Are corporate aircraft charters a commercial imperative or pure self-indulgence?
Business aviation still has a perception problem. Seen by critics as a flagrant self-indulgence designed to boost executive egos, it is pilloried (or expected to be) to the point where companies that use it keep quiet about it. The realities, however, are different. Business aviation in Europe serves 25,280 city or area pairs not connected by point-to-point commercial flights. As these represent 31 per cent of total city pairs analysed, nearly one connection in three would not exist without business aviation, according to the European Business Aviation Association (EBAA).
In addition, across all European point-to-point flight routes, business aviation flights save an average of 127 minutes, when compared with the fastest commercial transport alternative. Factor in the value of the time saved by checking in just before take-off and the flexibility to return as required, calculated on executive salaries, the commercial imperative is evident.
BBT talks to an entrepreneur, a TMC and a consultant about use of chartered flights. Is there a sound business case or is it just toys for the boys? Our experts share their opinions on private aviation’s role, impact and effectiveness.
The entrepreneur – Peter de Savary, international entrepreneur and hotelier
The reason for using aircraft charter falls into two categories: pleasure and convenience, and business efficiency. It is more difficult these days to fly commercially than it used to be: delays at the airport, so many people travelling, security, weather, checking in so far in advance. The use of chartered flights is time-saving, less frustrating and less stressful.
Commercial travel is a hassle and is often not convenient, as departures do not allow you to fit two meetings in a day, so you have to stay overnight. With a chartered flight, you can leave and come back when you want, which allows you to pack in a lot more work and to avoid staying overnight.
Milan is a good example. If you want to have a meeting in the morning, have lunch with somebody and have a meeting in the afternoon, it’s quite a stretch to do that in a day and be ready for work the next morning, especially if you don’t live close to a major UK airport. In a private plane, you don’t have to get to the airport two hours beforehand; with a 7am take-off, you can arrive at 6.45am. You land at around 9am in Milan, you have the whole morning in front of you, then lunch and afternoon meetings, and by 5pm you can get back on the aircraft. You’ve done a full day’s work and can get home in time for dinner, see your family and be fit for work the next morning.
In addition, if you are going to places that are far from a major airport, with a chartered flight you can head for one of the smaller airports, which have immigration and customs facilities, and avoid the extra travel.
The cost has come down with the new generation of lighter, smaller jets, which are ideal when there are only two or three of you travelling. Furthermore, you can talk freely, whereas on a commercial airline, you are unlikely to discuss confidential matters when people sitting in front and behind can overhear you. I still use jet charter for business and find it very effective.
The Travel Management Company: An agency which manages business travel for a company. – Adam Knights, managing director, ATPI
Corporate jet hire is expensive and whatever people say about it being “affordable” normally depends on their perspective. The economic climate in recent years has pushed executives of all companies to look at travel policy and associated expenses very carefully. In this economic environment, travelling in a corporate jet now requires a significant justification in terms of ROI.
We book corporate jets when senior executives need to be in a number of places over a relatively short period of time, often when a deal is being completed or they are attending a series of meetings in different countries. In that case, particularly if the locations are outside large traditional airport destinations, a corporate jet might become a viable option. Typically, we find that this type of booking is of an ad hoc nature and there is rarely a written policy for such a requirement.
There are cheaper options for corporate jet hire, for example when charter companies advertise seats on an empty leg at heavily discounted rates, making it highly competitive. However, these are rarely taken by executives because the rationale for using jet charter normally involves a return journey. We believe this market could represent a cost-effective alternative for senior executives in a managed programme who would normally be authorised to travel business class. In our experience though, executives are generally happier to maximise their frequent flyer points and like the routine of their standard programme.
We book corporate jets in the superyacht and sports sectors and for high-net worth individuals in the leisure sector. Typically, people in these categories use corporate jets for privacy or for logistical benefits.
For example, domestic football teams increasingly use them in the UK. Previously, they might have used a coach, but a private plane is worth the premium because players get home earlier and fresher, and are able to play at their best a few days later. This has been driven by an increase in mid-week games and competitions, adding to the pressures on time.
The consultant – Chris Pouney, director, Severnside Consulting
Aircraft charter might conjure up images of executives swilling champagne and having a very comfortable journey as they zip to where they need to be – and I’m sure elements of that exist – but generally, the reality is very different.
Sports teams and clubs need to charter aircraft for the comfort, security and safety of their players, and they are flying to places that don’t have commercial routes. In Africa, you might take a view because of the perceived safety and security of carriers on a certain route, or there might not be a scheduled flight and the alternative might be driving hundreds of miles on unpaved roads.
If you buy scheduled airline tickets for five or six executives and weigh that against chartering, in certain conditions, hiring a private aircraft could make more financial sense, particularly when you factor in time and productivity, flying to smaller airports and being able to delay flights in line with extended meetings.
I have worked with companies that increase the cost efficiency of aircraft charter with the number of people on a plane, where they have a large requirement; reducing the number of suppliers can also drive down cost, and you can challenge the airports you use. I did a project where the requirement was to fly from Cardiff but there aren’t many private charter aircraft operating there, so the recommendation was to hop over the water to Bristol, where many more are based. Adding 20 minutes to the front of the trip saved a lot of money because they didn’t have to reposition a plane. Good procurement practices should not stop just because it’s aircraft charter.
In the US, private charter is more commonplace because distances are huge and lots of people are travelling between non-hub airports, so the cost of flying aircraft in the States is lower.
But the perception doesn’t go away and the industry struggles with that – the man on the street thinks it is something glitzy and glamorous, whereas nine out of ten times it is a business tool.