The one thing nobody can buy is time, which is why so many wealthy individuals are willing to foot the bill for private air travel.
What advisors may not realize, however, is that they have a role to play in meeting their clients’ transportation needs.
Advisors should help clients decide on which form of private air makes sense for them, but they need to be familiar with the types of air travel that are available and how to assess them.
This article can hopefully serve as a starting point for advisors looking to gain such knowledge.
Deciding on a private flight service will typically be based on both practical and financial considerations. For those who want convenience, private air travel allows passengers to avoid the delays, overcrowded planes and security hassles associated with commercial airline travel. Private planes also offer direct routes not available through commercial airlines, more flexible schedules and, as a result, greater efficiency in terms of cost and time saved.
Advisors need to help clients answer three questions when it comes to a private aviation: First, does private aviation provide benefits over commercial air travel? If it does, what type of private air travel best meets the client’s needs, and which service provider offers the best value?
To answer these questions, advisors need to be familiar with clients’ travel frequency and destinations, and the reason they travel. Here are some of the questions advisors should ask:
• How often do clients travel and to what locations? How many miles do they travel per year?
• Do they often travel to places with poor or expensive air service? Commercial airlines fly to about 500 airports in the U.S. and the majority of flights connect through 70 major airports. In contrast, private air travel serves more than 5,000 airports, many of them closer to departure and destinations, further reducing travel times. That’s why private air makes sense for those jumping from destination to destination.
• Is it important for clients to avoid delays? Flight delays—as well as lost luggage—were up in the U.S. this year. Private jet travelers often can drive right up to a plane, bypass regular security lines, and have their bags loaded while their car is parked for them. The plane leaves when they want.
• Are your clients looking for transportation that allows them to be more productive? Private planes are tools, not toys. Travelers can use onboard phones and stay connected during private flights through Wi-Fi with little interruption. The National Business Aviation Association estimates that private travelers are productive 80% of the time versus 30% for airline users.
Whereas anyone who wanted to fly privately once had only one choice—buying a plane outright—providers have been changing how they charge for flight time. Options range from whole aircraft ownership to leasing to fractional ownership to jet cards to charters. There are more ways to access private jet travel today than ever before, and prices are the lowest they’ve been in years.
One of the chief metrics for advisors to consider when choosing among these options is the client’s total annual hours of travel. Those who spend 400 to 800 hours in the air per year may want to consider buying their own aircraft. Less frequent travelers, those who spend between 50 and 400 hours in the air per year, may get the most out of fractional ownership. At between 25 and 50 hours per year, travelers may be best suited for jet cards, which give an allotment of hours that cardholders can use as needed. Some of the hybrid programs that combine fractional ownership and jet cards also could make sense, depending on individual circumstances. If a client spends less than 25 hours traveling by plane annually, charter travel might be the most cost-effective alternative to commercial flights.
Of course, it’s not always as simple as that. There are trade-offs between service and operating costs. Plane ownership offers the ultimate in service, but it requires upfront investments and commitment. Other options provide similar levels of service, but with lower purchase prices, lower operating costs and a lower level of commitment.
For those who don’t want to take on the responsibility of owning and maintaining a private plane, there are other options, including leasing and fractional ownership.
One of the hardest choices is between whole and fractional ownership, both of which offer compelling—and very diverse—value propositions. Figure 1 lays out some of the key differentiating factors between full and fractional ownership.
Other factors that come into play include the type of plane you want to use, and its size and capabilities. For example, the airport in East Hampton, N.Y.—a popular summer destination—has a short runway that can be used by planes of limited size. Flying into the West Hampton, N.Y., airport as an alternative can easily add an hour of driving time to a trip. Yet the trade-off in aircraft size and capabilities might make that additional driving time worthwhile.
Conversely, the lower air density in Aspen, Colo., and other mountain destinations requires greater thrust on takeoff to overcome performance drop-offs caused by higher altitudes or warm summer air—something that should be considered when selecting an aircraft.
Aviation is rarely a one-size-fits-all proposition. One rule of thumb in determining the best option is to try to solve the majority of your client’s travel needs, not all of them. Look at what makes sense for 80% of your client’s travel needs. If 80% is domestic, for example, he shouldn’t purchase a plane for the 20% of travel that requires an aircraft with international capabilities. Instead, he should fly first-class commercial or charter for the international trips.
If a prospective owner decides to go the fractional route as opposed to purchasing a plane, the advisor should consider the following questions in helping the client decide on a service provider:
• Does the provider have the financial stability to deliver on its commitments, regardless of broader economic conditions?
• Who will operate the aircraft? What training and experience do the crews have?
• What are the company’s safety practices? Does the provider have an in-house safety department? What are the provider’s safety ratings from Argus International, or other reputable sources?
• Does the provider use the latest in technology?
• What backups are available if an aircraft is not available?
• When and under what circumstances can an owner exit the program before the expiration of the contract’s term?
• Can an owner renew without paying additional capital?
• How will the value of the aircraft be determined?
Those considering various providers are well advised to press hard for satisfactory answers to these questions. They can help determine which provider makes the most sense.
Private air travel offers a premium form of travel that is largely unavailable in today’s unfriendly skies—one that meets the highest standards of safety, customer service, convenience and performance. Advisors need to know when private air travel makes sense for their clients and what the most cost-effective ways are to access it.
Michael Silvestro is the CEO of Flight Options, the second-largest private aviation company in the world.