SOARING INTEREST IN CORPORATE JETS

Katherine Macklem October 8 2001

SOARING INTEREST IN CORPORATE JETS

Katherine Macklem October 8 2001

SOARING INTEREST IN CORPORATE JETS

Katherine Macklem

Among the first non-military planes in U.S. airspace after the Sept. 11 terror attacks was a privately owned jet. On the night following the disaster, pilot Mike Wiseman and a co-pilot flew across a deserted sky from San Diego to Washington transporting boxes of skin grafts for Pentagon burn victims. About an hour outside of the capital, a U.S. air force F-16 met their plane and escorted it into Reagan National Airport, where its lifesaving cargo was unloaded and whisked off. Wiseman, vice-president of Elite Jets Inc., a Palomar, Calif., company that manages and operates corporate jets, and his co-pilot climbed back aboard and flew home.

Well before the attacks, business jets were gaining in popularity. Companies considered them more convenient than commercial airline travel and, among firms whose executives are constantly on the road, more economical. Now, in the wake of the horror of commercial aircraft being used as bombs, business jets are also regarded as more safe. “Fortunately or unfortunately," says Paul Svensen, co-founder of eBIzjets Inc., a Boston-based private jets operator, “our business is going to boom as a result of the tragedy.” It was already doing well. In the United States, the number of companies operating business aircraft jumped more than 40 per cent between 1991 and 2000 to roughly 9,300 companies. In Canada, about 300 corporations have their own planes, with a handful, including Barrick Gold Corp. and Power Corp., owning more than one. Bill Bryant, vice-president of Corporate AirLink Ltd., one of the few Canadian operators of company jets, says the attacks in the U.S. have pushed business up by 20 to 30 per cent. “Any

company that was sitting on the fence, trying to decide whether to own or not, has now definitely said, ‘Let’s do it,’ ” Bryant says. “This isn’t viewed as a luxury anymore.”

“Owning” a plane these days can mean a lot of things, as companies look for ways to cut the cost. Some corporate owners use agents who, during their planes’ downtimes, shop them around for charter flights. Others turn to charter operators or agents when they need air service, much like booking a limo. One of the newest ways to own a plane is called fractional ownership, in which a number of companies share the use of an aircraft, much like a time-share resort condo.

Still, the growing interest in private jets isn’t enough to stop layoffs at Montreal-based Bombardier Inc., the world’s third-largest jet manufacturer. The company, which last week gave notice to 3,800 employees and told another 2,700 their jobs could be gone in 2002, makes both regional jets and business jets. Orders for new corporate craft this year were down about 10 per cent below last, due mainly to the slowing U.S. economy, says Robert Brown, Bombardier’s president and chief executive. While he believes it’s logical to expect orders to pick up as a result of the attacks, he wants to wait and see. “We’re being careful,” Brown says, “because we’re going into uncharted waters to say that the initial interest is going to be a trend.”

He may be overly cautious. A detailed study of the 500 largest U.S. companies, conducted last spring by consulting giant Andersen Group, makes a business case for the corporate jet. Andersen found that despite the hefty price tag-up to $80 million for a Boeing model-corporations with a plane made more money for their shareholders than those without wings.