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Elite purchasing private jets in rising numbers

By Simon Bowers
THE GUARDIAN, LONDON
Sunday, Jun 10, 2007, Page 12

A model walks in front of a private jet at the 2007 to 2008 Chanel Cruise Show presented by Karl Lagerfeld on May 18 in Santa Monica, California. PHOTO: AP

Private jet traffic is soaring to unprecedented levels as a burgeoning tier of super-rich private individuals and high-earning executives turn their backs on scheduled air travel, impatient with lengthy security procedures and frequent delays.

Despite unprecedented awareness about the impact of air travel on global warming, aircraft manufacturers forecast worldwide deliveries of new business jets will come close to 10,000 over the next decade -- almost double the production rate for the previous 10 years. Adding in very light jets, the forecast rises to about 18,000.

Private air travel will always be regarded as a hallmark of corporate excess in some quarters. But many boardrooms, emboldened by a favorable economic climate, are increasingly confident such an apparent extravagance can be justified if it enables the highest paid executives to maximize the time spent engaged with their work.

The longest order lists are coming from China, Russia and India, fast-growing economies with vast land masses that are difficult to cross by other means, the General Aviation Manufacturers Association said.

For the past 20 years, the US and Canada have generated about three-quarters of business jet sales. Last year jet makers reported that, for the first time, most orders were coming from outside North America.

In Europe, meanwhile, there has been an unprecedented surge in the number of multinational firms and wealthy individuals using private aircraft as "air taxis." More than half of European business flights are over distances of less than 500km, an analysis by the air traffic management firm EuroControl showed.

The latest figures available show 6.9 percent of European flights recorded by air traffic control authorities were "business aviation" in 2005, with an estimated 40 percent flying empty on "positioning flights" to pick up passengers. The number of business jet flights was growing at 8.9 percent two years ago -- twice as fast as the rest of air traffic -- and is believed to have accelerated since.

According to a spokesman for jet makers Bombardier, Europe is waking up to the benefits of executive jet travel which have long been accepted in the US.

"They can save time and they can save money," he said.

Discreetly pushing this argument, away from the media and investor spotlight, business jet operators have been enjoying a successful sales drive through Europe's top boardrooms. NetJets, a firm that allows customers to share aircraft ownership, increased flights by more than a third last year to almost 63,000.

In just five years, the company, owned by legendary US investor Warren Buffett's Berkshire Hathaway conglomerate, has built a customer base which boasts more than a third of Europe's 50 largest listed companies. The names of customers, however, remain a closely guarded secret -- as they do throughout the industry.

"There will always be someone who will point to this kind of expenditure as evidence of corporate excess," said Rob Dranitzke, NetJets' head of business development in Europe.

Marks & Spencer chief executive Stuart Rose was the latest high-profile business leader to have his travel arrangements scrutinized after the company launched a publicity campaign to highlight a series of progressive environmental policies, many of which have been applauded by green campaign groups. Later it emerged that Rose, who led M&S "Plan A" campaign, used a company aircraft not only for store visits but occasionally for personal trips.

"Absolutely I use it, but it is not my own personal steed," he said two months ago.

Several top international businessmen regard such expenditure as unnecessary perks rather than "productivity tools." Microsoft's Bill Gates and Ikea founder Ingvar Kamprad -- the world's richest and fourth richest men respectively -- have reputations for personal frugality, earned in part by taking economy class flights, setting the tone for cost-control within their business empires.

Those who believe business jets are largely boardroom perks point to European air traffic data which shows recreational destinations such as Nice, Cannes and Mallorca among the top 20 destinations for "business aviation." MaxJet, the business-only scheduled jet operator which is planning a London flotation this month, said one of its fastest growing routes is London to Las Vegas.

Judith Morton, of SkyJet International, said many wealthy individuals and executives used jet travel to ensure they were able to move with ease between homes in tax havens such as Monaco and business interests elsewhere in Europe.

"The lines between business and leisure are blurring. Although the initial focus of a trip may be business, customers may take their family with them and add an extra day as leisure time," she said.
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