Plane Conversations

In a recent meeting of shareholders, Berkshire-Hathaway executives reported that NetJets has returned to profitability after big losses in 2009. The company reports that NetJets had a pretax profit of $ 57 million (US) in the first quarter of this year which is compared to a $ 96 million (US) loss last year.

Warren Buffett attributes the turn around to putting David Sokol in charge. David Sokol also runs the company’s energy – utility business, MidAmerican, and is a candidate to take over Berkshire Hathaway’s operating businesses as a successor to Buffett.  

We have posted a couple articles on NetJets over the past few months regarding the viability of their business model built on fractional jet operations. NetJets is a key leader in our industry and how they fare will make a big difference in the future of private jet travel.  

The key will be if the company can sustain profitability over the long haul. If they can, then it proves they have a working business model. One quarter of profit or even one year of profit does not make a business. You can cut overhead and get most any business profitable if there is some present sustainable revenue stream, but can you grow it in the new economy? Will more people line up to buy fractions of business jets as they did in the last 15 years?

A lot of new business jet orders were canceled in the downturn of the economy. Will NetJets start ordering new aircraft again? Will they operate under a similar business model as they have in the past or will they have to come up with a new way of structuring their fractional business to make it work in the future?

It costs a lot of money to own and operate a business jet and there are fewer companies today than there were two years ago who are willing to spend the money, whether it is a whole aircraft or a fraction. NetJets may get new business from companies who overreacted by shutting down their flight departments last year; but, that will be limited.

Unless business jet travel innovates to the point where the occupied seat cost is brought down significantly, the NetJets client will remain the high end business user and elite traveler. That market is small in comparison to the rest of the travel market.

So where does the new client for flying on a business jet come from?

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There has been a lot of press lately about the airlines continuing to add fees for everything they can think of.

I don’t know what these guys are thinking when they do this.  

An article on CNN’s site quoting airline consultant Robert Mann, says the following about their thinking:

 Airline consultant Robert Mann of R.W. Mann & Co. expects the carry-on and possible toilet fee to remain firmly in the realm of the aggressive discount carriers, who capitalize on “an infinite demand for very low fares.”

“A lot of people will put up with a lot of inconvenience and crazy fees in order to think they got a low fare,” Mann said.

Can they not just figure out how to charge a price and make money to cover it? Are they trying to modify our traveling behavior through a pricing scheme?  

There is now proposed legislation requiring the airlines to disclose their add on fees to the customer in a way that you would really know what you are paying prior to travel.

So should we require McDonalds to tell you how much they are charging for the special sauce when you buy the Big Mac? Or can we be content that we either think the Big Mac is worth it at the price, or we don’t buy it.

Every time the airlines irritate the consumer with their pricing schemes or bad schedules or whatever the irritant of the day is, the government tries to legislate some way to make them behave.

Most of the airlines you fly on have their flight attendants thank you for choosing them.  It goes something like this: “Thanks for flying with us today; we know you have a choice and we are glad you chose us”.

Our friend Dan Robles who posts frequently on Plane Conversations writes the following about the airlines pricing schemes in a recent post on his site:

Steven Frishling (www.flyingwithfish.com) predicts that there will be a schism in the industry, some airlines will take on the race to the bottom with ancillary fees and others will realize that every angry customer is an opportunity to migrate to a superior travel experience.

Charging is obnoxious – every hit hurts. In fact, Expedia makes the majority of their fees off everything except airlines, why can’t airlines?

Steven suggests that the opposite of bundling – integrating hotels, taxis, sponsors, etc even using frequent flyer miles – is a the best way to improve the experience of flying.  Airlines should provide targeted portals, build sponsored content, attract sponsor revenue, supply hotlinks, etc. All of these are clever ways to derive revenue without alienating passengers.

All this “cost-saving” of ancillary pricing can quickly become a huge liability as competitors come along with comparable prices and superior service. Social media is proving to be an excellent tool for reaching out to passengers and understanding the needs. This allows them to package features smartly, unbundle fees in a way that adds value to the experience, not by squandering trust and respect at every opportunity.

Ultimately, the market will take care of this anti-social behavior of the airlines.  Maybe some airlines will succeed by attracting that “infinite demand for very low fares,” but I have to believe that most of us do not want the confusion, inconvenience and trickery of it all.  

We do have a choice as to who we fly with. We even have a choice to not fly at all. What about the choice to fly in a private aircraft?  Can we offer these consumers a better choice at a price they can live with?

If the airlines aren’t going to do what Steve Frishling suggests, then why don’t we?

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Of the many fun reasons to pilot new Embraer Executive Jets, one of the best is St. Martin.  Located in the Lesser Antilles island chain, the French/Dutch Island of St. Martin (or St. Maarten) is a convenient stop when ferrying aircraft out of South America.  The clear, blue Caribbean Sea is the perfect backdrop for this European tropical oasis. 

Located on the more raucous, Dutch side of the island; Princess Juliana International Airport is famous for its runway which begins just a few steps from the Caribbean.   Tourists like to hold onto the airport fence when jumbo jets depart, letting go at full throttle up for a brief flight of their own backwards into the surf.  And the Dutch brew Heineken…here it is half the price of your neighborhood package store.  On the opposite, French side of the island, are restaurants and hideaways well known for French cuisine and quiet honeymoons.   But here on the Dutch side, casinos and lively night life are the norm.

After a long day including three technical stops; the ground crew of Arrindell Aviation Services, www.arrindellaviation.net  is a welcome sight.  Henke is there to meet us with a very short ride in a gleaming white van over to the Sonesta Maho Beach Resort.

At the Sonesta, we all enjoy a quick clean-up prior to falling into a chair at Cheri’s Café just across the road.  Cheri’s is “island chintzy” but is just what we’re looking for with smooth tropical drinks in a very casual island setting.  The local band preys upon the tourists who take a willing part in the evenings shenanigans.

If you are lucky enough to arrive before sunset, I recommend you watch the water, airplanes and the sunset from the Sunset Beach Bar.  Just a short walk from the Sonesta Maho Beach Resort, the Sunset Beach Bar offers just the right elixir to rub off a full day of flying.  www.sunsetbeachbar.com

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In our ongoing discussions about how to reduce the costs of flying private aircraft by putting together a way to share a ride I posted a blog titled “Would Business Travelers Share?”

We believe that people would be willing to share a private jet flight with others provided it left at a mutually agreed on time both coming and going.

So if you can answer the when question (when we all want to go) what about the who (who will I share a ride with) question?  

Who you would share the flight with?

Would you share a flight with your competitor? Probably not. You would not want to have your competitor in close quarters for two hours listening to your discussions about today’s meeting or presentation.

If you are on a business trip would you share the flight with a group of college kids going to spring break and ready to party?

When you ride on the airlines you don’t have much choice who you sit next to. You may get lucky enough to sit next to Kevin Smith and share his space? Or a bratty kid who keeps kicking you and you can’t kick back?

If you were sharing a ride on a private jet charter flight it would be very easy to know in advance who was sitting next to you. With all of the social media profiling surely you could just go take a look at your seat mates Facebook page or LinkedIn profile and figure out if they might be OK to share the flight with. It would seem that knowing who you are riding with could be very easy to determine and even control.  

You never know, the person you share the flight with may end up being your next friend, client, partner, collaborator…..

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The following are excerpts from a March 9 Chicago Tribune article by Jon Hilkevitch.  

Passengers on U.S. airlines will pay relatively small increases in airfares over the next 20 years, but they should expect more flights crowding the nation’s busiest airports, including O’Hare International, the Federal Aviation Administration said Tuesday.

Travelers hoping to stretch out across an empty seat next to them will likely be out of luck. And, sorry, the small regional jets that are so unpopular among a significant segment of passengers are here to stay, although the commuter airlines will begin retiring their 50-seat jets in favor of somewhat larger aircraft.

The FAA now says it will take until 2023 to hit the 1 billion mark, indicating modest annual growth from the 704 million passengers carried in 2009 by U.S. airlines, on both domestic and international flights. Total passengers will rise to 1.21 billion by 2030, the agency said.

Coming off 2009, when U.S. airlines lost $8.1 billion, the total number of commercial flights is forecast to decrease 2.7 percent this year, the FAA said.  Flight volumes will then grow at an average annual rate of 1.5 percent by 2030, the FAA said.

Jetliners, which are nearly full on most flights today as the carriers try to prop up airfares, will stay that way, leveling out at 82 percent of all seats occupied on flights over the next 20 years, the FAA said.

While most passengers will continue to fly on the big, mainline airlines, that segment of the industry will grow the slowest over the forecast period, officials said. The biggest percentage gains will occur on international flights, followed by regional commuter airlines that operate smaller aircraft. Those regional airlines bucked the negative industry trend by turning a profit in 2009, FAA officials noted.

Twenty-nine large hub airports, including O’Hare and Midway, are projected to handle the bulk of the increased flights, growing at an average of 3 percent a year in landings and takeoffs through 2030, the FAA said.  It means that to prevent aviation gridlock, the FAA must complete its ambitious transformation of the nation’s air-traffic system, dubbed NextGen, to a satellite-based system that replaces the current ground-based radar.

So what does all of this mean for Private/ Business Aviation?

The airlines are going to crowd more people on aircraft by constraining supply in an effort to raise prices; they are going to use more regional airliners; they are going to focus more on the 29 major airports in the U.S., and focus more on international flights.  This looks like mass transit to me.

None of these trends provide better solutions for business travelers in small and mid size markets.

What it does spell is more delays, crowded flights, less tolerance on bad weather days at crowded hubs (I am feeling that right now sitting at ATL on a busy travel day and bad weather).

In all of this I see opportunity like never before for the general aviation and business aviation sectors to step up to fill the voids and ease the pain.  There are 5500 airports and the airlines are going to focus growth on the top 29? They only fly to around 500 airports in total so that leaves a lot of room for private aviation to provide point-to-point solutions between the rest of the nation’s airports.  

Air travel is supposed to be about time efficiency and if the FAA is correct in their forecast, the time to travel by air mass-transit is going to slow down even more, which widens the gap in time gained by flying private and helps close the gap in costs when you value your time.

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In a recent article in the Wall Street Journal, Scott McCartney talked about security taking longer than the flight.

Ever since the December 25 bombing attempt, travelers heading to the United States have had to face much tighter security.  The federal government issued new rules which made inbound travelers have to go through a number of screening processes which include some pretty intrusive searches.  And the crazy thing is people adjust.  We have all become indoctrinated to this.  We don’t like it, but we just have to do it.  

I know this because I flew from Brisbane, Australia to Los Angeles a week after the attempted bombing.  I was told that I would have to be at the airport three hours prior to my flight.  I went through a number of searches, pat-downs, emptying out of personal belongings and carry-on luggage.  I removed my shoes about four times.  My teenaged son, who happened to be walking ahead of me alone, with his hands in his pockets, wearing a hoodie over his head, was approached by security to have an explosives test.

The article says:  “If you’re coming inbound to the U.S., it’s going to be a tough summer unless we get some creative change in the security rules,” said Steve Lott, a spokesman for the International Air Transport Association, a Geneva-based group that represents airlines around the world.

Airports, airlines and government agencies around the world have hired more screeners to perform the “enhanced” security that the U.S. now requires for any flight headed to or flying over the 50 states.

Airline officials said that government agencies and airports in North America, Europe and Asia have promised that they will staff up enough to prevent long lines and delays as travel picks up this spring and summer. “All we’ve got at this point is their word and we hope their word is good,” said an official at a U.S. airline. “It’s a concern.”

This affects not only those traveling to the US from overseas, but also domestic flights around the country.  So, what’s the alternative to removing your shoes and standing in long security lines?  You could always get a bunch of buddies, or other business travelers heading your way, to charter a private aircraft.  You’d be surprised at the price of dividing a charter flight by six or eight.  And you’d love the fact that you can drive to the FBO, grab a coffee and board the plane from the ramp 15 minutes before wheels up.  And I haven’t even started on the luxury of the experience yet.

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We at Plane Conversations sometimes pick on the airlines because we hear all too often about the bad experiences people have when flying commercially.  But sometimes we hear stories, like the one below,  which lets us know that the airlines still have some great employees who get it right! 

On a recent flight back to Montreal, a client and friend of ours, Serge Charron, of Pascan Aviation in Canada, had the following airline experience, and wanted us to share it on this site.  This is how one person can make a difference to many.

I want to share an experience I recently had while travelling from the United States to Canada, which demonstrated how the proactive quality of an employee, versus a reactive attitude, can make a significant difference to a customer experience. This is an example where each and every employee – from a cleaner, to pilot, and even a CEO, must be dedicated to customer service to ensure a successful and healthy company.

This particular employee did her best to correct a problematic situation, when the cause was clearly out of her control.  A reactive employee would have done their duty as usual (a normal turnaround within the normal turnaround time).  This would have done nothing to resolve the delay to all subsequent flights.

Her initiative was safe, efficient and cost saving to the company.  Her dedication to customer service is invaluable and she is clearly a person with a strong worth ethic and who is looking out for the company.

This is what happened:

We arrived at the terminal in Nashville for our flight back to Montreal.  After checking the board, we saw that our flight had been announced 45 minutes late. We were concerned about our connecting flight, since this delay led to us having only 5 minutes to catch our connection in Philadelphia. As most people would, we just sat there.  There’s nothing much we can do!

An airline employee came to the small counter at our gate and took the microphone.  She announced the delay and explained that she will do her best to shorten the delay for those who have a connecting flight in Philadelphia.  She then called for all passengers who had a tight connection to visit her; there were about 10 in total.  She upgraded each passenger to the first rows in entrance of the plane, to enable us to exit the plane as quickly as possible in Philadelphia. That was smart!

When the plane arrived, she made another improvement.  She called for boarding and made it per row, commencing with the last row in the back of plane.  This made it so we were not stuck at the door waiting until everybody had finished stuffing their luggage in the overhead compartment, tightening belts etc before others can continue to the next seat.  This was very smart!  It facilitated a very quick turnaround. I wonder why it is not always like this?

 The professionalism the woman demonstrated and her initiative and customer service skills made the situation bearable, and made my day. I said to my colleague “I wish all of my employees were like her”.

The time she saved in this turnaround gave us 20 minutes for a smooth connection in Philadelphia, and on home to Montreal.

Thanks to Serge Charron, President of Pascan Aviaion in Montreal for sharing this story. One person can make a difference!

 www.pascan.com

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A  February 1 article by A. Pawlowski of CNN titled “How old is the plane you’re flying on?” says the following: “Few people expect luxury while flying, but these days, even the basics seem to be in bad shape. It’s not uncommon to find your tray table broken, the in-flight entertainment system not working and your seat cushion worn — all of which can make you think, how old is this plane anyway?”

“But for now, the reality for many U.S. air travelers is that most of their journeys take place on planes that have been in service for a decade or more and show it, though in ways that have no impact on their safety – like worn interiors, broken creature comforts and less than spotless conditions.”

Sounds more like riding on the metro rail than flying on an aircraft. Maybe that is what the experience ends up being in the future? Mass transit by Air! 

The average age of the fleet of the seven large U.S. passenger airlines – including American, Alaska, Continental, the merged Delta and Northwest, Southwest, United and US Airways – is about 14 years old, according to The Airline Monitor. It found American and Delta/Northwest had the oldest fleets, at about 16 years on average. As of the end of 2008, a small percentage of the merged Delta/Northwest’s planes dated back to the late 1960s.

U.S. fleets are among the oldest in the world, said Richard Aboulafia, an aviation analyst at the Teal Group in Fairfax, Virginia.

So all of this begs the question about safety and are these aircraft still safe?

Most everyone will agree, as do the experts quoted in the article, that the fleet of airline aircraft in the United States are maintained to the highest standards in the world and that they are safe. The safety record of US airlines have continued to improve each decade due to good maintenance, technology upgrades in the cockpit and better training of pilots and maintenance personnel.

I have no fear of getting on a 16-year-old aircraft operated by a major air carrier in this country and no worry about arriving safely. The professionals who fly and maintain these aircraft are the best in the world, in spite of the bad press of a very few isolated incidents where the pilots are “working on their laptops” and forget where they are.

The Airline Industry is Safe! But what about the experience?

Is the traveling public going to resign themselves to the idea that all they can expect is to safely arrive? That’s all you expect when you hop on the metro rail in any major city.

There is an alternative for the traveler - it’s called private aviation or business aviation and it’s anything but the same old experience!

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I recently had the opportunity to be part of an interview with Fleet Aviation executives Doug Brennan (CEO) and Ellen Sluder (Director of Marketing) about how, in a murky aviation market, they are successfully growing their aircraft charter business.

The business model behind this White Plains, New York, based company is simply offering complete travel solutions to the customer that is price competitive, safe, comfortable, convenient and environmentally friendly.  It’s what all of the aviation industry wish to do.  These guys have a solid history of success since 2005 and are offering a better solution to the business traveler.

So who is Fleet Aviation?  And what is their secret?  Well, it’s not really a secret at all.  Fleet Aviation provides on-demand charter service in small aircraft anywhere within 500 miles of the Greater New York City and Boston areas.   At Plane Conversations, from time to time we like to compare the different experience of riding on a corporate or private jet, with the experience of travelling on the airlines.  It’s our business, and we love to share with the market what a wonderful experience flying private is.  Well, the small aircraft offers the same experience.  Being a student pilot and flying in a two-seat Cessna 152 with less than desirable elbow room, I can fully appreciate the comfort level of flying in a four or six seat aircraft; whether it has one engine or two.  And these aircraft are not only comfortable and modern, but they are also fun, safe, and can get into any of the 5000 small airports in the US.  Only 500 are available to the airlines.  So it’s easy to figure out the time and cost advantage of chartering a single-engine aircraft. 

But what is the experience like?  Ellen Sluder says, “The experience of flying Fleet starts well before you arrive at the airport for your trip. You can either reserve online or call our concierge service. Once you have confirmed, you get a personalized itinerary that includes the name and phone number of your pilot. Should there be any concerns or questions, you can always call us or the pilot directly.  When it is time for the trip, you can drive right out onto the tarmac and your car will be valet parked and washed for your return. You step out of your car, hand your pilot your bags, climb right into the plane and can be taxiing in 5 minutes. Skip the crowds, lines and connections associated with major airlines. And, because you are flying private, we are completely on your schedule – if you arrive a few minutes late, we simply wait for you.”

Fleet Aviation keeps a clear business focus on regional travelers and aiming to attract a new market -those who might not have ever thought about aircraft charter.

Face to face is important for Fleet Aviation, but the social media trend has clearly started to penetrate the aviation industry.  “I fully believe that Social Media should be about getting feedback and creating a discussion.  ”Engaging” in the truest sense of the word”,Ellen says. ”Ultimately, I’d love to get to the point where I’m generating hundreds of hits and interactions – driving people to our website and getting actionable feedback.  But for now, the focus is really twofold: to provide fodder for folks who are doing due-diligence on Fleet Aviation, and use it as a tool for education.  We want to challenge the conventional thinking on regional travel. I read upwards of 30 blogs a day, and sift through to find topics I think would resonate and be relevant to regional travelers and then put the private aviation spin on it. Sometimes it’s about highlighting destinations that are best reached through private flying, sometimes it’s commentary on the current system”. 

To visit the great folks at Fleet Aviation, go to:  www.flyfleet.com

“With Fleet, it’s smooth, simple and straightforward, from booking to landing.”

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When it comes to air travel today, no one enjoys it.

Is There A Better Way?

Watch the video below and give this alternative some thought the next time you think about using a commercial airline. This alternative would have enabled me to go to New York City and back within the same day.  Total travel time would have been roughly five hours instead of 18.  And it would have cost me less!

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