Private jets add hours to the day

To most people private jets represent wealth, privilege and power. To Kevin O’Leary they’re really about just one thing – time.

“Private jets are about making money with time. On average, we save businesspeople about 20 business days a year,´ said O’Leary, president of JetAdvisors, a company in Broomfield that sells between 30 and 50 private jets a year.

SPONSORED CONTENT

How Platte River Power Authority is accelerating its energy transition

Platte River Power Authority, the community-owned wholesale electricity provider for Northern Colorado, has a history of bold initiatives.

Judging by jet sales and chartering, time is a hot commodity these days.

James K. Coyne, president of Alexandria, Va.-based National Air Transportation Association, said despite hefty government regulations, the cash register is ringing as loud as ever. The association supports aviation service providers.

Last year’s $11 billion in sales was the best in industry history.

O’Leary said the Citation Sovereign and Challenger 300, with sticker prices between $15 million and $19 million, are currently two of the most popular jets.

So what’s fueling the soaring sales? Coyne said new engines, new technology, more fuel efficiency, more safety, richer wbaby boomers and business expansion from regional to national and international frontiers.

“The country has become wealthier. Look at the second homes phenomenon, especially in Colorado. There’s an increased demand for the best of everything when wealth increases,” Coyne said.

O’Leary said the terrorist attacks on Sept.11, 2001 got the phone ringing, too. “Anything that makes it more difficult to use commercial (airlines) typically boosts our business.”

Adding more demand is the decline in commercial airline travel, according to Coyne.

“(Commercial airlines) thought they were the only option,” he said. “Charter is much more viable with 2,000 charter companies now across the country. That’s doubled in the last five years, and it’s not a lot more expensive than flying commercial.”

When it comes to getting on board a private jet, there are three options: buy it outright, buy a fractional share or charter one.

Some estimate a 16th share of a jet can be had for less than $100,000, and chartering ranges from $900 to $6,000 an hour.

Coyne said fractional shares and charters have positively driven usage during the last 30 years.

“It used to be that less than 1 percent (would) fly jets, now that number is at least 10 percent,” Coyne said.

Still, this is an option for those with fatter bank accounts than most.

“Most are entrepreneurs and business owners who’ve done pretty well, but they’re not like, you know, Bill Gates,” O’Leary said. “Jets to these people are tools, helpful tools that create time for them. They don’t have higher-level people who can go to three meetings in three cities in one day.”

O’Leary said most of his customers are from New York City, Chicago and Detroit, and only a very few are from Colorado.

He said it typically takes about six months to close a deal with a jet from start to finish.

O’Leary credited the economy with the recent boom in his industry. “The economy is brisk enough, but I also know that some of those sales had been under contract for a while, and the buyers would lose their deposits if they didn’t buy.”

One manufacturer told O’Leary that its backlog was in the billions of dollars. “So the industry is doing well,” he said.

Some of the better-known manufacturers are GulfStream, Bombardier, Cessna and Hawker Beechcraft.

One local success story is Adam Aircraft, an aviation manufacturer in Centennial. In 2006, the company reported it raised $93 million in venture capital funding – one of the largest venture capital deals in Colorado last year.

The company plans to use the money to speed up the certification of its A700 AdamJet and to ramp-up its A500 piston twin – recently featured in the “Miami Vice” motion picture.

According to the company, the funding more than doubled its previous capitalization, allowing it to speed up product development and production growth plans. It also reported that it has an order backlog in excess of 400 aircraft valued at $850 million.

Adam Aircraft makes aircraft that falls into the very light jet, or VLJ, category, something generating a lot of interest, according to O’Leary.

“VLJs are much smaller and much less expensive to operate, and there is talk that they’re the one-in-every garage type of airplane,” O’Leary said. “I think they’ll definitely make an impact in the industry. Some who weren’t going to fly before will fly because of them.”

Rob Theis, general partner of DCM, a venture capital firm that gave some of the Series F funding to Adam Aircraft, said that after looking at a number of emerging companies in the VLJ category, DCM was “particularly impressed” with Adam AirCraft’s ability to “efficiently deploy capital.”

O’Leary said there are cost advantages to VLCs, but the rides are rougher. “It’s a very different experience for passengers, but they are less expensive in the $1.5 million to $4.5 million range.”

Mountain Aviation, a Broomfield-based company that operates out of Jefferson (Jeffco) and Centennial airports, reports business is good, too.

Kerry McPherson, marketing manager for Mountain Aviation Inc. in Centennial, said his company has about 50 active charter customers and half a dozen owners.

“Our business is going through the proverbial roof,” McPherson said.

Nevertheless, McPherson said deep pockets are a prerequisite to do business in the general aviation industry. “Our base-prices per hour range from $984 to $5,800.”

He cited many advantages: Planes fly on the CEO’s schedule, the executive controls the itinerary, no wasted time with security, no hub city hassles, choices of nearly 3,000 airports, increased security and no lost luggage.

McPherson agreed with O’Leary about the time-saving factor for business folks. “Corporate air charter is all about saving time or giving an executive or executive team a few more working hours in their day.”