Many of the world’s wealthiest people were forced to sell their private jets during the financial crisis as they tightened their belts and avoided flaunting their riches.
Fractional ownership schemes – which work for aircraft in much the same was as they do for timeshare property – were also hit as the wealthy shied away from buying stakes in private jets.
But US-based NetJets, which pioneered the fractional ownership model, is convinced that there will be a rebound in luxury travel over the next few years.
After cancelling billions of dollars’ worth of new aircraft orders last year, the privately owned company placed a record order for 120 large aircraft in March, to add to its 800-strong worldwide fleet.
NetJets says that falling prices of fractional shares could prompt more people to consider buying.
Moreover, the recession might also generate new buyers by driving more companies and individuals to consider sharing assets rather than owning them outright.
Emily Williams, vice-president of NetJets Europe, says: “We’ve benefited from people wanting to sell their jets. “It’s a no-brainer. Unless you’re flying more than 400 hours a year, it’s uneconomic to have your own aircraft. The hassle and the bother of maintaining a flight department for just one or two aircraft just doesn’t stack up.”
Flight hours fell about 20 per cent in 2009 at NetJets Europe, Ms. Williams says. But they started to creep back last year and have continued to move steadily upwards this year.
“The market is really going to bounce back in 2013. It’s a strong model. We’re starting to see growth in some territories,” she says.
But not everyone is convinced that fractional ownership is a sustainable model for the private jet sector. Alex Berry, marketing director at Chapman Freeborn, one of the world’s largest aircraft charter brokers, says the fractional model is expensive, with many of the world’s wealthiest flyers opting for charter flights that require no long-term commitment.
“The heyday of business aviation was between 2004 and 2008, but many people considered themselves overcharged on fractional schemes so have been shifting their business,” he says.
“Customers have no commitment to you other than the last flight. They say what they want and we go and find the best deal possible.”
Switzerland-based VistaJet is proving to be one of the most successful of the branded charter schemes.
Founded in 2004, VistaJet promises access to a business jet from just about anywhere within Europe, the Middle East and Asia for a fixed hourly rate, provided the customer buys a minimum number of flying hours in advance.
Thomas Flohr, chief executive of VistaJet, argues that by buying aircraft in bulk, the company is able to offer cheaper prices than fractional carriers and carry the asset risk, rather than passing it on to customers. “If you want 200 hours a year of flying,” he asks, “do you really want to buy a management agreement and 60-page document for an asset you can’t even touch?”
He says demand for smaller aircraft is typically 25 to 30 per cent up on last year, with many of these customers having come from fractional schemes.
“A lot of people got badly burnt in the past 36 months,” he says. “There were a lot of people who wanted to liquidate their assets, but you can only really sell your fractional stake to the party that sold it to you.”
However, Ms. Williams of NetJets says: “Of course, people look at charter but it is always going to be hard for charter to deliver the safety credentials that NetJets does, or the reliability of services just because they are going to the market every time.
“As long as we show small and steady growth and deliver value to customers, then we consider that a success.”
In these tough market conditions, it could be said that no private jet model is 100 per cent safe.
But this has not stopped new types of private jet travel emerging.
Jet Connections, an executive aircraft management company based at London Oxford Airport in the UK, is offering to find up to three people to share the use of a jet with the owner.
The scheme is based on an annual contract between Jet Connections, the jet owner and those sharing the aircraft. By putting business jet travellers in touch with owners, the owner’s costs are shared, and Jet Connections runs a management contract.
Tariq Deir, director of operations at Jet Connections, says: “If you own a private aircraft, it costs you money even when you’re not using of it. Our programme offers you much better value on your asset.
“While the advantages of owning an aircraft are numerous, so are the costs.
“A private aircraft is very expensive to purchase and comes with many added expenses, for example, hiring and training pilots, maintenance, insurance, and management.”
He says his service works for those who have a “reason to own a private jet, but can’t justify the expense of owning the aircraft outright.”