Busy executives are finding the skies friendlier on private business aircraft

Global Finance, Dec 2001 by Green, Paula L

"You figure that an executive or mid-manager has to produce three times their annual income in sales to serve their company well," says Zimmerman, whose Wichita, Kansas firm monitors data in the international civil aviation industry. "Time is money."

If a company's executives are flying 300 hours or less per year, then fractional ownership or a charter arrangement is more cost-effective. "It still gives you the knowledge that a plane is available when you need it, with a minimum amount of fuss," says Zimmerman. He agrees that the terrorist attacks have generated more interest in business aircraft as corporations worry about the safety of their employees.

"The demand for fractional ownership is going like gangbusters," says Zimmerman. "Since September 11 corporations are putting their toe in the water and buying a piece of an airplane. It's like a condo share:You get an airplane for X number of hours per year.And with a fractional ownership, you have the comfort of knowing the crew and the airplane."

Fractional Ownership Growth

Although first developed in the mid- 980s, the fractional ownership concept didn't gain popularity until a decade later as financing arrangements became available and more corporations depended on business travel to keep their sales expanding. During this same period, the commercial airline industry became increasingly troublesome as airports became more crowded, departure delays occurred more frequently and business-class fares increased.

"I expect that companies and well-to-do individuals will continue to use business aircraft because of the time and hassle and personal safety issues associated with commercial aircraft," says Daniel M. Kaspar, managing director and head of the transportation practice in the Cambridge, Massachusetts, office of LECG Consulting, an economic consulting group based in San Francisco. "The main selling point of these packages is that you can fly when you want and where you want with less hassle and more securely."

Kaspar says the economic slowdown might make corporations more likely to choose charter arrangements or fractional ownership than invest in such costly capital equipment as aircraft.

While ownership means a corporation has an asset they can sell when they no longer want the aircraft, ownership also means the responsibility of maintaining the aircraft and associated costs such as fuel and insurance.

"It's also putting some money up front-tying up money-which you don't have to do with commercial airfares," says Kaspar.

For companies that don't even want to put up the smaller capital investment associated with a fractional ownership, charter service companies offer viable alternatives. FlightTime's Freedom Plan, for example, lets a client pay a membership fee and then book the number of hours needed for a year on a specific category of aircraft. In any case, whether through ownership, leasing, fractional ownership, or charter services, flying on a business aircraft is becoming an increasingly important tool for harried executives.