x Abu Dhabi, UAEFriday 19 January 2018

High flyers join the jet set once again

Even troubled carmaker GM charters private jets so executives can meet potential investors.

Those magnificent men in their flying machines: senior executives in the US are starting to take to the skies once again.
Those magnificent men in their flying machines: senior executives in the US are starting to take to the skies once again.

The high flyers in the US corporate world are taking to the air again in private jets.

Senior executives, including those at the government-owned General Motors (GM) who are preparing investors for today's US$18.5 billion (Dh67.94bn) public stock offering, are getting back on corporate aeroplanes as the economy in the US slowly recovers.

While airlines still account for the majority of corporate travel, many businesses are gradually returning to private planes. They are eager to avoid airport hassles, flight delays and other potential logistical snags associated with commercial flying. For some companies, corporate jets are also better value.

"We appear to be off the bottom," said Dan Hubbard of the National Business Aviation Association trade group that represents companies that own and charter planes. "We seem to be seeing things stabilise at this point."

Total business jet flights, privately owned and charter, jumped 7 per cent to 2.84 million in the 12-month period to September compared with the previous year. And, much of the growth was in overseas travel, according to data tracked by the US Federal Aviation Administration (FAA).

"People are feeling more confident," said Shirley Mason, a vice president with Argus International, which conducts market research and provides safety management and other services to the business aircraft industry. "Things are starting to improve in the economy."

The best year for business jet traffic was 2007 when the FAA recorded 4.82 million flights.

One example is GM, which chartered planes to haul teams of executives to meetings with prospective investors ahead of today's public share offering.

The car maker's return to private travel follows an incident in 2008 when politicians berated GM, Ford and Chrysler Group executives for taking corporate jets to Washington, to ask the government to help their struggling companies.

GM unloaded its leased fleet during its Treasury-led restructuring but is permitted under the terms of taxpayer ownership to charter aircraft in certain cases. The US Treasury does not sign off on each trip, but requires senior executives to do so.

Companies, however, are still reluctant to maintain their own fleets.

Corporate jet sales are down 20.3 per cent globally in the first nine months of this year compared with the same period last year, the General Aviation Manufacturers Association said in its third-quarter report.

Honeywell International's aerospace unit is forecasting a softer outlook for the sector next year, but expects expansion in 2012.

A sweet spot seems to be chartered jets, which allow executives to fly efficiently to multiple meetings without the major investment and expense of a corporate fleet. This was the option selected by GM.

Argus found in its latest report using TRAQPak data that overall business aircraft flying rose 10 per cent last month, compared with September. Charters were up 11 per cent.

Charter rates vary, but generally cost between $1,500 and $6,000 per hour.

"It's cost effective for business to travel efficiently," said Gretchen Collins, the vice president of special contracts and business development for CSI Aviation Services, a charter broker based in Albuquerque, New Mexico.

"They're trying to be smarter with the way they spend their money," Ms Collins said.