Personal Business: FLYING
CAN'T AFFORD A LEAR? BUY A PIECE OF ONE
The flight from Tampa to Newark, N.J., should have been a cinch. Commercial
realtor John Amend and his staff had finished one key meeting and were planning on an easy trip that left them plenty of time for getting to another the following day. But when can commercial business travelers count on things going perfectly?
Amend's American Airlines flight was sidetracked for hours by foul weather along the East Coast and a jet mishap in New York. Eventually, the plane was rerouted through Nashville and sent en to Newark. But by then it was 3:30 a.m., and a meeting with AT&T officials loomed less than five hours away. "We were tired, exhausted," recalls the 46-year-old president of Dallas-based Amend Group, a real estate consultant. "Delays like this had become routine."
So Amend decided to make sure he wouldn't again be stuck on the tarmac: He bought his own jet. Well, at least part of one. In a move that many executives of small- and medium-size businesses would have thought impossible just a few years ago, Amend purchased a stake in a LearJet 60 from Bombardier Business JetSolutions, a three-month-old venture between AMR Combs, an American Airlines subsidiary, and Canadian aircraft maker Bombardier.
Through JetSolutions' FlexJet plan aimed at smaller businesses, would-be owners most commonly buy an eighth or a quarter share of Bombardier-made business jets, which are then maintained by AMR Combs. Owners also have access to Combs's 13 corporate aviation service centers across the U.S. and Mexico. "We'd had enough of chartering and booking through commercial airlines," Amend says.
GOODBYE STANDBY. Per flight hour, FlexJet owners pay more than most other jet charter and fractional ownership schemes. But they don't pay for the time it takes their plane to reach them for pickup, nor for the time it takes the plane to return to its home base after dropping off part-owners.
Another big FlexJet plus: No matter where they are in the U.S., owners are guaranteed a plane within four hours. One-eighth-share owners are entitled to 100 hours flying time per year, while one-quarter share owners get 200. But part-owners can book time on any of the three jet models in the fleet. So, a part-owner of a seven-seater LearJet 31A, which flies short hops of up to three hours, can also book time on a widebody Challenger--which seats 10 passengers and can fly from the U.S. to Europe--by trading a chunk of hours.
JetSolutions also lines up Federal Aviation Administration-certified pilots. Each plane in the fleet is outfitted with sophisticated radar and collision avoidance systems. "We wanted to make business jets more accessible," says Robert D. Gillespie, president of Business JetSolutions. And through FlexJet, an owner avoids the cost and headache of establishing a corporate flight department, with its own maintenance staff and pilots. Such considerations often stop smaller businesses from buying aircraft. There are tax advantages, too. Owners have an undivided interest in their airplanes, allowing them to take a depreciation expense.
Of course, with purchase prices between $700,000 and $4.7 million, hefty monthly fees of at least $7,500, and hourly charges as high as $2,000, the FlexJet program isn't for everyone. For instance, ownership shares expire after five years. And companies that use aircraft more than 400 hours a year may find sole ownership of a used aircraft more economical. Chartering a plane that is owned and managed by someone else, or starting a flight department, also may be cheaper. And while 100% aircraft owners who are flying privately are exempted from the 10% federal exise tax, tax treatment of fractional owners is a murky area currently under litigation.
NO-FRILLS. For businesses that would rather not deal with a manufacturer or seek longer-term ownership, another option is a nine-year-old program called NetJets offered by Executive Jet Aviation based in Montvale, N.J. With Executive Jet, businesses do not buy the planes directly from the manufacturer; instead, EJA buys new planes and resells shares to fractional owners. But EJA does not have direct partnerships, as JetSolutions does, with a network of fixed-base operators who provide plush conference rooms, computers, and fax machines right at airports for business travelers. Adds Gilbert T. Wolin, an aviation management consultant based in Lafayette, Colo., "Sometimes it's more cost-effective to buy a used aircraft and have it maintained by a locally based operator."
Whether they own or lease, a growing number of executives these days believe that having their own plane--rather than booking flights aboard commercial airlines--is really the best flight plan.Christina Del Valle