Business Aviation

Have Cell Phone Will Travel… On Private Jet Charter, Naturally.

The Digital Age for Air Travel Has Arrived. Buying a Ticket (even an e-ticket) is So Old School.

Today you can simply go to an app on your cell phone and book a seat on a private jet or charter the entire jet for a flight, if you like. It’s all part of the digital explosion that links service providers with frequent fliers any time of day, any day of the year.

Before you go downloading the apps – these services are not for everyone, many require hefty membership fees and the price of flying on a private jet is usually much more than a first class airline ticket. The advantages, of course, are speed, privacy and convenience. Flying privately eliminates long security lines, airport traffic delays – even the possibility of lost or stolen luggage.

Private jets give you door-to-door service with access to thousands more airports across the world than commercial airlines fly to. All you have to do is find out which service offers the best deal for you and your needs.

So Who Are You Gonna Call?

The number of air  has ballooned in the past several years.  No two have the same pricing structure or membership costs.  Most do not own or operate aircraft, but provide access to those who do. Here are some of the most notable charter booking services, their websites and a comparison of their offerings:

JetSuite is a California-based private jet charter company, which does not require private membership, though you can request SuiteKey membership if you like with a pre-paid account. Their fleet consists of Embraer Phenom 100s and Cessna Citations. Unlike many Jet charter companies, they offer guaranteed online pricing to more than 2,000 airports. They also offer WiFi-enabled flights throughout North America. Jet Suite offers customized itineraries for those in their membership program as well as empty leg flights with special “next-day” deals. What’s an empty leg? It’s the transport leg the aircraft needs to fly to begin or end a charter flight. Rather than fly the jet empty, you  can hitch a ride, often for a fraction of the operating cost of the charter flight. Empty-leg deals are the most economical because you’re basically flying to a destination the jet charter has to bring the jet to anyway. JetSuite advertises seats starting at $99.

JetMe is the Priceline of charter jet online services. Their non-member app allows you to name your own price. Of course, they will provide suggested prices, too. Once you pick your price range, JetMe puts you in contact with the charter broker or operator to work out the final pricing with them. How likely are you to get the flight you want for the price you bid? That depends on how low the bid. The lower the big, the lower your chances of snagging a jet.

Fly anywhere, anytime, All is takes is an app, a membership fee and a healthy bank account.

Fly anywhere, anytime,
All it takes is an app, a membership fee and a
healthy bank account.

JetSmarter is a membership traveler service that allows users to book a private jet from a mobile app. JetSmarter claims to have access to the largest private jet marketplace in the world – 3,000 aircraft according to founder Sergey Petrossov. Your choice of aircraft ranges from King Air turboprops to Boeing 767s.

Membership is roughly $3,000 to join and around $9,000 per year. You can book a whole jet to take you just about anywhere. You can also select a service they call JetShuttle, which allows you to search for a flight that is already scheduled and may have spare seats available. The app becomes most economical when you book a seat on an empty leg.

Beacon was centered in the Northeast with a one-time $1,000 initiation fee and a $2,000 a month usage fee. Despite its white glove services, Beacon fell prey to regulatory and overhead costs it could not overcome. Beacon closed shop in April 2016. We mention it only to remind you that not all of these services succeed.  They are subject to regulations and to costs, which could cripple their chances of success.

BlackJet is a Florida-based service that is actually backed by original backers of Uber. The service requires a $5000 annual membership fee but it does allow you to purchase a seat rather than the entire plane. Of course, that seat could run you $6000 but that’s still cheaper than a whole plane. In the past several months, BlackJet has been grounded and restarted again. Much of this is due to financing problems. Whether it survives or goes the way of Beacon remains to be seen.

Blue Star Jets is a booking service that claims access to over 5,000 planes worldwide and operates in an Uber-fashion. They offer one-click reservations and a 24/7 customer service organization – they say they can book you anywhere across the globe in just 15 minutes.

imgresPrivateFly lets users see competitive quotes and aircraft, so they can comparison shop and the ability to choose both aircraft, as well as airports. PrivateFly claims to be a global booking service and the fastest growing private aviation company in Europe. The company claims they can get you in the air within one hour.

SkyJet is a New York based charter service that charges by the hour. About $3000 for a light jet, $4000 to $4500 for a mid-size jet and about $7000 for a large cabin jet. SkyJet does not offer long-term commitments and has been known to provide empty-leg seats.

Surf Air is a California based service that owns its own fleet of aircraft. You can purchase unlimited flights from $1950 a month – fly as much as you want but must make two reservations at a time.  Surf Air also provides Group Memberships for companies. Some days they launch as many 90 flights. Surf Air operates single-engine Pilatus PC-12 turboprops and is mostly a West Coast based operator.

Victor is booking service that is Uber-like, but worldwide. Use its one-touch mobile booking app, and as many as 7,000 jets are at your disposal. They claim they can get you airborne in a couple of hours. You also get real-time pricing and price comparisons to help you make an informed decision. Victor is based in London and allows you to book any size aircraft from a turboprop to a full-size Boeing or Airbus.

Wheels Up is a private aviation start-up that sells memberships and on-demand flights. It has two kinds of membership programs: Individual/Family and Corporate. Individual Family members pay an initiation fee of about $17,500 and fly at an hourly rate of about $4000 an hour.  Corporate membership starts at around $30,000. Wheels Up guarantees pricing and flies King Air 350 and Cessna Citation Excel aircraft.

Note: You should be aware that with some booking services, there may be addition fees that are not included in the price, such as airport fees or landing fees, which are separate from your negotiated price. Best to read the fine print before boarding.

The Last Word: Choose Your Options Wisely.

You can still choose to go direct to tried and true jet charter companies like NetJets and Avjet for your private aircraft needs. They tend to have programs that essentially make you a fractional owner in their fleet.  They, too, offer online and phone booking, but you are flying them exclusively. Their prices are usually fixed and you will be booking their aircraft, not just a seat.

In the end, it comes down to need, budget and availability. Choosing a mobile booking service may be right for you, becoming part of a jet charter service may serve your needs better. The truth is there are lots of options out there – more than we have covered here.  Some of them are global, some are regional. Do your homework and crunch your numbers and you can turn your cell phone into your own personal airline. Otherwise, do what the remaining 99% of us do, book a flight, drive to the airport and grit your teeth.

Do Uber Like Flight Sharing Services Compromise Flying Safety?

Aviation Marketing Consulting Blog

Will Uber like services for aviation open the skies to more travelers?

Welcome to the age of sharing. Looking for a ride to town? Call Uber. Want to vacation in Rome and do as the Romans do?  Book with Airbnb. Need to be in Hartford, Connecticut by 9 A.M. tomorrow morning?  Go online and see what flights are available on AirPooler or Flytenow.

Wait a second! You never heard of AirPooler or Flytenow?  Are they an online travel service?  Booking agent? Airline?

They’re none of the above. They’re online flight sharing boards. They’re designed to hook you up with a private pilot who just so happens to be flying to Hartford tomorrow and plans to arrive just about an hour before your meeting with the marketing manager of a huge insurance company in downtown Hartford.

Wow! No waiting on the security line at the airport. No baggage check. No boarding passes. Just you, your cash and maybe a form of ID to prove you are who you say you are. Hop in the Cessna and off you go. You don’t even have to land at Bradley International. You can touch down at Hartford-Brainard instead and be ten minutes closer to your downtown meeting.

Sounds great, right?

Hold it!  According to the FAA: NO CAN DO!

Anyone who has been issued a private pilot’s certificate in the United States is certainly familiar with a regulation called FAR 61.113(c).  It allows passengers to pay half the cost of a flight which includes gas and some other small expenses, but not much else.

According to now-grounded flight share organizations, AirPooler and Flytenow. all they ever intended to do was allow passengers to pay a fair share of a private pilot’s flight expenses to a specific destination.

The FAA, on the other hand, sees this service differently. They view flight-sharing services as commercial aviation, plain and simple. Commercial aviation by FAA standards means the service provider and pilots must have a commercial certification — therefore, those pilots must hold no less than an air transport license.

But wait! The private pilot isn’t making a profit on this arrangement; he or she is just splitting the cost of their flight. The parties involved do not think they are booking a flight on an air charter or an airline. As far as AirPooler and Flytenow are concerned, all they’re really offering is a private pilot, a private plane and a private agreement between the passenger and the pilot to pay half the flight operating costs. This is clearly defined in the FAA Part 61.113(c) regulations and has been around since the 1960s. So what’s the fuss about?

The fuss, according to the FAA is about safety and how these online sharing services “advertise” their flights. Because the flights are listed online, the FAA considers them to be “holding out” the services or advertising them.  By so doing, the online services are acting as commercial carriers and are thus subject to Part 119 regulations. The FAA asserts the private pilots listed online do not meet the commercial standards and so are operating illegally.

When in doubt, sue!

The order to ground AirPooler and Flytenow flight sharing services was issued by the FAA back in August of 2014. Since then, Flytenow has decided to take the case to Federal Court. Flytenow contends that share flights do not make the pilot a profit and therefore he or she is simply deferring cost and not acting as a commercially licensed airman.

They further contend that share flights are listed on Flying Club bulletin boards all the time and that the Part 61.113(c) regulations does allow folks to pay pilots for half the ride, so in essence, this sort of thing goes on all the time.

The FAA , on the other hand, claims that when friends or acquaintances, familiar with a private pilot, fly with him or her, they know what they’re getting into because they have some knowledge of the pilot’s skill set. Get into a plane with a perfect stranger who is a private pilot, says the FAA, and you’re taking a risk. Why? Because the private pilot’s skill has not been tested and endorsed to the levels needed for a commercial license.

If you’re keeping score of the arguments being volleyed back and forth, you don’t have to twist your neck any longer because the Flytenow vs. FAA case was heard by a three-judge panel in Federal court on September 25, 2015. You can read and hear the transcript  on Flytenow’s blog. Basically, the FAA is not backing down and in some ways doubling down. Here’s the current score:

  1. The FAA has admitted the order to stop practicing flight sharing at Flytenow was and still is a final order. That makes it official, legal and hard to maneuver around.
  2. The FAA is standing by its assertion that by advertising and broadly disseminating its services on the internet an online flight-sharing service is acting as a commercial or common carrier and subject to commercial regulations.
  3. The FAA points out that even ATP rated pilots are prohibited from transporting passengers for compensation when they are operating outside a charter or airline service. And this is despite their extensive pilot training and the certification they receive to carry passengers.

Meanwhile… at the Charter Airlines…

Online bulletin boards are helping to fill seats at charter jet services. Since they are charter carriers, they are commercial businesses and must hire ATP certified pilots, in which case the FAA has no problem with these air charter companies posting ride shares.

Why would a charter operator consider a ride share when they get ticketed customers through brokers? One reason is they have many empty-leg flights  – these are flights the charter operator needs to make to reposition their aircraft. Instead of flying them empty, some charter operators are setting up mobile apps, which allow customers to book direct without having to go through a broker. The brokers may not like it, but the charter operators do and the FAA has no objection because they’re commercial carriers.

The drawback to empty-leg flights is they revolve around the need of the charter company, not the paying customer. In truth, it’s the same idea as AirPooler or Flytenow. You’re hopping on someone else’s flight because it just so happens to coincide with your travel requirements.

The advantage of flight sharing for the charter operators is that it’s found money! The aircraft has to fly to the destination – empty or not. Having someone willing to pay to be a passenger on the flight means additional profit for the charter operator.

The bottom line

Why is sharing in vogue? The real answer isn’t because it’s sexy (although hoping a private jet during an empty-leg flight could make you feel like Donald Trump). No, the real reason is the high cost of everything – especially aviation– in a relatively flat economy.

For private piston jockeys, sharing could be a way to defer the ever -increasing cost of flying. For their passengers, it could be convenience at a highly reduced rate. Unfortunately, there are safety and regulatory concerns involved. The flight share businesses were betting the courts would rule in their favor, as they have with Uber.

The bottom line is the paradigm is shifting. We now live in an age of sharing created by a digital marketplace – and we share not because we want to, but because we have to. There is no doubt aviation has changed in these digital times. You can see it in our glass cockpits, our tablet- filed flight plans, our portable avionics, and now in the way some passengers are hitching rides with us.

As the saying goes, change or get out of the way. It’ll be interesting to seeing who ends up on the wayside.       Like so many other things in our lives, technology creates both opportunity and disruption. Either way, we all eventually have to adapt to it.  Perhaps, even the FAA!

ADS-B – To Some Aviators the Most Expensive Letters in the Alphabet

ADS-B Is it worth it?

The FAA has mandated that by 2020 all aircraft flying in controlled airspace must have ADS-B. Is it worth it?

The FAA mandates you add ADS-B OUT (Automatic Dependent Surveillance-Broadcast) to your airplane’s cockpit by 2020, no ands, ifs, or buts. No worries if you’re a multi-million dollar airline with a relatively healthy revenue stream. However, if you’re a typical GA (General Aviation) pilot, it could be a real pain in the wallet.

Why? The money to meet the requirements is high compared to an aircraft’s net value.

Let’s look at a very possible scenario. You purchased a thirty year old Cessna 172M for $39,000 with a $15,000 down payment four years ago. You took out a 20-year loan on the remaining $24,000, which means you’re not even a quarter of the way to payoff.

The previous owner had a top overhaul done on the engine fifteen years ago, which means it’s well past TBO. Even though the every cylinder compression is still good, you know you’re looking at a new engine, or at least a factory rebuild, somewhere down the line. In fact, you’ve been salting away a few bucks a month to ease the pain when the A&P mechanic shakes his head and says the old Lycoming has to go.

Now the FAA comes along and says you have to install ADS-B OUT into your thirty year old bird, whether you like it or not. You do a little investigating and quickly come to the conclusion it is going to take at least $6,000 to meet the FAA requirements – that’s almost a sixth of the net value of the airplane, which will need a new engine, sooner than later.

Is it worth it? Depends on where you fly and how badly you want to keep doing it.

Is ADS-B necessary, or just an expensive bell and whistle?

The FAA issued its mandate in 2010 for ADS-B, giving aircraft owners ten years to comply. Here are the “cliff notes” on ADS-B and why the FAA wants you to install it within the next four years:

  1. ADS-B is one of several air traffic management systems that’ll shift air traffic control system from radar based surveillance to a digital network of airborne, ground and satellite-based systems; it is an integral part of the NextGen air traffic system.
  2. All aircraft flying in controlled airspace must be equipped with ADS-B OUT by January 1, 2020. It will give both ATC and ADS-B equipped aircraft the position and altitude of all aircraft in a given airspace.
  3. ADS-B is more accurate than radar with position updates once-per second as compared to between 4 and 12 seconds for radar.
  4. It will allow for closer separation of aircraft and more direct routing of all aircraft through controlled airspace, which includes Class A, B, C and everything above 10,000 MSL.
  5. Compared to radar ground stations, ADS-B ground stations are relatively low-cost and it will require only 800 ground centers to cover the entire U.S.
  6. An ADS-B installation requires two items: 1) a certified, rule-compliant WAAS GPS high-integrity position source (please note that this must be a IFR certified GPS, so even those who have GPS may have to upgrade) and 2) a datalink radio of which there are two types: 1090 MHz and 978 MHz
    • All aircraft operating at or above 18,000 feet must have a 1090ES (Extended Squitter); aircraft flying below 18,000 feet can use 978 UAT (Universal Access Transmitter)
    • The 1090ES ADS-B requires transponder replacement or modification. The 978 UAT will work with existing Mode A C or S transponders, which aircraft flying in controlled airspace must already have by regulation.
  7. Adding ADS-B IN adds weather and traffic data the pilot can see in the cockpit without adding costly subscriptions even if displayed on a tablet device such an
  8. ADS-B should increase the availability of flight following and should go a long way to increasing the accuracy in locating missing aircraft.
  9. Lastly, with the increased use of unmanned aircraft in the skies, ADS-B may become more and more of a necessity over time and provide more comprehensive situational awareness to all pilots, especially those flying at lower altitudes where Flight following may not be available or is restricted by workload factors.

A Reality Check

As of this writing you should know there is a controversy brewing over the efficacy of ADS-B. According to the Wall Street Journal, “the FAA itself has determined that taxpayer investments in such ground-based applications ‘now outweigh the projected benefits of the program by as much as $588 million.”

While the FAA insists it has delivered its part of the bargain by building ADS-B ground stations, many argue the systems is not yet ready and has several inherent problems. These include:

  • Gaps in the network of ADS-B towers with a need of as many as 200 more stations at an additional taxpayer cost of $258 million
  • Lack of true “end to end testing,” connecting cockpit equipment to controller stations to ground installations, due to the users’ reluctance to install the equipment on a large percentage of their aircraft.
  • Defense Department concerns about the system’s capability to block cyber-attacks or to ensure ADS-B infrastructure and avionics security
  • Effective monitoring systems to determine whether the system/equipment is safely functioning.

Situation Awareness vs. the Money Situation

Given the U.S air traffic system is still relying on 70 year old radar technology, the move to ADS-B should be an idea that is easy to embrace from a situation awareness and safety point of view. The fly in the ointment, however, is not just money, but value-added service for the money. Many would argue, the latest digital technologies already offer some of what ADS-B promises.

AOPA (Aircraft Owners and Pilots Association), which generally supports the ADS-B concept, is lobbying the FAA to push back the 2020 deadline for certain GA segments until a less costly solution can be found to the nearly $6000 equipment and installation price tag.

The fear is the cost may ground many airplanes and their pilots at a time when the General Aviation industry is stagnant and the number of pilot flight hours flown declining. AOPA argues the economics of GA are fragile enough without adding another tipping point. Clearly those who fly in wide open G space, will be reluctance to install ADS-B in cockpits until the last possible moment. If, however, you fly in crowded Southern California or the East Coast, adding ADS-B as soon as possible might appear prudent.

AOPA has asked the FAA to consider several technical changes so that the price of ADS-B could come down and be more in line with the economics of certain GA pilots. For example, AOPA is lobbying the FAA to allow pilots to use hand-held ADS-B receivers, which would eliminate installation costs.

Because the FAA is implementing ADS-B on two independent frequencies, 1090 and 978, AOPA is also recommending there either be a re-broadcast service at all general aviation airports or that all aircraft use the same frequency.

 The Get IN and Get OUT argument

The other side of the argument, is you should get in earlier than later and add ADS-B IN to your equipment so you can get weather and traffic services without paying subscription fees that Garmin and other GPS software companies charge for these services. ADS-B manufacturers argue that the additional situation awareness will help promote GA rather than shrink it and that flight schools in particular will like the added advantages of being able to track their students’ whereabouts, as well as give them an added margin of safety. The manufacturers believe the system will work and only improve with time.

A matter of when, not if.

The reality is to fly in controlled airspace, you will have to add ADS-B to your airplane.  That goes for owners of thirty five year old piston driven Cessna’s as well as owners of state-of-the-art Cirrus R22s. In either case it may be more sensible to do it sooner than later because the FAA mandate stands. You’ve got to 2020 to comply. And, by the way, that’s already 20 years into the 21st century.

Pilot Shortage? Some Say Yes. Some Say No.

Pilot Shortage Possible

The government says there are 137,000 pilots available to fill 65,000 pilot jobs. on the horizon. Really?

The impending pilot shortage, which has been predicted for almost a decade, seems much like the ’70’s folk rock lyric, “First there is a mountain, then there is no mountain, then there is.” That is to say, depending on whom you talk to there is a shortage, then there isn’t, then there is. Well, what is it …   yes or no?

The answer, it turns out, is not that simple.

According to a recent Government Accountability Office Report there are more than 137,000 ATP-rated pilots available to fill some 72,000 airline pilot positions in the near future due to attrition and retirement. Does that sound like a shortage?

Many of these pilots are eager to jump into major airline cockpits to replace the thousands who will be retiring in the next few years (FAA mandatory retirement age is now 65). That being said, the number of available pilots willing to jump at a chance to fly at a regional airline, the current stepping stone to the majors, is paltry at best. We’ll get to the reasons for this in a moment.

But First a Word from Your Former Sponsor, the C.A.B.

Before we get into the pros and cons of who is right and who is wrong about the real or imagined pilot shortage, let’s look at some of the forces that have brought us to this point in U.S. commercial aviation.

Until 1978, the U.S. airline industry was regulated and subsidized by Uncle Sam. The government controlled fares, scheduling, even staffing and other business-related aspects of the commercial aviation industry – all of this oversight rested with the CAB (Civil Aeronautics Board) which was charged with ensuring the airlines a reasonable return on investment. In other words, a profit.

The 1970s, however, brought changes to the airline business that neither the airlines nor the CAB could control. First, there was the introduction of wide-body jets, which dramatically increased passenger capacity. Almost simultaneously, there was the first Middle East oil embargo, which caused fuel prices to soar as well as the cost of transporting all those additional passengers.

Faced with more seats, higher fuel costs and record inflation, the airlines found themselves at odds with their regulator, the CAB,  because airlines couldn’t raise fares or choose more lucrative routes over less profitable ones without CAB permission. To assuage the airlines, the CAB allowed fares to increases, an idea that did not sit well with airline customers and their representatives in Washington.

The CAB’s own studies confirmed regulation was strangling the airlines and preventing the market to find its own price levels. Combine that with increased Congressional pressure and soon the way was paved for The Airline Deregulation Act of 1978, signed by President Carter and sanctioned by CAB chief Alfred E. Kahn.

At first, it appeared as though deregulation was a win-win for everyone.

It opened the door to free market competition among airline companies, gave them autonomy over routes and pricing structure as well as the salaries and benefits of their employees. The immediate result was an industry expansion ushered in by price wars, discount airlines, (remember People’s Express, remember Freddy Laker) and increased consumer demand.

The CAB had presided at its own demise and because of it was dismantled in 1985. The only aspect of civil aviation left to government oversight was safety and that was given over to the FAA.

Fly Me, I’m Broke.

The expansion that lasted through the 1980s, however, was followed by a downturn in the ‘90s. Then came 9/11 and the deregulated airliners found themselves facing more than rising fuel costs and empty seats. Now there were higher operational costs for added security and safety regulations as well.

Profit margins grew slimmer, Chapter 11 filings became more frequent and mergers grew increasingly prevalent. The remaining airlines had to find more and more ways to shave costs and streamline services – no-frills rides, baggage fees, dropped routes. In addition, they started laying off pilots and aircrews. They also slashed benefits and pensions and slowly eroded the perks that went with flying for the airlines. In the end it came down to reduced options for the flying public and reduced opportunities for airline industry employees.

Which Brings Us to the Pilot Shortage?

U.S. Airlines, who haven’t hired new pilots in years, now find the times they are a-changing. Many pilots are reaching the FAA mandatory retirement age of 65. Many more are being lured away by higher pay and better benefits at overseas carriers (i.e. U.S. airlines start first officers $61,000/yr. – foreign airlines pay $80,000/yr.). There are higher training requirements for pilots, new mandatory rest periods for pilots, and according to many (but not the Government Accountability Office) fewer qualified pilots. Please note that the airlines helped craft some of these safety regulations themselves. What’s more, there aren’t legions of military pilots waiting to fill the ranks like there were in times past.

After more than a decade of furloughs, reduced pay and slashed benefits, some pilots have just dropped out of aviation. Worse yet, young adults, who might have considered a career in aviation are looking elsewhere.

Air Line Pilot Magazine says there isn’t a shortage of qualified pilots but, “a shortage of qualified pilots willing to fly for substandard wages and inadequate benefits.”

If that’s true, the “pilot shortage” becomes even more acute when you look at what’s going on with the regional carriers. After the Colgan Air crash in Buffalo a few years ago, Congress pressured the FAA for new pilot requirements. Now a pilot cannot even be considered for a right seat at a regional airline unless he or she has at least 1,500 hours (that’s six times higher than previous requirements).

Rest rules have also been extended, creating scheduling problems and at times crew scarcity (more aircraft available than pilots legally permitted to fly them). Some airlines are using this fact to close down routes and stop service to certain cities. Not good news for small cities and worse news for someone looking for a flying gig.

It’s Money That’s In Short Supply, Not Pilots.

The truth is the regional carriers operate on shoestring budgets. They always have. The pay for flying the right seat is often $20,000 a year or less. That’s so low; a military pilot would do better by re-enlisting.

Then there’s the flight school problem. It’s not just that the price of learning to fly is sky high (which wasn’t always the case), but that there are 40% fewer student pilots than a decade ago. Today’s commercial flight schools rely more and more on foreign students to stay open. Foreign students eventually take their skills home, reducing the market for American pilots abroad as well.

Aviation colleges still attract students, but almost all students are encouraged to take business management classes in addition to their pilot training. The conventional wisdom is be prepared for more than a career in aviation, be prepared for one outside of aviation.

Why?

Because after sinking one to two hundred thousand dollars into training at an aeronautical college, a $20,000 a year right-seat flying job at a regional airline will barely put a dent paying off a student loan and hardly leave enough left over for a pilot to exist on while waiting for an opening at a major airline.

Why Don’t Airlines Just Hire Military Pilots?

At one time, the military was the training ground for the U.S. airline industry.

Airlines got skilled pilots with thousands of hours of flying experience and they got them without having to train them. This is no longer the case. Now the route to flying for a major airline job is through the regional airlines and if their pay stinks and the career path is long and serpentine, you begin to see why there may be a pilot shortage – if not in the immediate future, but in the not too distant one.

One person who doesn’t think there is a shortage is Louis Smith, president of FAPA.aero. He believes there is a pilot “workforce defect.” That defect is in the way regional airlines operate, hire and pay. Mister Smith believes “since the regional airline passenger feed is critical to mainline success, measures must be taken to make the career path more compelling and lucrative.” Given the current fragile economics of running a regional airline that may be easier said than done.

Is Anyone Doing Anything About All This?

One aviation powerhouse who has taken a stand on the current situation in commercial aviation is aircraft manufacturer Boeing. They announced at the 2014 Air Venture in Oshkosh that they’re starting a “Pilot Development Program.” Note that Air Venture is not a commercial aviation venue, but a grass-roots, general aviation one and this was the first time Boeing has made an appearance in this kind  of airshow. Boeing thinks there really is a coming pilot shortage and they’re doing something about it.

Boeing is partnering with local flight schools to get pilots to the point where they have the 200 to 250 hours needed to get their ATP rating. Qualifying graduates will then be moved to a Boeing owned and operated jet transition facility to prepare for airline flying.

Boeing is hoping partners will step up to finance the program. They’re hoping those partners will be major U.S. airlines who they believe have a stake in the success of the program.

Meanwhile, some regional airlines are trying to entice recent ATP-rated pilots to join their ranks by giving signing bonuses and other incentives. It doesn’t make up for the lousy pay, but it does show there is at least some awareness that problem may be more financial than aeronautical.

You Say Yes, and I Say I Don’t Know.

Still, some people are saying all this pilot shortage stuff is nonsense… that there are plenty of pilots to go around. Louis Smith, for example, says, “I will call it a pilot shortage when pilot employers begin paying students to learn to fly.”

In that case, if Boeing convinces airlines to go in with them on their “Pilot Development Program,” we’ll know whether or not there is a real pilot shortage…   or not.

Economic Forecasts Call for Bluer Skies. Will Jet Manufacturers be Putting On A Happy Face ?

The super rich are buying high-end private jets making jet makers smile again.

The super rich are buying high-end private jets making jet makers smile again.

For jet aircraft manufacturers, the past several years have been both the best of times and the worst of times, depending on the market niche they occupy. The commercial airliner segment enjoyed robust sales before, during and after the Great Recession of 2008/2009, but is now descending to lower sales heights. Meanwhile, business jet sales , which were severely grounded due to the recession are now beginning to take off again.

Mr. Biz Jet Goes to Washington – Leaves With His Tail Between His Wheels

Without a doubt, the business  sector took a big hit during the economic downturn. A great deal of the damage was caused by the perception that the “Haves” were flying around in their plush biz jets while the “Have-Nots” were experiencing economic free fall.

The sight of automotive and banking industry executives flying to Congressional hearings in multi-million dollar private jets, asking fora  handout, did not sit well with the Congressmen and the general public in 2008. Despite valid  arguments that corporate  jets save businesses time and money.  the press  skewered executives for  this particular company perk which in turn fueled the public outcry against their perceived conspicuous consumption.

A Better Economy- a Brighter Day for Private Jet Sales

More than half a decade has elapsed since those dark days of 2008, and while the economy still isn’t as healthy as we’d all like it to be, it is much healed and continues to mend. Some business segments in particular are back in the black  positioned for future growth. Both aerospace analysts and jet makers alike confirm the industry is growing again.

  • Gulfstream indicates customers are back and wealth creation is bringing out shoppers for private jets.
  • Pratt and Whitney’s President Paul Adams says deliveries of private aircraft are growing after hitting bottom in 2011.
  • Cowen and Company’s aviation analyst Cai von Rumohr recently stated the business jet market “remains poised to accelerate next year.”
  • Teal Group aerospace analyst Richard Aboulafia contends we’re seeing a resurgent of the “Haves” coming back to buy something they simply cannot live without – their own private jet.
  • The Highs & Lows Of Private Jet Sales

The Highs & Lows of Business Jet Sales

Before you break open the champagne, please note that not all business jet categories are up. According to Honeywell’s Business and General Aviation President Rob Wilson, “the trend towards larger-cabin aircraft with ever increasing range expectations and advanced avionics is seen to be stronger than ever.” According to Honeywell’s most recent annual aviation forecast this large-cabin sector will account for 56% of Biz-Jet sales in the coming decade compared to 25% for smaller cabin jets and 19% for mid-size private jet aircraft. Honeywell’s overall forecast for the category is 4 to 5 percent annual growth beginning in 2014.

Biz Jet?  Make That Tycoon -Jet Instead

If  you think the corporations are leading the charge for bigger, plusher, more technologically advanced private jets, think again. The money and the interest aren’t coming  from the executive suite so much as it is coming from high net worth individuals in the ever-expanding Billionaire’s Club. Manufacturers of jets with price tags of $26 million and up are seeing the greatest demand, not so much  for those corporate jets in the meager $9 million  range. Aviation market analyst Richard Aboulafia says “in its own way, it (the biz jet market} mirrors what’s going on … it’s the ‘Haves’ and the ‘Have Nots’, but it’s mostly ‘Haves’.”

Mr. Aboulafia further believes that tight credit is holding back the small and mid-size business jet categories and that the large-cabin market is being fueled by people who are capable of self-financing the purchase.

In case you were wondering where all these new “Haves” are coming from, the answer is every corner of the globe. Forbes estimates the number of billionaires reached 1,645 worldwide this year, up 213 individuals from last year.  Or course, some of these individuals are tied to major corporations, but the real money is buying jets for personal use not just to get corporate officers to meetings on time.

How Did We Land Here?

Because banks played a large part in creating the recession, they came under great scrutiny and stringent regulation in its aftermath. Some banks were bailed out by Federal TARP funds and others were forced to merge with more solvent banks. Not only did it become hard for individuals to get loans but the requirements for getting a business loan became stiffer as well. Needless to say, financing a company jet is now harder than ever.

In addition, the resale value of everything fell, including corporate jets. Like houses, company jets lost value. Some companies found they owed more on their jet than it was actually worth. In other words, their high flying aircraft was underwater. You don’t have to be an economist to see what these factors do to aircraft resale or to new aircraft sales.

As companies started selling off their corporate aircraft, it created a glut of pre-owned inventory which further suppressed new aircraft sales. Even though the pre-owned inventories are beginning to diminish, Bombardier says, “the gap between new and used aircraft pricing remains wide and is restraining demand from customers looking to trade in their existing aircraft against the purchase of a new aircraft.”  However, Bombardier does see a light at the end of the tunnel. They contend as the pre-owned inventory continues to dwindle, the number of new aircraft sales in the business and private jet category will increase. They believe, as do many others analysts, that  we are approaching that tipping point.

More Reasons to Be Optimistic

Honeywell concurs with the Bombardier analysis. Every year Honeywell surveys 1500 business jet operators.  They currently estimate that as much as 28% of the current business jet fleet around the globe will be replaced in the next five years. Here’s how they break it down worldwide:

  • 61% of the demand will be generated in North America
  • 18% will come from Latin America
  • 12% will come out of Europe
  • 5% from Asia and the Pacific

Economists are predicting the global economy to improve as much as 2.9% in 2014. Bombardier believes that when the global economy grows at a steady 3% per year, business aircraft sales of all kinds will grow.

The Other Side of The Market

What’s good news for Gulfstream, Bombardier and Falcon does not spell good news for Boeing and Airbus. Teal Group forecasts the stunning annual 9% growth rate the airliner manufacturers have enjoyed over the past ten years will fall to less than 1%. You can point to a lot of reasons for this including the expected end of low interest rates and  stable fuel prices, which helped create a favorable market condition for airline orders for over a decade.

A Parting Thought.

Although the demand for private jets is being bolstered by the uber rich, sellers of smaller-cabin, shorter- range business jets have reason to be optimistic over the long haul as well.  Bombardier cites three other important trends in its current forecast for the business jet market:

  •  increase in on-demand travel
  • continued growth of air charters
  • fractional operator purchases are now 10% of the biz jet orders and growing

Additionally, industry insiders like Steve Varsano of London’s The Jet Business, sees private jet sales growing due to the rise in international travel. And as far as those jet-setting corporations are concerned – they are beginning to pack their corporate jets with middle managers in order to get them to spend more time at meetings and less time at airports going through security.

Once again, nothing in life (or in markets) is certain, except change. For the business jet market change is currently for the better and that is certainly something to smile about.