Do the math on air charter.

For companies whose executives travel extensively or for individuals who take to the skies regularly, the benefits that private jet charter offer are clear in terms of flexibility, time savings and increased productivity. What most travelers don't recognize is that air charter with a reputable company is also cost effective. Just do the math.

Commercial airlines continue to gouge first class customers with exceptionally high fares and exceptionally poor schedules and services. An average first class fare from coast to coast now runs about $4,500 round trip. If four people are flying, the cost starts getting closer to the same trip on a chartered jet, where working on board is much more comfortable and scheduling is completely flexible. You can charter a small jet for $1,800 per hour plus tax, so if six or eight people are traveling, you can achieve cost savings compared to first class fares. Many companies are running the numbers and figuring out that charter service makes economic sense; especially when you factor in the lost time and productivity of highly paid executives stranded at airports waiting for commercial flights.

Another option that has been promoted heavily as a more cost-effective alternative to chartering is fractional jet ownership. This is where a company or individual purchases an ownership interest in a jet. Fractional ownership generally does not pencil out for most travelers when compared with air charter except in some select cases. For example, if you frequently travel one way and don't return for several weeks, a fractional program may work for you. It also may make sense for a top executive in medium-sized cities like Little Rock where there is no access to good charter service.

Years ago The Air Group completed a comprehensive survey designed to help us understand our clients and their air travel needs better. It involved thousands of flight hours and hundreds of missions. We learned that 88 percent of their trips are completed in days, not weeks, so for them, charter offers a better deal than fractional ownership.

The hidden costs of fractional ownership often make it more expensive than chartering, and sometimes more expensive than owning your own jet. Furthermore, fractional participants do not enjoy the same level of flexibility or service. Finally, most fractional owners don't realize that they are paying retail price for the plane, not the discounted price that the fractional company receives from buying in bulk. And, at the end of their 5-year commitment, if they decide to sell their interest they will pay a commission back to the fractional company for the priveledge of reselling their share which can be as high as 5 to 7 percent.

Each fractional owner typically is charged for the annual cost of maintenance, insurance and other expenses at rates comparable to those if the individual owned the airplane outright. For example, with a Gulfstream IV SP owned by four shareholders, each is charged more than $550,000 annually for these costs. In addition, each will pay an hourly operating cost of $3,300 per hour for each flight taken. Total cost; about $6,200 per hour. If you add depreciation, the hourly cost can skyrocket to as much as $10,000 per hour. Finally, when a participant sells you're his share on the open market, if the resale market is not good he risks selling the airplane for less money than he paid for it.

On the other hand, You can charter the same Gulfstream IV SP aircraft for a total outlay of approximately $5,500 per hour, or the top of the line Gulfstream V for $7,500 per hour. In fact, you can now charter commercial jets like the Boeing 757 or 737 for $10,000 per hour.

The advantages of time saved, travel convenience, security and all of the other benefits of private jet travel can be enjoyed through the use of properly operated charter aircraft--and for a lot less money. Most large charter companies have a fleet of jets that span the range of available aircraft and they can match the traveler with the most cost-effective charter alternative. A professional charter operator can effectively manage your costs more efficiently by carefully matching the right aircraft with the right mission, so that a hop across one state uses a KingAir while a flight to London is aboard a Gulfstream V.

Invest the time necessary to do a thorough investigation of your private flight alternatives and make sure you do the math for yourself. We think you will find that charter will be the clear winner.

Jon R. Winthrop is President/CEO of the Air Group, a full-service international aircraft management company with a base in Van Nuys: www.theairgroup.com.

Statistics: Private Jets

Large Jets-Cost Per Hour (in dollars)

   Boeing 727-100   $3,805
          DC-9-30    2,686
   BOEING 737-500    2,311
     BAC 1-11-400    2,208
    GULFSTREAM 11    1,939
   CHALLENGER 600    1,830
     FOKKER 100ER    1,813
   GULFSTREAM 111    1,795
  GULFSTREAM IVSP    1,614
   GLOBAL EXPRESS    1,493
     GULFSTREAM V    1,439
   CORP. JETLINER    1,435
CHALLENGER 601-3R    1,333
        FALCON 50    1,327
      FALCON 900B    1,237
     FALCON 900EX    1,174
      FALCON 2000    1,090
     ASTRA GALAXY    1,079

Note: Table made from bar graph.

Medium Jets-Cost Per Hour (in dollars)

    JETSTAR 11   $2,928
   HB 125-600A    1,657
    FALCON 20F    1,369
     SABRE 75A    1,356
    FALCON 200    1,355
      SABRE 60    1,312
   HAWKER 1000    1,139
   HS 125-700A    1,108
    FALCON 20B    1,076
      SABRE 65    1,059
    CITATION X    1,036
CITATION 111V1    1,033
    LEARJET 60    1,033
    LEARJET55C    1,010
   CITATIONV11      976
      ASTRA SP      970
    HAWKER 600      959
     ASTRA SPX      853

Note: Table made from bar graph.

Small Jets-Cost Per Hour (in dollars)

        SABRE 40A   $1,326
       WESTWIND 1    1,138
      LEARJET 24E    1,131
       WESTWIND 2    1,124
      LEARJET 25D    1,119
       FALCON 100      932
      LEARJET 35A      865
       DIAMOND 1A      846
       CITATION 1      844
   CITATION ULTRA      841
     CITATION 11S      826
      LEARJET 31A      807
   BEECH JET 400A      806
      CITATION 11      783
CITATION 11 BRAVO      757
            SJ-30      750
     CITATION JET      699

Note: Table made from bar graph.

Source: J. Mesinger Corporate Jet Sales