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The challenge of running a corporate jet

Combining luxury with convenience, the corporate jet is becoming a vital working tool for more and more businesses – but although the benefits are plentiful, it can be a struggle for companies to make a return on the hefty initial cost

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The Legacy 600 is one of Embraer's most luxurious models. In recent years many corporations and entrepreneurs have struggled with the cost of running a corporate jet
The Legacy 600 is one of Embraer's most luxurious models. In recent years many corporations and entrepreneurs have struggled with the cost of running a corporate jet 

The allure of the corporate jet has proved fatal for some companies. Dazzled by advertisements extolling luxury in the skies, many entrepreneurs have treated themselves to an aircraft of their own as compensation for all those 16-hour days. But it’s usually the Bombardier, Dassault, Lear or Embraer that is the first asset to be flogged off – or, indeed, seized – when times get hard, and the liquidators move in.

Though relatively easy to buy with the right financial package, corporate jets cost a lot to run. Many an owner has come to rue the hidden expenses of maintaining an aircraft – not to mention the unexpected tax claims that come with it. No company should buy a jet without first consulting an expert aviation lawyer, as the way in which the sale of the aircraft is legally packaged – as well as how it is used – has a lot to do with how much it costs to run. However, when certain protocols are observed, the company plane can undoubtedly be a highly productive business tool that saves time, money and energy.

Manufacturers now minutely analyse cabin space in order to provide the most bang for the aviation buck

The long haul
Few companies really need a bird of the skies capable of transcontinental flights. The 2014 Formula 1 world champion Lewis Hamilton may own a $30m blood red Bombardier Challenger 600, which can reach a cruising speed of 850kph and has a flight range of 5,186km, but not many companies have a need for those kinds of capabilities. There is a wide range of less expensive aircraft available, which are more than adequate for the shorter hops that most corporate jets are employed for.

The Dornier 328 jet, for example, was originally designed as a rugged short-haul commercial aircraft. It is now enjoying a tail wind as a reconditioned VIP medium-range plane. And the 328 has proved particularly popular since the financial crisis – at a cost of around $13m, including a bespoke interior, the 328 has found a ready market as a relatively budget-priced offering.

“It’s a value proposition”, pointed out Ray Mosses, Head of Sales for Munich-based conversion company 328 SSG. The latest iteration of the 328 has proved irresistible to buyers; mainly those from Western Europe and the Middle East who can afford VIP aircraft but are nevertheless keeping an eye on their money. Aircraft such as the Dornier can also be more practical than their pricier competition: they are fuel efficient, capable of landing on short runways and are able to make the steep climbs that are often unavoidable in Europe.

Fit for purpose
There is little point in buying an aircraft that is too good for its purpose. Jean-Claude Biver, Chief Executive of the luxury watch brand Hublot Geneve, could certainly have bought himself a bigger, faster and longer-range plane than his Embraer Phenom 100. But as he points out, this beautiful little aircraft is perfect for short-distance hops between the capitals of Eastern and Western Europe, where he does much of his business. For transcontinental flights, he travels first class on commercial airlines.

Although Biver says that he enjoys the convenience of his own plane, which is helpfully parked near his office, the Phenom 100 serves mainly as a workhorse. A firm believer in face-to-face marketing, Biver averages around 100 hours a year in the aircraft, travelling mainly between F1 venues, Hublot-sponsored events, celebrity customers’ residences, conferences and seminars. For example, it’s not unusual for him to visit Ferrari’s works at Marinello half a dozen times a year. But primarily, Biver values the Phenom 100 for its practicality. “It’s small and designed for European routes”, he explains. “It’s got the latest generation engine and it’s very economical. It saves me hundreds of hours a year.”

A race for space
The turbo-prop market is also thriving, as demonstrated by Italian aerospace manufacturer Piaggio with its new Avanti Evo. The twin-engined Avanti is remarkably fuel-efficient, has low carbon emissions and, in this updated version, is much quieter. Like the Phenom 100, the Avanti is very much suited to smaller airfields near towns and cities because of its short landing and take-off capabilities.

But the versatility of this turbo-prop has been discovered far beyond Europe. The first aircraft off of the production line in September 2014 went to a buyer in India, and Piaggio says that it is also attracting considerable interest from China. Piaggio’s Avanti may not have the range and speed of the elite jets, but with a maximum speed of 402kt, it’s not too far behind. And the interior space is generous by any standards: with a height of 1.75m and a width of 1.85m, the aircraft is big enough to accommodate up to nine passengers – a capacity that should keep eagle-eyed shareholders happy.

Ultimately, what most corporate buyers want these days is reconfigurable space that makes their investment more defensible to shareholders. As such, manufacturers now minutely analyse cabin space in order to provide the most bang for the aviation buck. For example, Embraer Air’s two new aircraft – the $16.57m Legacy 450 and the $18m Legacy 500 – took seven years to design, with the cabin spaces being reinvented to make them considerably larger than those of competing aircraft. As Jay Beever, Vice President of Marketing and Interior Design for the firm, pointed out at the release of the aircraft last year, “Our plan was to modify and rework areas of the interior to achieve the best results for the customer”. The Brazilian aerospace manufacturer’s golden rule throughout the design process was ‘more for less’.

The result is a cabin that has a flat floor throughout, allowing six feet of headroom – a real luxury in corporate jets. An extra half-foot in the cabin means a lot – at a pinch, the Legacy 450 will accommodate up to nine passengers, with 12 passengers able to squeeze into the 500. If the entire board of a company wants to travel together, that kind of configurability is important.

Office in the sky
Because the main cost comes from the aircraft itself, not even economy-minded companies need to skimp on a bit of inside luxury. It’s become increasingly standard for owners, whether corporate or private, to expect fingertip connectivity, television, plush adjustable seating, well-staffed galleys and individual soft lighting in their aircraft – for example, the Embraer 450’s seats can swivel, and some can be converted into flat beds.

In a more cost-conscious age, corporate buyers should also look for low maintenance costs. As part of its massive order for up to 200 of Bombardier’s latest version of the Challenger 350, fleet owner NetJets demanded that the aircraft be delivered with extra coats of protective paint, as well as dent-proof Teflon strips on the harder-worked exterior edges and interior surfaces.

However, productivity is still the order of the day. Consequently, Lufthansa Technik has introduced a virtual office in the sky for the Challenger 350 – its system functions seamlessly alongside personal electronic devices, and it is equipped with MP3, HDMI and multimedia USB ports as standard. Wi-Fi can also be hooked up, and the system can handle Iridium satellite phones. As such, it would appear that, despite being advertised as a source of convenience and luxurious relaxation, the main appeal of today’s corporate jet is the potential to get even more work done at 35,000ft.

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