Dodging Delays, Businesses Embrace Jet Time Shares
By DEBORAH BELGUM
For David Bienstock, hopping on a plane to Dallas on short notice is as easy as it used to be before Sept. 11.
“I can fly in and out of a city and be back in the office in one day,” said Bienstock, president of Encino-based Target Enterprises Ltd., which places ads for political candidates.
Except he doesn’t dare navigate LAX or even Burbank Bienstock uses a plane kept at Van Nuys Airport, a scant 10 minutes from his office.
Bienstock’s is among the growing number of middle-market companies, spurred by travel constraints after Sept. 11 and daunted by the $10 million price tag of small jets, that are turning airplane time shares into one of air travel’s fastest growing segments.
Fractional ownership, as it’s known, has grown about 35 percent a year between 1995 to 2001 and has seen a huge surge in the last several months.
On April 1, Bienstock purchased a 16th share in a Learjet 31 from Bombardier’s Flexjet, based in Dallas.
“It is convenient, comfortable and very efficient,” he said. “We can be very responsive to our clients. The other day I had to go to Dallas with only 12 hours notice for a meeting. All I had to do was make a phone call and the aircraft was there and the catering was on the plane.”
One local venture capitalist who bought his first jet share two years ago added an eight-passenger jet two weeks ago. “You find out you use it more than you thought you would. The convenience and the service is exceptional,” he said. “But particularly since Sept. 11 it makes more sense because more flights have been canceled and check-in times are longer.”
Companies in the fractional-ownership market saw a major bump in activity after Sept. 11 when airlines trimmed their flight schedules by 20 percent and beefed up security led to longer check-in periods. The commercial carriers have slowly recovered, although there’s concern that the normally congested summer travel season could see more delays.
“Business aviation has been on the increase in the last 10 years,” said Cassandra Bosco, spokeswoman for the National Business Aviation Association. “That’s because companies are looking for safety and security, productivity and efficiency. And those reasons are in demand more now than ever.”
Darnell Martens of Flight Options Inc., a Cleveland-based company that began its fractional corporate jet ownership program in 1998, said the September attacks prompted many tire-kickers to get serious about the program.
“A lot of individuals and corporations thought fractional ownership made a lot of sense before 9-11,” he said. “After 9-11 they stopped thinking about it and committed.”
While business at CitationShares Holdings LLC, a joint venture of Cessna Aircraft Co. and Tag Aviation USA Inc., has backed off from the level immediately following Sept. 11, it is still 50 percent greater than before the attacks, said John Hall, senior vice president of sales and marketing.
“With the economy starting to pick up, we are starting to see business pick up significantly,” said Steve Phillips, director of marketing for Bombardier’s Flexjet program.
While far cheaper than buying and storing a corporate jet, fractional ownership remains pricey.
At NetJets, $620,000 buys a 16th interest in a Cessna Citation Excel and 50 hours of flight time per year aboard the eight-passenger jet. In addition, there is a $7,909 monthly management fee and a $1,675 hourly flight fee.
The share is not in a specific jet; rather, when a shareholder books a flight the nearest available jet is sent by the operator.
The typical client is a business with $50 million to $100 million in annual revenues flying staff in and out of smaller cities, often on short notice. (There are 5,300 airports used by business jets in the U.S., compared to 563 used by commercial airlines, according to the National Business Aviation Association in Washington.)
Most of the corporate jets seat eight people, which means executives can hold meetings with their associates while traveling back and forth.
It also means less time away in faraway destinations and more time with families. “We don’t have to do as many hotel overnights,” said Bienstock. “Instead of saying to one of my people, ‘You have to go to X tomorrow,’ they now look forward to the experience.”