Allan Houston, the professional basketball player, likes the glass of fresh carrot juice that awaits him every time he climbs on a Marquis Jet Partners plane. It’s his favorite drink.
But that's not why the New York Knicks star started flying with Marquis, purchasing blocks of time on a private jet. It was the hassles of airline flying, which increased with tightened security after the Sept. 11, 2001, terrorist attacks.
“It’s more convenient than flying commercially,” he said. “Privacy is important to me and I save a lot of time when I fly in a private plane.”
Even as they struggle with the same business slump as the airlines, private jet companies are coming up with new ways to lure passengers unhappy with airline cutbacks, delays at airports and other inconveniences of scheduled commercial flying.
They are offering the ability to fly closer to final destinations or to smaller airports instead of major hubs, and even the ability to change plans during a flight. There are also the kinds of special perks, like pickups and meals from a clients’ choice of restaurant, that appeal to well-heeled travelers, some of whom are being lured away from airliners’ first-class seats.
New York-based Marquis Jet Partners linked with Berkshire Hathaway-owned NetJets in 2002 to offer clients access to any one of NetJets’ fleet of more than 500 planes. It has attracted about 1,000 members, who buy flight cards to a particular plane for $110,000-$300,000 for a minimum of 25 hours.
Another company, Sentient, based in Norwell, Mass., also offers flight cards and has about the same number of members. But instead of its own fleet, it uses chartered planes.
Flight cards are one way for travelers to buy time on private jets. Travelers can also be fractional jet owners, purchasing a piece of an aircraft, with the burdens and benefits of actual part ownership like tax deductions on depreciation.
Customers of companies like Marquis buy use of a specific aircraft for a set period of time. They pay for it accordingly — more for a larger or more luxurious aircraft. Sentient customers buy chunks of flight time on a plane the company charters or rents for a given flight.
The same slump in business flying that has sent major airlines like United and American into or near bankruptcy has hurt private flight concerns.
“The fractional market is down 50 percent each year for the past two years,” says Richard Santulli, CEO of NetJets. “Marquis may be doing well, but they use about 15 of our planes. They need to sell a lot of cards.”
Kenny Dichter, co-founder of Marquis Jet Partners, envisions a bright future. He sees the fractional market as comprising 100,000 people but says Marquis could reach a million. Marquis revenue, he says, could grow from just over $100 million now to $3 billion to $4 billion in five to seven years.
But not everyone shares Dichter’s vision that every first-class commercial flyer is a potential customer.
“That’s simply not true,” says John F. Walsh, an aviation consultant based in Annapolis, Md. “There may be some who are doing it, but many are flying on cheaper fares or simply not flying as much.”
According to the National Business Aviation Association, the number of fractional jet owners has grown from 3,834 in 2000 to 5,827 in 2002, and the number of planes in fractional programs has increased from 696 to 776.
And Walsh says that while the number of owners is increasing, the size of each share is shrinking.
“People were supposed to come in at a one-eighth share and increase that share. Instead, they are buying only one-sixteenth,” he said.
The flight cards are cutting into the fractional business, not simply building on it. “People are mixing and matching concepts,” says Gilbert Wolin, publisher of Business and Commercial Aviation. “Fractional shares are being repackaged into bite-sized pieces. There is fractional leasing and block time membership programs, so there’s something for everybody on the market.”
The market should get a boost from a recent tax change that increases the depreciation amount an owner can claim in the first year.
Charter flight companies also benefit from an increase in fractional activity. Not only do companies like Sentient rely on them, but part-owners of jets turn to them when another owner is taking his or her turn with the private plane.
“Charter grows especially in times of recession,” says Mark Wanthouse, president of Boca Aviation in South Florida. “Since 9-11, borderline people have also moved to charter.”