The Jet Set
CEOs and Entrepreneurs Queue Up To Buy the Ultimate in Private UltraLong- Distance Jet Travel
From the Print Edition:
Ernest Hemingway, Jul/Aug 99
(continued from page 1)
The GV has set 55 world and national records--30 city-pair records and 25 performance records for distance, speed, altitude, time-to-climb and payload carrying capability--since receiving FAA certification in 1997. In one example, a GV with seven passengers and a crew of four flew from Washington, D.C., to Dubai, United Arab Emirates, on a nonstop flight of 6,330 nautical miles in 12 hours, 40 minutes. Average speed was 556 miles an hour.
In mid-1998, the aircraft was also honored with aviation's most prestigious award, the Robert J. Collier Trophy, by the National Aeronautical Association. The trophy has been awarded annually since 1911 "for the greatest achievement in aeronautics or astronautics in America, with respect to improving the performance, efficiency and safety of air or space vehicles, the value of which has been thoroughly demonstrated by actual use during the preceding year." Past recipients include pioneers Orville Wright and Chuck Yeager.
While the Gulfstream V's accomplishments have been impressive, Bombardier has not been shy about discussing the GV's shortcomings--particularly that the aircraft is a derivative of an older design. To some customers, this is an advantage, because these older designs have proven their reliability over time. But not to Bombardier.
Of the four competing aircraft, only Bombardier's Global Express can boast of a built-from-scratch design. The other business jets are modified versions of existing aircraft, with some of their designs two decades old.
"The primary reason we went with Bombardier was because they designed an aircraft for the twenty-first century instead of extending older technologies," says casino builder Marnell, whose company now flies a GIV but has ordered a Global Express, which Bombardier will deliver in about a year. "The other manufacturers are taking an engineering idea that is probably 25 years old and continually extending that design. We felt, as an investment, we were compelled to go with next-generation technology."
For Boeing and Airbus, the most obvious attribute of their models is their size. A cabin that might seem cramped for the approximately 120 passengers those aircraft were originally designed to carry is downright spacious for the handful of people likely to fly on the corporate/VIP versions of the aircraft.
The A319CJ has the larger cabin of the two, with a length of 78 feet, width of 12 feet, 2 inches, height of 7 feet, 3.1 inches, and volume of 7,000 cubic feet. The BBJ is 14 inches longer, but has about two inches less head room and it is about six inches narrower.
Airbus's Leahy offers one benefit that his competitors can't match. Because the company's corporate jet is based on a certified commercial aircraft--the A319--it can be easily configured for airline use should the operator want to sell or lease the aircraft. The Boeing Business Jet can't, because its design incorporates features from two different models of the 737. The other two jets are not airliners.
That flexibility gives the A319CJ a "higher residual value," allowing operators to ride out the "boom and bust in the corporate jet market," according to Leahy. The aircraft's cockpit is identical to the ones used in the full line of Airbus jetliners.
While the enormous cabin of each manufacturer's aircraft is its main selling point, it also causes Boeskov's aforementioned "perception problem." Having one of these four ultralong-range--and pricey--jets in the company holdings doesn't always go over well with stockholders.
That's one of the reasons for the popularity in recent years of fractional ownership plans. These plans typically offer customers one-eighth, one-quarter and one-half shares in business aircraft. The fractional ownership company maintains the jets, having them on-call when needed.
Executive Jet International developed the fractional ownership market in 1986, and it is the market leader today with a customer base of about 1,200. The Woodbridge, New Jersey-based company was recently purchased by Warren Buffett's Berkshire Hathaway Inc. for $725 million. Executive Jet has purchased GVs and BBJs for its portfolio, and Boeing has said that nine of the initial aircraft to roll off its assembly line in Washington state will go to Executive Jet.
"We think the Boeing is a perfect fractional airplane," says Executive Jet chairman and CEO Richard Santulli. "There are governments and rich people that are going to want to buy a Boeing. But most people don't travel long range and with a lot of people."
For those people, as well as Fortune 200 companies that need an aircraft for fewer than 200 hours per year, it makes economic sense to buy a share in a business jet rather than the entire aircraft. At Executive Jet, a one-quarter share in a BBJ costs about $11 million. For that, the customer gets on-demand usage of the aircraft--request the jet, and it's ready within six hours--for 200 hours a year.
The success of the NetJets program--the name of Executive Jet's fractional ownership plan--has prompted others to get into the business.
Bombardier saw fractional ownership as a way to sell its own Lears, Challengers and Global Expresses, so in 1995, it started Flexjet. The Dallas-based Flexjet now has 65 jets with 350 individual customers, with 90 jets and 500 customers anticipated by the end of the year, according to Steve Phillips, director of marketing. Share owners can upgrade or downgrade the type of jet according to their needs, says Phillips, using a Lear jet for a Manhattan to Chicago trip, for example, while taking a Global Express for a Los Angeles to Tokyo flight. Flexjet also offers its customers the use of more than one jet at the same time. As far as availability, "We don't have an issue of supply," says Phillips. "When we need jets, we get them."
The third major player is Wichita-based Raytheon Travel Air, which offers its parent company's Beech King Air turboprop as well as the Beechjet 400A and Hawker 800XP in its fractional ownership portfolio, though none of them are ultralong-range jets. Clients have the option of choosing among the aircraft to suit their needs.
Like Boeing's Boeskov, Santulli has been surprised by who is buying fractional shares in its ultralong-range business jets."We thought it would be more skewed to large companies," Santulli says. "If you asked me last year, I would have said 70 percent of the buyers would be Fortune 200 companies." Instead, those companies account for less than half.
The number of individuals and corporations willing to spend $35 million on superlong-range business jets proves that timereally is money.
Barry Rosenberg is a New York-based journalist specializing in business and technology.
FOR FURTHER INFORMATION, contact the manufacturers at the following numbers: Airbus (703/834-3434); Boeing (206/655-9800); Bombardier (514/855-5000); and Gulfstream (912/965-5555). For additional information about fractional ownership plans, call Executive Jet (and the NetJets program) at 800/821-2299; Flexjet at 800/FLEXJET; and Gary Hart, president of Raytheon Travel Air, at 316/676-8222.
You must be logged in to post a comment.