Dowley, an executive for a private equity firm and a marketing consultant, said he still flew commercial planes on the long, nonstop routes that airlines offer in abundance. But he will sometimes take a business jet to a smaller destination the kind of place that could take an additional three hours or more to reach by commercial plane. So he may fly commercially from New York to San Francisco for a meeting in San Jose, and then fly by private jet to San Diego for more meetings.
He said he used private jets as a filler to circumvent time-consuming airline schedules that often require inconvenient connections, even on short hops.
He buys hourly flight time on a light jet through NetJets, the leading player in the fractional ownership market, which also sells per-hour private jet flying through its Marquis jet-card program. He said he flew more than 300,000 miles a year for business, about 90% on commercial jets and 10 % on private jets.
Commercial air is more cost-efficient, but private is a massive timesaver, Dowley said. Im very judicious with the private flying time, though, to manage the cost.
The industry has been struggling since the recession hit and criticism arose over corporate executives use of private jets.
But deteriorating commercial airline service has underscored one of the rationales long cited for flying privately: the efficient use of business time.
According to the annual forecast by Honeywell, deliveries of business jets this year will probably grow only slightly over last years total of fewer than 650 planes, which in turn was down about 15% from 2010. The peak year was 2008, when 1,139 jets were delivered.
NetJets, a Berkshire Hathaway subsidiary, remains the market leader. But the second-largest company in the fractional-share market, Flight Options, reported that its business had grown for three consecutive years.
Kenn Ricci, chairman of Flight Options, which operates a fleet of more than 100 private jets, said his company had a 53% increase in new fractional owners last year, when it took delivery of 14 new jets. Those were among the more than 140 it had on order.
We have stabilized the business and made Flight Options into a much better company than it was a good alternative, Ricci said.
NetJets, which has more than 700 jets in its fleet, is also growing. In June, it announced orders and options to buy up to 425 new jets, which it called the largest airplane purchase in private aviation history.
NetJets said the deal, with a value of $9.6 billion at list prices, included up to 200 Bombardier Challenger 300s, 75 Challenger 605s and 150 Cessna Citation Latitudes, with deliveries starting in 2014. All are in the supermidsize and midsize cabin categories, which typically carry eight to nine passengers.
That transaction followed another big one last March, when NetJets announced orders and options for 120 Bombardier Global jets, with a total value of $6.7 billion at list prices. Aircraft in the Global series are large-cabin jets that typically carry about 13 passengers and cost $48 million to $58 million each. With flying ranges of up to 6,600 miles, these so-called heavy-metal jets are becoming increasingly popular as business aviation expands globally.
Slightly more than half of global business-jet deliveries are made in the US, with the next biggest proportion, about 17%, in Europe, where the industry has been battered by the economic downturn. We take a global view, with our large operations in the US and also in Europe, and expanding operations in China, said Jordan Hansell, chief executive of NetJets. Were looking at more than just the US aviation market, which is holding its own.
NetJets, Flight Options and a third big player, FlexJet, a unit of Bombardier, dominate the fractional-ownership market, which NetJets popularized starting in 1986. Rather than buying an entire airplane, fractional owners purchase a share, starting at one-sixteenth or one-eighth, of a certain model. Share ownership ensures a customer the availability of that model of plane on short notice for a specified number of hours a year.
A one-eighth share typically equals 100 flying hours a year. Besides buying a share of the plane prorated on its overall price, customers pay an hourly fee when flying and a monthly maintenance fee. The companies offer other options, including so-called jet cards sold in hourly blocks, usually in increments of 25 hours, but without the same rights as ownership.
Even at this less expensive end of the business, flying privately is not cheap. A 25-hour Flight Options card for a speedy, seven-passenger Hawker 400XP light jet, for example, costs $110,000, plus fuel and taxes.
Jet cards are typically used by people who fly fewer than 50 hours a year.
Its very hard to justify all the costs, Dowley acknowledged, but Im in the service business and in the private equity business, where you have multiple clients and multiple issues.The commercial schedule is just so grossly inefficient, he said, that augmenting it with private jets makes economic sense.
Over all, the cheapest per-seat method of private flying is charter aviation, in which travel is usually sold on a per-flight, on-demand basis.
(XOJet, a leader in the on-demand charter business, said recently that its flight hours in the first half of 2012 were up 55 % from the same period in 2011.)
The most expensive private-jet option, of course, is outright ownership of a plane. This end of the market remains the most severely affected since the recession, both by basic economics and by the populist criticism that developed against the high-flying rich.