High-class travel, earth-bound prices
Once the exclusive domain of the wealthy, jet hire is getting cheaper, says Kevin Allison.

Any commercial air traveler who has set foot on a private jet will tell you that once you experience the forbidden pleasure of private air travel, it is difficult to go back.

As with most luxuries, travel by private jet enjoyed a boom in the heady 1990's as companies and freshly minted millionaires all bought into the fractional ownership of corporate jets.

After a slowdown in 2000-02 the market in private jet travel has perked up and the companies that own and manage private jets have been scrambling to come up with new ways to bring even more customers over to the brighter side of air travel.

"Flying privately is addictive," says Kevin Russell. He should know. Mr. Russell is chief executive of NetJets, the Berkshire Hathaway-owned company that emerged as the leader in fractional jet ownership.

Mr. Russell said that private jets offer a significant improvement in the quality of life for frequent fliers. "It does not buy you time but it allows you to make better use of it," he says.

For years, the private jet was the exclusive province of the heads of big corporations and the handful of wealthy people who could afford to buy, maintain and house their aircraft. That began to change 20 years ago with fractional ownership schemes, which offered customers a chance to share the costs of a private jet. For a fee paid in advance, fractional jet customers share in the ownership of an aircraft.

But even shared ownership can be expensive. Access to 50 hours' of flying time a year for five years on a light jet can cost upwards of $250,000 a year, and 50 hours in a Gulfstream 400, the grand-daddy of business jets, fetches a cool $2m.

Luckily, the companies that offer charters and fractional ownership have begun to realize there are larger numbers of people interested in gaining access to private aircraft slightly less frequently, and at a lower price.

The result is that companies such as NetJets and Sentient Jets, a membership based operator, have begun to lower the barriers to entry for wealthy businesses and families interested in private air travel.

NetJets offers a pre-paid "Marquis Jet Card" that gives customers 25 hours' flying time a year on a jet in the group's privately owned fleet. The card, offered with conjunction with Marquis Jet Partner, represents a sublease of a share in NetJets aircrafts. The leases last one year and vary in cost according to the class of jet. Twenty five hours' access to a light jet, useful for quick hops by a few passengers, costs about $115,000, substantially less than it costs to take out part ownership.

Mr. Russell says NetJets began to offer the Marquis card as an alternative to its traditional fractional ownership scheme, in which owners get 50 hours of flying time in return for their share in an aircraft.

"We found there were three to four times as many people who did not need 50 hours a year," Mr. Russell says. The program has attracted about 3,000 new customers since it was launched in 2002. A Marquis card membership does have a few drawbacks compared with other schemes, however. There is no refund for unused flying hours. And, since the Marquis scheme is technically a lease and not an ownership program, participants cannot use the depreciation of the aircraft to help offset their capital gains come tax time.

Another interesting option for those exploring private jet travel is Sentient Jet, a Massachusetts company that operates like a private jet club. Customers pay between $100,000 and $250,000 for a membership that entitles them to choose from a variety of jet types, each of which has different hourly rates. Members receive a card that acts as a debit card customers can use to pay as they go. The rates start at about $2,200 for a round trip flight on a light jet, a yield of about 45 hours' flying time per $100,000.

Steven Hankin, chief executive, says Sentient's membership model offers wealthy individuals and businesses less expensive alternative to traditional charter flights or fractional ownership schemes.

"We are not asking people to buy a fraction," he says, "we access a general charter fleet that is already out there." At the end of the year, any remaining balance in a member's account rolls over to the next, so customers can choose to fly as much or as little as they want, Mr. Hankin explains.

Sentient members can also order more than one jet at a time. This is useful for businesses or wealthy families that need to travel from different parts of the country to one central location for big meetings or gatherings.

As with NetJets' Marquis program, members do not own their jets, so they cannot deduct the aircraft's depreciation from their capital gains.

Mr. Russell of NetJets says the disadvantage of such Membership Programs is that they rely on a fragmented and dispersed network of private charter operators, some of which fly older aircrafts. But customers who are more comfortable flying on newer aircrafts can pay a little more to guarantee the jet they use at any given time will be no more that ten years old, says Mr. Hankin. He adds that Sentient carefully screens its operators to ensure it works with only those who follow best industry practices.

For people or businesses that require between 400 and 500 hours of flying time each year, the equivalent of three weeks, or 62 working days, in the sky, outright ownership may still make sense. But new jets come with acquisition costs that can range from $4.5m to $35m, and they must be insured, housed and maintained.

Those who cannot afford outright ownership can always charter a private jet, an option that remains popular with businessmen who typically make one-day, out-and-back regional or cross country jaunts.

But charter operators frequently charge customers for ferrying the aircraft from the hangar to the departure airport, as well as for any waiting time and the return trip. If a customer is flying one-way, a charter business might charge for the empty return flight, a so called "dead head" fee that can add significantly to the cost of a trip.