CEO Guide to Private Jet Travel

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The huge disrepancies between commercial and private flying from an experience and all-in cost perspective have already motivated tens of thousands of companies around the world to embrace the advantages offered by business aircraft. At the same time, the sheer number and variety of options available—charters, jet cards, membership programs, fractional ownership and hybrids of all of the above— can be overwhelming.

Here’s a guide to the wide range of private aviation options and inventive companies that are changing the business-travel landscape.

THE INS AND OUTS OF CHARTER TRAVEL
Charter is one of the easiest ways to gain business and private aircraft benefits. You book the airplane, not the seat, so six or eight can travel for the same price. There are no long-term commitments, capital investments, flight-hour quotas or ongoing obligations. You fly as little or as much as you like, and you pay only when you fly. You arrive at a local airport 10 minutes before departure, board the plane and take off on your schedule, not an airline’s. You can fly halfway across the country, have meetings in three cities and still be home with the family that night. But, charter also has a downside. Not all charter is equal, and the scale ranges from superb to perilous.

The FAA charter regulations are bare minimums, so look to charter companies that integrate professional training, operations and maintenance programs that far surpass FAA requirements. These companies receive the highest safety ratings from independent auditing firms such as ARGUS, Wyvern or the Air Charter Safety Foundation. According to Francine Brasseur, associate publisher of the Air Charter Guide, the worldwide charter print and online publication, there are approximately 1,065 charter operators in the U.S., but only 418 have had an ARGUS audit. Less than one-quarter of those qualify for the ARGUS Platinum safety rating, which is considered the most exacting standard in the industry.

“Charter is one of the easiest ways to gain business and private aircraft benefits. There are no long-term commitments, capital investments, flight-hour quotas or ongoing obligations.

Typically, charter requires a same or next-day return. If you stay longer, you will still pay the round-trip price for the one-way trip because the plane needs to return to its home base. What’s more, if you depart from an airport other than the plane’s home base, you’ll also pay repositioning fees.

There is a consistency factor as well. Most charter companies do not own their aircraft. Instead, they manage aircraft owned by individuals or large corporations that make their planes available for charter when they are otherwise not required. That means the Falcon Jet or Learjet that you fly today could be different in age and looks compared to the same model you fly tomorrow. Also, the flight-hour rate for the same model could vary from place-to-place or day-to-day. Furthermore, charter flights are not guaranteed, so you could learn on short notice that your aircraft is no longer available and a more costly one is substituted or the trip is cancelled entirely.

THE FRACTIONAL ADVANTAGE
Fractional ownership brought consistent pricing and quality, guaranteed availability plus an exemplary level of professionalism to the world of private jet travel. Why buy an entire airplane when all you want are the benefits an airplane can provide and for just part of the time? Fractional ownership made that possible.

With fractional ownership, your plane (or one exactly like it), is only a phone call away and guaranteed available anytime, anywhere you need it. If you need a plane for only 50 or 100 hours a year, you pay one-sixteenth (50 hours) or one-eighth (100 hours) of the whole aircraft price, plus a fixed monthly management fee to cover crews, maintenance, insurance, hangarage, etc. In addition, you pay a fixed per-flight-hour charge, but it applies only for the time you are on board.

There are no positioning fees or empty return flight charges, and you can choose a larger or smaller aircraft depending on trip requirements—so you gain an entire fleet for a fraction of the price of a single airplane.

“At the end of the five-year contract, the fractional company buys back your investment at fair market value.”

At the end of the five-year contract, the fractional company buys back your investment at “fair market value.” For Mace Pinchal, founder and chairman of Houston-based private investment firm Pinchal and Company, switching from full ownership to fractional offered a double benefit. Gone were concerns over insurance, hangarage, crews and maintenance.

“I quickly realized that with a fractional share I could eliminate a lot of that responsibility. It’s a fraction of what my capital cost would be, and I have all the benefits of owning my own aircraft.” He can also select an aircraft in the fleet best suited for the specific trip. “When I owned my own airplane, that option wasn’t available unless I wanted to charter, go commercially or just flat out cancel my plans.”

JET CARDS
Jet cards, available in dollar or flight-hour amounts, require an initial deposit and operate like debit cards. They eliminate the large capital investment, long-term commitment, monthly management fees and market risk that fractional owners face, but, like fractional ownership, they offer consistent, nationwide one-way pricing and guaranteed availability.

Most fractional companies offer jet cards in 25-hour increments, while charter jet cards are typically dollar-based. You choose the aircraft model desired for each trip, and the contracted flight charges are deducted as you fly. Hourly pricing for occupied hours in each aircraft type remains the same nationwide.

Like fractional ownership, there are no return-flight or repositioning costs, but jet card hourly rates are higher than fractional or charter. Jet card buyers are willing to pay that premium in exchange for convenience and flexibility. Unused balances are typically refundable, and when your balance runs out, you walk away without further obligation.

“With a jet card, I know what I am going to get.

David Thorson, CEO of California-based Thorson Specialty Insurance Company, tried both private jet ownership and charter before deciding that a jet card suited his unpredictable schedule, desire for consistent service and safety and the uncertain economic climate.

“With a jet card, I know what I am going to get,” he says. “I can get a bigger plane when I need it.” He can take as many as six associates to visit multiple clients and assess new opportunities in a day. When his card runs out, he can buy another or not, depending on current needs.

MAKING THE MOST OF MEMBERSHIP PROGRAMS
Membership programs typically require an annual non-refundable membership fee, which entitles members to access a particular aircraft type or group (small, midsize or large cabin) for an agreed upon number of flight hours per year. Members can purchase pre-paid, flight-hour cards that allow them to fly at a fixed hourly rate until the card balance runs out. Then, if desired, they can purchase another card up to the limit of their membership hour allocation. If membership provides 75 hours annually, for example, buyers are entitled to as many as three 25-hour cards. There are variations from operator to operator, but the membership fee is an additional expense on top of the individual, per-hour flight charge.

Sidebar: Innovative Companies Offer a New Way to Travel

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Mark Patiky
Mark Patiky’s aviation background spans four decades including writing and editing for more than a dozen international and U.S. aviation publications as well as Fortune, Forbes, ForbesBusinessAviation.com and Business Aviation Voice on Forbes.com. He has written a book on investing in Star Wars technology and currently owns and flies his own airplane, which he uses extensively for business.

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