Plane Conversations

A strong Commercial Aviation Industry portends a strong private aviation industry.  This article features data from Honeywell Business jet forecast which correlates with the FAA forecast for 2011 through 2031 for commercial aviation.

Social Flights was launched at precisely the right time with up-to-the-minute social technology tools and business methods for aggregating large fleets of private aircraft and building out public charter routes that can meet customer needs.

According to Honeywell Aerospace’s Annual Business Outlook, business aviation is poised for recovery beginning in 2012.  The Honeywell forecast is based on surveys of more than 1,500 flight departments around the world.

The World According to FAA.gov

The carriers have stopped less profitable routes, retired older aircraft, and unbundled services while initiating new services that passengers were willing to pay for such as WiFi.  There is optimism in the industry that the next decade will show sustaining profits as the industry continues to grow in the long term.

The 2011 FAA forecast now calls for one billion passengers to be flown in 2021, two years earlier than projected in last year’s forecast.  Growth over the next five years will average 3.7 percent per year, with average annual growth of 2.5 percent per year for the remainder of the forecast period.  The level of activity and demand is expected to eclipse those published in last year’s FAA forecast. 

Some of the reasons include stronger than expected traffic and higher expectations of economic recovery.  As such, available seat miles (the benchmark for industry capacity) is expected to increase globally by 4.5% next year after years remaining flat or decreasing.  The global market is expected to increase at 3.1% through 2031.

In the domestic market, capacity grew 2.9 percent in 2011 and is expected to grow to 3.0% in the long term.  For the regional carriers, the domestic capacity will increase at 3.8% over 2010 rates.

The average size of domestic aircraft is expected to increase to 122.0 seats from just over 121.7 seats currently. The demand for 70-90 seat aircraft will continue to grow.  The FAA expects the number of 50 seat aircraft to fall (and many will become available for lease or purchase).  The average regional jet size will increase to 54.6 seats while the average length of the trip will increase.

The profitability of all air carriers will depend on stable fuel prices, increase in demand for business travelers, and the willingness of travelers to continue to accept higher prices for less services.  In order to keep costs low, the carriers will need to better match their routes, aircraft capacity, and their markets (supply and demand).  they will need to ground older aircraft, drop low margin routes, and pressure regional carriers to accept lower fees.

 This is where social flights comes in:

All this is bad news for 6-60 passenger scheduled service. However, Social Flights can effectively join these two forecasts by providing public charter services across industries.  The weakness of one mode can be hedged by the strength of the other, and vice versa.  This makes for an excellent investment opportunity in social organization methods for air transportation pioneered by Social Flights.

There is an entire segment where Social Flights can capture market share that commercial carriers would willingly cede to Social Flights in order to keep THEIR own costs low.

Google Search for the term "Jet Charter"

Google Think Insights is an amazing resource for looking at who is searching on certain terms, and from where.  This post shows two search categories and related terms from which we can draw several general ideas about private air travel.  These data demonstrates that an increasing amount of people are searching on terms such as private jet, jet charter, VIP travel, etc.

Another curious trend is the term “Jet Charter Cost” is also increasing significantly as people seek to find the value threshold for private air travel vs commercial air travel.

Recession or transition?

These data all refer to a date range between the dates of january 2008 and December 2011 corresponding to the greatest economic downturn in the US since the Depression.  There are likely many forces acting on the market including the pullout of commercial aviation from minor market, few travel alternatives,  increased usage of internet search technology, increased business travel needs, and upper class growth rates.

The increase in terms related to cost may suggest that even the most wealthy are becoming cost conscious, more people want to fly private, more businesses need to fly private in order to access their market, and more VIP travel is required.

It is not surprising that the term “business aviation” has a similar location density to the term “Jet Charter”.  This reinforces the suggestion that corporations increasingly need to send their executives on travel outings.

Social Flights is in the business of social organization too:

It is likely that wherever executives go, so too will managers and lower level employees.  Social Flights has long suggested that there is an opportunity to increase private charter shuttle service between key locations.  Likewise, there are opportunities for companies to share private aircraft scheduled to fly between regions.

Next we looked at the term “VIP Travel” and identified the following locations where the terms were searched.  We found a similar increase in VIP Travel related terms as we did for terms related to jet charter costs, except related to supporting services such as reservation, booking, schedules, and services.

This suggests that the door-to-door experience is underserved and that an air transportation service that is able to connect the dots would hold a true value advantage over one that just drops the passenger off at a hub airport.

Search terms are important because they indicate the intentions of a market.

While little is ever conclusive, the rate at which something changes can say more than the thing being observed alone.  At Social Flights, the demands of a dynamic market are clear.

1. Companies must have business travel options.

2. A door-to-door value proposition is essential.

3. People are searching online more than ever

4. The commercial airline industry leaves a market underserved.

Economic recessions have been shown to be more about technological transition and adjustment rather than any single underlying factor.  We believe that this transition will be no different.

Recently I was talking with a friend about business flying.  He is not in business nor is he a pilot.  But he had trouble getting around the notion that business aircraft are all about excessive luxury for the super-wealthy.  I commented that there might be some merit to his claim if the majority of business aircraft owners were all super wealthy individuals.  But they aren’t.  This opinion also belies a scarcity mentality that assumes if someone “has” then it is because they have taken it from someone who, as a result, “has not”.  Funny, but we forget that the vast majority of the world lives on less than 2$ per day and considers anyone who has an automobile to be “rich”.  Perspective and assumptions are often overlooked in these discussions.   Personally,  I reject the idea of a closed economic system and the resulting scarcity mentality that accompanies it.  But, alas, I digress.

Yes there are aircraft owned by the super-wealthy who utilize them mainly for pleasure.  But that is the exception (as well as their prerogative, by the way.)  However, according to a 2009 study from the National Business Aviation Association (NBAA) small businesses own the majority of business aircraft.  Less than 1 in 4 passengers on business planes are top level leadership.  More often, 70% of the time, business aircraft are used to transport mid-level mangers, sales, support and technical staff. 1  The image of the aircraft being utilized only by the CEO or COO as a luxury is simply not factual.

The practical uses of business aircraft are many.  You can more efficiently fly into airports not serviced by the airlines and reduce the expense of hotel stays and car rental.  Employees can work during the flight and not waste precious time standing in line at security or waiting for standby flights because their original flight was cancelled.  Those travelling on business aircraft said that they felt 20% more productive on the plane than in the office and felt that on the airlines they were at least 40% less effective.2

The larger businesses that operated corporate aircraft are reguarly among the most profitable (which means, in turn, they are able to hire and employ) and respected in our country.  NEXA Advisors, LLC, conducted a study to see if business aircraft ownership actually had a correlative effect on the health of the business operating the aircraft.  In short, yes, it did.  It made a solid positive difference in these companies.  The report’s conclusion was, “Business airplane users continue to outperform nonusers in terms of revenue growth, profit growth, and asset efficiency.” 3

Moreover, what is lost in the grandstanding on Capitol Hill and the media’s constant badgering of Business Aviation is how much business aviation contributes to our economy and to the success of companies that employ tens of thousands. Aviation and it’s related businesses directly employ more than 1.2 million people and infuse $150 billion into the economy.  Aviation is a signficant contributor to our nation’s health.4

The businesses operating their own aircraft were to be found on lists such as : Business Week’s 50 Most Innovative Companies, Fortune’s 50 Most Admired Companies, Business Week’s 25 Best Customer Service Companies, Fortune’s 50 World’s Most Admired Companies, and Corporate Responsibility Magazine’s 100 Best Corporate Citizens.5  Again, the caricature of the business jet operator is found to be just that -a caricature that does not accurately represent reality.

Without a doubt business aircraft have a degree of luxury about them.  And why not?  Do you chastise someone for having leather seats in their car?  An .mp3 player?  Satellite radio?  GPS?  But those things are pretty standard these days in our cars.  Perhaps one of the major issues is that business aviation stands in stark contrast to the miserable state of the commercial airline experience that we all know only too well.  If you had the choice of driving in a 76 Plymouth or a 2011 MKZ, would you really have to think long about the choice? (And for the record I drive a decade-old Ford Taurus with 140,000+ miles)  If it’s your car or boat or plane, why not make it comfortable and functional?  But at the end of the day, that’s not the point as my friend’s faulty assumptions illustrate.

Most businesses don’t operate aircraft because they simply like the luxury.  They operate them because they make practical and financial sense.  They don’t buy an aircraft so they can look cool and yet lose money.  No, they have learned that business aviation can make good business sense.  And the business aviation industry stands ready to be an integral part of the equation to help individuals and business achieve the success that, in the end, makes us all stronger.

1.  Real World Business Aviation 2009, page 5 (http://www.nbaa.org/business-aviation/Real-World-of-Business-Aviation-2009.pdf)
2. IBID, page 6
3.  The Bizav Advantage: The case for bizav, in dollars and cents Robert P. Mark, Business Jet Traveler, Oct 1, 2010
4. Aviation Week, Kansans Demand Obama End BizAv Rhetoric, July 22, 2011
5. IBID, Mark

Click on pen to

A LA Times article by Hugo Martín discusses what those who travel on the airline have experienced in the past year and it looks like we can expect more of the same in 2011.

Passenger demand has returned with the upturn in the economy and airlines have limited their growth in inventory (seats) in order to make a profit by increasing their yield per flight. Less empty seats means more control over pricing and greater yields per flight. Simple supply and demand economics.

That’s all great if you are on the selling side of that equation. If you are on the buying side it increases the likelihood that you will get bumped off a flight. When a flight cancels your next flight out may be the next day, not a few hours later, because that next flight in a few hours is already sold out.

Load factors in this article for Delta and United are running at around 84%. Load factors at that level mean a lot of flights are full at peak times and many are oversold. I don’t mind a full flight if you just get me home on time and don’t lose my stuff. I do mind it when you cancel the flight and tell me you will get me home the next day.

The LA Times article posts some interesting comments from a survey by Zagat of 8000 frequent fliers:

* The only thing missing is a blindfold and a cigarette.

* My bags get better service, but they pay extra.

* The only difference between economy and business classes is a shrimp on your salad.

* “Unwelcome aboard!”

* I don’t love getting up-close-and-personal with the head of the person in front of me.

* Who made them mad at their customers?

* Entree selections should be labeled “choose your poison.”

* When two crummy medium-size airlines merge, all you get is a crummy large airline.

* Seats make an iron maiden seem comfortable.

Business Aviation continues to have unprecedented opportunities to meet the market of frustrated travelers with a better proposition. As airlines turn into mass transit systems that sell a commodity (seats) are there still people willing to pay for service? More importantly can business aviation save time over airline travel and do people value their time more or less in today’s economy?

I think I know the answer but from my viewpoint I am biased. If the airlines just got me there on time I think I could tolerate the rest. But when I don’t get there on time then all of the service failings start to really get to me. Too much time in a crowded terminal waiting on that “next flight” is not good for travelers to reflect on the experience

Click on pen to

Many of us who work in business aviation wonder if people would be willing to share their travel plans, share a flight together, let others know what they are up to, so they can meet up on trips, share rides from the airport to the hotel and so forth.

In other words, will business aviation travel go social?

One of the terms used for the aircraft we operate is “private” which does not exactly line up with “social” in a public sense.  We fly “private jets.” Private sounds like I don’t want the public to know what I am doing, where I am going and I most likely do not want to share my private ride.

Sharing is already happening in the world of airline travel and the events that drive travel; maybe to ease the pain inflicted on travelers by the airline system.

As I have looked around on the internet for social media platforms related to travel some really interesting ones have started showing up.

• Planely (www.planely.com) allows airline travelers to share their flight itinerary with the hope of connecting with others on the same flight. If this builds critical mass it could become a valuable tool.
• IMGuest (www.imguest.com) allows travelers to share their hotel location and plans in order to meet up face to face with others at the same or close by hotels, and expand their network.
• Plancast (www.plancast.com) is a site that is really done well, allowing people to post their plans for attending conventions, local events, music events, etc. and easily see who else is attending. A great way to make connections both locally and at away events.
• TripIt (www.tripit.com), which just announced its acquisition by Concur (Nasdaq: CNQR), was one of the first travel sites allowing travelers to share their itineraries that gained a mass adoption. Concur is a leading provider of integrated travel and expense management solutions and apparently thinks TripIt is on to something based on the acquisition price.

These sites allow you to sign up and use them for free, and in some cases check in through your Facebook or Twitter accounts. The Facebook check-in creates an instant profile for fellow travelers to see plus it gives the site access to your Facebook information.

So the question asked again: Are travelers willing to share their travel plans in the hope of making the experience more social? The answer seems to be yes, as travelers are signing up to these social technology platforms in droves.

What about personal and business travel in private chartered aircraft?

What is the value in sharing travel plans with others you don’t know too well? Is it too risky?  Most of these sites tout the value proposition of networking and meeting up with people you would not otherwise meet.

The value of each of us knowing where others are going can go beyond just networking.

If you and I find out we are going to the same places, we can get together and come up with new solutions for getting there more efficiently by sharing costs and buying travel collaboratively. Eventually we may even be able to drive the market to offer better solutions that fit our needs, versus what suppliers of air mass transportation offer us today.

It would great if we could go when and where we really want to go in the most efficient manner as opposed to being pushed and shoved through a system that is not designed to really meet our intentions.

When that happens can the private aircraft, and the industry that supports it, be a possible solution?

Click on pen to

A January 17 press release from Embraer announces that Embraer delivered 100 Phenom deliveries in 2010 making it number one in most deliveries. That’s pretty impressive for a new aircraft that was only certified at the end of 2008, and especially taking into consideration the economy.

An excerpt from the press release:

One hundred aircraft delivered: more than any other business jet in the world.

São José dos Campos, January 17, 2011 – Embraer’s Phenom 100 entry-level executive jet was number one, with 100 deliveries in 2010. Together with the other airplanes of Embraer Executive Jets’ portfolio, the Phenom 100’s success is also reflected in the Company’s increasing market share, which is the fastest growing in business aviation in terms of units delivered.

“Its clean-sheet design, superior cabin comfort, amazing performance, low operating cost, as well as the jet’s great looks, have thrilled our customers,” said Luís Carlos Affonso, Embraer Executive Vice President, Executive Jets. “We are honored and thankful to our customers for their choice and confidence in the Phenom program and in the Embraer brand.”

Our delivery group at JetQuik, led by Bill Minkoff, has delivered 16 Phenom 100 and  2 Phenom 300 aircraft to customers in the US and Europe since October 2009. The acceptance and deliver process gets smoother with each delivery. Embraer is building great aircraft.

We are proud to be managing and operating two Phenom 100’s in charter service. They have gained good market acceptance with our charter passengers and are proving themselves as they get time in service.

Congratulations to Embraer for making a great entry level business jet.  I look forward to seeing the Legacy 450 and 500 aircraft when they reach certification and production.

Click on pen to

It takes a day like yesterday to remind me why we are in the business of business aviation.

The day started with a 4:00 am departure from the house to make it to the Nashville Airport by 5:15 am for a 6:15 am departure.  Leon Custers and I were taking a Delta flight to White Plains, NY to meet up with business partners in Danbury, CT.

Delta had the best price / schedule to get us to White Plains by noon with a 45 minute drive to Danbury.  The main benefit of White Plains (HPN) was avoiding one of the big NYC airports such as La Guardia (LGA), which are off schedule more than they are on.

Yesterday was a big snow storm day for the Midwest, and Nashville even had an inch or two on the ground, but the roads were fine.  We made it though check in and security fine and boarded the aircraft set for an on time departure. This was an originating flight so the odds for an on time departure were good. After the aircraft was loaded, we sat for 30 minutes waiting on fuel, and then a ramp worker to push the aircraft off the gate. In our world this happens rarely, and when it does, it is a major event to not make an on time departure due to line service issues.  This was not a good sign for the day.

We arrived in to Detroit for the connecting flight and it looked like the trip was going to settle back down. We were sitting at the gate with 30 minutes to spare and an on time departure status on the board for HPN.  About 30 minutes past scheduled departure the announcement was made that the flight had been canceled. Everyone was to rebook to HPN on later flights. The computer system at DTW was down so flights that had canceled were still showing as on time departures. This made it very difficult for travelers trying to rebook flights and figure out where their new departures were.  

 Here is where the problems starts for most travelers in the airline system.

Airlines have reduced their capacity (inventory of available seats). Load factors are up, providing more pricing strength and higher revenue per flight, which is good for the airlines profit margins.

It is not so good for the traveler when flights cancel. The next flight for us was not later in the day, because the next three flights were all sold out. It was the next day.

Needing to get to our destination in the same day, like most business travelers, we resorted to looking for alternatives within the system and settled on La Guardia (LGA) which is an extra hour drive to Danbury. So, after trying to avoid LGA we ended up there anyway, only 5 hours later.

While waiting on the flight to LGA we got to witness the DTW police deal with a lady who decided to go back down the jet bridge after getting off the aircraft. She ignored the warnings of the gate agent and created a whole crisis, most likely over nothing other than she panicked trying to go back after her bag.

Another lady traveling with husband and baby had a melt down because she left a bag on her previous flight and they could not find it. I know that feeling when you have just lost your lap top with your whole life on it. I felt sorry for her. The gate agent was overwhelmed with issues and could not provide much help other than to tell her to file a claim. 

Departing DTW for LGA our flight was further delayed because the catering did not get loaded on the aircraft on time.  The arriving flight aircraft could not off load passengers because the Jet bridge was broken,  and TSA decided to pull a random gate security check.  All of those issues caused a one hour delay.

On the taxi into the LGA terminal I overheard another business traveler on his cell phone recounting his day that sounded much like ours.  He had started at 4.30am, was on his third flight segment and still had not arrived at his destination. His comment – ‘this is another one of those travel Mondays”.  Another lady in front of us missed her planned dinner.

Fortunately the weather was good at LGA, so we did finally get there, but our bags did not.  A lady in the lost bags line was very upset.  She was on the last day of military leave and her stuff was lost.

We made it to Danbury and were able to make dinner with our business associates, although late.

So this morning it was the trip to Wal-Mart, when they opened at 7.00 am, for emergency clothes and a tooth brush to survive until the bags show up.  As I write this, I feel sure that this story could be told millions of times over by the road warriors who travel in the system every week.  

As we waited to board the flight in DTW to LGA, you could look at the countenance of the men and women business travelers, and see a look of exhaustion, defeat and frustration.

The purpose of air travel is to save time. Somehow the airline system is not gaining in productivity in its mission. It is slipping.  And what about the stress of the travel?  Not knowing for sure when you are going to arrive, dealing with missed meeting times, lost bags, rerouted destinations….

Enroute time from Murfreesboro, TN to Danbury, CT: 15 Hours

Average Speed door to door: 65 miles per hour

There has to be a better way, and business aviation should keep seeking to provide the solution in ways that more travelers can afford. I can tell you that everyone of the people I rode with yesterday would take another solution if they could.  

Click on pen to

The elections should be good not only for business aviation, but also for the overall aviation industry in the United States.

Less government meddling and more free-market forces will ultimately lead to a more efficient system.

A significant change has taken place with the defeat of Congressman James Oberstar (D) Minnesota, who was the powerful Chair of the House Transportation Committee. Even had he not been defeated, with the change in party control, John Mica from Florida would still take the leadership position on this committee.

Josh Mitchell writing for the Wall Street Journal in a November 5 article talks about this in more detail.

If you have tracked Congress’s work (or lack thereof) in passing the FAA Funding Reauthorization Bill, you know that this bill has been held up from final passage due to non-related issues being attached to it regarding unionization of FedEx’s drivers. Mr. Oberstar was a friend of the unions; but, his tenure in Congress is over.

Could it be that the gamesmanship might finally be over? Maybe we will get funding of NextGen and the FAA can take a long-term view of the development of the infrastructure this country needs to have an efficient air transportation system.  

Another post-election articlein Bloomberg discusses the major airlines gaining allies with the new Republican House on out sourcing and anti trust issues.

Quoting from that Article:

“The current Congress has been anti-airline,” said William Swelbar, a research engineer specializing in air transport at the Massachusetts Institute of Technology in Cambridge. “There will be a new set of ears to listen to the industry.”  

The consensus seems to be that the new guard will be less intrusive into the affairs of the airlines and general aviation, letting the market work things out.

This is good news for the air transportation system and, ultimately, good news for the business and general aviation segments.

Less interference will allow us to demonstrate our value without legislation unbalancing the system towards unions or big business interests.

Click on pen to

News of the past two weeks indicates some signs of recovery in travel overall and maybe even the beginning of a recovery in the business aviation sector of travel.

But, is it a real recovery across the entire industry?

USA Today reports that business travel is up, and surveys of travel executives indicates that their company’s people will travel more in 2011. Even though travel will be up there is a new mindset that is more frugal about how travel dollar are spent.

Excerpts from the USA Today article:

The economic downturn has left its mark. The ACTE survey finds that 54.1% of corporate travel executives in the U.S. are “encouraging or mandating” alternatives to travel, such as videoconferencing. And a survey by Egencia finds that 56% of North American travel managers say they increased advanced-ticket bookings in the last year to keep expenses in check.

“In general, travel managers and purchasers have decided this new frugality is working well, and it’s allowing them to do a lot with a limited travel budget, and they’re sticking with it,” says Noah Tratt, vice president, supplier relations for Egencia Americas.

That can mean squeezing two or three clients into a trip. Corporate fliers are more likely to be sitting in coach when criss-crossing the U.S., though they might be able to book business class for flights overseas. And business travelers may be asked to use the frequent-flier points they’ve accrued on business trips if they want to upgrade to a premium section.

A NY Times article reports that Gulfstream orders in the 3^rd quarter were the best since 2008 and deliveries are up over last year. The catch here is that the majority of Gulfstream aircraft now are being sold outside the US.

The good news is that people still need to travel to grow business. Video conferencing has not yet totally replaced the face to face meeting.

The bad news is that Cessna laid off another 700 employees in September and slowed production so the recovery is not across the board here in the US. Used aircraft prices are still depressed indicating a lack of demand. The manufacturers think, or hope, this will change in 2012.

It seems to me that the US Business Aviation market is going to be stuck in a no growth mode for 2011 with maybe some recovery in 2012, barring a major economic game changing event.

Where the growth seems to be is in Asia, India and Latin America. There is great opportunity in China where there are only about 1000 GA aircraft in the country of 1.4 billion people compared to 200,000 GA aircraft here in the US.

Has the US Business Aviation market reached maturity in its life cycle?

If so, then we must find ways to reinvent the business if we want growth.  Or move to China.

Click on pen to

An October 14 article in the Wichita Eagle by Molly McMillin says the aviation manufacturing industry in Wichita is waiting on the rebound of the economy and the business aviation market.

If you are leading you don’t sit around and wait on anything or anybody. You blaze a trail and create your own economic recovery.

The true innovators in the history of modern economies did not wait on rebound, they created it.

In business aviation will we allow our fates to be tied to decisions made by the government, by economic down turns and up turns, by someone else’s innovation and prosperity? If so we are in trouble.

A recent post by Dan Robles  of the Ingenesist Project stated the following:

The invention of the wheel, wedge, and pulley came long before the invention of credit scores, CDO’s, and International Trade Agreements.

Technological Change must always precede economic growth – economic growth cannot sustainably precede technological change. If you throw money at a problem, you are not guaranteed technological change.  If you throw technological change at a problem, you are guaranteed money.

We are going about the process of globalization as if economic growth can precede technological change.  This is the tiny flaw of market capitalism and it is unsustainable.  In short, we’ve gotten it backwards and continuing on this course prevents us from seeing the future.

Sadly to me it seems that our industry is stuck in a mindset that we will be in a “no growth mode” to “slow growth mode” for the next few years. That means no new jobs, maybe even a few more layoffs,  and those of us who are here today will be fighting for a piece of the pie that is not going to get any bigger anytime soon.

A good example of innovation driving a market is the personal computing industry.  The market has grown because price went down at the same time computing power went up. The growth has been exponential, not in small increments. And because of that growth, billions of people have the power in their hands to communicate and connect that we could not have imagined 20 years ago.

What about the growth of social media as a way for people to connect? Facebook surpassed 500 million users this summer. Who could have predicted the adoption rate of social media 5 years ago? Did any of us have social media in our marketing plans in 2005?

So if we want our industry to grow, and the manufacturers of  business aircraft can’t innovate fast enough to deliver a faster less expensive machine like the personal computing industry, then what do the rest of us to do?

Can we innovate, through the use of social technology, to offer travelers a new solution?

Click on pen to