Nice Transportation if You Can Get It

For Charlie Horky, buying a corporate airplane is one of the best decisions he ever made. As president of CLS Transportation, a Los Angeles-based limousine company that operates about 130 vehicles in L.A., Las Vegas and New York, Horky likes to keep tabs on his business in person. He has found that having a plane at his disposal makes getting around quicker and easier.

“There are people who are richer than I who wouldn’t dream of traveling like this,” Horky said. “But I enjoy the freedom of movement. My schedule is my own.”

Companies of all sizes have found that chartering, buying, leasing and time-sharing business aircraft, though extremely expensive, is worth the expense--primarily because the jets save time. And safety records of corporate jets are comparable to those of scheduled airliners.

“I don’t know how busy executives would do their business any other way,” said Scott Lucas, manager of aviation for the giant tractor maker Deere & Co. in Moline, Ill. “I just don’t know how they would move around quickly and do what they have to do.”

The National Business Aircraft Assn., a trade group, estimates there are nearly 10,500 jets and turbo-prop aircraft based at airports nationwide. Nearly 800 of those are based at California airports. And those figures include only corporate jets--thousands of private planes are routinely used for business as well.

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At first blush, the prices seem astronomical. New jets range from roughly $3 million to $33 million, although used jets can be had for as little as $350,000. The price of a short-term charter is also high--although it can be much less than the cost of flying several employees first-class.

Air Justice, a charter operator based at Santa Monica Airport, charges about $1,000 for a day trip in one of its jets to San Diego. Chrysler Aviation at Van Nuys Airport charges $2,500 round-trip to Phoenix. And Ultimate Jet in Santa Monica charges about $9,000 for a round trip on an eight-passenger jet to Dallas. In Los Angeles, the entertainment industry makes up the lion’s share of the market for business aircraft.

“It makes economic sense to fly corporate airplanes--like if the chairman needs to be in a couple of different cities in a short period of time, we can actually do that,” said Bill Hiniker, spokesman for Honeywell, which owns a fleet of jets.

For the money, business people get convenience. Most small airports--such as Santa Monica and Van Nuys--rarely have traffic delays, meaning executives can quickly be dropped off and be on their way. Limousines and company cars can pull right onto the tarmac. The flight crew waits, ready for takeoff, and minutes after the passengers arrive, the plane is in the air.

On board, executives have space to work comfortably, and most jets are outfitted with phones, fax machines and other conveniences. Particularly important to some executives is privacy--no strangers can eavesdrop.

Business aircraft can fly into approximately 11 times as many U.S. airports as large commercial jets. And a growing number of overseas airports now can accommodate business craft.

Although private airplanes in general do not have an impressive safety record, corporate jets are virtually as safe as scheduled airlines.

In 1995, corporate and executive aircraft had 0.25 accident per 100,000 flight hours, compared with the airlines’ record of 0.27, according to statistics from the National Transportation Safety Board.

It’s true that the Federal Aviation Administration’s standards for the pilots who fly corporate airplanes are not as stringent as those for airline pilots. But Chuck Hicks, regional safety program manager for the FAA’s Western Pacific region, points out that many corporate pilots hold the same license as that of airline pilots, meet the same flying hours and have the same training as their counterparts in the airlines.

“But how well-trained they are also is a function of what company they fly for,” Hicks said. “Some companies send their pilots for more training than others.”

And not all companies using jets are giant corporations. Indeed, chartering a jet for an occasional trip is not unusual among even tiny companies.

Dozens of charter companies operate in Southern California airports--Van Nuys alone has 19.

According to the operators, if a company starts to charter 500 or 1,000 hours a year, it should consider buying its own plane. Some companies hire staff and create in-house flight departments that handle the operation and maintenance of the corporate fleet, but others use aircraft management companies that can also arrange deals to lower costs--such as leasing a plane to other users when it isn’t needed for the owner.

“It’s total convenience,” said Horky, who has leased back his Learjet to Jet West, a charter and airplane management company in Van Nuys.

The details of such deals can vary widely. For example, Jet West charges up to $650,000 a year to manage a Lear 35, which is a mid-size jet, said Tim Prero, director of flight operations. Management fees are cut roughly $700 for every hour the company charters a borrowed plane. If Jet West charters a leased-back Lear 35 for 40 hours a month, the owner can reduce management costs by about $336,000 a year, Prero said.

The newest twist in the industry is time sharing. Bombardier Business Jet Solutions Inc. in Dallas, one of only a few companies nationwide that specializes in the practice, sells up to eight shares in each of its jets.

Time sharing works well for companies that are located where there are few charter operators, or if the firm cannot justify the expense of buying an airplane outright. But time sharing can also be more restrictive than owning an aircraft.

A one-eighth share of a Cessna Citation S/II managed by Executive Jet costs $330,000. The Citation S/II is the company’s low-end model. Its operating fees run about $6,074 a month, and there is a $1,149-an-hour charge for flight time. For its top-of-the-line Gulfstream IV-SP, Executive Jet charges investors $3.5 million for a one-eighth share, $14,500 a month in operating fees and $2,480 an hour for flight time.

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Montvale, N.J.-based Executive Jet has been offering fractional ownership for the last 10 years. The company runs 78 fractionally owned planes with more than 400 investors--80% of whom never owned a business plane before, said Kevin Russell, senior vice president of marketing.

Despite all the advantages of private jets, many executives still fly the airlines--especially when they are traveling to hub cities. National Business Aircraft Assn. members bought nearly $11 billion worth of airline tickets in 1995.

For example, executives generally can’t justify flying a corporate jet from Los Angeles to San Francisco when the airlines run shuttle flights there every half an hour.

“I can’t make a case that that would be a good use of your money . . . That’s not what these planes are used for,” said NBAA spokesman David Almy.

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Some Guidelines for Prospective Buyers, Borrowers of Corporate Aircraft

Need a private jet? Here’s a guide:

Charter or buy? As a rule of thumb, industry experts say, chartering usually is cost-effective for companies that accrue fewer than 500 to 1,000 hours a year in the air. After that, consider buying. A used jet is a good way to start. A new jet, with the latest equipment and greater fuel economy, can cost as much as $30 million.

Charter companies usually charge by the hour, and rates vary depending on the type of aircraft and the distance of the trip. The charter price of a Gulfstream II--a large aircraft--for a trip from Los Angeles to New York and back can run upward of $35,000. The same trip to New York on a Westwind, which is a medium-sized airplane, costs roughly $11,500.

Trans-Exec Air Services Inc., based at Santa Monica Airport, charges $1,550 an hour to fly passengers on one of its eight-seat Westwinds, which have a fuel tank large enough to handle nonstop trips to the East Coast.

Customers must guarantee Trans-Exec a two-hour rental, and those that charter trips that require an overnight stay must pay a $750 fee.

What’s included? Most charter companies include in their prices the cost of pilots (often two), fuel, landing fees and other necessities to operate the plane. Charter prices do not necessarily include the “extras,” such as flight attendants, special meals or phone calls.

Charters often come outfitted with high-quality communications and entertainment equipment, along with other amenities such as food-preparation galleys and bars. Ultimate Jet, based at Santa Monica Airport, charges an hourly rate of $1,550 for a Westwind 1124 that offers telephones, a state-of-the-art stereo, compact disc and VCR entertainment center with personal flat-screen monitors and headsets at every seat. Ultimate Jet’s larger airplanes also have faxing capabilities.

Trans-Exec includes a flight attendant on its larger jets--a Gulfstream II or a Jetstar 731, for example.

What about used jets? The purchase price of a used airplane is about 50% less than for a new model, although those in the airplane manufacturing industry point out that maintaining and fueling a used aircraft can be expensive.

Airplane brokers can help track down used craft worldwide. Brokers usually charge either a flat fee (based on the type of aircraft and the scope of the search) or a percentage of the selling price.

Keep in mind that brokers are not licensed. Those who belong to the National Aircraft Resale Assn. in Alexandria, Va., are expected to follow the organization’s code of ethics.

Key questions. Some of the first issues a broker addresses are how the company plans to use the airplane, the range of the plane and how many people it will carry. Additionally, brokers will ask the price a company is willing to pay to buy and operate a plane.

How long are the runways at the airports where the plane will be taking off and landing most frequently? What are the noise restrictions at these airports?

Will the company create an in-house flight department to handle the maintenance and operation of its new aircraft or contract out the work?

Companies that have flight departments often hire aviation consultants to design and implement in-house flight operations. The National Business Aircraft Assn. in Washington distributes brochures that help companies get started.