Air travel chaos could boost exec jets demand
LONDON (Reuters) - Heightened security in the United States and Britain could boost demand for executive jets, a sector expanding with more models, greater range, and cheaper seats on planes once the preserve of the super-rich.
Analysts say a suspected plot to blow up transatlantic airliners flying from Britain to the United States which sparked travel chaos on Thursday underscored the appeal of such jets, which typically seat fewer than 20 passengers.
Executive jets offer an alternative for busy executives or wealthy travelers who want to bypass crowded airport terminals by using quiet, smaller airports.
Still often associated with the fabulously wealthy and famous film stars such as actor John Travolta who pilots his own Gulfstream, the industry has widened its potential market with pre-paid cards for flying hours, fractional ownership schemes and a new class of smaller, far cheaper models dubbed "very light jets" (VLJs) due to hit the market by 2008.
Two people flying from one of London's Biggin Hill airport to Toulouse in southern France, for example, would pay about 5,200 pounds to charter a private jet on a round trip versus less than 400 pounds on a budget airline.
"We are looking at security queues being considerably longer and time is money for businessmen so that pushes them toward going on executive jets," said Geoff van Klaveren, an airlines analyst at Exane BNP Paribas in London.
Sheer congestion at major airports is already helping spur sales of such planes, which contributed to record levels for general aviation aircraft in the first half of 2006 which hit more than 1,800 planes worth almost $9 billion.
Business jet sales faltered after a record 784 planes delivered in 2001 but are surging this year, on track for a new record with 415 sold by mid-year, said Katie Pribyl, director of communications at the Washington-based General Aviation Manufacturers Association.
ALTERNATIVE AIRPORTS
Airports were already overstretched and according to travel information firm OAG an estimated 7 million transatlantic passengers will now face delays or cancellations in August if current levels of heightened security at U.S. and UK airports persist.
The executive jet sector offers a network of 5,000 airports to bypass congested major airports as well as various financing alternatives to outright purchase of a business jet.
Automaker Honda Motor Co. and Brazilian planemaker Embraer are two top firms gearing up to enter the new VLJ market segment.
Florida-based DayJet, set up by former software firm Citrix Systems Inc. chief executive Ed Iacobucci, expects to start flying VLJs in 2009 to offer an "air taxi" service that is expected to lower the cost of executive jet travel so smaller businesses can afford it.
Current major executive jet makers include France's Dassault Aviation and U.S. firms Gulfstream and Cessna.
Canada's Bombardier is the sector leader, building models such as the Global Express, which can seat up to 19 passengers plus crew and fly more than 11,000 kilometers (6,835 miles), far enough to go from London to Dubai, for example.
A Global Express costs about $45 million while some of the VLJs due to hit the market are expected to sell for as little as $1.3 million, the same price as a Bugatti Veyron sportscar.
CARDS AND FRACTIONAL OWNERSHIP
Bombardier via its SkyJet unit offers cards that allow individuals or companies to purchase as few as 25 hours of guaranteed, fixed-price access to business jet travel.
The service taps a fleet of over 900 business jets based in Europe, North America, Asia-Pacific and the Middle East.
The industry also offers pay-as-you-go on-demand charter flights.
Another approach is fractional ownership of the type offered by NetJets Inc., part of Warren Buffet's Berkshire Hathaway Inc.
, which offers stakes for as little as $400,000 which buys the user access to a fleet of business jets of various sizes and ranges.
TIGHTENING RULES
A British government watchdog in June called for executive jet travel to be more tightly regulated, citing the risk that such aircraft could be hijacked.
Lord Carlile, the Home Office's independent reviewer of terrorism laws, said companies which offer executive jets by the hour should be subject to European Union and UK security regulations.
"It is possible to purchase, from reputable international companies, piloted flying hours in sophisticated executive jets capable of high speed travel from continent to continent. The risk of hijacking of such aircraft is not fanciful," Carlile said in a report on Britain's anti-terrorism laws.
Yet analysts say even if smaller airports are forced to adopt the same tight security measures that are slowing major airports, executive jet travel will offer benefits.
"The difference is if you only have 8 people going through that (security) process it is not going to impact your travel too much," van Klaveren said.
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