Over the past four months, personal travel has helped the private aviation industry move from a nearly 80% drop in April to within 20% of pre-COVID-19 flight levels.
Those discretionary flights have been a combination of existing customers, first-timers, and returning users. For the latter, think retired CEOs and business owners who are in the high-risk age demographic, but previously didn’t see the value of extra cost versus time savings and convenience.
Of course, those who benefit most from private flights are business travelers who absolutely, positively have to be there, something that’s harder than ever to accomplish flying the airlines.
And then of course there is the risk, both to employees and customers, partners, or whomever else you are flying to visit. As you have probably heard by now, door-to-door, private flights have less than 20 touch points. That compares to over 700 possible opportunities to come in contact with somebody who has the deadly coronavirus when you add fellow passengers in a cramped airliner and those who will be less than six feet away transiting passenger terminals. Private jets use FBOs with lowly trafficked lounges dedicated for customers. In some cases, you can even drive to your plane.
All of the above has meant more companies are looking at private aviation. Executives from several of the biggest players in the market have said they are seeing increased queries related to business travel.
Megan Wolf, COO of Flexjet, told Bloomberg Markets TV, “What we’re seeing is some business travel is coming to the private jet industry that would normally have been in the commercial world because there is confidence in flying with us.”
NetJets’ president Patrick Gallagher said existing clients have been calling to ask about buying more hours or adding executives to the roster of who has access to their company’s program.
Jet Linx Aviation, one of the industry’s largest management companies, launched a new jet card dedicated to the corporate travel market in August. It offers shorter lead-times for booking, the ability to guarantee WiFi, and an unlimited number of employees who can access your access. It also enables you to charter up to four private jets per day at your contracted rate. The company even has its own private terminals just for its customers in the 19 markets it serves.
One benefit of private jets that seems particularly attractive right now is the ability to fly out and back the same day, thus lessening the need to stay overnight, and further reducing COVID-19 contact risk.
So, if you are looking into using private travel to keep your business humming in these challenging times, here are a few tips on variables you should compare that are important than just looking at price.
Fixed One-Way Rates
Most jet cards and fractional share ownership plans give you a contracted hourly rate based on occupied flight hours. That means you are only charged for when you are flying in the airplane. In other words, you don’t have to pay the cost of repositioning flights before or after your trip. These rates apply in what’s called the PSA, or primary service area, so check to make sure where you are flying is covered. Most programs are national in scope and some include Canada, Mexico, Europe and even places beyond.
Guaranteed Availability vs. As Available
Guaranteed availability means that so long as you call to book before the contractual deadline, you get an airplane. As available, means you get a plane, if the aircraft is available when you call. If you are making reservations within a few days or your trip, you will want a program with guaranteed availability. Most, but not all jet card and fractional programs offer both guaranteed availability and fixed-one-way rates, so read the fine print.
Booking and Cancellation Terms
If you book charters on-demand, or one-by-one, the terms of each booking are going to be different, particularly when it comes to how far in advance you need to cancel to avoid penalties.
Some jet cards and fractional ownership programs give you the ability to book at your contracted rate with as little as four hours notice and the ability to cancel without penalty inside of 10 hours.
If your travel plans tend to change, something more likely than ever with the current situation, or you have trips that come up at the last minute, this can be much more important that lowest hourly rate.
Segment and Daily Minimums
Segment and daily minimums refer to the the minimum amount of time you will be charged, even if your flight is shorter. NetJets recently waived minimums on several of its aircraft. However, minimums typically range from 60 to 180 minutes, depending on provider and size of jet. Make sure your typical flights are longer than the minimums. If you make a lot of 45-minute flights and your program minimum is 90-minutes, you will be charged 90 minutes for those flights. It’s one reason just looking at hourly rates on a website won’t necessarily allow you to accurately compare pricing.
On peak days, some providers have surcharges up to 40%, while other don’t have any. All have longer windows for booking and cancelation. Most providers have the right to move your requested departure time up to three hours in either direction, something that can put a crimp in your plans. Some programs don’t have peak days while others have 50 or more.
Unlike the airlines, not all private jets offer WiFi as a guaranteed inclusion. If you charter on-demand, and WiFi is not part of your contract, be prepared to get a bill afterwards. If inflight connectivity is important, you will want to target providers that include it as part of your agreement.
Some jet cards give roundtrip discounts of up to 40% on published rates. These discounts are meant to make them price competitive with operators at your local airport. The most efficient trip for an operator is one where they can use the same crew and aircraft to fly you out and back.
The rule of thumb in terms of qualifying for a roundtrip discount is to average at least two billable flight hours per day. That means a same day trip where the outbound and return flights are at least 60 minutes each way. At the same time, if you have a five-day trip where you have a four hour flight, a two hour flight, and then another four hour flight returning to the airport you started, that’s 10 hours and should gain savings.
Keep in mind Part 135 flights, the FAA regulation governing jet cards and on-demand charters, limit your pilots to a duty time of 14 hours per day. That means for your single day and multi-city trips, you have to start and begin within that period or sometimes less, based on operational factors.
Long Flight Discounts
Some providers offer discounts for flights over three or four hours, and several have rate caps or fixed rates for longer flights. XO has a 3.5-hour rate cap on its Challenger 300s and Citation Xs, which have a nonstop range of about six hours. Directional Aviation’s FXAIR and Sentient Jet offer a fixed-rate of $31,900 on super midsize nonstop cross-country flights starting or ending in any U.S. state that touches the Atlantic or Pacific.
A big benefit of jet cards and fractional ownership is when there is a last-minute mechanical or a pilot gets sick, your provider has to find a replacement aircraft at their expense.
With on-demand charter, the operator or broker will try to find you replacement options, which late in the game are often considerably more expensive. If you want to travel, you have to pay the difference.
That said, how quickly the provider can get you a replacement aircraft will vary, in part depending on where you are flying from. If you are departing a major market like New York, South Florida or Los Angeles, there are likely more possible replacement aircraft nearby. Larger operators or brokers likely have an edge here.
A lead passenger is somebody designated by the buyer who needs to be on the flight. Whoever else is on the plane is up to you. Therefore, you will want to find out how many lead passengers can be named to your account.
Multiple Same-Day Aircraft
Some programs will guarantee the ability to arrange flights on multiple aircraft in the same day based on your contracted rates and terms. If you think you will have multiple teams traveling at the same time, this is a critical feature.
If you will be doing a lot of winter weather flying, deicing can add up. Charges range widely based on size of your private jet – larger aircraft require more deicing product – and the airport. Each airport has its own rules and regulations about the types of products that can be used and where on the field it has to be done. Think somewhere between $1,000 and $10,000 per incidence.
Quite a few programs include deicing. Magellan Jets recently added the option to pay extra for deicing insurance when joining.
Buy Now, Fly FET Free in 2021 and Beyond
The CARES Act provided a boost to the hard hit aviation industry. As part of the legislation, commercial flights, which includes Part 135, booked and paid for before year’s end, are not subject to the 7.5% Federal Excise Tax. That’s true even if you fly after it goes back into effect January 1, 2021.
A growing number of jet card providers are saying if you buy now, so long as you have funds in your account or until the card expires, you will fly FET free. The IRS issued guidance back in 2015, however, lawyers are right now racking up billable hours advising providers about how their cards need to be structured so as not to run afoul of the taxman.
It appears there is a low probability the government will go after you. That doesn’t mean your provider can’t. John Hoover, an aviation attorney with Holland & Knight, LLP, says he’s advising his operator and broker clients to write their contracts so they have the right to come back to you should the IRS deem their program’s structure didn’t meet its undefined criteria.
Protecting Your Money
The recent bankruptcy by JetSuite left nearly 900 of its SuiteKey jet card customers out more than $50 million. The company had high-profile backers, including JetBlue and Qatar Airways. Netflix, a corporate client, had close to $1 million in unused flight credits at the time of its bankruptcy.
The best way to protect your funds is via providers that offer an escrow account. A number of the largest operators don’t. In those instances, you need to assess the financial stability of the company you are wiring your money to. Some will allow you to break up payments. Another option is pay-as-you-go programs, where you pay a joining fee, but you don’t pay for your flights until you book them.
Health Safety Protocols
Virtually all providers have increased cleaning procedures and instituted social distancing measures. For operators, they have direct control over the aircraft in their fleets.
Nicholas J. Correnti, CEO Nicholas Air, an operator with a popular jet card program, says, “Even pre-pandemic, we had a division of our company that was dedicated solely to ensuring our aircraft are detailed frequently by way of mobile units that crisscross the country every day.”
With brokers, ask about what procedures they’ve implemented to ensure the operators they are using are following best practices. Sentient Jet, a broker, has been providing kits that enable flight pilots to report blood pressure and temperature. They’ve also mandated the same anti-bacterial treatments used by Flexjet, a sister company, on its fleet.