Halogen Guides Jets | The Insider's Guide to Private Aviation

Eclipse Aviation Files for Bankruptcy

2008-11-25T20:26:41Z

Eclipse Aviation, the maker of the Eclipse 500 very light jet, filed for Chapter 11 bankruptcy today. The company is seeking to sell the bulk of its assets to ETIRC Aviation, which is the largest investor in Eclipse.

Leading up to the bankruptcy filing, Eclipse endured several rocky months, including the departure of the founding CEO this summer, an FAA and Congressional investigation over the certification of its jets and, most recently, failure to meet employee payroll earlier this month.

Eclipse’s stumbles had some aviation watchers predicting that the company would stop making the Eclipse 500 in the first quarter of 2009. In the wake of this filing, the company has arranged interim financing that must approved by the bankruptcy court to allow the company to continue operating through the sale of its assets.

How the Recession Will Impact Private Fliers

2008-11-20T23:09:16Z

When three top auto executives traveled to Washington yesterday to plead for a multi-billion dollar slice of the government bailout, headlines blared about the trios’ choice of transportation. But even as private jets are being painted as the latest symbol of corporate excess—at least by Congress and taxpayer advocacy groups—private aviation companies report that now is actually a good time to be a private flier. With companies rolling out more deals and programs with increased perks for consumers.

As the end of the year approaches, everyone from jet makers to fractional and charter providers are readjusting their outlook for the slowing global economy. Here are three ways that this tough market can positively impact your private aviation bottom line.

More deals

Some private jet makers are cutting prices and throwing in incentives to sweeten the deal. This week, Diamond Aircraft, a manufacturer of single-engine aircraft, announced a promotion that includes a year’s worth of free fuel, maintenance and insurance—a package worth $13,750—for buyers who purchase Diamond’s DA40 model before December 31.

Used aircraft buyers should also see dropping prices. Used aircraft inventories were up again in October, according to a report from J.P. Morgan, and as inventory grows, asking prices are expected to dip. In the market for a used very light jet? When air taxi operator DayJet closed its doors this fall, the company sold its fleet of 18 Eclipse 500 jets back to Eclipse, which is now unloading them.

More flexibility

If you’re interested in fractional ownership or a jet card, know that buyers have more options than ever. Jet card companies are rolling out new card configurations, including ten-hour plans and options that allow access to more than one type of aircraft.

Fractional providers are giving owners more options for dealing with unused hours. Flexjet, for instance, now allows fractional owners to sell unused hours to other owners.

Empty leg bargains

Charter providers are beginning to see some changes in the travel patterns of private fliers. These types of shifts have a direct impact on where private fliers will see the greatest availability of empty-leg segments (cut-rate flights that are flying passenger-free after dropping off a traveler, or repositioning to pick a client up).

Justin Sullivan, president of charter jet provider Regent Jet, said that his typical client has multiple second homes in places like Aspen, Jackson Hole and Palm Beach. “They still have those homes,” said Sullivan. “Those routes are just as strong as ever.” As a result, those prime winter travel corridors are likely to remain flush with empty-leg deals. It’s the flights to second-tier locations—and even Europe—that are seeing less activity, according to Sullivan. “The Giants fan who flies to every away game—those flights have dried up,” said Sullivan.

Flexjet CEO Reid Talks About State of Private Jet Industry

2008-11-13T18:39:59Z

With just under three months on the job, Fred Reid, the CEO of private aviation provider Flexjet, is tackling marketing private jet ownership in an increasingly tough economy. Reid, who joined Flexjet after stints as head of Virgin America and Delta Air Lines, talks with Halogen Guides about the current demand for fractional jet shares, how private fliers are adjusting their travel purchases and how Flexjet is fine-tuning its programs.

How is the economy impacting your business?

Reid: There is no question that the percentage of fractional owners renewing ownership is declining somewhat. The majority still renew, and we are still selling new shares today, but we are seeing a lot of movement. We have some people who own multiple shares who trade down a bit to a lesser share. We have some trading up to whole ownership. We have seen some reduce shares to go with a jet card. But I’m also anticipating that a number of corporations that have their own fleet of aircraft will give us a serious look. I’m not pretending that we are not in a dreadful economy and there will be other forms of stress on us, including reduced consumer spending. But having said that, there are sectors that remain healthy, and we’re not excessively exposed to financial services as an owner base.

Are there any price cuts in store?

Reid: We are not price cutting now, but we are trying to do everything we can to meet our customers’ requirements. On the Flexjet 25 card, we announced a split payment option a few weeks ago. For those that buy a card before the New Year, they can pay the card price in two installments—one by December 31 and one six months later. We also have a combo jet card that lets fliers use different aircraft models. We’re also allowing fractional owners to put hours up for sale. Owners can carry over a quarter of their hours to the next year, or they can put unused hours up for sale. Say you need 20 more hours in the next six months. You buy a card or buy hours as you need them from this pool.

What is your focus for the next six months?

Reid: I’m looking for new product offerings. We are looking at how to be more creative on contract extensions. We are also looking at geographical expansion. Canada and Mexico are natural extensions. It was misreported that we were reopening Europe, but we’ve made no such decision. We will continue to retire older aircraft to keep our fleet the youngest in the industry, but the number of aircraft exiting the fleet will be higher than the number entering the fleet.

How’s demand looking for the holidays?

Reid: Most of our demand emerges just 10 to 24 hours ahead, so it’s hard to say. Like everyone else, our so-called live hours are down a bit in the last 60 days. One barometer for the business is budgeted hours—a measure of how much owners are flying. If 10 owners have 50 hours a year each, they tend to burn through 500 hours in a year. Now, we are seeing them burn through those hours slower.

The price of oil just hit a 20-month low. Are private fliers seeing savings yet?

Reid: They are enjoying much cheaper fuel. There is some administration cost—we have to source the fuel and pump the fuel—but that is standard across the industry. The cost of fuel is 100% passed on to the flier. It’s not like the airlines that institute a fuel surcharge, but when the price of fuel falls, the surcharge remains.

Air Taxis May Take Another Hit in 2009

2008-11-06T23:44:54Z

In mid-September, charter company DayJet grounded its fleet of very light jets (VLJ) and closed shop, bringing to an end one chapter in the fledgling air taxi industry.

Now the industry may be headed for another challenge, as one aviation market researcher speculates that production of the Eclipse 500, a workhorse in the air taxi world, will cease in early 2009.

Last week Connecticut-based Forecast International released a report predicting that Eclipse Aviation, the maker of the Eclipse 500 jet, may be forced to stop production of the aircraft in the first quarter of 2009.

The aviation market watcher estimated that just 12 Eclipse 500s would be produced in 2009. “Even this forecast may prove too optimistic,” said Forecast International aircraft analyst Douglas Royce, in a company-issued release.

The necessary economies of scale—dependent on fast, cheap production of the aircraft—never materialized for the company, according to Forecast International. As a result, Eclipse was forced to raise the Eclipse 500 price tag by 41% this spring while continuing to take a loss on every jet ordered prior to the price increase. Add in credit woes that have made raising new capital nearly impossible, and the business model gets even tougher.

So is the concept of air taxis, which launched amid promises to bring down the cost of private aviation by offering consumers short hops on small jets, grounded for good? Not necessarily.

There are still a handful of smaller regional operators in the U.S., including Linear Air, an air taxi operator in the Northeast that continues to operate and just announced a new round of funding. But no doubt new air taxi companies like POGO, slated to launch in 2009, will face a huge challenge if they do lift-off.

In Europe, the air taxi concept is still spreading. Blink operates flights throughout Western Europe and this fall, U.K. startup FlairJet announced that it would begin flights next May with a fleet of Phenom 100s, a new VLJ model that should hit the skies this year.

If the Eclipse 500 ceases production, air taxi companies and fliers will have fewer choices, since the Phenom 100 and the Cessna Citation Mustang would be the only two remaining VLJs in production.

Three Big Trends Impacting Private Fliers

2008-10-27T12:14:13Z

With the biggest private jet tradeshow of the year behind us, the traditionally busy holiday travel season ahead and the grasp of a deepening recession squeezing wallets and stock portfolios, we thought it was time to look into the private aviation crystal ball.

Whether you’re in the market for a jet (or more likely sitting on the sidelines waiting for the right time to make that investment) or simply trying to avoid LaGuardia this holiday season as you head down to Florida, here’s what you need to know.

More flat-rate pricing

More charter operators are offering flat-rate pricing on select routes. In August, XOJet announced a $25,000 one-way transcontinental fare. The price includes catering, fuel surcharges and even ground transportation.

This month, Regent Jet rolled out a $10,000 fare from New York to Florida on a Hawker 400XP. Flights operate between airports in the Tri-State area and New Yorkers’ winter stomping grounds in south Florida. Flights are sold in packages of five one-way trips for $50,000, or a single one-way flight for $12,000.

While these flights typically cost a bit more than booking an empty leg, fliers can book them in advance without worry that the schedule will change, or the flight will be canceled.

Shorter waiting lists for new jets

The Teal Group, an aerospace consulting group, revised its outlook for business jets, predicting deliveries of new jets will peak in 2009 rather than in 2010. The downturn will bottom out in 2012, but until then expect to see big order cancellations and buyers even deferring purchases.

Industry watcher Brian Foley was even more frank in his assessment, telling AINonline, “New aircraft orders are poised to fall off a cliff.”

What does all this mean for aircraft buyers? For those still in the market, the next few years could see shortening waiting lists for the most in-demand aircraft models.

Buy used, get a deal

The used aircraft market is starting to look like, well, the real estate market, with a swelling amount of inventory and stagnating price increases. The market is especially loaded with light jets, according to the most recent Honeywell Business Aviation Outlook, and prices have moved quite a bit from 12 months ago. The biggest demand has been for long-range models. Last month, a J.P. Morgan report said used jet inventory was up 52% since the beginning of the year. Also impacting the used aircraft market are the sluggish economy and jet buyers preference for newer, faster and more fuel-efficient models. Of course, if cheaper is on your list of criteria, this is likely the time to go pre-owned.

Jet Card Companies Roll Out New Products & Ways to Save

2008-10-21T16:35:42Z

In the face of a slowing economy, private jet providers continue to launch new products to ready for the approaching holidays and lower the price of a flight. Jet card providers have been especially aggressive in announcing new products and perks.

New 10-hour cards

Air Partner, a U.K.-based charter company, rolled out its first jet card in the United States last month. While most jet cards require a 25-hour minimum, you can buy an Air Partner jet card with just 10 hours of flight time. (Delta AirElite also offers a 10-hour card). Prices start at $47,000 for flight time on a light jet like a Hawker 400; all taxes and fuel surcharges are included. Air Partner also offers cards for midsize, super midsize and large jets. The decision to split the midsize category into two is unique in the industry. Air Partner senior vice president David McCown says the super midsize category is directly aimed at those fliers who want to fly coast to coast without a fuel stop but are comfortable flying on a smaller aircraft. “A large-category jet is going to cost 15 to 20% more,” he says.

New ways to save

CitationShares recently gave owners of its $100,000 Vector JetCard new ways to lower the hourly cost of flights. It now offers a series of discounts on its Citation Bravo, a light jet. New customers can qualify for an hourly rate cut, and there are discounts for customers who agree to avoid traveling on the 30 busiest travel days a year or who will allow CitationShares to move up or delay flight departures by up to an hour. Buyers can qualify for multiple discounts. For instance, a new customer who will both avoid peak-day travel and allow CitationShares to adjust flight departure times can lower the annual hourly cost from $5,094 to $4,548. A new customer who still wants to travel on peak days and doesn’t want departure times changed can secure an hourly rate of $4,898. Hourly rates do not include the federal excise tax.

Christmas comes early

Holiday promotions have already begun. Bombardier’s Flexjet is rolling out its Flexjet 25 Expert Guide Edition jet card on November 1. While the price, starting at $107,900, is the same as for the standard Flexjet 25 card, the company has partnered with Mint, a high-end concierge service, to fold in additional travel perks. With this Flexjet card, for instance, buyers can secure a four-hour meeting with art consultant Barbara Guggenheim to get tips on art investing or a private tour of a museum in New York or Los Angeles. Another option? A three-hour lesson with poker champ Antonio Esfandiari at the Bellagio in Las Vegas or a two-day fly-fishing trip on Idaho’s Henry’s Fork River with a top guide. Other free add-ons include a session with a philanthropy advisor and an invitation to the Pebble Beach Food & Wine event next April. The card is available until December 15.

Private Jet Savings: How to Book an Empty Leg

2008-10-16T12:21:32Z

For travelers seeking to trim the cost of flying privately, booking an empty-leg flight is routinely touted as a key way to save big. Empty legs, one-way flights aptly named because they are flying passenger-free after dropping off a traveler or repositioning to pick up a client, can mean savings of more than 50% off the cost of an on-demand charter flight. But there’s often a catch to booking these flights. Here’s what you need to know before booking.

Timing is everything. Days of the week and seasonal travel patterns directly impact the availability of empty-leg segments. For instance, private jet traffic in the winter picks up between New York and south Florida on Thursday, Friday and Sunday, so the best empty-leg deals on that route are northbound on Thursday and Friday and southbound on Saturday or Sunday, according to charter brokers. “It becomes very pronounced around the holidays. Everyone is booking to and from the northeast to Florida and the Caribbean,” says Justin Sullivan, president of charter company Regent Jet. “If you are in Florida and want to come to New York for Thanksgiving, you can get a heck of a deal.”

Empty-leg flights also increase between the Colorado ski hubs Aspen, Vail and Telluride and the East and West coasts during winter. In the summer, empty legs peak between the United States and Europe and the West Coast and Hawaii.

Savings vary. Charter brokers say that empty-leg flights represent a savings of 25% to 70% off the cost of an on-demand charter flight. With such a wide discount, don’t expect the same deal each time.

Best availability is last minute. You can book an empty leg months in advance, but you are more likely to find one closer to your desired date of travel. Charter brokers say that most private jet bookings happen within four days of the flight, increasing the availability of empty-leg segments. Virgin Charter executives say that empty-leg flights booked within 48 hours of the flight are less likely to change or be canceled.

Your flight may be canceled. Booking an empty leg comes with inherent risks since your flight directly depends on another traveler. If that traveler decides to leave a day earlier or later, your empty leg will change accordingly and can even be canceled with little notice.

You can make changes to the itinerary. You find a flight that leaves out of San Jose instead of Oakland. Can you change it? Sure. Sullivan says that most empty-leg bookers make changes to flights, but be aware that you will pay for any jet repositioning, even if it’s just a five-minute flight to a different airport.

Search online for deals. Charter operators like Talon Air have an empty-leg email list for deal alerts. Regent Jet has a large inventory of empty-leg flights, and fliers can submit a request online. Virgin Charter has a database of about 500 empty-leg flights that you can search online by route, airport, plane type or travel date. A recent search for flights out of the San Francisco Bay Area turned up good availability to Phoenix, Ft. Lauderdale, Van Nuys and Dallas, but the greatest overall empty-leg flight volume was for trips to and from New York.

How to Travel in Space

2008-10-09T17:13:28Z

The next frontier for the ultimate globetrotter? Space. Once you’ve crisscrossed the seven continents, there’s only one place left to go: up.

Thanks to a group of innovative companies developing new space vehicles, the approaching wind down of NASA’s shuttle program and a Russian space program that welcomes civilian travelers, space tourism is poised to become the next extreme travel niche.

So what trips can be booked now, and what’s likely to remain a sci-fi fantasy? Our new guide, How to Travel in Space, covers all the latest developments in this fledgling industry, from Virgin Galactic’s recent advances to gravity-free treks from space travel agent Space Adventures. Check out the key space travel companies to watch, learn about what it takes to go into orbit and find out just how much lifting off for a weightless vacation will cost you so, well, you can start saving. Nothing makes private jet travel look more affordable than heading into the great beyond.

New Jets Roll Out Amid a Tempered Outlook for Private Aviation

2008-10-09T10:06:51Z

The National Business Aviation Association convention, the biggest annual gathering of the private jet industry, wrapped up in Orlando this week. Despite the deepening economic crisis and a dip in demand for private jet travel, news from the jet industry was for the most part, upbeat, as jet makers debuted new aircraft models and initiatives. Here are the highlights.

Major industry forecast calls for a dip in jet deliveries in 2010 and 2011

According to Honeywell Aerospace’s 17th Business Aviation forecast:
• About 1,200 business jets will be delivered this year, 15% more than in 2007.
• Deliveries will continue to rise in 2009, topping out at 1,300 – 1,400 jets.
• Deliveries will dip in 2010 and 2011, primarily because new jets ordered this year, like the Gulfstream G650, won’t be airborne until 2012 or beyond.
• International orders will make up 45% – 55% of new aircraft purchases estimated over the next five years.
• Sales of new jets to fractional providers have remained flat since 2004, while jet cards and charter operators continue to increase demand for new aircraft.

Gulfstream debuts its super mid-sized G250

Gulfstream announced its newest model, the G250, that will roll off the assembly line in 2011. While the G250 will have the same basic fuselage as the G200, the new model will be more fuel-efficient and have more cabin space and a larger bathroom than the G200.

The G250 is Gulfstream’s second new jet unveiling this year. In March, the company announced the G650, a long-range jet that despite its $56 million price tag racked up a huge backlog of orders.

Hawker gives the 450XP a makeover

Hawker Beechcraft is upgrading the cabin on its 450XP jet and adding new engines to boost the jet’s fuel efficiency by 10%. The $7.7 million light business jet will debut in 2010. Hawker says the 450XP is the most commonly used aircraft model among fractional providers.

Bombardier Aerospace introduces the Learjet 85; stays positive about industry prospects

Bombardier showed off a full-size mockup of the interior of its midsize Learjet 85, an aircraft designed with a lighter composite material meant to improve flight and fuel efficiency. The aircraft will have the largest cabin space of any Learjet model.

Production of the new jet recently hit a snag when Grob, a German company handling the aircraft’s structural design, filed for bankruptcy. Bombardier still hopes to deliver the first jet by 2012 as planned.

Though company executives expect a slight softening in the market through 2010, their long-term outlook is positive—they say Bombardier will maintain a 33% share of the market.

Flexjet goes green

Fractional jet provider Flexjet announced that it’s created a new voluntary green initiative—owners can now pay an hourly fee to offset the carbon output of their flights. The company will offset any non-owner flights, such as trips made for maintenance purposes. Flexjet teamed up with carbon-offset provider Climate Care, which invests in projects around the world, including a wind-power farm in China.

Embraer CEO Concedes Credit Crunch is Making it Harder to Purchase Planes

2008-10-02T15:09:53Z

In a sign that the financial crisis is impacting the private jet industry, the CEO of Brazilian aircraft manufacturer Embraer concedes that tight credit markets are making jet purchases difficult for some buyers. “Some customers have said they are facing more difficulties in financing,” said Embraer CEO Frederic Curado, in an interview with Bloomberg last week. “But we haven’t seen any impact on our business.”

The current crisis nearly claimed one of the biggest players in aircraft finance. AIG, which was rescued from collapse by the U.S. Treasury Department, is the parent company of International Lease Finance Corporation (ILFC), one of AIG’s few profitable subsidiaries.

In spite of the economic slowdown, Embraer remains on track to deliver 215 planes this year. However, many of those orders were made when loans were easier to secure. Given in the current credit crunch, next year’s deliveries may be impacted.

Private Aviation May Not Have to Worry About "Paris Hilton Effect" Anymore

2008-10-01T16:03:51Z

Earlier this year representatives from the industry complained about the “Paris Hilton effect,” the popular perception that private jets are playthings for the spoiled rather than essential business tools. It looks like that problem may be on its way to being solved. Heiress, socialite and “actress” Paris Hilton has taken a vow to “never fly in a small plane again,” after her celebrity friends, musicians Travis Barker and Adam “DJ AM” Goldstein, narrowly escaped death following a plane crash in September.

Barker and Goldstein were the only survivors when their Learjet 60 bound for Los Angeles crashed on takeoff from Columbia Metropolitan Airport in Columbia, S.C. Four others, including the plane’s pilots perished in the crash. Cockpit voice recorders show that the pilots believed one of the plane’s tires had blown as the jet sped down the runway. Barker and Goldstein, who each suffered substantial burns, have been released from hospital.

Hilton told TeenHollywood.com, “I couldn’t believe it … I’m scared to go on small airplanes now … I’ve been on that sort of plane and now I’ll never go one again.” We suppose that it wouldn’t help to tell Hilton that the Learjet 60 has, apart from last month’s incident, an admirable safety record. The blown tire which the National Transportation Safety Board believes caused the crash could happen to any aircraft, regardless of size. And of course, private aviation is still significantly safer than driving drunk down the Sunset Strip in Los Angeles, as Hilton did in 2006.

Queen Elizabeth Planning Jet Purchase, But is her Budget Big Enough?

2008-09-30T15:43:03Z

UK tabloid the Sun is reporting that Queen Elizabeth II has commissioned four of the world’s major private jet manufacturers to submit interior designs for an official royal aircraft. The Queen has been allotted a budget of £7 million (roughly $12.5 million).

With security concerns making commercial aviation out of the question, the royal family relies on private jets for transportation. Last year UK taxpayers shelled out just under $10 million for the royals’ charter flights. While some anti-monarchist types probably won’t be too pleased at the prospect of footing the bill for this new royal jet they should take heart that the Queen appears to be coming in under budget; in June of this year, the UK Department for Transport approved the use of as much as £10 million of public funds for the purchase of a royal jet.

The Queen reportedly wants a jet with room for 13 people, but one wonders whether she’ll really be able to get all that much plane for $12.5 million. She can forget about the high-end. A new Gulfstream G450, with intercontinental range and seating for 19, goes for around $49 million. The comparable Global Express runs around $45 million, and the Falcon 7X is about $50 million. At $21 million, even the appropriately named Citation Sovereign would seem to be outside of the Queen’s budget. Is her majesty planning on buying used or could she be considering a fraction perhaps?

What plane do you think would be the best fit for her highness’s budget? Weigh in with your comment.

Wall Street Journal's Robert Frank on Glut of Used Jets

2008-09-29T17:03:26Z

The Wall Street Journal’s Robert Frank reported in his Wealth Report blog last week that the market for used private jets has been flooded in the last year. Halogen Guides reported on the phenomenon earlier in September, when J.P. Morgan analysts reported a 52 percent increase in used private jet inventories in the U.S. Now Rich has found that the problem is even more acute for one of the most prestigious private jets, the Gulfstream GIV.

The number of GIVs for sale this July was more than triple the number on the market last summer. These jets aren’t exactly flying off the shelves, so to speak, either. GIVs are averaging 212 days on the market, compared to 168 days last year.

While these numbers, along with reports of decreased charter demand, are enough to have executives in the private aviation industry passing the Maalox around, it is worth noting that they don’t take into account the financial crisis that is currently gripping the markets. Not only are financial firms, historically some of the most frequent users of private aviation, likely to cut back jet use even further, but the credit crunch is going to make it much more difficult for interested jet buyers to secure financing.

Manufacturers are likely hoping that global demand will help them weather what increasingly looks to be a prolonged recession in the U.S. While there may be plenty of Middle Eastern sheiks, Russian tycoons and Asian magnates clamoring for the latest and greatest Gulfstream or Global Express at the high-end of the market, the industry as a whole cannot look to a small crowd of plutocrats to see them through these hard times.

Readers weigh in. If you were at the helm of a private aviation firm, what would you do to stabilize business? What do today’s private fliers need from the industry? Leave a comment below.

Jet Republic to Challenge NetJets in Europe

2008-09-26T15:53:04Z

A strong challenger to NetJets on the continent appears to have emerged as Jet Republic has placed an order for 110 Learjet 60XRs. The order is the largest ever European business jet order, valued in excess of $1.5 billion. The Portugal-based Jet Republic received substantial financial backing from an Austrian private bank, European American Investment, to complete the order which breaks down into 25 firm orders and an option for 85 more.

With Jet Republic’s first Learjet 60XRs arriving late next year, the company intends to launch a charter card service through partnerships with a variety of European operators in the meantime. The company has announced that it will begin to sell fractions in its just ordered planes as soon as the end of the month.

It’s unlikely Jet Republic will unseat NetJets anytime soon. NetJets Europe offers fractions in some ten aircraft models in every major private jet category. But Jet Republic, by organizing its operations around just one aircraft model, could realize significant efficiencies, with regards to pilots and servicing. With the market for private jet travel in Europe expected to expand greatly in the years to come, it’s likely that Jet Republic will be able to carve a sizeable niche with this investment.

Economic Hard Times Contributed to DayJet's Demise

2008-09-23T16:10:36Z

Dayjet we hardly knew ye. The pioneering air taxi service announced on Friday that it was grounding all but one of its fleet of Eclipse 500 very light jets (VLJs) and firing most of its employees.

In a statement released to the press, DayJet’s CEO Ed Iacobucci blamed the demise on the worsening credit crisis, which hampered the company’s ability to finance its expansion. DayJet, which started operations in the southeastern U.S. late last year, had ambitious plans and an innovative business model that some industry watchers considered the wave of the future.

Indeed DayJet looked to be on solid footing as the company’s offering of inexpensive point-to-point on-demand flights initially garnered a good deal of demand. When its ascent stalled in May, after it was unable to secure adequate funding, DayJet was forced to scale back its operations.

Unfortunately for DayJet, its fortunes seem to be tied to those of Eclipse Aviation, the manufacturer of the Eclipse 500, which DayJet selected for its operations. In 2007, DayJet had a firm order for 237 of the jets, but Eclipse was never able to keep up its schedule of deliveries. In a statement, DayJet cited Eclipse’s “failure to install missing equpment or functionality or repair agreed technical discrepancies in accordance with the terms of DayJet’s aircraft purchase contract” as a contributing factor in the company’s demise.

Eclipse has had its own problems. After failing to meet production targets, it was forced to sell itself to a European investment concern and it also faced a Congressional inquiry into its F.A.A. certification.

Eclipse announced today that it secured a deal to manufacture Eclipse 500s in Russia, after firing roughly a third of its workers in August. While that deal may secure the VLJ manufacturer for now, DayJet, the most visible operator of its planes, will likely vanish. Iacobucci has stepped down as CEO, though he remains on the company’s board. DayJet’s chief financial officer John Staten steps into the CEO role as the company ponders its future.

Yet Another Reason to Fly Privately

2008-09-22T15:50:04Z

Just for fun, I often ask commercial air travelers how they enjoy their flights. Turns out, they’re not having fun at all.

Here are some recent comments:

“I’m not doing that again.”
“There’s got to be a better way.”
“A complete mess.”
“What an ordeal. It took me days to recover.”

Recently released statistics for 2007 bear out these complaints:

➢ 20% of travel time is spent in delays at the gate, in taxi lines and circling the airport, at an annual cost of $41 billion.
➢ 30% of all flights (1.6 million flights in all), were delayed at least 15 minutes. (This does not include time spent waiting in security lines and at baggage claim, or the fact that the airlines have quietly increased projected flight times so that the numbers won’t look so bad.)

All in all, airline passengers are more dissatisfied than at any time since 2001.

Once an elegant experience, flying today is more akin to traveling in a cattle car. Legroom has been eliminated and new checked baggage charges have lead passengers to stuff more and more into their carry-ons. The result—you’re cramped into less and less space; indeed, you may experience your seatmate in a way you probably don’t know your best friend.

Passengers, feeling like they’re treated disrespectfully by security personnel, ticket agents and flight attendants, in turn tend to leave their manners at the gate. Flight attendants report passengers attending to personal hygiene matters in flight (don’t ask!), leaving chewed gum on seats, and stuffing seat pockets with all kind of debris (including dirty diapers).

If all that isn’t bad enough, now the airlines are eliminating flights and retiring aircraft, further restricting the flexibility of an air travel system that is already stretched to the breaking point. Thus, when weather or equipment problems cause flight delays, whereas you used to be able to hop on the next flight, now it may be a day or two before you can find a seat, leaving you stranded and with a feeling of anger and helplessness that sparks a kind of “road rage” we hear about more and more, as cranky passengers and crankier airline personnel face off in venting frustrations that neither has caused and neither can remedy.

Contrast this nightmare with flying on a private jet. You fly where you want to fly, when you want to fly and with whom you want to fly. You fly direct (not through the airlines’ arbitrary hubs). No long layovers. No redeyes. No lost luggage. No intrusive searches.

You fly on a clean, well maintained and safe aircraft, with a pilot who’ll even help you with your luggage. Catered meals and drink of your choosing await you; there’s internet and phone service and, perhaps most importantly, a comfortable seat with plenty of legroom.

Many clients come to us for the first time after they’ve reached the breaking point with the airlines. I can’t tell you how many calls we get from new clients who say, “I just had a horrible experience with the airlines. I’m not doing that again. What are my options?”

As private air travel advisors, we analyze your needs and budget and go out into the marketplace to find you the best private air travel options—whether it’s a one time charter flight, a 25 hour jet card, a fractional share, or a combination thereof. In all we do for our clients, our goal is the same—find the best price for your flights with an experienced operator on well maintained and appropriately equipped aircraft flown by top notch pilots—all with an impeccable safety record.

In leaving the airlines behind, our clients find that the sense of civility and peace of mind that comes with private jet travel is priceless. As one client summed it up, “Flying privately used to be a luxury, but today it’s a necessity.”

James Butler is an attorney and the chief executive officer of Shaircraft Solutions LLC (www.shaircraft.com), based in Bethesda, Md. Shaircraft advises individuals and businesses with respect to the full range of private air travel investments, including fractional ownership, jet card programs, air taxi services and charter, and also specializes in fractional share valuation disputes.

Night Falls for DayJet?

2008-09-19T15:02:22Z

According to AINonline, air-taxi operator DayJet grounded its entire Eclipse 500 very light jet fleet this afternoon due to “economic reasons.”

The exact reason for the grounding is still unknown. However, in May the company was forced to significantly scale back its operations after it failed to secure an expected round of funding. It’s not clear yet if DayJet plans to resume operations.

DayJet, which serves the southeastern U.S., was one of the first air-taxi services. When it launched, the company was touted as a potentially revolutionary force in the aviation industry. The shuttering of DayJet comes on the heels of a Congressional probe into alleged certification irregularities of the the Eclipse 500, the only aircraft model in the DayJet fleet.

Are we witnessing the death of the VLJ dream? Sound off in the comments and share your opinion.

Bloomberg Markets Magazine Questions Charter Safety

2008-09-19T14:24:14Z

An article appearing in the October 2008 issue of Bloomberg Markets magazine has succeeded in causing a fair amount of consternation among the private aviation community. The article by Seth Lubove, titled “Flying Blind”, alleges that a lack of charter broker regulation is linked to some of the accidents that have occurred aboard on-demand charter flights in recent years.

Charter brokers do not operate flights but instead arrange travel for customers through a network of charter operators. Lubove points to the crash of a Challenger 600 on takeoff from Teterboro Airport in 2006 as an example of how the current system can go awry. In the incident, a flight brokered through Blue Star Jets was operated by Platinum Jet Management through a license it had borrowed through another operator, Darby Aviation.

Charter brokers who organize flights through subcontractors without performing the proper due diligence are, of course, a major cause for concern. Lubove believes that the answer to the safety issues in the charter industry is greater government regulation. However, trends in the on-demand charter industry may render his argument for more regulation, moot.

The emergence of online charter marketplaces, such as Virgin Charter, which cuts out charter brokerages altogether and allows customers to book directly with an operator, and the establishment of independent charter safety auditors such as Wyvern and ARG/US, encourage the open market to improve safety. Fliers can easily consult these services for comprehensive assessments of planes, pilots, and crews on prospective charter flights. If an operator has a poor safety record, a flier can take their business elsewhere.

Fliers look to charter flights for the comfort, convenience, and, most of all, flexibility that is unavailable in commercial aviation. It would be a shame to see the charter industry, which is just beginning to branch out to a broad customer base, encumbered by excessive and, perhaps unnecessary, government regulation.

What do you think about government regulation and the charter industry? Share your opinion in our comments section.

Fractional Jet Primer: Navigating the Contracts

2008-09-18T15:38:10Z

Once you’ve decided to purchase a fractional share, you’ll receive a set of contract documents from your provider. Your salesperson will do his best to convince you that everyone signs the same simple contract. The contracts are short and are made to look like standard “boilerplate.” Don’t be fooled. These documents govern your rights and obligations with respect to what most likely will be a multi-million dollar investment, and they are negotiable. Here’s a brief primer that describes the critically important documents and what they mean to you:

Binder/Deposit Agreement

If your provider is awaiting delivery of your aircraft, it’ll want you to put up a deposit to hold your share. This document should identify the specific aircraft in which you’re buying the share, guarantee that the pricing won’t change and a include a firm delivery date. Most importantly, make sure you understand how and when your deposit becomes nonrefundable.

Purchase Agreement

This is the document through which you purchase your share from the provider. Just as important, the Purchase Agreement provides the terms under which the provider will repurchase your share at the end of your contract term. All too often, buyers don’t consider the likely decline in value of their aircraft, and thus their share, when projecting the all-in cost of their investment.

Master Dry Lease Exchange Agreement

This document governs the relationship among all fractional owners in the program. Essentially, each owner agrees to share his plane with every other owner, thus enabling the provider to utilize the entire fleet to service all the owners. This arrangement is a common feature of all fractional programs; so much so that you may rarely, if ever, actually fly on the aircraft in which you own a share.

Management Agreement

This document governs the core issues of your investment. Nominally, it reflects your appointment of the provider as the manager of your aircraft and as the administrator of the program. But more importantly, the Management Agreement tells you when you can fly, how many hours you can fly and what costs you’ll incur when you fly. It describes how your flight time will be calculated, what you’ll pay if fuel prices go up and how far in advance you must reserve your flight. It spells out your right to interchange, i.e., use other models of aircraft in the fleet, and how you’ll be charged if you do. It specifies peak travel days, when greater restrictions on your use of the aircraft apply, and it maps out the service area within which you can fly.

These documents, and not that beautiful brochure, will govern your rights and obligations. The contracts may look simple, but if you don’t read and negotiate them carefully, you may make a million dollar mistake.

James Butler is an attorney and the Chief Executive Officer of Shaircraft Solutions, a Bethesda, Md.-based consulting firm advising elite travelers on all aspects of private air travel, from charter and jet card programs to fractional ownership and whole aircraft investments. Shaircraft analyzes clients’ private aviation needs, identifies suitable programs and negotiates with the many aircraft providers to get clients the best deal. Shaircraft recently launched Shaircraft Connections, an exclusive Web forum for private air travelers. Since founding Shaircraft in 1997, James has become a well-respected private aviation authority. He writes a regular column for Business Jet Traveler magazine on fractional jet ownership called “Inside Fractionals” and is regularly interviewed by major media, including the Wall Street Journal, Bloomberg News and CNN. He can be reached by email here.

Congress Hears Testimony on Eclipse 500 Certification

2008-09-17T16:19:42Z

Congress heard testimony today alleging that the Federal Aviation Administration speeded approval of the Eclipse 500 very light jet (VLJ), despite concerns over safety and production. The Eclipse 500, one of the first VLJs to enter the market, had been heralded as the start of a new era in private aviation, where point-to-point charter flights, operated by so-called air taxis, would be within the reach of the average flier. But as mechanical problems and production delays hampered the Eclipse 500 in the years since its introduction in 2006, critics also alleged that the plane was rushed to market, with the F.A.A. partly to blame.

Calvin Scovel, Inspector General for the Department of Transportation, told the House Aviation Subcommittee that the F.A.A. was aware of issues with the Eclipse 500 when they issued the manufacturer a certification for the VLJ. The F.A.A. went ahead with certification, Scovel said, due to both a cozy relationship with Eclipse and a more lax regulatory stance from the agency as a whole.

Among the specific allegations raised against the F.A.A. are those from David Downey, an F.A.A. manager put in charge of engineering compliance for the Eclipse 500. He said he was removed from the project after voicing safety concerns about the jet. His colleague Dennis Wallace, meanwhile, testified that he was rebuked by senior F.A.A. management for his reluctance to approve plane software he believed was unready.

Another F.A.A. employee, Ford Lauer, testified that his inspection of Eclipse 500s revealed some shoddy workmanship, but that Eclipse management had an open line to higher-ups at the F.A.A. Eclipse would complain to corporate-friendly F.A.A. management about what they saw as overly intrusive inspections, and the F.A.A., in turn, modified instructions to employees. Lauer said that the F.A.A. then scaled back inspections, putting a cap on how long inspectors could look at the planes, while limiting access to the guts of the aircraft, so as to not interfere with Eclipse’s production timetable.

The F.A.A.’s own hopes for the plane may have played a role in the agency’s alleged behavior. With the nation’s aging air traffic control system sagging under the weight of flights between regional hubs, some in the F.A.A. may have believed that the promise of point-to-point flights offered by the Eclipse 500 would alleviate some of that stress.

Other critics say the Eclipse certification episode is indicative that regulatory agencies are acting less as guardians of public safety and more as favor-dispensing buddies to the very industries they are charged with overseeing. In the end, this corporate-friendly approach may have had a negative effect on the industry as a whole, as design flaws, production delays, and safety concerns, highlighted most recently by a throttle malfunction that grounded Eclipse 500s this summer, have stalled the progress of the VLJ market.

An internal F.A.A. investigation, called a special certification review, convened in August and determined that the agency had acted appropriately through the certification process. F.A.A. administrators reiterated these claims in their testimony before Congress today. Eclipse denies any wrong doing or interference, and points to the disagreement as an internal F.A.A. matter