jet travel is proving more popular than ever,
as time, convenience, privacy and safety are first
and foremost for those that have the choice.
Charter: Ready for take off, by Marilyn Adams
those who can't abide flying with the masses,
chartering a private jet may be getting a bit
easier, though not necessarily cheaper.
Briton Richard Branson, chairman of Virgin Atlantic
Airways, is about to dip his toe into the tantalizing
but murky waters of the private jet charter business.
Charter jets aren't just for actors, sports stars
with the commercial airline industry, the private
jet charter business is small "about $8 billion
a year in sales" but it's growing fast, both
in hours flown and revenue.
Charter, a new Virgin-financed website scheduled
to launch this fall, plans to use Internet technology
to provide prospective buyers with immediate price
quotes for the trip destination, day and time
requested. Buyers will also get details about
the specific aircraft; pilots and operator; safety
audits; and quality ratings from previous customers.
or travel agents will be able to use Virgincharter.com
to book domestic or international trips online
with any one of a variety of charter operators
using a credit card or wire transfer. Virgin will
collect from the seller a commission on each trip
Charter CEO Scott Duffy compares his travel site
to financial website LendingTree, where competing
lenders provide online interest rate quotes to
Charter will not be the first charter jet website
to link buyers and sellers. But Virgin promises
to be the most comprehensive charter jet marketplace
and, with the Virgin brand, is likely be the most
one else has brought everything together with
this level of transparency," says Duffy,
who is based in Santa Monica, Calif.
sell 'empty legs'
Charter is not planning to own or operate charter
jets. It will offer price quotes only from operators
that undergo safety audits. Operators will not
be charged for giving quotes, and passengers will
not be charged for using the site.
says the site will also offer a dedicated area
selling "empty legs," the inventory
of trips that private jets will be flying without
many as 40 percent of private jet trips are flown
empty because jets are shuttling to a different
city to start a scheduled trip, or have delivered
their passengers and are returning to home base.
translates into lots of trips that could be sold
if the information were available to potential
Coyne, president of the National Air Transportation
Association, a charter trade group, says Virgin's
entry into the business shows the charter jet
business has a strong future.
estimates the industry has attracted $1 billion
in new capital investment in the past two years.
attributes that to the improving quality of charter
jet operations and the deterioration of U.S. airline
face it: 90 percent of what used to be considered
first-class airline service has evaporated,"
experts aren't so sure Virgin Charter will be
a sure success.
Gevalt, founder of the Air Charter Guide, one
of the earliest guides to private jets for hire,
isn't convinced the clubby charter business will
embrace Virgin's concept.
is an industry that has defied efforts to commoditize
it," he says.
estimates the jet charter business survives on
thin profit margins of 3 percent to 5 percent.
Private jet operators tend to resist brokers and
other agents that get between buyers and sellers
because they trim that profit further.
price transparency Virgin Charter is promising
could put pressure on prices. "If Virgin
Charter drives prices down, operators won't like
it," Gevalt says. "I don't think it
will rock the industry."
isn't the first big commercial airline name to
enter the sexy world of private jets. In the spring
of 2001, United Airlines launched a unit called
Avolar and ordered small jets worth $2 billion.
planned to sell shares of the aircraft to investors
for their use. Six months after the Sept. 11 attacks,
United, fighting for financial survival, closed
Avolar after investing $100 million.
welcome Virgin's entry because it could bring
more transparency and competition to a diverse,
decentralized industry that, compared with the
airlines, is not widely understood or regulated.
best thing that could happen is for Richard Branson
to come into this business," says Adam Webster,
a founder of RSVPair, an air charter directory.
he says, may instill greater business discipline
into the charter jet world.
Charter: Ready for Takeoff - In a bid to make
luxury travel an upscale commodity, Virgin Group
is launching what it hopes will become the Priceline
of the private aviation industry
December, Scott Duffy got the kind of offer every
entrepreneur dreams of receiving. The 37-year-old
former dot-com executive had been trying to raise
funds for an online booking site for charter aircraft.
Coincidentally British billionaire Sir Richard
Branson, founder of the Virgin Group, had been
studying the same opportunity. That's when Duffy
says the Branson camp called with a tantalizing
offer: "We want to give you much more money
than you ever imagined you'd need, and we'll put
all of our marketing behind it." Duffy quickly
forgot about other investors. "It wasn't
even a choice," he says.
June 12, Duffy launched an invitation-only maiden
flight of the new business, Virgin Charter. He
hopes to have the site open to the public by this
fall. Branson and Duffy hope to capitalize on
the booming, $10 billion-a-year charter aircraft
industry. Private aviation has been in a steady
climb since the 2001 terrorist attacks increased
the wait time and frustration of commercial airline
travel. Not everyone can afford to buy their own
planes, of course, and even the folks who do own
them frequently try to offset the costs by chartering
the aircraft out when they're not using them.
That's where services such as Virgin Charter come
in, acting as middlemen for travelers looking
to charter a business trip or high-end vacation.
FOR PRIVATE JETS
aviation is a crowded, fragmented market. There
are some 2,500 charter aircraft operators in the
country. Most of them own just three or four planes.
There have also been a number of players trying
to address the online booking market, among them
Blue Star Jets and AirCharter.com. John Maguire,
who runs JetTrip.com, says it's very hard to get
up-to-the-minute pricing and availability information
from the charter operators: "We spend 10
percent of our time on the phone with customers
and 90 percent tracking down available jets."
Charter hopes to bypass some of those problems
by creating what's essentially an eBay (EBAY)
for private jets. Customers will input their desired
trips and charter operators will bid for their
business. The customers will then choose which
operator they want. Virgin Charter, based in Santa
Monica, Calif., will get an unidentified cut of
each sale. Richard Aboulafia, a vice-president
with the defense and aerospace research outfit
Teal Group, said the venture "could produce
some interesting results" if Virgin is able
to improve the efficiency and fluidity of the
market. "Turning a luxury product into a
larger near-commodity product is a clear trend
with business jets these days," Aboulafia
wrote in an e-mail.
adding a bit of social networking to the site,
which is expected to be available to all customers
in the fall. Charter customers and the aircraft
owners will both be able to post comments about
each other on the site, so travelers will know
whether the operator was late and the plane owners
will know whether the customer smoked in a nonsmoking
plane. Given the fussy nature of private aircraft
owners and customers, this could make for some
of the biggest issues in dealing with charter
operators is the lack of information about their
safety records and the quality of their planes.
That's why many private aviation customers tend
to choose one charter operator and stick with
them. Duffy is encouraging plane owners who list
on the site to get their planes certified by third-party
observers such as Wyvern Consulting, whose parent
company, CharterX, is partnering with Virgin Charter.
"Our belief is that if a buyer looks at 10
quotes, they'll gravitate toward the ones with
the high safety and quality ratings," Duffy
private isn't cheap. Even a two-hour trip from
Los Angeles to Denver can cost $20,000 round-trip.
Duffy hopes to reduce costs somewhat by establishing
Virgin Charter as a clearinghouse for "empty
legs," the return trips without passengers
that chartered planes often make to their home
airports. Duffy gives an example of a recent trip
he made from Las Vegas to his home city, Los Angeles,
with six friends. To test his theory he called
charter operators and found one plane that was
returning empty that usually rented out for $5,000
for the one-hour jaunt. He offered $1,000 and
the charter operator accepted.
charter companies are quoting you in a vacuum.
With us, they'll see what other people are quoting,"
Duffy says. "We think we'll create price
competition in the space."
is a senior correspondent in BusinessWeek's Los