The flamboyant British billionaire launches a new business that lets executives fly privately for less
Private airfare couldn't get a better poster boy than Richard Branson. The billionaire founder of the Virgin brand is known for living the high life: jetting across the globe between business meetings, doing cameo film appearances, and appearing at social events on Necker Island, his private Caribbean paradise. Now Branson is putting that jet-set lifestyle in reach of executives from small and medium-sized businesses.
Branson's month-old Virgin Charter service has taken off among frequent business travelers seeking a less time-consuming alternative to commercial airfare at more reasonable prices than those often charged by private airfare brokers. The service, launched in New York on Mar. 4, provides an online marketplace in the U.S. where clients post desired travel arrangements and receive bids from more than 100 participating private aircraft operators. Of the 450 to 500 trip requests sent daily since the service launched, the vast majority are from small and medium-sized business owners who have flown private in the past, says Scott Duffy, Virgin Charter's CEO. "We are seeing a big surge in business users," says Duffy. Virgin Charter is a subsidiary of London-based Virgin Group.
Not So Romantic
The popularity among executives of medium-to-small businesses is somewhat surprising. Initially, the service launched with the idea of bringing private travel in reach of higher-end recreational travelers who were sick of airport security lines but considered private airfare out of their price range. The service allows operators to sell so-called "empty legs"—return flights back to home hangars that must be made after a plane drops off its passengers at their desired locations. Because the flights are often empty, they can be sold at significantly lower prices than normal charter airfare.
Branson made that vision clear when launching the service. At a private dinner before the launch, a somewhat jet-lagged Branson (he had just flown into New York from India, where he made a cameo appearance in a Bollywood movie) told the crowd he had wanted to call the service "Empty Legs," but was overruled by partners.
Clients of the service say their private airfare decisions are more about saving time than money. The flights sold on the service so far, after all, have ranged from between $7,500 and $3 million, hardly comparable to a commercial airline ticket. "The romance of private travel and how it is envisioned in the movies is hardly ever the case," says Zachary Sobel, a managing director at Kravetz Realty Group who is based in Florida and pays several thousand dollars per hour to fly along with colleagues to client meetings. "It is usually executives in suits."
Sobel, who claims to fly more than 200 hours a year, says he has saved tens of thousands of dollars booking through the service for his whole company since it launched. Much of that savings comes from reduced broker fees. Virgin Charter takes a 10% commission from operators for brokering empty-leg flights and a 5% commission on round trips closed through the system. It charges passengers 3.5%. "Private travel is so outrageously expensive with the price of fuel now," says Sobel. "But if you need to go to remote locations at odd hours and with more than one passenger, it makes sense."
Duffy still sees a future where the service brings private airfare in reach of higher-end travelers. But, for now, they're happy to be serving the business class.