The distinctions between business aviation and scheduled air transport are becoming blurred, with a spate of new hybrid services
European business aviation has reached a defining point. After decades defending the use of business aircraft travel to their lofty and often dismissive airline counterparts, the message from business aircraft operators and manufacturers seems to have finally got through.
Business aviation has brought to the transport industry a subtle mix of convenience, flexibility, privacy and productivity for passengers, which a growing number of carriers are striving to emulate through the use of business aircraft to reclaim and expand their base of profitable business-class passengers.
The concept of scheduled business jet services is nothing new. But until recently only Middle East operators have found success. Qatar Airways operates two Airbus Corporate Jetliners (ACJ) on first-class services from Doha and is soon to add a third, while Gulf Air last year wet-leased a Boeing Business Jet (BBJ) from Abu Dhabi charter operator Royal Jet to provide extra lift during its busiest period.
Service closed
Elsewhere, Indigo Airlines in the USA was forced to close its scheduled service from White Plains, Chicago to New York Teterboro following accusations by US politicians that it was performing less rigorous pre-flight security checks than large airlines because of the small aircraft and airports it used. Indigo was using the 16-seat Embraer Legacy shuttle, for which its has orders and options for 50 aircraft.
In Europe, German flag carrier Lufthansa was the first to offer business aircraft on scheduled routes with the launch two years ago of a BBJ all-business class shuttle between Düsseldorf and New York under a wet-lease agreement with Swiss business aviation services provider PrivatAir. "The success of the service took us by surprise," admits Lufthansa, which had only planned the route as a year-long experiment after it was forced to drop an Airbus A340 on the same route due to a lack of demand after 11 September. "We were so delighted by the feedback from our customers that we have added two new routes," Lufthansa adds. These are Düsseldorf to Chicago and Munich to New York, to which the BBJ has been transferred. PrivatAir now operates two 48-seat Airbus A319 Long Range (LR) types, a derivative of the A319CJ on the Düsseldorf routes. Lufthansa has also extended to three years its wet-lease contract with the Geneva-based operator.
Lufthansa says that with 40 of Europe's largest 100 companies based in Düsseldorf, ranging from pharmaceuticals to telecommunications, "the business potential for the airline is huge". PrivatAir began to develop ties with the airlines in 2001. "We were getting nowhere selling the shuttle concept to corporations at that time," admits Greg Thomas, chief executive of PrivatAir, "as the recession had begun and companies were re-evaluating their cost bases. We then pitched to the airlines that were looking at opening new routes where the economics of using a business aircraft as opposed to a widebody could be sustained."
Thomas says business aviation can be a positive influence on the airlines, with its high levels of customer service and the use, where possible, of fixed-base operators (FBO) to ease the processing of passengers. PrivatAir did propose using the FBO at Düsseldorf, but Lufthansa declined "as it doesn't want this service to be too different from the rest of its airline". Nonetheless, PrivatAir has carried over 20,000 passengers for Lufthansa since services began, averaging a load factor of more than 60%. "We also have a 95% passenger satisfaction rate," says Thomas.
Market newcomers
The success of the Lufthansa service has attracted newcomers to the market. Italian charter carrier Eurofly plans to launch all-business-class transatlantic flights next year from Milan Malpensa and Rome Fiumicino airports to New York using ACJs. The carrier also plans a domestic business shuttle with a reconfigured Boeing MD-80. BMI British Midland is also believed to be interested in launching a similar service.
Surprisingly, Air France, which operated five Concordes, has elected to use business aircraft on an entirely new strategy. The venture, called "Dedicate", is a departure for the Paris-based carrier, which plans to use five 82-seat A319LRs flying from Paris Charles de Gaulle to destinations tailored to suit major oil and gas corporations including Kuwait; Doha, Qatar; and Tashkent, Uzbekistan.
"The first flights to Pointe Noire in the Republic of Congo and Malabo in Equatorial New Guinea in West Africa started on 28 January," says Patrick Roux, Air France vice-president for marketing and quality. The ACJ-based services are operated under a flexible wet-lease by Paris Le Bourget-based Aero Services and average a load factor of more than 60%. This is a niche concept that the airline's large corporate clients first encouraged it to fill in 1997, but the timing was not right, Roux says. Aero Services, he continues, has provided the stepping stone to move into this market, "but we will take over the routes when the three-year contract comes to an end". Air France plans to add new weekly services in June and October, following the delivery of its first A319LRs.
The latest ventures have provided a significant revenue opportunity for Airbus, which has left its nearest competitor Boeing Business Jets at the starting blocks. "In the first three months of 2004, 40% of 30 ACJ/A319LR orders have come from the airlines," says Richard Gaona, vice-president for the Airbus Corporate Jetliner, who says he is also talking to several other carriers that are looking to introduce similar transatlantic services. This view is supported by PrivatAir's Thomas, who says he has submitted offers to over 100 airlines. Gaona says the Long Range version is essentially an ACJ without the airstairs and the showers. "The LR usually has four removable fuel tanks which gives the passengers 14m2 (150ft2) of baggage space."
Unlike the BBJ, the ACJ can be converted into an airliner and because of this Airbus can offer favourable lease rates. Lee Monson, president of Boeing Business Jets, says up until the introduction of the ACJ and the BBJ, there was no business aircraft big enough to offer this service. "If you try putting 19 seats in the fuselage of a G550 or a Global Express and start charging a premium fare you are running a very high risk," he says. He suggests that the BBJ is just "too much aircraft for the job". The hybrid aircraft combines the fuselage of a 737-700 with the strengthened wings and landing gear of an -800. But Monson says he is not conceding this market to Airbus; Boeing may eventually offer a "scaled-down version"of the BBJ based on the standard 737-700, configured with business-class seating. On the shorter legs, Boeing offers the recently launched 717 "Business Express", targeted, the company says, "at corporations to help deal with high volume business travel", although the company has no orders for the aircraft yet. The standard corporate shuttle version would carry 60 first-class passengers a distance of 3,800km (2,060nm) while an extra 4,890 litres (1,290USgal) fuel tank would increase the range to 5,810km.
For the traditional business aircraft manufacturers, the revenue opportunities from the potential brigade of airline entrants are apparent, but many say it is too early to tell how the market will develop. Bombardier is understood to have shelved plans to develop the Global Connector, under internal review with UK airline Virgin Atlantic, as the costs of converting the ultra-long-range business jet into an air carrier was prohibitive. Dassault says it has been approached by airlines but has chosen, for now, to watch from the sidelines, a view reiterated by Gulfstream, which says: "We view this market with interest; we will wait to see what it has in store for us."
Transfer opportunity
The opportunities may arise sooner than expected as several airlines are believed to be evaluating the use of business jets to transfer passengers from the airports to final destinations.
Embraer, meanwhile, is keen to penetrate the European scheduled operator market with its Legacy business jet. Despite the collapse of Indigo, Embraer says the Legacy is ideally suited to the all-business class airline market and Europe, where the manufacturer has sold its only 14-seat Legacy Executive, provides the ideal infrastructure for this service market. "About 30% of our market share is in Europe," says Embraer vice-president for corporate aviation Antonio Pires Monteiro. "We offer the 16- to 19-seat Legacy Shuttle or the 22- to 37-seat high-capacity derivative."
Club Airways is looking to introduce large cabin, mid-range aircraft to the fleet of its private member airline. The Geneva-based company is believed to be the only operator of its kind to use business jets on scheduled services within Europe. Club Airways, which was launched in February last year, operates from its Geneva base to business aviation centres in Basle, London City, Paris Le Bourget, Milan and Zurich.
Route network
The route network is serviced by Cessna Citation Bravos, Citation IIs, Dassault Falcon 20s, BAe 125-700S and Raytheon Hawker 800s owned and operated by Club Airways operating partners Jet Aviation of Switzerland and Elbe Air and Triple Alpha of Germany and Bookajet International.
At the end of the month, Club Airways will launch its first 16-seat aircraft on the Geneva to Paris route, followed in August by a similar service on the Geneva-London route. The success of the operation has persuaded Club Airways to create an operating structure at each destination in an attempt to build regional membership. "We are successfully lowering the cost of entry into business aviation," says Club Airways founder and chief executive Hans Schwab. Making business aircraft more accessible, he suggests, is helping to alter the negative perception in Europe of this form of transportation. He says: "Many of our frequent customers, who had previously never flown on business aircraft, are regularly using charter." Club Airways, Schwab continues, was started by accident. "Europe's airlines began to focus on low-frills operations at the expense of their business class customers. I stepped in." Two years on Club Airways boasts 1,200 members from individuals to large corporations who pay a monthly membership of €1,500-15,000 ($1,770-17,770) a year, to access the business aircraft service.
The private membership concept gives the company more operational flexibility - avoiding using the main terminals and purchasing slots, for example. But in exchange, Club cannot advertise it fares or timetables.
The use of FBOs at major airports contributed to the temporary suspension in April of scheduled services of Northern Ireland-based business aircraft company PrimeFlight, which operates a Piaggio P180 Avanti wet-leased through Piaggio's Bologna-based subsidiary FoxAir. A month earlier the company began operating twice daily scheduled services from Belfast to Brussels International, where it would use the Abelag FBO. However, many customers would arrive at the main airport terminal, where its flights are not listed on the departure screens, and the airport's information desk had no record.
The airline is in talks with Brussels National to list its service on the terminal flight information system, says Primeflight director Giles Atkinson, who admits the fledgling airline suffered other technical and operational hitches, particularly with its online reservation system. "We are now looking to join a proprietary reservation system such as Amadeus or Worldspan which will widen our coverage," Atkinson says. He admits the demand for a scheduled business jet services from Belfast to Brussels is promising and before the suspension, PrimeFlight had built a loyal customer base. "We expect to be up and running again by September," he says.
Traditional business aircraft operators, meanwhile, argue that a service truly aimed at businesses must be tied to the customer's and not the airline's schedules. They are fighting back, particularly on the transatlantic route, where there is predicted to be at one more traditional business aircraft service launched in the next few months. NetJets set out its stall early this year using Gulfstream GIV-SPs, GVs and from September, Dassault Falcon 2000EXs, with a service designed, it says, not only to reclaim former Concorde customers, but to offer an alternative to disillusioned business and first-class airline passengers.
Charges dropped
To raise the stakes NetJets has permanently dropped ferry charges which can cost up to $25,000 on flights that originate or terminate in continental USA. "Private aviation is the only hassle-free solution to travel," says Robert Dranitzke, NetJets director of business development.
However, some in business aviation are concerned that companies constrained by funding and forced to switch to the airlines are reluctant to return to private aviation and the appeal of the scheduled business jet service is an added deterrent. David MacDonald, director of Air Partner, Europe's largest charter broker, says many clients with limited travel budgets moved into greater or total use of airlines over the past couple of years. "The move from charter to scheduled was swift, the return takes much longer," he says.
KATE SARSFIELD / LONDON
Source: Flight International
