UK terror plot broadens market for charter services

 - September 12, 2006, 6:58 AM

Although last month’s foiled terrorist plot to bomb as many as 10 airliners while they were en route to the U.S. from the UK immediately threw airports on both sides of the Atlantic into chaos, business aviation came through relatively unscathed.

On August 10, the day the scheme was revealed, the Department of Homeland Security increased the threat level for U.S.-bound airliners from the UK to severe (red) mostly to conform with the British alert level. Within the U.S., the threat level was raised to high (orange) for all commercial aviation, including all international flights.

Drinks and most other liquids and gels were banned from carry-on items, and British authorities banned all carry-on bags. Screening lines grew long and slowed to a crawl, and hundreds of flights were delayed, diverted or canceled.

For business aircraft operators, the Transportation Security Administration (TSA) initially requested only that they exercise an increased level of awareness concerning any suspicious activity, particularly involving the use of liquids or gels in a suspicious manner on board or in the vicinity of aircraft.

Later, the TSA ordered that Part 91, 91K and 135 operators traveling between the U.S. and the UK would require an international waiver from the TSA and removed the UK from the list of approved portal countries. On August 12, the FAA issued Notam 6/6101, exempting operators of aircraft with an mtow of less than 95,000 pounds from waiver requirements.

On August 18, the FAA issued a National Security Flight Advisory that replaced 6/6101 effective August 23. The advisory modified the weight limits contained in Notam 6/6101 to 100,309 pounds mtow, matching the weight specified in the Private Charter Standards Security Program. Operators of aircraft with an mtow of 100,309 pounds or less were no longer required to fly through portal countries.

As AIN was going to press, the three requirements for operations to or from the U.S. were: operators must file and operate with an active flight plan, aircraft must
be equipped with an operational mode-C transponder and continuously squawk an ATC-issued transponder code, and operators must maintain two-way communications with ATC.

The arrest of 24 suspects in London on August 10 disrupted the plan to blow up airliners in flight. However, the tight new security measures the British government issued snarled air traffic throughout that day and filled airports with crowds of disgruntled passengers.

As London’s main commercial airports (Heathrow, Gatwick, Stansted and London City) came nearly to a standstill, business aircraft were diverted to outlying GA airports such as Farnborough, Luton and Biggin Hill.

In a perverse perspective, it was a good day for business aviation. As might be expected, with the increased scrutiny at airline airports, as well as limitations on what could be carried on board, many travelers began looking beyond the airlines for transportation.

Paul Svensen Jr., COO of Miami-based JetNetwork, told AIN that his company experienced “an immediate uptick of over 60 percent in call volume for flights starting that day.”

He said JetNetwork received calls from travelers stranded in major European cities, from individuals whose JetNetwork FlightCard renewal contracts were stalled and from travelers whose commercial flights were delayed considerably.

With the possibility that restrictions might continue at least into the near term, business travelers are especially spooked at the prospect of not being able to travel with laptops, Blackberries and such.

Svensen said that one of his company’s management teams also had numerous calls from groups that wanted to fly 20 or 25 people at a time.   

“Not that that’s something that we specialize in, but it is certainly as a result [of the plot],” he said. “I believe they said there were 60 RFQs [requests for quotation] in the system that had come in in the last 72 hours. A good chunk of it was from companies who had groups of 15, 20 and 25 people that they needed to move as well.”

Svensen, an early player in the “jet card” business model that has been implemented by all of the major business aircraft manufacturers and fractional jet providers, said there is no question that the trend to private jet charters will continue, because of the limits on what can be carried on board and the extra time to go through security.

“I flew commercially myself last week and I went through three security checkpoints,” he recalled. “I literally had to do the shoes and put things in the bucket three times. I don’t know if that’s typical everywhere, but [that’s] three times to catch the one flight.”

Svensen posited that the security routine is too much for the average business executive who has the means or whose company has the means to fly private aircraft. That should bode well for charter aircraft. “I think this is going to be with us for the long run,” he added.

Million Air Charter president and CEO Roger Woolsey said that requests for quotes have increased by 61 percent since August 10, while the actual charter bookings are the same as or slightly ahead of the pre-plot figures.

“The fact is that if you’ve got more phone calls coming in and are turning into revenue the same percentage of those calls, revenue is up as well,” he said. “So our capture rates actually improved as well over the last couple of weeks.”

Million Air said its charter requests have risen to a level comparable to the holiday season, equally split between domestic and international flights. And business travelers made the most of those reservations.

“Chartering a private airplane is not just for the rich and famous, as most people tend to think,” Woolsey said. “To put it in perspective, the cost is slightly more than a first-class airline ticket. When you consider the incidental costs of flying commercial, such as hotel stays and meals, not to mention lost employee productivity time, the value of charter far exceeds commercial travel.”

He added that productivity is suffering because business professionals lose valuable hours of their workday standing in long lines at airline airports. They also can’t depend on the reliability of airline schedules or the availability of flights.

According to Woolsey, only 14 percent of Million Air’s charter customers are top managers, such as CEOs and presidents. The other 86 percent are middle managers and other professional staff members.

“It’s difficult to predict how long this spike will last,” he said. “But I believe any luxury product or service used once becomes a necessity. Once someone experiences the convenience of air charter travel, they will truly see the value.”

John Winthrop, chairman and CEO of Van Nuys-based The Air Group, predicts this latest incident will have a more permanent effect than 9/11 did. After that attack, he said, there was a knee-jerk reaction for a period of four months and then people decided that the expense was too great.

“My feeling is that this latest incident will have a more profound and lasting effect than 9/11 did because everybody is going to have forgotten 9/11,” he said. “We haven’t seen the burst in business that we saw after 9/11 because it was huge then. We’re up, but it certainly is not night and day.”

He believes that the most recent terror plot will have a more lasting effect because people are generally more rattled by the potential that was there.

“I think that’s scared people much more than 9/11 did,” Winthrop said. “Everybody’s figured out that nobody’s going to hijack an airplane again. This one is different, in my opinion.”

Winthrop estimated that, conservatively, bookings with The Air Group are up by probably 10 percent over where they would have been. “We are a strong international carrier anyway,” he added. “Our fleet is predominantly large-cabin, and we do a tremendous amount of international travel.”

He acknowledged that the phone is “quite busy” and that there is much information gathering under way. “Today’s traveler is much more informed than before and he’s just not prone to doing the jumping and the knee-jerk reacting that he did after 9/11,” said Winthrop. “So if I had to tell you are we up–yes, we’re up. Are we up 50 percent? No.”