Financial details of private charter jets business and brokerage opportunities? - MERCURY JET CHARTER ANNNOUNCES CONTRACT FOR DEVELOPMENT OF AIR - zjsk.com

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Financial details of private charter jets business and brokerage opportunities?

Financial details of private charter jets business and brokerage opportunities?
Published by: anonym 2009-01-07

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MERCURY JET CHARTER ANNNOUNCES CONTRACT FOR DEVELOPMENT OF AIR ::
Mercury Jet Charter is a full service private jet charter broker, representing our clients in the acquisition of charter services from a select network of
http://www.free-press-release.com/news/200729/1196362444.htmlHOME

I am currently in the travel business and am looking at entering the "private charter jet business". My primary focus would be to broker flights on behalf of other charter jet companies to corporations and individuals (essientially brokering contracts)I am looking for the following information. 1. Is this a viable business and what are the names of companies/entities that are strictly brokers (these companies do not own their own jets, they brokers the flights on behalf of others) 2. What is the overall market for this in terms of dollar value in the USA only? 3. What are the inside financials. i.e. margins (percentage/dollar value), total market size, profitability of other brokers? 4. Are there any licenses required to be a broker and enter this business? 5. Are there any associations that represent the private jet charter business? What are the names and specific urls pertaining to their sites. What are the names of relevant trade publications? 6. Who are the major players? Provide specific urls and details. 7. Can you provide financial information on a specific player (www.airroyale.com) 8. Is this a viable business based strictly on the internet? 9. Any other information that may benefit us? RESTRICTIONS 1. We are not interested in investing in infrastructure. We want to maintain toll free phone/fax numbers and an office. Essentially, we want to trade contracts or agreements

In response to your question, you should note that there are several key players here. Perhaps understanding the market could prove more beneficial than an analytic detailed review of several companies. To operate a coporate jet, for what is considered "on demand charter" a company must comply with certain restrictions listed under FAR 135.xxx. Aircraft maintenance, pilot qualifications, training, records etc. all add up to high costs. These companies then market their aircraft to individuals or companies who might fill a void by using their aircraft. An extremely large pitfall here is that there is an extremely large sunk cost invested into providing the service that a large return on the charter rate (hourly) is required to make the venture profitable. Another pitfall is that once the aircraft and pilots are available, the aircraft must meet the needs of the client, and airplanes, like automobiles are very different in their "mission profiles." For instance, a certain jet might be able to transport 8 people from Las Vegas to San Antonio, but could not take 4 people from Aspen to Las Vegas. Perhaps a midsize jet advertises a 2500 mile range, but can not travel from New York to the Los Angeles Basin, (one of the most popular year round routes) with 80% reliability due to changing winds. Another pitfall in the business, is that Charter operators are typically not Multi-Million dollar companies that OWN their corporate aircraft. These aircraft are typically owned by a client and are "managed" by the charter company for the client, and chartered when they are not in use by the client. Because of this, the airplanes available for charter are not always the best fit for the charter client. Therefore when a client begins looking for a charter flight, some knowledge of the aircraft available is invaluable, this is where the customer sales representative becomes the shining light. There are several very profitable companies operating internationally here in the US alone. Blue Star is a popular one, and while they don't own, manage, take care of or even see an airplane, their web page convinces clients that they have at their disposal, hundreds of aircraft located throughout the world, for different missions. For the non-discriminating client, it is easier to pick up the phone and call one person rather than try and get several quotes from operators you don't know over the phone, and so begins the life of the charter broker. An important question to ask is who does all the work? Once the client calls the broker and requests a quote for Chicago to Vancouver, then it's up to the broker to decide which airport in Chicago and Vancouver and to find the operator that will best fill the need. Is there an empty airplane going that direction? That would be the most profitable. Or is there an airplane that will fit the bill located in Chicago so that a positioning leg will not be required? Also, how reputable is that operator and how do you control quality? Wyvern? Once the best price is found for the flight, a commission is added and the quote forwarded to the client. If the client books, then money is made off the top and the broker hopes all goes well on the charter side. If it does not, the broker's career will be short... In real life companies feel the same way about brokers as they do real estate agents. With no overhead expenses except for a land line or two, charter operators do not hold them in the highest regard, but on the other hand will not turn down their business should the phone ring. Best of Luck.

Private Jet Charter Flight News from New Flight Charters::
Aug 28, 2007 New Flight Charters, a leading private jet charter brokerage company, D&B continually updates credit, business history and financial
http://www.newflightcharters.com/news_about_private_jet_charters.htmHOME

Private Jet Charter: Helping Managers Get Home For Dinner London ::
Dec 5, 2002 By chartering a business jet he squeezed both into a single day and was the price of using a private air charter "comparable to - and in
http://www.jets.com/Jets_PressArticle.aspx?ArticleID=18HOME

FAQTs - Knowledge Base - View Entry - Where i can find ::
Luxury jet charter, business jet charter, aircraft sales, acquisitions and and efficient private jet brokerage company. luxury private charter jets,
http://www.faqts.com/knowledge_base/view.phtml/aid/60020/fid/1896HOME

Industry Headline News - Air charter products and services - CharterX::
Texas-based Connect-A-Jet Inc., a Web-based air charter broker, says its new business is aimed "to eliminate the world of private jet charter brokers," and
http://www.charterx.com/resources/article.aspx?id=2946HOME

Sentient - Private Jet Membership Program - Private Jets ::
Air Partner, an aircraft charter broker said Thursday it will form a strategic April 14, 2005 - Boston Business Journal. Private jet membership company
http://www.sentientjets.com/news/inthenews.aspHOME

Dear mikeinseattle, Thanks for your question. First, let me request that if any of the following is unclear or if you require any further research – please don’t hesitate to ask me for a clarification. As with every other segment of any other business I had ever looked at, what you had defined as the “private charter jet business” is simply fascinating. I will address your questions one by one as best I can – please feel free to ask for clarifications once you have reviewed the information below and the links I will provide you with. 1) Is this a viable business? Names of companies that are strictly brokers? --------------------------------------------------------------------------- Let me start with a resounding yes. However, not only is this a viable business – there are several models in play, and various companies are making a brisk business leveraging these models. Let’s begin, then, by reviewing these models quickly – following a review of each model I’ve included the leading players: Jet Charter Models ’’’’’’’’’’’’’’’’’’ I’ve identified four distinct business models in this space as follows – a) Professional aircraft and flight management companies These companies basically take over the management of business jets owned by various corporations, doing absolutely everything except for actually financing or owning the plane – they typically do have some limited infrastructure for maintenance etc., but this could be outsourced to a third party that does aircraft maintenance (such as British owned Signature Flight Support, http://www.bba-aviation.com/flightsupport/ ), leaving you “infrastructure free.” Some such companies “own” the pilots (i.e. employ them) while others require that the corporation which owns the jet employs the pilots. Jet Aviation – leading global provider of “business aviation service management” http://www.jetaviation.com/ “Jet Aviation was founded in Switzerland in 1967 and is the leading business aviation service company today. More than 3,500 employees in over 60 facilities and stations worldwide cater to customers in North & South America, Europe, the Middle and Far East. The company provides maintenance, completions and engineering services, fixed base operations, along with aircraft sales, charter, and management on a global basis. Jet Aviation's U.S. and European aircraft management and charter divisions jointly operate a fleet of more than 150 aircraft, including 38 Gulfstreams (including 9 Gulfstream Vs), 31 Falcons, 20 Challengers, 16 Cessna Citations, 6 Global Express and 5 BBJs, among others. In 2002, Jet Aviation provided close to 60,000 hours in global flight operations.” *** The company claims $500 million in year 2000 revenues *** Signature Aircraft Charter http://www.signatureurope.com/charter/ Seems to offer less comprehensive services, but competes with Jet Aviation. Executive Jet Management (subsidiary of NetJets) http://www.ejmjets.com/ b) Fractional Ownership (new or used) In the fractional ownership model, a company coordinates fractional ownership of airplanes among several owners – typically, there are 2, 4, or 8 owners to a plane, depending on the size of the plane and of the company. The company also undertakes all management and maintenance functions and employs the pilots – or hires them from a third party flight crew outsourcer (e.g. Jet Professionals, http://www.jet-professionals.com/ ). Net-Jets (owned by Berkshire Hathaway) http://www.netjets.com/home.asp “NetJets is the overwhelming choice of Fortune 500 companies. More successful individuals, financial service firms, information technology companies, professional athletes and celebrities choose NetJets. In fact, in 1998 after experiencing NetJets ownership for the prior three years, Warren Buffett and his company Berkshire Hathaway purchased NetJets and its parent company, NetJets Inc.” *** Fill out this form to receive a free guide to fractional jet ownership from Net-Jets *** https://www.netjets.com/guide/buyers_form.asp Flight Options http://www.flightoptions.com/ “Flight Options offers both factory-new and pre-owned aircraft, the largest Beechjet 400A, King Air and Hawker 800 fleet in the world and exclusive factory maintenance. And with the youngest flying fleet, Dedicated Crewing, paperless cockpits plus the FAA's Diamond Certificate of Excellence in its Aviation Maintenance, you'll always be assured of our diligence to providing the highest level of safety in the business.” *** recently acquired TravelAir *** Tikal Aviation Services http://home.earthlink.net/~angera3/ “Tikal Aviation Services, Inc. offers a variety of aviation and business services, including supporting the Command Share aircraft ownership program and offering the only integrated acquisition service for buyers and sellers of aircraft.” Citation Shares (joint venture of Cessna and Tag Aviation) http://www.citationshares.com/ “CitationShares is owned equally by two of the leading names in aviation. Cessna is synonymous with top of the line aircraft manufacturing, and TAG Aviation is one of the world's premier aircraft management and operations companies. As a CitationShares owner, you get the best of their experience and expertise.” Command Share http://www.planeadvice.com/ “Command Share programs offer services similar to fractional programs such as Executive Jet's NetJets, FlexJet, TravelAir and Citation Shares. The primary difference is the utilization of cost effective piston and turboprop aircraft with limited use of jet and other turbine aircraft. The services provided give you a sense of having a private corporate aircraft with a dedicated flight department available at a moment's notice.” FlexJet (owned by Bombardier) http://www.flexjet.com/ Sentient Jet http://www.sentientjet.com/home.htm c) Business Charter Services Charter management companies operate much as tourist charters do, but rather than coordinating leisure travel they coordinate business travel. It seems that the leading charter companies are subsidiaries of aircraft management and fractional ownership companies. What they do is lease out free time available on the jets they already manage – such a company could, therefore, also be managed as a infrastructure free entity. Some charter companies charter their own company-owned planes. Executive Jet (Now NetJets) http://www.ejmjets.com/ Operates charter services through its Executive Jet Management subsidiary. Jet Aviation http://www.jetaviation.com/ Already mentioned under model “a” above – charters managed jets, and I believe also owns jets which it charters out. Profile of a charter company – SkyJet http://www.btnmag.com/businesstravelnews/images/pdf/corporate_profiles/skyjetcorp_promay01.pdf d) “Pure Play” Charter Intermediary (Broker) This is the ideal model – if you can swing it… The leader seems to be Flighttime – http://www.flighttime.com/flighttime_web/index.jsp Flighttime, founded in 1985, went bankrupt a couple of years back and is now managed by Zineth LLC, a company I could find little about but seems to be buying up similar distressed operations worldwide (I found some information relating to an additional acquisition in New Zealand. I could not find additional companies operating exactly under this model. A paid article appeared in a special advertising section in Forbes in 2001 – http://www.forbes.com/specialsections/aviation-2001/08.htm A pure play charter intermediary can operate from an office with a phone, fax and server – basically, the company coordinates supply and demand. Supply is managed by aggregating information through partnerships with any and all of the companies of the types mentioned above, as well as with private owners of business jets, corporations etc. Demand nowadays can be managed much like Expedia in the leisure travel category – through a Web-based application. For examples, see Flighttime’s site, as well as Executive Jet Management linked above. One similar company I had managed to identify is LegFind – http://www.legfind.com/index.asp An interesting twist using an auction model is – Charter Auction www.charterauction.com And yet another one – Air Charter Net http://www.aircharternet.com/ 2) Overall Market in US ------------------------------ Market size data for this segment is somewhat elusive. According to Business Travel News, the fractional market alone recorded upwards of one billion dollars in sales in 2000. In addition, we know that JetAviation, a management company, recorded about $500m in 2000. Given the size and stature of the players profiled here – and the hundreds of small players in the market, it’s safe to say that the market as a whole is worth upwards of two billion dollars annually (and probably a couple times that). Perhaps more importantly, however, evidence concerning the rapid growth in this market – especially since September 11 2001 – is reassuring. Here are some prime quotes: From a recent press release by Air Charter Guide, “the U.S. charter industry continues to grow steadily despite depressed travel markets, financially challenged scheduled carriers and a volatile economy. Over 70 percent of 100 US charter operators surveyed reported increased bookings in the second quarter of 2002 over the same quarter a year ago, with an average increase of 8 percent in jet aircraft preferred by business travelers. This is the third consecutive quarterly survey showing growth.” http://www.guides.com/acg/pressroom/LaunchPress.asp?path=8-26-02.htm And from another source – “The air charter market has seen a noticeable increase of 20 percent to 30 percent over the past few years, Stroud says.” http://www.bizjournals.com/bizresources/toolbox/topics/professional_services/charter_plane.html “"Fractional ownership represents the fastest growing area of aviation, period," said Phil Roberts, president of Par-Travel Tech and chairman of the National Business Aircraft Association, speaking this summer at the National Business Travel Association's annual conference in Atlanta. According to NBAA's Business Aviation Factbook, the number of fractional aircraft owners increased in 2000 to nearly 3,700, from just 542 five years ago, representing more than $1 billion in fractional shares sold.” “The ***NetJets*** program from Executive Jet is the market leader and last year flew 200,000 flights for its fractional owners. A one-sixteenth share buys a client 50 flight hours in a year for $375,000.” Source: Business Travel News, 18 (19): 24(1), September 03, 2001 (not online) A great deal of industry statistics are available here – http://www.nbaa.org/factbook/2003/section4.htm#05 3) Financials ---------------- Since none of the companies are public, it is difficult to locate data on margins etc. – however, I have found a variety of interesting information which could be used to conduct some financial analysis of the industry. Average national hourly rate to rent certain types of aircraft, according to industry tracker Air Charter Guide: Aircraft Avg. National Hourly Rate Helicopter $924 Single engine piston aircraft 188 Multi-engine piston aircraft 440 Turboprop 948 Small Jets 1,653 Medium Jets 2,500 Large Jets 4,305 Source: http://www.thestreet.com/funds/ericgillin/10047431_2.html (October 2002) “The average price of flying charter was 8.7% lower in July than it was the previous year, according to CharterAuction.com, an online exchange for charter flights. "The drops in pricing are even more remarkable when one considers the demand for charter services has risen more than 20% over the past year," said Nate McKelvey, president and founder of CharterAuction.com.” http://www.thestreet.com/funds/ericgillin/10047431_2.html Charter cost comparison http://www.charterauction.com/Compare/CostCompare.html An incredible wealth of information is available on what seems to be the only industry site out there – Air Charter Guide. Data available through the following URL includes: August 2002 US Business Survey Results May 2002 European Business Survey Results March 2002 Quarterly Business Survey Results US charter operator numbers by state US charter aircraft availability by state US charter aircraft by major metropolitan market US charter aircraft price averages by state US charter aircraft type changes over time And much more… http://www.guides.com/acg/pressroom.asp?acgprofile=ex 4) Legal ---------- You asked whether any licenses are required to operate this kind of a business – from what I have gathered, it does not seem that any license or any other form of registration outside of standard business license and incorporation requirements are needed. However, I would recommend that you pursue this issue with a suitable lawyer prior to embarking on any significant investments. 5) Associations and Trade Publications ----------------------------------------------- As mentioned, I could not identify an association that is specifically associated with the charter industry – although according to the following press release, there will be one soon… http://www.usaenews.com/news/Oct_29_2002/AirCharter.htm In the mean time, there is a wonderful site chockfull of information, the Air Charter Guide site mentioned above, accessible at – http://www.guides.com/default.asp I doubt you’d be interested, but there is a Baltic charter association – Baltic Air Charter Association http://www.skylineaviation.co.uk/baltic.html The following are not charter specific but you may find them to be of use – National Business Travel Association http://www.nbta.org/ National Business Aircraft Association http://www.nbaa.com/ Aircraft Owners and Pilots Association (AOPA) www.aopa.org A comprehensive guide to trade publications is available at the following site: http://www.business.com/bdcframe.asp?ticker=&src=http%3A//rd.business.com/index.asp%3Fbdcz%3Di.l.l.ml.e%26bdcr%3D31%26bdcu%3Dhttp%253A//aeroflt.users.netlink.co.uk/mags/worldmag.htm%26bdcs%3DFE60D0A3-AFD0-42CE-A8A4-3E361F604A90%26bdcf%3Dd30b9c2f-df55-11d3-82d3-00c04f01021c%26bdcp%3D%26partner%3Dbdc%26title%3DWorld%2520Guide%2520to%2520Aircraft%2520Magazines&back=http%3A//www.business.com/Directory Transportation_and_Logistics/Airlines/Airline_Personnel/Maintenance_Crew/Reference/Publications/&path=/Directory/Transportation_and_Logistics/Airlines/Airline_Personnel/Maintenance_Crew/Reference/Publications (copy and paste…) 6) Major Players --------------------- Please see companies highlighted in section (1) above – as far as I can tell, those are the major players. 7) www.airroyale.com - financial information -------------------------------------------------------- Air Royale International is privately held – the company does not provide financials. I have managed to gather the following information: “Air Royale International has a worldwide network of more than 5,500 aircraft ranging from twin turboprops to corporate jets and wide-bodied commercial aircraft.” Source: http://www.thetimesharebeat.com/2002/htl/sept/0906-01h.htm From Hoovers (www.hoovers.com), I have gathered the following info: Sales range: $10 to $15 million # of employees: 11 to 20 Key executive: President, Wayne J Rizzi You can purchase a comprehensive D&B report from – http://www.apollolibrary.com:2420/cgi-bin/offsite?dn=849366943&site=HBN&url=http://dodge.hoovers.telebase.com/cgi-bin/dandb.cgi?P=P0020HA&Q=HOOVERSNOCHG&service=HOOVERS&U=[IP]&r=HO0 (copy and paste….) The cost is $123. If you can’t get to the report through this link, go to www.dandb.com and search for the company. 8) Is the business viable based strictly on the Internet? -------------------------------------------------------------------- It seems to be, although this will of course require a far more in-depth analysis and some significant primary and secondary research. As a vote of confidence in the viability of an Internet model, check out the press coverage Charter Auction, an Internet pure play, has received – http://www.charterauction.com/Press.htm 9) Additional information -------------------------------- Please see reference list and additional links below. I hope this response adequately addresses your request. Please let me know if you are in need of additional information concerning this query. Thanks, ragingacademic-ga References: The Enlightened Business Traveler Forbes Special Advertising Section http://www.forbes.com/specialsections/BusinessAviation/BusinessAviation.pdf 2001 Special Section http://www.forbes.com/specialsections/aviation-2001/flashintro.htm Chartered Flights Boom Signals Change in Air http://www.thestreet.com/funds/ericgillin/10047431.html Additional Links: Directory of Charter Companies http://www.avbuyer.com/MainCharter.asp Business.com Air Charter Directory http://www.business.com/directory/transportation_and_logistics/airlines/carriers/charter/ Profile of Canadian Charter Market http://www.planebusiness.com/perspectives/perspectives081598canada.html Charter Terms Glossary http://www.guides.com/acg/articles/glossary.asp Google guide to charter companies in North America – http://directory.google.com/Top/Business/Transportation_and_Logistics/Aviation/Charters/North_America/United_States/ Search Strategy: "jet broker" –ink “flight broker”