CORPORATE TRAVEL : Flights of Fashion – The Pros and Cons of Charter and Commercial

If you’ve ever tried to travel to one of New Zealand’s regional centres like New Plymouth or Napier to deal with an urgent business issue, you’ll know how frustrating it can be to get there on commercial airlines. last-minute booking can cost more than seven-day holiday in Australia. If your meeting plans are uncertain, even travelling to one of the main centres, Auckland, Wellington or Christchurch, on fully flexible fare can be expensive. Your trip might involve an overnight stay and if you’ve got large project on at the same time, the time away from the office can be costly.
This is where the convenience of charter travel is an option, albeit one which may may look expensive on first glance.
Nigel Walkington, manager of Pacific Jets in Christchurch, acknowledges charter flights will always be more expensive than travel with commercial airlines but says the convenience it offers is the main factor driving executives to his business. And sometimes convenience and time-saving can be bigger draw than extra dollars.
“It is very time-consuming to transfer through Wellington. Then there’s the risk of delays and cancellation. Time is of the essence and commercial airlines are just not doing the job for them [companies],” he believes.
Walkington says trip from Christchurch to New Plymouth might cost $10,000 on charter flight. While that is obviously more expensive than commercial option, you will get there in 40 minutes and be able to get home the same day. The cost can be shared if more than one person is travelling.
He cites one situation where CEO wanted to fly to regional centre to sort out an employment dispute. Getting there the next day wasn’t going to be good enough. charter flight provided suitable solution.
Walkington says chartering aircraft is very well accepted form of travel in Europe and the United States of America but it’s “not the done thing” in New Zealand.
“There is negative perception in New Zealand. We have had situations where executives have booked travel with us but then, when someone on the board finds out, they ring and cancel,” he says.
He says this harks back to the 1980s when lot of companies had their own aircraft, and “executives were seen to be spending shareholders’ money wining and dining on corporate jets. But this perception is slowly being overcome and charter air travel is not all wining and dining”.
Air National Corporate operates five British Aerospace jetstream J32s on regional routes. These are 19-seat turbo prop aircraft. It also has three privately owned jet aircraft available for charter.
Sales and marketing manager Richard Bagnall says charter flight is convenient to cover number of destinations in short period of time.
“It can be less expensive,” Bagnall says. “It depends on what value they [executives] place on their time.”
He says an Auckland to Wellington return flight could cost about $12,000 for six people. There’s no inconvenience of waiting in queue at the airport. On the way they could discuss business and plan for meeting. The plane is waiting to take them home whenever they are ready to leave, it won’t leave without them.
Bagnall says Air National Corporate has handful of New Zealand corporate clients who use the service once or twice year. It is used more frequently by people coming from Europe to do business in New Zealand six to 10 times year.
Air Center One manager Rob Leach says privacy is also factor driving executives’ decisions to use charter air travel.
“A lot like to be able to discuss business on the plane without anybody hearing it,” he says, adding that on commercial flight there might be somebody who overhears discussion or sees some paperwork and later phones competitor.
Leach says the convenience of transTasman charter air travel should also be attractive to executives. He gives the scenario of two executives travelling to Sydney – one on commercial flight and the other on charter flight. On commercial flight, the executive is paying the taxi driver or organising long-term parking at the same time the charter flight’s doors are closing and the engines are starting. Ten minutes later the charter flight is at the end of the runway ready to take off while the executive on the commercial flight is in the check-in queue. The executive on the commercial flight goes upstairs at the international terminal in Auckland to clear customs and the charter flight has reached cruising altitude. The charter plane has been in the air 30 minutes by the time the commercial flight is called and the executive goes to the departure gate. It’s 20 minutes before everyone has boarded the commercial flight and by the time the plane is at the end of the runway ready to take off, the charter flight is half way across the Tasman Sea. When the commercial flight reaches the half-way point, the executive on the charter flight is sitting in Sydney office.
“I don’t know why more business people don’t look at the charter option,” Leach says.
Lufthansa German Airlines’ sales and marketing manager for New Zealand and the Pacific Islands, Anton Musin, says New Zealand business executives spend lot of time in Europe where Lufthansa’s charter service is very popular.
“It is predominantly high-net-wealth individuals using it in high volumes,” he says.
“Shareholders and people involved look at that travel and think it is an over-the-top luxury and ask: ‘Is it required?’ but worldwide it is on the up. In Europe and the US they have worked out it is better.”
Musin says New Zealand companies need to look bit closer at the sums.
“How much time are we spending away from business by doing travel in the standard format? Then if you replace standard travel with hiring something to get there quickly, in some cases it will be very close to saving money. It is lot closer than people realise.
“If you are the last person booking and paying full business class fare, it is extremely expensive. If you had to do that two or three times to get business completed, it can play big part in the sums. It might be quicker to take very short private jet flight and get back to business.”
Some companies are also using charter flights as treats or incentives for sales teams.
Dennis Thompson International director Dennis Thompson says owning an aircraft might be something companies start to look at again.
“More and more people are being inconvenienced by commercial travelling, security and lack of facilities. The busy executive finds that bit difficult to deal with.”
He says the Cessna Citation brand is very popular. Cessna Citation Mustang Very Light Jet (known as VLJ) which can seat six people averages US$3 million for new aircraft. Thompson says aircraft increase in value over time, which can be benefit. For example, Cessna Citation Sovereign which seats up to 12 people is US$17.5 million new. 2005 model is now for sale at US$15.5 million. When it was built, it was worth $15.2 million. It has increased in value by $300,000.
Air NZ general manager New Zealand region Cam Wallace admits that charter flying offers degree of flexibility but believes the airline’s prices, schedule, frequency and network is compelling. He says Air NZ has not seen huge growth in corporate travel and believes charter flights are niche market.
“There would have to be significant travel to make that work,” he says.
Wallace says Air NZ has the needs of the corporate traveller pretty well covered. The airline offers Koru Hour where, during peak travel (early morning and evenings), corporate travellers are offered food and beverages while daytime passengers receive snack. Seat pitch – distance between seats – is progressively being increased in the front 10 rows of Air NZ’s aircraft from about 83 centimetres to about 89 centimetres to meet the demands of corporate travellers.
Wallace is also excited about some new technology planned for introduction before Christmas this year which will speed the executives’ journey through the airport – “so