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We’ve been remarkably inventive in creating new ways to slice and dice access to business aircraft- in order to broaden its market appeal. We’ve done that out of love- as much as out of economic necessity. While Jet A may fuel our aircraft- it’s passion that fuels our people – passion for aviation and concern for our friends who share that passion.

If whole aircraft ownership were the sole option for flying a business jet- we’d be a much smaller industry- and this month’s NBAA Convention would not be hosting some 30-000 attendees in Orlando- Florida. We’ve grown because we’ve created so many ways to access business jet travel.

It began with charter in the early 1950s- when aircraft dealers made their inventory aircraft available on a per flight basis. Clients paid per hour- all hours home base to home base- including positioning- if any.

Next came the pure charter companies- like the original EJA- with fleets dedicated exclusively to charter flying. These offered a new twist: aircraft had no home base- and floated from one destination to the next trip’s origin. This arrangement enabled the charter operator to charge clients only for “live” occupied hours. And that opened new markets by making charter more affordable outside of large metropolitan areas.

Next came aircraft management combined with charter- providing operators with a charter fleet owned by part-users of aircraft. From there it was a short leap to fractional- enabling frequent users of charter to take advantage of investment tax credits- depreciation and capital preservation by purchasing an aircraft share.

Charter brokers were yet another variation on a theme. Originally a small cadre of charter sales professionals- these first brokers realized they could better serve their clients as independents. They offered the expertise to conduct an unbiased search for the best aircraft at the best price for each flight. That kind of charter broker serves as a legitimate extension of the entire industry’s sales department- broadening business jet use into a larger market.

The rise of the Internet gave birth to yet another iteration of corporate jet usage – filling empty legs. Charter operators always have been able to sell the occasional positioning leg to “friendly” competitors. Today the Internet provides a 24/7 electronic marketplace to place those flights at the disposal of end-users as well as brokers and operators.

And while there might be other new and creative ways to grow demand for business jet activity- some of the ideas floating out there today seem to skate on the edge of safety and regulatory abuse – a combination made possible by the Internet’s reach and a new breed of parasitic charter broker who is indifferent to the industry- and in it only for the money.

It’s when someone gets into aviation only for the money that problems arise for owners- pilots- passengers- vendors – and yes- for investors.

Wall Street has an unrelenting and understandable thirst for new ways to generate revenue – that is its core business. At times it has done so by bundling and reselling investments- in order to offload questionable risk and generate fees. The 2008 collapse of the home mortgage industry can be traced to the reselling of securitized sub-prime mortgage bundles. With investment returns still wallowing in the current economic cycle trough- Wall Street has turned its sights on a new way to generate fees and positive ROI – “life settlements.”

According to an article by Jenny Anderson in the September 6 New York Times: The bankers plan to buy “life settlements-” life insurance policies that ill and elderly people sell for cash … then …“securitize” these policies… by packaging hundreds or thousands together into bonds. They will then resell those bonds to investors- like big pension funds- who will receive the payouts when people with the insurance die.

Whew! Banking on Great-Grandma’s early demise is not my idea of a comfortable investment. But then- neither is trying to aggregate passengers flying similar trips by Bundling empty seats on charter flights. But that’s exactly what one NY-based charter broker is attempting to do. It’s been tried before by several 135 certificate holders with no success- because aggregating charter clients violates several primary motivations for corporate jet travel- including privacy- confidentiality and security.

It also appears to be very close to selling seats on a scheduled flight without appropriate authority- something at which the DOT and IATA look askance. The program works much like an online dating service- where the clients post and connect independently from the broker. But it’s not free: the broker gets a cut of the action from both passenger and aircraft owner/operator- with no questions asked about the charter operator’s safety record or SMS program.

This is much like Wall Street’s plans to earn fees for creating- reselling- and trading the “life settlement” bonds. The difference is that Wall Street traders are regulated to protect the public.

Maybe it’s time for the DOT to provide the public with some oversight of those charter brokers- for the same reasons – before another Challenger buries itself in a warehouse across the street from TEB…or worse.

Read more about: Charter

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