Hubbed and Spoked to death

Fed up with delays, security checks and the "hub and spoke" airport system, executives are turning to fractional aircraft ownership operators like AirSprint to get greater control of their travel

Earlier this year Jim Hewitt took the business trip from hell. His flight to Greenbriar, Virginia, left Pierre Elliot Trudeau Airport an hour late and he missed his connecting flight in Pittsburgh.

The alternate connection brought him 100 miles from his destination and he had to rent a car to do the last leg. The trip ending up costing Hewitt eight hours of stress-filled travel time, for a flight that would have taken just over two hours if he could have flown direct.

"I travel a lot for business. It's an important part of my life," said Hewitt, president of Hewitt Equipment, a Caterpillar heavy-equipment dealership that services Quebec and the Atlantic region. "In the old days we used to rely extensively on commercial airlines and we got good service. But not any more."

Not long after Hewitt's Greenbriar trip, he signed a letter of intent to acquire a one eighth interest in a corporate jet from AirSprint Inc. a fractional aircraft provider, which set up shop in Quebec last year.

AirSprint, which was founded in 1999 by Calgarian Judson Macor, now maintains a fleet of 11 time-share jets including nine Pilatus PC-12 turbo props, which are owned mostly by corporate users and based across the country. If an exec's jet is being used by one of the co-owners, another jet is flown in for him. AirSprint sells the aircraft shares, and then manages the fleet for the owners, providing pilots and maintenance services. Although there are several similar businesses in the U.S., notably NetJets, which pioneered the industry, AirSprint is the largest domestic player.

"We never felt that we could justify owning an entire plane," said Hewitt. "But the shared ownership system ensures that we always have a plane on standby."

According Fernand Croisetiere, AirSprint's vice-president (Eastern Canada), Hewitt isn't the only executive who is fed up with the state of North American business travel.

"Time is money," Croisetiere said. "People don't realize how much their companies lose out if their CEO is sitting in an airport lounge."

According to Croisetiere, a CEO who earns $1 million a year, costs his company $4,000 a day. But if the CEO wastes a day because of travel delays, the loss to the company can be much more.

"When executives travel it's often to attend high-level meetings or negotiations where intense concentration is needed," Croisetiere said. "If they arrive tired or stressed out, the meeting could be ruined."

While airline executives tend to blame their problems on extensive security checks and other fallout from 9-11, the problems go far deeper. Much of the difficulties originate with a long-term rise in air travel and the "hub and spoke" system that has evolved during the past few decades to help meet the demand.

Major airlines have been gradually abandoning smaller markets focusing instead on routes between hubs such as New York, Atlanta, Toronto and Montreal. Passengers heading to smaller airports such as Harrisburg Pennsylvania, or St. Georges De Beauce, are then transferred onto smaller airlines, a process that eats up copious amounts of time.

Shared ownership services have been a big help to Paul Gaulin, CEO of packaging plant operator Induspac, who has been using AirSprint jets during negotiations to purchase of a string of U.S. plants. On a recent road show he loaded a dozen banking executives on two Pilatus jets, took them on a six-plant tour and got them home at the end of the day. Recently he had lunch with one of the executives, who told him how much she had enjoyed the trip.

"I'm trying to get cash from the banks so I treat them like they are my customers," Gaulin said. "I would never have been able to take them to all those cities in one day if we had flown commercial."

In fact when you calculate taxi rides to and from the airport, the hours spent in security, baggage and other lineups, coupled with the time and expense of buying tickets, it's often more attractive from a cost-benefit point-of-view to drive than fly. That applies even to relatively direct routes such as Montreal-Toronto.

Despite this, in these days of tough shareholder scrutiny many CEOs would rather talk about their latest STD test results, than their corporate jets. Photographers aren't allowed to take pictures of the private planes lined up at the Shell Aerocenter on Ryan Avenue in Dorval, without the express permission of the owners. And that's not just for security reasons.

But one thing is clear says Croisetiere, the demand for fractional ownership of corporate jets is rising.

"As air traffic bounces back, and security gets tighter, it's only going to get worse for ordinary travelers," Croisetiere said. "So I don't think my phone is going to stop ringing any time soon."

 

 

 

Sidebar: The advantages of fractional aircraft ownership

o Company personal avoid luggage, customs and security line-ups.
o They fly direct to their destination saving them significant time on corporate travel.
o Private jets such as the Pilatus PC-12, which can land on shorter runways, have access to thousands of smaller airports that the major carriers don't.
o Personnel fly according to their own schedule, not the airlines'. They thus arrive at their destination on time, ready to do business.
o Aircraft are available when needed, and when not required, are used by group partners, significantly reducing cost.

Fact Box:
Company Name: AirSprint Inc.
Web-site: www.airsprint.com
Owners: Judson Macor, Michael Knapp
Founded: 1999
Products: Fractional ownership sales and management of commercial aircraft
Employees: 50
Sales: $30 million
Phone #: 514-398-0222

peter@peterdiekmeyer.com

 

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Peter Diekmeyer
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