Air charter
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Air charter is the business of renting an entire aircraft as opposed to individual aircraft seats. While the airlines specialize in selling transportation by the seat, air charter companies focus on individual private aircraft and itineraries, urgent or time-sensitive freight, cargo, air ambulance and any other form of ad hoc air transportation.
Air charter is also known as air taxi, executive charter, jet charter and is part of general aviation. In the United States air charter and air taxi operations are governed by Part 135 of the Federal Aviation Regulations, unlike the larger scheduled airlines, which are governed by more stringent standards of Part 121 of the FARs, which are regulations designed for scheduled air carriers.
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[edit] History
The growth of corporate aviation and related air taxi and air charter suppliers, boomed following the close of World War II. With surplus aircraft available air charter companies entered the business of charter flights for executives, high end travelers, special missions (such as organ donor flights, critical auto parts freight, etc.), sports teams, entertainers, etc.
[edit] Technology and business structure
The 1960s saw the arrival of the first small jets, such as the Learjet. The Learjet was adopted by some of the first jet air charter operators, such as Hop-A-Jet and Clay Lacy. Both companies still exist today as larger charter management firms. Charter management became popular at the dawn of the private jet age as a way for companies to own aircraft "off their books" - namely away from the prying eyes of shareholders. Local entrepreneurs realized that by managing the aircraft that belonged to another entity (one that could afford to buy the multi-million dollar aircraft) they could help offset the cost of ownership through rental income and aggregate owner costs for insurance, fuel, maintenance, etc. Today, this type of aircraft ownership arrangement forms more than 75% of the on-demand air charter industry for the United States, which encompasses about 70% of the air charter activity in the world.
In 2004, the FAA began the process to re-regulate the Part 135 industry, mainly due to the widespread problems created by the tension between aircraft owners and management companies. The FAA felt that air carriers (the air charter companies) had in some cases begun to lose operational control. The term "operational control" indicates which entity (aircraft owner, management company, broker, etc.) is controlling the aircraft's movements, crewing and compliance with applicable government regulations. In 2006 the FAA released a new Operations Specification regulation and guidance which more clearly defined the requirements for operational control of an aircraft performing a private charter flight.
[edit] Growth factors
Beginning in the late 1990s air charter benefited from the following growth factors:
- Internet Communication: Because air charter was never part of the major GDS or travel distribution systems, it could not reach wider audiences. With the advent of the Internet, distribution of information regarding the availability of aircraft, placement, pricing etc., became more available to the increased broker and buyer community.
- Growing Popularity: Air charter became more available to the public through brokerage businesses able to connect passengers with aircraft for charter nationwide and worldwide. Where previously passengers were limited to a few local yellow pages listings, they could now access aircraft through brokers specializing in locating aircraft. Brokers could offer a wider selection, and potentially lower cost options including one-way charters where an aircraft was available without positioning or empty leg charges.
- Airline Problems: Growing dissatisfaction with the scheduled airlines over security and congestion related delays. While not all airline passengers could afford alternatives, well-off airline passengers sought ways to stop flying commercially and started to explore corporate aviation, fractional, jet cards or air charter.
- Very light jets or VLJs popularized the concept of small jets that would bring the capital carrying cost of aircraft down enough so that many more could be sold and operated. The very first VLJs have just been rolled out of the factory. VLJ companies include Eclipse Aviation, Adam Aircraft, Cessna, Honda, and Embraer.
- Uniting the Industry: In an effort to encourage air taxi & air charter industry and market development, the Air Taxi Association, ATXA, was formed. Backed by leading air taxi operators, ATXA has been a contributing factor for growth of the industry.
VLJ aircraft manufacturers maintain that the construction of cheaper, smaller and faster jets will enable point-to-point private aviation, creating a new industry. Others maintain that these new aircraft will lower the barriers to ownership enabling more wealthy individuals to own jet aircraft, but will not result in their wide adoption for commercial applications. Critics [1] [2] argue that basic economics, demographics, industry inertia and operational constraints will automatically limit the birth of an air taxi industry.
[edit] Air charter options available
Several options are available for flying privately, according to investment available and flight frequency desired. Fractional ownership programs popularized the notion of private aircraft use and ownership in the 1990s. A number of owners share an aircraft (or a certain type aircraft - one of many a fractional company manages). Owners purchase typically from 1/2 to 1/16 of an aircraft, pay a per-flight-hour charge, related fuel and flight fees, and divide management expenses. Fractional aircraft ownerships growth led to the advent of regulations in the United States designed to regulate fractionally owned aircraft companies. These regulations are given in Part 91 Subpart K and bring fractional aircraft operations into line with existing air charter regulations, making fractional ownership into simply another flavor of ad hoc air transportation.
Jet Cards became popular around 2002-2005 when fractional companies and jet charter brokerages began offering pre-pay debit accounts for per-hour private aircraft charters. Customers would pre-pay around $120,000 - $500,000 for a set number of flight hours in a certain size aircraft. Those hours may expire at a designated time or be available for partial refund. On Demand Charter is trip by trip, pay as you go charter. One of the earliest forms of private flying and still growing, the passenger selects a specific charter quote provided by a local aircraft operator or national broker and pays for that trip alone, either before or after the flight. Jet Cards and On Demand Charter fall under more stringent FAA regulations Part-135 governing aircraft for hire with paying passengers.
[edit] Developments
Some aviation professionals foresee the middle class traveling easily and with much less expense than is currently possible, using VLJs (very light jets) and other types of comparatively inexpensive aircraft. New technologies in engine design, airframe manufacturing methods, computer aided design and avionics as well as ATC upgrades, many say, will come together to drastically reduce cost while increasing efficiency, comfort and safety. These aircraft (such as the Eclipse 500) are said easier to fly and much cheaper to produce than current production jets. 5,400 small airports across the United States make point-to-point air travel on smaller jets quicker for travelers than the airline hub and spoke system. Next generation avionics and systems may also make these small airports accessible even in poor weather conditions.
RTI International, a nonprofit research organization, has developed a modeling and simulation tool which allows operators (or potential investors) the opportunity to craft a living business plan to gauge the potential of any prospective air taxi operation. Developed to answer questions about the economic and operational feasibility of the air-taxi market/business case during the SATS program, it has now been adopted in Europe and the US by a broad user base desiring to plan and optimize operations.
[edit] Skepticism of change
Despite the substantial investments by firms such as DayJet, other aviation professionals remain skeptical on whether we can expect this mode of travel to flourish due to the decreased cost of personal air travel. The primary obstacles being that aircraft utilization is the largest limiter in reducing costs of operation (fixed overhead) not necessarily advancements in technology.
The most notable evidence / example of this problem is the fact that direct operating costs of VLJs are not substantially lower than existing turbofan and turboprop technology that can carry larger loads, greater distances, and in some cases for a smaller initial investment.
[edit] Publications
- Evaluating the Efficiency of a Small Aircraft Transportation System Network Using Planning and Simulation Models (2006)
- Nationwide Impacts of Very Light Jet Traffic in the Future Next Generation Air Transportation System (NGATS) (2006)
- A Transportation Systems Analysis Model (TSAM) to study the impact of the Small Aircraft Transportation System (SATS) (2005)
- An Integrated Model To Study The Small Aircraft Transportation System (SATS) (2003)
[edit] References
- Air Taxi—Myth or New Market Niche? Perspectives within the industry.
- Private jets for non-gazillionaires. The changing landscape of air taxi and air charter.
- Private Jet Program Comparison. Calculator for the most cost effective way to use air charter. Compares, fractional, jet card, membership and charter programs.
- Commercial aircraft comparison chart. Specifications for larger aircraft used for air charters
[edit] External links
- Air Taxi Association (ATXA)
- National Business Aircraft Association
- The National Air Transportation Association
- FAA Regulations (FARs)
- FAQs Frequently asked questions about air charter.
- Transportation Systems Analysis Model - TSAM is a nationwide transportation planning model to forecast air taxi demand in the United States.
- Jet Charter Travel - Jet Charter industry blog and online charter company reviews.
