Archive for August, 2009

Private Jet vs Air Taxi

Tuesday, August 25th, 2009

If you’re familiar with chartering your own aircraft the answer is possibly “No!” and certainly there is no legal or officially technical difference. But wait… actually there are important differences. The expressions as commonly used denote rather different types of aircraft but more importantly, an appreciation or even awareness of what an “Air Taxi” is leads to the realisation that it is a form of transport sensibly available to many who perhaps hadn’t thought private flight was for them.

So, in order, let’s look at how private jets and air taxis differ, what they’re used for and finally, why you don’t need to be Sir Alan Sugar (Simon Cowell, Bon Jovi or David Beckham) to make good use of an air taxi here in the real world! This is the key to the question; it’s one of practical use as much as technical detail.

Private Aircraft, Air Taxi or Jet — the science bit.

First off, we’re about chartering here, by definition the commercial hire of an aircraft and crew not running to any schedule – any schedule but yours that is. The term “jet” in this context actually refers to the means of propulsion. Jet engines suck air in the front with a compressor, mix it with kerosene, and ignite it; the high speed hot gas propelled form the rear provides thrust in the same way a released balloon shoots across a room. On the way out the gas passes through a turbine which in turn drives the compressor at the front and hence it is effectively self sustaining all the time fuel is around. The main thing is, there is no propeller. Aircraft so powered are, in simple terms “jets”, private, chartered or otherwise.

By contrast there are also many propeller powered aircraft, falling into two categories; piston engine powered or “turbo-props”. Piston engines in aircraft are in principle the same as a car engine. Turbo-props are actually a development of the jet engine; the turbine of the jet engine described above is connected to the compressor by a shaft and this shaft continues to a gearbox which in turn drives a propeller. (The aircraft carrier HMS Ark Royal was actually a turbo-prop of sorts, Olympus gas turbine engines as powered Concorde were connected to shafts and gearboxes driving propellers … but we digress!). Although not a hard and fast rule private aircraft powered by plain old jets are just that, private jets, and those with propellers are commonly referred to as “air taxis”.

Jets and propeller aircraft come as large and small aircraft; the differences are mainly those of speed, range and altitude. Jets are fast, they fly high (in fact the higher the better for efficiency) and they have typically longer ranges that propeller driven aircraft. The air taxis by contrast come into their own on shorter trips where flat out speed, range and altitude are not necessary. Remember, a Ford Focus will get you to the corner shop pretty much as quickly as a Ferrari, door to door, and a lot more cheaply; you need a long autobahn to get the benefit of a sports car.

Private Jet and Air Taxi uses

Let’s continue with the Ford Focus and the Ferrari, it’s really very similar. Long distance, short of time, need a little full on luxury …  go with a jet! You’ll fly high, fast and in some cases flash (ahem Simon Cowell). However, if you need to get from A to B safely, comfortably and over a relatively short distance (for aircraft this is 500-800km) then an air taxi is just the ticket. A spade is a spade and there is no point pretending that an air taxi is a private luxury jet because it’s not – there is usually no cabin attendant and meals, though provided and far tastier than airline fare is nevertheless self service. But don’t be put off…..

Who uses air taxis and why

Very normal people and companies use air taxis and for a good reason, they get the job done affordably and safely. Prices can start from under a thousand pounds but for that you get every seat on the aircraft. Compare that to a handful of schedule tickets on anything but the likes of … well, I shan’t say the name! Families use air taxis for special occasions, small companies use air taxis to eliminate overnight accommodation on business trips and actually save money overall (add in the reduced “out of office” time). Individuals use air taxis for just about anything.

In conclusion, the difference between a private jet and an air taxi is not a hard and fast one (the new concept of “Very Light Jets” has blurred the boundaries even more!) but an appreciation that private flight is not restricted to the rich and famous but offers the option of an air taxi also  is one well worth having. The beauty is that it costs nothing to find out how having the choice might benefit you. Any reputable charter company will provide a quote in a few hours or less for a flight specifically tailored to you.

EC VAT decision -good news or bad?

Sunday, August 23rd, 2009

Since its inception in 1973 UK VAT law has stipulated that “qualifying aircraft”, those over 8,000kg max take off mass, are exempt from VAT for the purpose of acquisition, management and operating costs. This exemption has been enjoyed by private owners and commercial operators alike.

A recent EC decision states that this threshold for exemption is no longer acceptable and while the UK authorities response is still not yet clearly defined it is certainly a cause for thought if not concern for all those possible affected by it. For private owners who partly use their aircraft for private travel it would no longer be possible to reclaim VAT on a proportion of the overall costs. Commercial operators will no doubt be able to reclaim the Sales Tax or equivalent on costs but will nevertheless be faced with serious cash flow issues.

On the up side there is potential for private operators to pass their aircraft over to commercial operators for use on their fleets. This will further increase the already wide range of aircraft available to charter passengers.

It is estimated that business aviation contributes some £3.5 billion to the UK economy annually and provides approximately 50,000 jobs either directly or indirectly. In such economic conditions as we currently endure it is a shame that such far reaching edicts are put out with seemingly little regard for their true impact and for all the world to have apparently come from a base of, shall we say, “reduced awareness”. Dave Edwards of a leading UK operator phrases it thus: ” …To implement this change in such a rapid manner, with virtually no industry discussion, opinion or debate would be, frankly, ill-considered at this time.”  Will Curtis of Rizon is somewhat more outspoken; “This is typical of the way that the EU legislates – from a position of comprehensive ignorance and without consultation of any description.”

Whatever your stance on the subject it is an area to keep a close eye on. Fortunately our charter clients are relatively insulated from its effects and will continue to be free to use business charter flights as and when they are seen to be cost effective.

European support for business aviation?

Sunday, August 23rd, 2009

From the Editor:
Earlier this month Brian Humphries, president of the Eurpean Business Aviation Association, published the following article highlighting the plight of SMEs in the business aviation market during this recession particularly when compared to government approaches to legacy industries such as car manufacturing. I will let the article speak for itself – as a broker in the business aviation market Aviastra soundly echoes all the points raised.

The European Business Aviation Association was founded in 1977 to [quote from www.ebaa.org]
“….. promote excellence and professionalism amongst our Members to enable them to deliver best-in-class safety and operational efficiency, whilst representing their interests at all levels in Europe, to ensure the proper recognition of business aviation as a vital part of the aviation infrastructure, supporting local and national economies.”

Their website is at www.ebaa.org

The Article [by Brian Humphries of EBAA]:

I am writing this column in both my EBAA and British Helicopter Association (previously BHAB) roles when I address the plight of the backbone of business aviation in Europe, the small operator, and ask:

Why it is that in the depth of this recession they seem to be the focus of attack by authorities and governments rather than receiving the sort of support the large “has been” industries such as motor manufacturing have been enjoying?

After EBACE I wrote that a number of indicators suggested EBACE may have coincided with the market bottoming out and perhaps a sign of better times to come. However, looking at the traffic figures since and talking to our members, there is no doubt we are still bumping along the bottom and times will continue to be very tough for many of them for some time yet. While we wait with some trepidation for the July Eurocontrol figures, informal indications suggest these may be down again and there is no doubt that if, overall, we end the year around 15% down on last year, we shall have done very well. But some countries and some market segments, especially some elements of charter, are faring much worse than this. As a result, from the largest operators, where the furloughs and job losses are very large indeed, to the smallest with relatively few employees, all are having to make severe economies and let valued employees go just to stay in business. In recognition of all this and with their formally stated commitment to Small and Medium size Enterprises (SMEs), would you not think that European and national governments would be sympathetic to helping them stay in business – remembering that Eurocontrol figures show that 40% of operators in Europe have only one aircraft and 80% less than four. Indeed, EU policy, to which the UK government is a signatory, says: “Being SME-friendly should become mainstream policy. To achieve this, the ‘think small first’ principle should be irreversibly anchored in policy-making from regulation to public service thus ensuring that rules reflect the majority of those who will use them. SMEs must be helped to thrive. When the setting up of businesses and their growth is hampered by unnecessary obstacles, these must be removed.”

Sadly in practice things are very different. In the UK, the general aviation sector will have seen its regulatory charges rise by an average of 60% in five years and small aircraft operators will have seen their regulatory charges increased by several hundred percent with further increases planned until all cross-subsidies are abolished in 2010. A small company that employs one pilot to fly their sole aircraft will have suffered an increase in AOC charges from £834 in 2005 to £10,030 in 2010. Another company that operates, maintains and manages helicopters on behalf of their owners will have seen its charges rise from £11,664 in 2008/09 to £18,618 (+59.6%) in 2009/10 and £31,030 (+66.6%) in 2010/11!

So, far from helping SMEs in line with policy commitments, govern-ments are just making things a great deal worse. The mounting costs of regulatory compliance with EU directives, the cost of oversight by the CAA, the growing cost of environmental compliance are all conspiring to drive our SMEs out of business. Added to this, we know of at least one case where the CAA has been highly unsympathetic to a basically sound very small operator under temporary financial pressure. Instead of showing sympathy and allowing them time to pay in stages to allow the business to survive an especially difficult time, they threatened early redress to the Courts to recover non-material amounts of money.

Higher up the scale, we have similarly unsympathetic treatment of mid size operators by the EC, who despite pleas to the contrary, will require any operator emitting more than 10,000 tonnes of CO2 per year to follow the whole panoply of ETS reporting. We did a trial with one such operator and found it would cost them ?70,000 to comply in the first year; funds that just aren’t available in the current market. And as if that were not enough, we now face pressure from the EC to raise the UK’s zero rate of VAT rate on aircraft above 8,000 kg. As one commentator noted, the addition of VAT to the cost of buying and flying private jets is likely to sound the death knell for a significant number of owners, operators and manufacturers.

What is so worrying is that all this comes against a background of great progress in getting the importance of business and general aviation recognised in Europe. For example, the European parliament noted in February that business aviation “provides specific social and econ-omic benefits such as increasing the mobility of citizens, the productivity of businesses and regional cohesion”. It also noted the sector’s “growing economic importance” as vividly illustrated in the recent PriceWaterhouseCoopers report showing that business aviation was worth some ?20bn to the European economy in 2007, around 0.2% of GDP and generating 164k jobs.

So come on governments. Please can we have the hard nosed financiers talking to the policy makers and showing a bit of sympathy to these SMEs who fulfill such a vital role in European mobility? We are not looking for handouts. Just the same sort of sympathy being shown to other businesses with the avoidance of yet more costs, a pause in already planned cost increases until the economy recovers, and time to pay when businesses are struggling. Is this really too much to ask after what you have given the banks and other legacy industries?

Brian Humphries, EBAA president

Discerning Design

Thursday, August 6th, 2009

Article with the editor

Noizy Boyz

Thursday, August 6th, 2009

Article with the editor