38 Aviation International News • October 2011 • www.ainonline.com www.ainonline.com • October 2011 • Aviation International News 39