PracticeAccounting FirmsBusiness travel: join the jet set

Business travel: join the jet set

Economic turbulence hasn’t hit demand for private jet hire

Private aviation has traditionally been seen as the preserve of the super
rich, or, at best, an occasional perk for the top echelons of executive.
Clearly, under such circumstances, private flights were expenses to be presented
to only the most accommodating FDs, as invaluable as these journeys may well
have been.

But fundamental changes are afoot that are throwing the doors of business
aviation open to a wider range of clients. Despite rising fuel prices, airline
failures and the onset of recession, there has been a boom in the sector that
looks set to continue largely unaltered. While business class-only airlines like
Silverjet, Eos and MAXjet may have foundered, the dynamics governing demand for
business jet travel in Europe appear different, and they are leading to a
long-term change in how many companies move their people.

In 2007, the number of business jets delivered worldwide passed 1,000 for the
first time. Many aviation experts believe that the industry will remain in a
high gear going forward – perhaps less so than prior to the economic downturn,
but still at historically high levels of production. Only last month, respected
industry analysts The Teal Group predicted that over 13,000 business jets will
be built and delivered between 2008 and 2012 – a $200bn (£126bn) order book.

Long gone are the days when millionaires and celebrities were the only
passengers. Today, we see an increasing democratisation through which business
jet use is determined far more by need than status.

Companies are springing up to serve not only major multinationals but also
mid-sized firms, with passengers now ranging from board level executives all the
way down to junior accountants.

The recent boom is the result of several factors. At its heart lies the
tension between increasingly pressured executive time and the various
inefficiencies of scheduled airline travel. For many, a trip through a hub
airport has become a protracted ordeal, involving lengthy security checks,
congestion and delayed departures, an excellent recipe for stress in anyone’s
book. Many have been prompted to look for ways to get around this problem.

The opening up of European economies has also been a driver – both because of
the need to reach destinations not well served by airlines, and also because of
the growing prosperity of the region as a whole.

Together, these developments explain much about the growth our industry has
seen over the past decade.

However, many predict that growth is set to accelerate again with the advent
of a new class of small business jet, commonly called ‘Very Light Jets’ (VLJs).
These entry-level aircraft have dramatically reduced the costs of buying and
operating a business jet. With advanced – and reassuringly green – technology,
plus a clever use of space, they allow up to four passengers to travel in
limo-like comfort for a fraction of the cost of traditional jets.

The market leading VLJ at present is the Citation Mustang from Cessna, the
world’s largest manufacturer. At £1.5m it is a snip compared to the conventional
£5m to £7m asking price for a jet. It is soon to be joined by rival aircraft
from other manufacturers, including Brazil’s Embraer and – making its debut in
aviation – Honda, a company that knows a thing or two about efficiency and

The cost savings are very real. Since we became Europe’s first VLJ fleet
operator this year, we’ve been able to cut the price of chartering by up to 50%
for smaller groups (the average number of passengers on a business jet is less
than three). As other operators bring similar aircraft into service, more
businesses than ever will be able to tap the advantages of business aviation.
For this reason, many in the industry now use ‘air taxi’ as shorthand for this
new type of service – low-cost business jet travel that gets you to your
destination without flash or fuss.

As an example, a London-Milan day return by Citation Mustang costs around
£5,100, around half the cost of a traditional mid-sized jet. If you spread the
cost between four passengers that equates to £1,275 a head – at a glance, it
seems quite a bit more than scheduled business class, but many travel managers
have found the economics quickly become compelling once you factor in other

The greatest saving is that most precious business commodity – time. You fly
from private, queue-free terminals, so check-in and security are done in a trice
– you can be airborne in as little as ten minutes after parking your car. While
flying, you can also work properly and hold confidential meetings with your
colleagues. At the other end, you can fly into much smaller airports, meaning
you avoid the mêlée at major hubs and arrive far closer to your end destination.
Lastly, of course, the timetable works around you: you can fly when you want,
where you want – and missing your flight never becomes an issue.

The upshot of this is that you can often do in a day what would take two or
three if you were flying by airline.

As a result, you can also achieve substantial savings on hotels, subsistence
and entertaining. The last major benefit is that your team wastes less time away
from the office. A hypothetical but entirely reasonable example could see a
business save £1,600 on accommodation alone, and add 20% extra working time per
passenger (a substantial gain if your rates are £150-£600 per hour).

However, the key to understanding the future of business aviation is not at a
replacement for airlines, but as a complement. It is the right tool for the job
when time is of the essence, and could make the difference between an
opportunity seized and one lost. For that reason, you can expect VLJ business
aviation to become an increasingly familiar feature of European travel.

Patrick Margetson-Rushmore is chief executive of
London Executive

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