Flying CEOs around still good business

Just saying it must be half the fun. “No, Samantha, book the company jet.”

You know you’ve made it in business when even first-class doesn’t cut it. When you fly regularly but no longer have to shuffle through airport security, jam your laptop under the chair in front of you and scarf down a bag of peanuts for dinner. (The JetBlue Doritos blend is by far the best in-flight snack, for what it’s worth.)

Even in a sluggish economy, CEOs’ time is still worth more than the lost productivity from flying commercial, according to to one local charter company.

I exchanged several emails with Elis Olsson, the director of operations for Richmond-based Martinair, to learn more about how the business of flying high-flyers. The company has 49 full-time employees and more than 100 customers.
Below is an edited transcript pieced together from several email conversations:

RBS: Everybody has horror stories about flying commercial these days, and the airlines seem to be doing worse by the week. How’s your business holding up?

Elis Olsson: Our business is holding up reasonably well in spite of uncertainty in the financial markets and higher fuel costs. Overall, our industry is reporting a slowdown by as much as 40% in some areas, with the west coast charter market being hit the hardest. Richmond seems to be doing a little better than the rest of the nation, so far.

RBS: And what’s happening with your local customers?

EO: Our management customers are flying a little less, but still using their aircraft where it makes sense. For example, we had two light jets go out yesterday flying managers from a local company. Each plane had seven passengers and was going to a fairly remote area in the Deep South. This trip would have taken three days if they had used the airlines, so it really was a lot more efficient for them to use private aircraft and get the work done in one day.

RBS: About how much are your clients cutting back?

EO: Looking at the monthly hours flown, our total flying (charter and owner flights) is probably off about 15% from 2007.

RBS: Are people shifting to smaller planes to save gas?

EO: We are seeing a slowdown in medium-sized jet activity as many customers are shifting to less expensive light jets and turboprops. Customers are very price sensitive but still buying charter flights where it makes sense.
RBS: You say that customers are shifting to light jets and turboprops. Do you have those? Is that an easy shift? Are the smaller ones less comfortable?

EO: We do operate two King Air turboprops and eight light jets. The light jets, such as the Beechjet or Learjet, are smaller than medium jets like a Hawker. Light jets are still very comfortable with four to six passengers but start to feel a little crowded with more than six. King Air’s are very comfortable aircraft for eight or nine passengers but not as fast as jets.

RBS: How many pilots do you guys have?

EO: Approximately 35 full-time pilots.

RBS: Are companies cutting back on letting management and only letting C-level execs fly?

EO: We would not be informed of this kind of decision by our customers.

RBS: How are the disruptions in the commercial airline industry an opportunity for you?

EO: We’ve had customers who have had terrible experiences on the airlines with missing connections, losing baggage and arriving exhausted at their destinations. Aircraft charter gives travelers more control over their schedule and can significantly reduce the risk of delays. For example, when airports like Atlanta-Hartsfield, Chicago-O’Hare and JFK are experiencing delays, we are able to avoid them and get our customers to their destinations on time. Plus, the airlines have no excess capacity right now and a minor disruption, such as a thunderstorm in Atlanta or Chicago, can foul up their flight schedules for days. Airlines do not have the flexibility they had just a few months ago and they have never been as flexible as charter companies and corporate flight departments to react to change.

RBS: How far can you fly without refueling?

EO: This depends on the aircraft. Our Challenger aircraft can fly coast-to-coast without stopping. The smaller aircraft have shorter, but adequate ranges for most missions. For example, a Learjet can fly non-stop to Denver, CO or Antigua from Richmond.

RBS: How far a trip does it have to be before your corporate clients fly charter as opposed to drive?

EO: It varies by the customer. We have flown customers to Washington-Dulles to catch international flights. In many cases, it’s not that the distance is so great, it’s that flying is so convenient versus sitting in traffic.

RBS: What do you see going forward?

EO: Our strategy has been one of slow, conservative growth over the years. 2008 will be a flat year for us, but my hope is that we resume growing slowly in 2009.

But overall, I am very optimistic about the future. I think that once we get the presidential election behind us and a less volatile stock market, we will see an improving economy. Oil prices have come off of their peak and that has allowed us to reduce the fuel surcharge that our customers pay. Most forecasts that I have seen predict oil prices to continue to come down in the near term.

RBS: There’s one more thing I’ve always wondered. Can a plane get struck by lighting, and if so, what the heck happens?

EO: It is very unlikely for a plane to get struck by lightning. In general, lightning seeks the ground and a flying aircraft does not take it to ground. Occasionally, aircraft do get hit by lightning. The lightning general causes a pinhole at the entry and exit points. Aircraft systems are designed to withstand lightning strikes. If one of our aircraft is struck by lightning, we are required to perform an extensive inspection after it lands and before it is allowed to fly again.

Editor Aaron Kremer has never flown anything but discount airlines. Please send story ideas to [email protected]

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