An on-demand jet service offers obvious advantages for traveller and operator alike, but getting it off the ground is not so clear-cut.
Call it the “uberfication” of jet travel. It’s the idea that some day soon, travellers will be able to hail a private jet to fly to their destination, just as they now Uber up a car ride. For jet owners, the idea promises to raise money from seats that currently fly empty. It drives a host of mostly US-based new private jet booking start-ups with names like PrivateFly, JetSuite, JetSmarter, Victor and BlackJet.
Celebrity-backed aeroplane operator BlackJet has positioned itself as the Uber of private jet travel ever since its 2012 founding by a group including original Uber co-founder Garrett Camp.
Another claiming Uber-like status is JetSmarter, which in mid-2015 announced it had raised US$20 million in funding from Saudi Arabia’s royal family and US hip-hop artist and entrepreneur Jay Z.
Jet air travel has long been cast in the sexy-wealthy category, but many pundits say it’s just an efficient business tool that offers more flexibility and fewer hold-ups than normal scheduled flights. Darren McGoldrick CPA, Australasian vice-president of ExecuJet, describes it as tantamount to a flying office.
“The aircraft is not a shared space; it is discrete, confidential and can be used to conduct business en route, or for post business debriefs with access,” he says.
“Jet air travel has long been cast in the sexy-wealthy category, but many pundits say it’s just an efficient business tool.”
Even famously thrifty investment genius Warren Buffett has become a believer. After years of criticising corporate CEOs’ use of private jets, he bought one, christened it “The Indefensible” and then – convinced of its usefulness – renamed it “The Indispensable”.
Given the capital cost of private jets, it seems plausible to bring private jet travel to a larger audience, as the US start-ups want to do.
Straining to be Uber
Right now, Uber-style jet travel is still happening very slowly, even in the home of jet air travel, the US – and it has yet to take flight further afield in Europe, China or Australia.
The US jet market, by far the most sophisticated, is a long way from being uberfied. A plethora of apps, memberships and so-called “on-demand” options claim they can do it
faster and cheaper, but growth has been slow.
Most of the new US players are looking at one market – leveraging what the aviation industry calls “empty legs”. It’s estimated that the average private jet spends 5000 hours each year flying empty en route to pick up someone.
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Getting some of that spare flight time isn’t cheap, though. JetSmarter, the self-described “Uber for private jets”, asks members to spend US$9000 a year for unlimited access to private flights – and no, that does not include the price of the flight. BlackJet’s US$5000 annual membership gets you 80 per cent off a seat on someone else’s jet, or on a charter of your own if you’re bringing the whole crew.
Hitting the limits
As a matter of economics, Uber-style disruption needs a healthy supply of willing buyers and a healthy supply of willing sellers with accurate information to drive down prices. As one unnamed executive noted to Forbes magazine last year, the supply of flights remains thin. There simply aren’t enough spare jet seats to get Uber-style jet booking to the take-off point.
The services also lack reliability. You can never be sure that one is flying your way at the right time – and travellers willing to pay the prices on offer generally want certainty as well as privacy.
EmptyJets is one of the few operators in Australia that specialises in dead-leg travel. Normally, an eight-seater private jet flying from Sydney to Melbourne would be hired for around A$15,000, whereas EmptyJet will sell you the already-paid return leg for as little as A$2000. Split between eight people, that’s just A$400 each. That may be Uber-style in price, but it’s very hit and miss. You could also book it with a phone call, so it’s hardly Uber-style in technology.
“When commodities prices dropped, one of the first things the miners cancelled was jet chartering.” Frank Tadros, Air Charter Network (Australia)
Barriers in Australia
In Australia, the concept faces an even bigger hurdle: in part, it’s illegal.
“You can’t sell seats or space on a private airplane,” explains Osman Bahemia, general manager of sales and marketing at Australian jet air broker Adagold Aviation. He points out that you can hire it as a whole and bring your mates – the service that EmptyJets offers –“but you can’t actively go out and sell single seats”.
Australia’s Civil Aviation Safety Authority (CASA) stipulates that once a single seat is sold, it becomes a regulated passenger service and no longer a private concern.
Furthermore, according to Essendon Airport chief executive Chris Cowan, with only an estimated 150 private jets in Australia, there simply isn’t a big enough market to create any kind of high-tech flexibility in private flight arrangements. Cowan says Australia is the seventh-largest market in the world for private jet air travel, but it’s still very small fry.
China has more than twice the number of private jets – about 330 to 350 – but nowhere even comes close to the US, which has about 10,000 private jets in service Australia’s geography also entrenches the big airline operators. The Melbourne to Sydney air space is one of the busiest on earth, and the Sydney to Brisbane leg is not far behind.
Australia is among the most urbanised countries in the developed world, and almost 40 per cent of Australians live in the two largest cities, where most of the big companies are located, so there is less need to fly regularly to the smaller, second-tier towns than in the US or Europe.
Another problem is cultural.
“Private jet travellers prefer to stay under the radar,” says Mark Peart, chief pilot and managing director of Light Jets Australia. “As soon as you have a jet, clients think you’re a billionaire and you’re ripping money from them.”
Australian private jet travel must also fight economic changes. The days of mining magnates enjoying unlimited intra-continental travel are over, says Frank Tadros, who runs Air Charter Network (Australia).
“When commodities prices dropped, one of the first things the miners cancelled was jet chartering,” he says.
Bahemia agrees that a lower Australian dollar has changed the client mix. It’s now about wealthy offshore holidaymakers and a new wave of rich but time-poor overseas investors (mainly from the US and China), keen to see their far-flung agricultural, mining or property investments up close and quickly.
At best, Australia’s market for private jet travel is steady. Cowan says Essendon Airport’s recent A$20 million face lift, which incorporated improved runways and greater hanger space, was not precipitated by an expected surge of new jet arrivals, but by demand gently rising at about 3 per cent a year.
“We’re currently handling about 3000 movements per year, which will rise to 5500 movements in 20 years,” says Cowan. “We don’t expect any quick ramp-up.
“We hear the number of corporate jets arriving from China will grow sixfold in no time at all – but we haven’t seen it yet. The Chinese economy is not as strong as it was.”
If private jet travel is to be transformed, it still has some challenges to overcome. Most of us will just have to keep facing the airport lounges and the boarding queues ... and save uberfication for the trip home from the airport.
The most common use for private jets is chartering, where just about everything is possible for the right money.
ExecuJet boasts the ultra-long-range Gulfstream G650, a US$65 million plane often hailed as the best private jet in the air. It regularly flies up to 16 passengers to New Zealand, Beijing, Los Angeles, Hong Kong or Singapore. ExecuJet’s Bombardier Global XRS (list price US$60.5 million) can fly up to 13 passengers non-stop from Sydney to the Maldives, Hawaii, Hong Kong or Singapore.
The Gulfstream series can be equipped with bedrooms, sleeping up to eight. It offers leather seats and a stand-up bathroom – and it will cost you about A$12,000 an hour to rent, says Osman Bahemia, from Adagold Aviation.
ExecuJet says that as well as transfer from the limo to the aircraft, it offers premium catering (to suit any dietary preference or religious requirement); all the latest in-flight communication and entertainment devices; and cabin attendants who are specially trained and often fluent in several languages.
There are cheaper options. Travel the same route in a two-seat Cessna and the cost is about A$3000 to A$3500 an hour, says Bahemia.
Mark Peart, from Light Jets Australia, says he regularly sells memberships that incorporate 100-hour flight packages to his business clients – at a cost of A$350,000. He sells packages by analysing the time that corporate executives will save with private jets.
Peart recommends that businesses only buy their own aircraft if they need 250 hours of flying time or more per year. Crews, hangerage, insurances, airways charges and training can push operating costs to A$300,000 a year without even putting your aircraft in the air. When you do get airborne, “just 100 hours a year will cost you another A$160,000”.
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