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Convenience Trumps Price for Air Charters.

SCOTT McGEORGE SAID HE can't beat the convenience of using a charter airplane service.

"There are places that we work in Louisiana that you can work a full day and you can fly back in an hour or 45 minutes," said McGeorge, president of Pine Bluff Sand and Gravel. "Then you're home for supper rather than driving four and a half hours into the night."

Although no agency tracks the number of chartered flights in the state, tax receipts and anecdotal evidence support the industry's assertion that business is up.

In Arkansas, John Knight, director of the Department of Aeronautics, said the charter airline business is doing well because of the tax revenue it brings in.

In Fiscal 1996, $2.26 million in taxes was collected on aviation fuel, parts and services conducted in Arkansas. In fiscal 2000, the tax collected was $2.63 million For 2001, tax revenue of $3 million is expected, he said.

"The only way we've got to gauge aviation business is the income from the taxes on aviation," Knight said. "With that increase in revenue, obviously, there's more fuel being bought, more airplane parts being sold."

Dick Holbert, president of Central Flying Service Inc. in Little Rock, said the commercial airlines were driving passengers to charter carriers.

"It's clearly becoming more difficult to fly on the airlines comfortably and conveniently," Holbert said. "And that has always been one of our selling points for charter. We have always gained customers in proportion to the level of inconvenience and the level of crowdedness."

Delays by the major airlines rose more than 50 percent and canceled flights more than 70 percent from 1995-99, according to a report by the U.S. Department of Transportation. Complaints increased 16 percent from 1999-2000, the report says.

McGeorge said he had used air charter services more in the last year than he had in years past. He does construction work in four states, and there's often no commercial air service to his sites. By using an air charter service, he said, he gets to visit the sites more often and spend more time at them.

The downside, he said, is "it's relatively expensive."

But in a healthy economy, more businesses and individuals can afford to charter planes, said Clif Stroud, spokesman for the National Air Transportation Association at Alexandria, Va.

"Business executives are growing frustrated over the airlines and the crowds you must deal with and the delays," Stroud said.

The National Business Travel Association, also in Alexandria, says more than 75 percent of its corporate travel managers surveyed in March had used corporate fleets or air charter services when booking flights, compared with about 40 percent in 1996.

"As long as the economy holds up, I don't see any decrease in demand for air charter," Stroud said. "It's very stable right now."

A number of companies are buying their own planes as well.

Jack Olcott, president of the National Business Aviation Association in Washington, D.C., said more than 9,000 companies own at least one aircraft. In 1995, that figure was 7,126, he said.

Acxiom Corp. of Little Rock, for example, has three jets in its fleet.

"Because Acxiom is a global company with offices across the United States as well as Europe, the jets provide both an efficient and economic way for Acxiom's associates to interact on a personal level with its various offices," company spokesman Jonathan Portis said. "We can also bring our potential customers back here to see how our technology works."

He said the company saves time because employees don't have to find a convenient flight on a commercial airline.

Acxiom's planes are frequently in use, and CEO Charles Morgan, is sometimes at the controls, along with another pilot, Portis said.

Fractional Ownership

Another part of the air charter business that is taking off is the fractional aircraft market, which is like a time-share arrangement that allows companies to share ownership of a plane, Holbert said.

In the fractional aircraft market, a company pays a monthly fee and hourly rate for the plane, he said.

"Those rates are all guaranteed, which is different than if you just owned it yourself. Other than the warranty, you would be at the mercy of whatever may happen," Holbert said. "The airplane is managed by these firms, so you don't have to worry about pilots."

Central Flying Service has its own version of the fractional aircraft market, SkyShare, and has three planes dedicated to it.

Benefits of Air Charter

The primary attraction to charter flights is time savings, Holbert said.

"An airplane manufactures time for these people," he said.

And cutting down on travel time increases an employee's productivity.

"That could pay for an airplane in no time at all," Holbert said.

He said typical air charter customers are doctors, lawyers and business executives.

"[Executives] need to travel on business and they can't wait," Holbert said. "They have to get back on a certain time. They can't take a chance on one of these delays or overbookings."

Chartered flights have other benefits as well.

"You control who is on board," Stroud said. "If conducting any kind of confidential business discussion, you can do that on a charter flight without worrying who is listening in on your conversation."

In addition, air charter planes have access to more than 5,500 airports in the country, while the major airlines' larger planes have access to fewer than 700, the National Business Travel Association said.

Holbert said that the air charter business had been steadily increasing over the years but that it had really started to pick up in the last five years.

But charter air service come with a price. Just as it's cheaper to buy milk at a high-volume grocery store than at a convenience store, it's cheaper to fly on a high-volume commercial airline.

A passenger can fly from Little Rock to Dallas for less than $200 if the flight is booked that day. If the flight is booked weeks in advance, the cost could be less than $100.

The same trip would cost about $1,250 at Air Charter Express at the North Little Rock Municipal Airport.

Tom Murchison III, owner of Air Charter Express, said air charter businesses can't compete with the prices commercial airlines offer. But up to 10 passengers can ride on one of Murchison's charter planes, bringing the cost per passenger down. The company charges per trip on the basis of the nautical mile and the size of the plane.

Additional fees are charged if a crew has to stay overnight while waiting to take a passenger home. The passenger saves time, however, by the ease of travel, Murchison said.

The plane can leave when the passenger is ready, at any time of the day or night. From the time the passenger arrives at the airport, "we can be in the air in about 10 minutes," he said.

And a flight can go right in to any small city as long as it has an airport. In Arkansas, there are 91 public-use airports.

"That's one of the conveniences of it, too," Murchison said. "We can go to exactly where you need to go. You don't have to go in to a major metropolitan area," he said, although those destinations also are available by charter plane.

Another benefit is that there's no lost luggage because luggage goes on the plane with the passenger, he said.

Murchison bought an air charter company in June 1999 and changed the name to ACE. The next month, he hired David Duch of Hazen, a pilot with 25 years of commercial experience, as director of operations. ACE has seven planes in its fleet.

In its first couple of weeks of operation, ACE had two to three flights a week; now it has at least 10. According to Duch, the most popular destinations remain in and around Arkansas.

"Lawyers, especially, we haul in-state when they run and get depositions," Duch said. "On-demand charter is exactly what it means."

Not everyone is using the air charter for business, either. Murchison said some passengers use it to attend sporting events.

The National Air Transportation Association's Stroud said he doesn't see the art charter business declining any time soon.

"I don't see any major downturn unless it's years down the road when airport access could become a problem because of the amount of traffic, both [commercial] airline and general aviation, that is expected to increase over the next 10 or 20 years," Stroud said.
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Comment:Convenience Trumps Price for Air Charters.
Publication:Arkansas Business
Geographic Code:1USA
Date:Jan 29, 2001
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