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Don’t call it a comeback

Submitted by Paul Maurer on Friday, 06/03/2011 - 07:57

They’ve been here for years, very light jets (or entry level jets) that is, and they’re finally making inroads within the charter industry. Yet despite a recent significant jump in their utilization, the potential for these aircraft to gain market share has been discussed extensively since their debut in 2007. It’s only now that they are coming into their own, particularly in Europe where the vast majority of charter flights are between 1-2 hours.

However, the predicted revolution in charter business models (per-seat, shared, etc.) that many predicted would accompany the introduction of these efficient aircraft and bring prices down to commercial rates have yet to materialize. Traditional charter sales and aircraft management, a well proven business model, is still the norm for current VLJ ‘air-taxi’ companies.

Yet a new business model entrant, Social Flights, will be an excellent proving ground for new alternatives. And an even more efficient jet, the Cirrus Jet, continues apace with development and flew several fly-bys at Cirrus’ annual gathering this month.

For sure, weakness in charter demand and disappointing delivery statistics for the quarter continues to challenge the industry. Plus, it will be interesting to see if the DOT’s recent decision to eliminate the BARR (Blocked Aircraft Registration Request) program, thus exposing all private jet activity to the public, will affect demand. The Wall Street Journal published an excellent accounting of private jet activity from 2007-2010, much to the chagrin of the industry, yet of no seeming concern to Mark Cuban (go figure!). Perhaps the Fractionals will continue to lead the industry back to health as they can best offer identity privacy.

Regardless, private aircraft operators can count on commercial airlines’ lessening public appeal to regain lost business from the recession. Less flight availability due to airline consolidation, inconvenient security procedures, and ancillary fee madness (up to $22B in 2010, doubling since 2008) makes traditional commercial service a ripe target.

(Excerpted from the May, 2011, Igojet e-newsletter. To receive future e-newsletters directly to your Inbox, please click here and sign up)

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