Fancy flights on the ascent
Tripling of local private air traffic reflects the changing economics of Orange County and travel.
By JOHN GITTELSOHN
THE ORANGE COUNTY REGISTER
After Kevin Roberts sold his seven auto dealerships in 2005, he splurged on a card to travel 25 hours on private jets. The cost: $115,900.
Roberts of Corona del Mar used his Marquis Jets card to fly from John Wayne Airport to a vacation in Cabo San Lucas, to golf at Pebble Beach Resorts, to deliver his daughter to college in Arizona, to get to a business meeting in Las Vegas, to attend a family reunion in Arkansas.
The flights' onboard service featured Roberts' favorite drinks: Cakebread chardonnay and Bloody Marys made with Ketel One vodka.
"I had such a good experience, I decided to do it again," said Roberts, 50. This year, he upgraded his card to fly half of the time on a Citation Excel, with a jet cabin big enough for him to stand up and stretch his legs. The cost for 25 hours: $144,900.
In Orange County, Roberts has a lot of company. The number of private jet flights going to and from John Wayne Airport tripled over the past decade. Last year, the airport tallied nearly 36,000 private jet arrivals and departures, an average of 100 a day.
That's still less than half the number of commercial aircraft winging through John Wayne and represents less than 3 percent of the airport's total revenue. But private jet flights soared at Orange County's largest airport while commercial traffic leveled off and other non-commercial flights declined by more than a third.
Orange County's private jet growth exceeds the national rate, mostly because of the number of wealthy people who live, work or vacation here. As local private jet traffic tripled, the total number of private jets in North America grew 66 percent to 10,000 total aircraft.
"There's a lot of money here, and people keep spending it," said Barbara Hunt, general manager of West Coast Charters, the largest air charter company headquartered at John Wayne, with 85 employees and 30 aircraft, including eight jets, based around California.
The biggest constraint on growth, she said, is lack of space. West Coast maintenance facilities are at the Long Beach airport because of John Wayne's hangar scarcity.
From her second-floor office at Atlantic Aviation, one of John Wayne's two fixed-base operators for private aircraft, Hunt surveys the tarmac as private Falcons, Hawkers, Gulfstreams and Lears jockey for limited parking spaces.
While commercial travel has become more complicated – especially since Sept. 11, 2001 – private jets are more available and easier to book. They fly to 5,000 airports compared with 500 for commercial aviation.
"Owners are usually guaranteed a flight if they give us at least six hours' notice, but we need 72 hours in peak travel times, which are the holiday weekends," Hunt said.
Private jet passengers face no waiting lines or X-ray machines. They keep their shoes on and walk their dogs aboard. Arriving passengers hop into valet-parked Bentleys, Range Rovers and Cadillac Escalades.
Orange County industry observers say private jet travel is booming among both corporate and personal users. Private jets offer executives more efficient use of their time. They get where they're going faster, hold confidential meetings and stay in communications with the ground while airborne.
Some shareholder advocates have raised a fuss over jets as examples of excessive executive perks, and the Securities and Exchange Commission has stiffened reporting requirements for use of company planes. But industry observers say this has actually fueled alternative ways of paying for private jet travel. Instead of owning outright, more corporate users are chartering or purchasing fractions of jets.
An industry forecast by Honeywell Aerospaceprojected 12,000 new business jets worth $195 billion will be sold over the next decade, with very light jets showing the biggest share of growth. About 60 percent of those jets are sold in North America. The report also said "fractional, jet card and branded charter" are buying "significant numbers of new aircraft."
For two decades, fractional jet programs have sold as little as 1/16 of a plane, giving the tax benefits of ownership without the cost or responsibilities. NetJets,the first fractional company and now a subsidiary of Warren Buffett's Berkshire Hathaway Inc.,runs a fleet of 650 private aircraft and reported a 25 percent revenue increase in the first nine months of 2006.
The Marquis Jet cards grant access to NetJets' fleet for travelers who plan to fly as little as 25 hours a year, the equivalent to 1/32 of a plane. Skyjet cards, sold by Canadian aircraft maker Bombardier, start at $94,000 for 25 hours on the company's small Learjets.
Ownership costs are also declining as new very light jets enter the market. The latest example: the Eclipse 500, the first of which was sold in January, is designed for a single pilot and up to five passengers, selling for $1.5 million. Its range is 1,300 statute miles at a cruising speed of 420 mph. The Eclipse costs $500 per hour to fly, the company says. That compares with $3,900 for a Citation X chartered through TWC Aviation, another charter company at John Wayne.
Despite rising demand for private jets, operators say their margins remain thin, threatened by rising fuel prices – jet fuel typically costs $2 a gallon more than gasoline, a surcharge often passed to customers – insurance rates and stiff competition.
"Obviously, our company is doing very well," Hunt said. "We've been in it 20 years and gone from one to 30 planes. But you don't get rich."
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