Partial ownership of a jet can save time
tmcnet.com
Partial ownership of a jet can save time
(Ventura County Star (CA) (KRT) Via Thomson Dialog NewsEdge) Mar. 5--Jet-Alliance of Thousand Oaks will get its first very light jet this year, which will be owned by several families that share the cost of purchase, maintance and pilot. Randall Sananda, chairman, thought it was such a good idea he put it out on the Web and now there are 400 people waiting to the part of the Jet-Alliance fractional ownership plan. It starts at 1/16th ownership, which costs $81,000 initially.
He expect the company to someday have hundreds of planes criss crossing the country and jetting owners around for business meetings, vacations and to new potential investment sites.
To get from Norm Lapin's office in Sherman Oaks to one of the surgery centers his company runs in Fresno, he and two business partners have to drive 3 hours one way, a total of 21 work hours lost for a round trip.
A day after they return, one of them sometimes has to head to another center in San Diego.
Noticing the amount of time spent on the road, a colleague suggested to Lapin that he consider buying partial ownership of a private jet that could zip him and two or three others around from a small Van Nuys airport.
The potential upside is too good to ignore for Lapin's firm, Physicians Surgery Center.
Jet-Alliance is recruiting potential owners, such as Lapin's firm, for a one-sixteenth share of a new "very light jet," the Eclipse 500. It falls in the price category of a luxury vehicle, compared to other jets that rival the price of a luxury home. The buy-in is about $81,000 for a one-sixteenth share or 50 hours of flight time per year.
"The affordability of it is amazing," Lapin said.
Jet-Alliance, incorporated in Thousand Oaks in 2000, has more than 450 people lining up for the delivery of its first Eclipse 500 jet.
On Wednesday, Eclipse Aviation said it has started filling the initial 2,400 orders.
"It's the beginning of a whole new era in aviation," Eclipse President and CEO Vern Raburn said in an interview with The Associated Press.Raburn said he envisions small businesses using the $1.5 million twin-engine, six-seat aircraft to fly when they used to drive and to access smaller airports. The next size up in private jets, called light jets, typically cost $4.5 million, according to Eclipse.
"You can fly cheaper commercial, but what is your time worth?" said Randall Sanada, Jet-Alliance co-founder and chairman.
Sanada talks about a fleet of jets with hundreds of owners who would have access to jets all over the country. He wants to add a jet a month as soon as the they start to be mass produced.
Interest is coming from lawyers, investment bankers, business owners with scattered offices and others who travel frequently, "people who have time as their most precious resource," he said.
The $81,000 upfront cost might be close to a sports car, but the Eclipse 500 runs on jet fuel and is piloted by professionals. Ownership likely will run an extra $50,000 per year, plus or minus $5,000. That includes $1,230 per month in fees for staffing pilots and regular maintenance, and from $455 to $650 per hour to fly. Prices were calculated in 2000 and will have to be adjusted.
It's possible part of the cost could be a tax-deductible business expense.
The jet holds a pilot, co-pilot and four passengers. The interior has about as much room as a mid-sized sport utility vehicle. There is no bathroom or space for walking around.
The price and the plane are small in comparison to other options.
Chartering a nine-person jet for a round-trip from Camarillo to Denver would cost about $20,000. A Cessna prop plane that seats eight runs $1,050 an hour out of Camarillo.
Other so-called fractional ownership plans use jets that are larger and more expensive. NetJets, the largest fractional ownership firm in the country, has one-sixteenth shares starting at $406,250, with from $5,000 to $10,000 in monthly fees, plus air time. NetJets also offers a card that amounts to 25 hours flying time a year -- a sublease of a fractional ownership -- for about $116,000.
Small jets have a major advantage over commercial air travel: complete flexibility. There are no set travel times and, perhaps more importantly, there are small airports in many parts of the country. With 5,000 regional airports in the U.S., a Ventura County resident can reduce travel time by two hours or more.
"It really does bring the jet age to the masses," said Todd McNamee, director of airports for Ventura County.
The Camarillo Airport had 203,000 takeoffs and landings, in 2002, but that figure slipped to 156,000 last year. Oxnard Airport has handled as many at 170,000 operations in a year but had about 90,000 in 2005.
Ventura County can accommodate these jets easily, McNamee said, and he expects there also will be a lot of usage.
At Camarillo Airport, Channel Island Aviation will be caring for the Jet-Alliance planes and running many of the operations. Owner Mark Oberman said it will be the company's first time working as the operator for a fractional ownership company, but the charter business has the support system to staff, schedule and maintain the jets.
Channel Island Aviation's charter program has acted as a backup for fractional ownership programs when a plane was unavailable, and likely will play that role as well with Jet-Alliance.
"They are going to be the sales and marketing arm, and we are going to be subcontracting with them to provide all support and management for the flight end of the operation," Oberman said.
Channel Island Aviation now has 48 employees working in the two-plane charter department, fuel station, flight school and repair bay.
"Ventura County was a very late bloomer when it came to corporate jet aircraft," Oberman said, adding that popularity has picked up, particularly with part ownership, in the past 10 years.
"Airplanes are a beautiful business and recreational tools, but most people don't have sufficient use for individual ownership to make sense," he said.
In the '90s, Sanada used a friend's private jet for a weekend ski trip. This is the life, he thought, but even a comfortable life in Camarillo doesn't afford something that costs millions to buy and hundreds of thousands of dollars to operate.
He considered the somewhat popular option of splitting the cost with several other families, but the complications and cost didn't make the idea worth it.
Then, Sanada heard about the very light jet concept, a small jet mass produced. Combined with the concept of fractional ownership, akin to a time share, the price comes way down.
For now, Jet-Alliance is supported entirely by Sanada with the staff from his family business, Alliance Financial Group Inc., in Westlake Village.
A 7 percent fee included in the monthly and hourly rates is the extent of the administrative costs, but someday the company will have to operate with a more full-scale administration when there are multiple hubs.
At that point, Sanada hopes the costs will come down for owners through efficiencies, such as not sending a jet back to its home airport empty.
A current estimated fee of $650 per hour is actually double what the jet maker expects it will cost to fly, but it includes the price of taking the airplane back to the original destination. If one family is headed to Dallas and a business group is heading back to Ventura County, or anywhere in California for that matter, the price will be lower for everyone.
The ability to move easily from small airports is not being used efficiently at all right now, Sanada said.
Being able to avoid LAX is one of the best parts for Lapin. He expects the jet could save 12 man-hours for every trip involving three people, plus some work could be done en route.
There also is the "appealing" but expensive idea of using some of the flight hours for personal use. Lapin said he thinks the time will be depleted on business. Still, his voice gives away the excitement at possibly doing something reserved for the rich and famous.
"If we have hours left at the end of the year, I'm sure Vegas is not that far away," he said.
On the Net: jet-alliance.com |
