Curtailed flight schedules, security worries and a fear of severe acute respiratory syndrome (SARS) are draining first-class travelers from the major commercial airlines. But those problems have indirectly benefited several new companies that sell multiple flights on private jets.
Marquis Jet Partners, Sentient and the Delta AirElite subsidiary of Delta Air Lines are among the companies selling these private-jet membership services. These companies essentially sell prepaid blocks of travel on small aircraft -- like Cessna Citation jets that seat six and Gulfstream IVs that seat 14 and can accommodate a flight attendant.
Prices vary and can be difficult to compare, but they generally start at about US$100,000 for about 25 hours of flight time. Gourmet catering is included.
PHOTO: NY TIMES
While those prices average out to well above first-class fares on scheduled airlines, the companies promote their services as a novel way, amid a sluggish economy and corporate belt-tightening, to fly privately without some of the expense of owning a jet outright or having a fractional share in one. They also bill their newer and plentiful planes as better alternatives to those of traditional charter services.
Sentient, based in Norwell, Massachusetts, said it signed up over 200 more customers in March than it did in the same month last year.
The company, which T.H. Lee Putnam Ventures, a New York investment firm, bought this month from a unit of Credit Suisse First Boston and other investors, now has 1,300 customers, divided almost equally between corporations and wealthy individuals. Harvey Golub, the chairman of T.H. Lee Putnam Ventures, is a former chief executive of American Express.
Sept. 11 effect
"People are really looking for security and convenience," said Mark Stone, the chief executive of Sentient, which was formerly known as eBizJets. He said the company's total revenue since the week after Sept. 11, 2001, has been about US$100 million, and that the company has been profitable since the second half of 2001.
He declined to provide further details, saying only that sales for last year rose 78 percent from the previous year.
Marquis, a privately held company based in New York, said its sign-up rate for new members more than tripled in March from the month a year earlier. The company says that it has 600 customers -- about 500 of them individuals and the rest corporations -- and that it became profitable last month, ahead of its year-end target.
Total revenue since it opened for business in June 2001 has been about US$105 million, said Kenneth Austin, the executive vice president. He added that the company was nearly "one year ahead" of its original revenue projections, but declined to disclose further details.
He said Marquis had been growing so fast because "people just can't get from here to there commercially anymore."
Or at least not as quickly. Major airlines have been paring back their schedules to save money, making commercial flights less convenient for some frequent travelers. Delta Air Lines, for example, cut its regular service by 12 percent last month.
In addition to offering service on demand, private jet services also help travelers avoid airport delays. The services, including Delta's own, often fly to many of the nation's 5,000 tiny municipal airports and airfields, away from congested commercial-airline hubs and clogged security checkpoints.
Delta AirElite, based in Cincinnati, declined to disclose its revenue or to say how many customers it had enrolled since introducing its membership program in January. The company said only that it had received more than 900 inquiries. Cameron Gowans, Delta AirElite's director for sales and marketing, said the company hoped that its private-jet membership service, which it calls "fleet" membership, would replace charters as its flagship product.
Buying time
Sentient, whose clients include sports stars like Shaquille O'Neal of the Los Angeles Lakers and Alex Rodriguez of the Texas Rangers, does not own any planes; instead, it can charter as many as 1,400 as it needs them. Delta owns four planes, leases five more, operates 20 aircraft owned by others and charters an additional 200 jets through various charter operators.
By contrast, Marquis offers 400 planes through a sub-leasing arrangement with NetJets, the leading seller of fractional shares of aircraft and a unit of Berkshire Hathaway.
Under fractional ownership, customers buy a partial interest in a jet. For around US$600,000, for example, they can buy a one-sixteenth share of a small jet, entitling them to about 50 hours of flying time a year. They also pay management fees, typically at least US$10,000 a month, and flying fees, usually starting at US$1,400 an hour.
Some industry analysts say that they wonder if Sentient and Delta AirElite are really just souped-up charter services, unable to guarantee high-quality planes.
"There's a lot of range of what you probably get in terms of the age and capabilities of planes" with both of the companies, said Barry Justice, an aviation consultant in Grapevine, Texas.
Chartered planes can be new aircraft with leather seats, laptop hookups and DVD players, or low-technology jets that have been in service for decades.
Starting next month, Stone said, Sentient's new quality-control team will make quarterly, sometimes monthly, inspections for eyesores like coffee spills. The company has also hired a second, independent safety-auditing firm. Sentient and Delta AirElite also say that they charter their planes only from reliable, well-vetted sources.
S. Jerry Glauser, the owner of a Mercedes-Benz dealership in Sarasota, Florida, said he had flown dozens of times on his US$100,000 Sentient card in the last 10 months, including trips to to Aspen, Colorado, New York and the NCAA basketball championship in New Orleans.
"It can certainly be luxurious if you want it to be," he said. "Everything has been extremely pleasant, very easy," he said.
Marquis may have an edge with its fleet, but some industry analysts question how much the company actually saves some customers. For a corporate client whose executives take trips that require them to stay at a destination for several days, "you might want a fractional instead," said Joseph Moeggenberg, of the Aviation Research Group/US, an aviation consulting firm in Cincinnati.
Pricing strategy
Marquis charges from US$109,900 to US$299,900 for 25 hours of flight time, depending on the size of the jet. It requires notice of 10 hours to send in a plane to pick up passengers.
By contrast, Delta AirElite charges from US$99,500 to US$245,500 for 25 hours. But members can earn up to 7-1/2 free hours if they always fly round-trip, so the pilot can wait at the destination. The company guarantees a plane on 12 hours' notice.
Sentient, using a different pricing model, sells travel cards for US$100,000 to US$500,000, and then debits them at US$3,100 to US$7,100 a flight hour, depending on the size of the plane and whether the trip's length is short enough so that the pilot can wait for the return.
On a small jet, Sentient's US$100,000 card can buy more than 32 flight hours of one-way trips or nearly 49 hours of round trips. Sentient says it needs booking notice of only five hours.
For all the companies, the most popular destinations are the Northeast, California, Florida and the Caribbean, but they occasionally fly farther overseas, through affiliate charters.
Stone of Sentient predicted that revenue from private-jet membership services would overtake those of fractional jet ownership, a fast-growing business itself, in five to seven years.
But John Olcott, the president of the National Business Aviation Association, a trade group for the private-jet industry, disagreed.
"To expect the same level of service and efficiency as in a corporate or private jet," he said, referring to private aircraft owned by the traveler, "is probably unrealistic," he said.
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