Corporate jets save time and money

Latin Trade, April, 2004

Orders for new corporate aircraft are increasing as businesses worldwide are experiencing the benefits of control over executive air travel time in an improved global economy.

About 7,815 new business jets valued in total at US$123.5 billion will likely be delivered between 2001 and 2010, according to the General Aviation Manufacturers Association (GAMA). The group is a trade association representing approximately 50 manufacturers of general aviation aircraft, engines, avionics and related equipment worldwide.

Business jet operations at large airports throughout the United States increased in 2003, according to the Federal Aviation Administration, while fractional ownership of airplanes throughout the world also lifted during the year by nearly 7%.

The total number of corporate jet operators worldwide also rose in 2003 by about 4.3%, according to industry research group AvDataInc. At the end of 2003 there were 14,555 corporate jets operators in the world utilizing a fleet of 23,121 aircraft. In the United States alone, there were 10,661 operators utilizing a fleet of 15,870 aircraft by the end of 2003.

One reason for the increase is an improved global economy, which is considered by the aviation manufacturing industry to be the largest driver of sales. Manufacturers expect 2004 to be a year of stabilization that sets the stage for a period of sustained growth.

An improved global economy is particularly important for sales of corporate jets in Latin America, however the impact of that expected improvement would take a longer time to be felt in the region, according to Carlos R Horan, sales director of Latin America for Boeing Business Jets.

"We are anticipating an increase in activity, although it will come a bit slower than in some other areas throughout the world," he said. "We have already begun to receive a lot more inquiries about replacing planes from companies in Latin America whose planes are from six to eight years old. Of primary importance to these companies are space, comfort and range."

Boeing Business Jets, which is a joint venture of the Boeing Company and the General Electric Company, offers the BBJ and the BBJ 2 business jets--both of which are designed for longer-range flights of around 5,000 to 6,000 nautical miles.

Companies with business interests in Latin America are faced with the challenge of frequently moving senior management while improving productivity. These combined issues make corporate jets a particularly sensible investment, according to officials at Embraer (Empresa Brasileira de Aeronautica S.A.).

Embraer is one of Brazil's leading export companies and a major aerospace corporation with 34 years of experience in designing, developing, manufacturing, selling and providing after sales support to aircraft for the global airline, defense and corporate markets.

The company has specifically designed a new concept for business jets with its Legacy Executive, Legacy Shuttle and Legacy Shuttle HC--all created to meet executive needs for top performance, conservative investment, luxury and common sense.

The Legacy Executive provides first-class comfort for up to 16 passengers in a spacious cabin, offering privacy in three distinct seating areas. The plush interior features full-berthing leather seats and divan where up to seven passengers may lie asleep. It also features tables for business meetings and meals, hot and cold food galley, full-breadth aft lavatory and optional forward lavatory, wardrobe and storage cabinets, full entertainment system, and satellite telecommunications. The baggage compartment, the largest in the industry, is easily accessible during flights.

The Legacy Shuttle carries up to 19 passengers in business-class comfort or as many as 37 passengers in the superior airline-type interior of the Legacy Shuttle HC. Both Shuttle versions offer convenient in-flight access to a generous baggage compartment.

As corporations expand across countries and continents, controlling the rising costs of corporate travel becomes critical to a sustainable growth plan, Embraer officials said. The group's Legacy Executive, Shuttle and Shuttle HC require only a conservative level of investment and have some of the lowest operating costs in the industry.

Turmoil in the commercial airline industry is also currently a factor in making corporate jets increasingly more desirable to companies worldwide, according to Paul Nisbet, an aerospace analyst at JSA Research in Washington D.C.

"The increased amount of time it takes to fly on commercial airlines is a macro trend that we believe will drive aviations sales in the future," said Clay Jones, chairman of the GAMA. "Traffic to and from congested airports, long check-in and/or security lines, reductions in flight frequencies and the elimination of service to many smaller communities are all combining to make it more difficult for people to rely on commercial airlines to meet their need for time sensitive travel."

Private jet users typically fly to business aviation airports or terminals, where check-in, customs, security and baggage handling times are much shorter than those experienced by commercial air travelers at main international airports.