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Aerial Combat
Michelle Seaton
08/01/06
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Arrangements like this give the charter industry a substantial competitive
advantage over fractional companies that manage their own fleets. According to
Gil Wolin of TAG Aviation, a global aircraft charter service based in
Burlingame, Calif., 80 percent of jets owned by companies and private
individuals are managed by a third party who makes them available to charter.
Aviation companies, such as NetJets, CitationShares and FlexJet, which own huge
aircraft fleets, must price their flights to make money. By contrast, individual
companies that own one or two jets view these planes as cost centers rather than
revenue centers. When these companies make an aircraft available for charter,
they generally can price it below the market, just as a way of defraying the
cost of maintaining it. Wolin says charter companies booking these aircraft make
their money from management fees and do not need to make a huge margin on any
individual flight, so the flights can be offered at lower all-in costs to
travelers.
Brokers Ascending
Several charter brokers have
decided to market themselves as quasi-fractional companies, despite their not
owning the planes on which they sell hours. The most innovative of these is
Weymouth, Mass.-based Sentient, which has assembled a national network of
charter operators from which it has bought tracts of flight time at wholesale
prices.
Instead of buying a set number of hours on a particular aircraft,
customers pay up to $250,000 for what Sentient calls a membership, but what is
really access to its scheduling service. Sentient members then book trips on
light, medium or heavy jets. Cost of flight time and fees are deducted from the
membership fee.
According to Stephen Maloney of Aviation Management Systems,
a Portsmouth, N.H., consulting company that advises buyers on private flight
options, Sentient hours cost a bit more than those of the typical charter
company. (A light jet, he reports, costs a minimum $2,500 per hour, but can cost
as much as $4,050 per hour plus standard fees for fuel, taxes and taxi time.)
However, customers benefit from Sentient’s reach: With so many operators in its
network, it can have planes available anywhere in the country in 10 hours.
Although Sentient will not release sales or membership figures, it does
claim that membership has increased by 60 percent in the past 12 months. This
success comes from the explosive growth of private aviation in general, but also
because charter companies have finally begun to address persistent concerns
about the safety of the industry. (See “Safe Travels”)
The success
of Sentient’s model has spawned similar services, including Blue Star and
JetNetwork, based in Miami. Jets International, a Quincy, Mass., company that
was once called CharterAuction.com, is a broker that books flights online. This
service offers charter companies a way to sell their deadhead flights
(repositioning flights flown without passengers), which would otherwise bring in
little revenue.
With Jets International, cardholders who have prepaid up to
$500,000 in flight time can log onto the website and post a proposed flight
plan. Charter operators who need to move airplanes along those routes bid on the
flight in a real-time reverse auction. Cardholders can then choose the operator
that offers the best price, or they can choose based on safety records and other
operator information provided on the site. Finally, Jets International checks
the trip, jet and crew against safety standards set by Aviation Research
Group/US, a Cincinnati service that rates charter providers.
According to
Jets International CEO Nate McKelvey, the service offers competitive pricing on
a per-flight basis and allows customers to choose their actual aircraft. They
can even see inside some aircraft before making a choice.
Michelle Seaton is a private pilot and a senior correspondent for Worth. Additional Information
 Safe Travels
Turbulent Times
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