Line between bizjet and airliner blurs

 - October 11, 2007, 9:28 AM

The scheduled airlines, after years of seeing business-class travelers lured away by business aviation operators, are fighting back.

Actually, it’s only one airline, but interestingly enough its weapon of choice is right out of the corporate aviation arsenal–the widebody business jet (not widebody in the airline sense, but wide by business-jet standards). And the success of the resulting all-business-class service by partners Lufthansa German Airlines and PrivatAir, using a Boeing Business Jet, suggests that it is the right weapon at the right time. For the past decade, business aviation operators have been developing more ways to bring business travelers under their umbrella, through such programs as fractional ownership and block charter. Lufthansa is offering business travelers yet another alternative.

A Lufthansa source said the idea was promoted within the company when a search began for ways to accommodate the rising demand for business-class seats between Düsseldorf and New York. Unofficially, the successful operation of several all-business-class shuttles run by major corporations offered Lufthansa marketing mavens a model for serious consideration.

An all-business-class shuttle is nothing new. Corning Inc. has been operating one since 1994. The Corning, N.Y.-based company now has two Dornier 328 twin turboprops in service. It operates two round trips a week to Bedford, Mass., two round trips a week to Newark, N.J., two round trips a week to Wilmington, N.C., and two weekly round trips combining the destinations of Lexington, Ky., and Hickory, N.C.

More remarkable is the DaimlerChrysler Aviation operation, using an all-business-class Airbus A319LR on a nonstop run between Stuttgart, Germany, and Pontiac, Mich.

(Airbus distinguishes among its A319 products; the A319 is the airliner version, the A319LR is essentially the same airplane but with four auxiliary fuel tanks, and the Airbus Corporate Jetliner [ACJ] is identified by the presence of six auxiliary fuel tanks.) In a recent interview with AIN, marketing director Jonas Kraft noted, “Some 35,000 of the 160,000 [DaimlerChrysler] employees in Germany can be considered frequent travelers.” The 44-seat A319LR flies five days a week, delivering westbound passengers from Stuttgart to Pontiac in time for lunch, and taking eastbound passengers back on an over-night flight. The schedule is almost identical to that offered by the Lufthansa/PrivatAir BBJ. According to Kraft, “It has been very successful,” maintaining a load factor approaching 80 percent. He added that the dispatch reliability has exceeded 99.9 percent.

The Swiss/German Connection
Lufthansa promoted the idea of an all-business-class scheduled service to Switzerland-based charter and aircraft management specialist PrivatAir some 18 months ago, and the two companies launched the service in the spring of last year. The joint venture put an all-business-class BBJ into service, connecting the German business center of Düsseldorf and Newark, N.J., just a 30-minute drive from downtown New York City.

The cost of a ticket is the same as the price of a business-class seat on one of Lufthansa’s larger, multi-class airplanes. The service is all-business-class in all respects, from the more spacious 48-seat configuration to personalized service by four flight attendants. In fact, it may be slightly better, with a cappuccino machine and individual videotape players with about two-dozen entertainment offerings. Aisle cart service is only for beverages. Meals are individually delivered.

The Lufthansa/PrivatAir partnership is a wet-lease agreement under which PrivatAir provides the aircraft, crews, maintenance and insurance. Cockpit and cabin crews also receive some training from Lufthansa to ensure the seamless service expected by customers who fly business class on Lufthansa’s multi-class aircraft. Lufthansa establishes tariffs and manages scheduling and ticketing.

Successful? Lufthansa thinks so. According to the company’s Newark station manager, Jens Dietrich, the aircraft load factor is averaging about 60 percent and the aircraft often flies full. On a recent flight, passengers were seen greeting one another and crewmembers, with the easy familiarity and good humor of established traveling companions. Dietrich said many of the passengers are frequent fliers on the BBJ.
It has been successful enough to prompt Lufthansa to add two more all-business-class airplanes, both Airbus A319LRs and both in a 48-seat configuration.

The A319LRs will be leased by PrivatAir and operated by the Swiss company on behalf of Lufthansa under the same wet-lease agreement as the BBJ. The deal includes total technical support by Lufthansa Technik in Hamburg. Lufthansa Technik was also contracted to perform the cabin completion work.

The additional aircraft, along with the BBJ, will allow Lufthansa to open up two new nonstop routes, one between Munich and Newark and another between Düsseldorf and Chicago O’Hare Airport. The first A319LR was delivered from Lufthansa early last month in anticipation of service on the Düsseldorf-Newark run starting on May 22. The second bizliner is scheduled for delivery this month and will serve the Düsseldorf-Chicago route. At press time, the BBJ, which launched the Düsseldorf-Newark service, had already been reassigned to the Munich-Newark run. Subject to slot agreements, the Munich-Newark flight will operate daily except Saturday. The Düsseldorf- Chicago flight will operate daily except Wednesday. The Düsseldorf-Newark run will continue to operate daily except Tuesday.

As for the cabin amenities, there are some upgrades, including new seats with a 160-degree recline feature and laptop power ports at each seat. Lufthansa and PrivatAir are also considering discarding the older videotape personal entertainment systems in favor of DVD players.

Like the BBJ, the A319LRs are equipped with auxiliary fuel tanks to extend the range to allow the nonstop transatlantic service.

While Lufthansa is the only airline flying an all-business-class scheduled service, a New York-based Lufthansa spokeswoman told AIN, “It’s something the industry is watching very closely.”

All Business Class with a Twist
Indeed, Lufthansa is actually the second airline to offer an all-business-class service. The first was a small Chicago-based airline called Indigo, which began providing all-business-class service between Chicago Midway Airport and New Jersey’s Teterboro Airport three years ago, but with a twist. Indigo operates as a “public charter operator,” authorized by the Department of Transportation to do business under Part 380 of DOT regulations as an “indirect” air carrier. The Part 380 authorization allows it to deal with the public and sell seats, while Indigo’s sister company, Air-Serv, holds the Part 135 certificate that permits it to “physically and directly” operate the aircraft on behalf of Indigo.

The Indigo service proved successful enough that in March of this year, the company relaunched the service with an Embraer Legacy Shuttle with 16 seats in an all-business-class configuration. The company has since put a second Legacy Shuttle into service and hopes to have seven flying by late summer. According to chairman and CEO Pete Pappas, the company has a firm order for a total of 25 Legacy Shuttles and options for another 50 aircraft.

The one-way fare from Midway Airport to Teterboro is $749, including taxes and fees. It is comparable to the walk-up, one-way ticket price range of a coach seat on a scheduled carrier, but considerably below a first-class ticket, which typically starts at more than $1,000. Additional destinations being considered include Hartford, Conn., White Plains, N.Y., and Philadelphia. Service to Westchester County Airport in White Plains, N.Y., is scheduled to begin in mid-June, using the Westair FBO terminal and services.

Boeing Launches 717 Business Express
More recently, Boeing announced at the European Business Aviation Convention & Exhibition last month that it is offering its Boeing 717 regional jet in a shuttle
configuration known as the 717 Business Express. The company hopes to find a ready niche among corporations, as well as a market among the airlines for a short-haul, all-business-class airplane with more room than the BBJ or ACJ.

As incentive, Boeing has lowered the price from $37 million for the airliner to $27 million for the 717 Business Express. Boeing believes it will be a fiscally attractive alternative to a green ACJ or BBJ, priced at about $40 million and $37 million, respectively. It is also extending the airframe warranty from three years to five years and is offering other incentives.

In the corporate shuttle configuration, the aircraft would typically carry a maximum of about 60 first-class passengers in a four-abreast, center-aisle configuration. In that layout, the aircraft would have a max range of about 2,060 nm. Individual laptop computer power ports would be standard at every seat. Boeing might offer as optional cabin equipment satcom, Boeing Connexion high-speed Internet service and satellite-direct television.

Boeing v-p Tom Lindberg also noted that in its shuttle configuration, the aircraft mtow is not likely to exceed 100,000 pounds. This would allow the twinjet to operate at a greater number of airports, including Teterboro, one of the nation’s busiest corporate destinations.

With the addition of an auxiliary fuel tank in the belly, the range of the 717 Business Express would be increased to 3,140 nm, giving it U.S. coast-to-coast capability. The interiors for the bizliner would be installed by Boeing at its Long Beach, Calif. plant. The airplane in its airline guise meets Stage 3 noise-abatement requirements, and in a lighter-weight shuttle configuration, said Lindberg, it would be even quieter.

Somewhat removed from the more typical all-business-class configuration is an ACJ that was delivered to Qatar Airways in 2001. The aircraft is in service as the “Oryx Express,” named in honor of the Arabian oryx, a graceful antelope native to the Arabian Peninsula and now almost extinct.

Strictly speaking, the Oryx Express, with a cabin completion by Airbus’ EADS Sogerma Services subsidiary, is not quite all business class. While the aft section of the cabin is in a business-class shuttle seating layout for 16 passengers, the forward cabin section carries 20 in a VIP/executive configuration. With auxiliary fuel tanks, the aircraft has a max range of 4,700 nm.

A 10-year Market for 400 Airplanes
At the Large Executive & VIP Aircraft Conference last December in Hamburg, Airbus expressed confidence that market demand for widebody jets suitable for corporate shuttle and all-business-class operations would continue to grow.

According to Arnaud Martin, program director of corporate and VIP aircraft for Airbus, the requirement for bizliners over the next decade would approach 400 aircraft.
News from PrivatAir would seem to support Airbus’ projections. PrivatAir CEO Greg Thomas said his company has been approached by more than 30 airlines to do something similar to the Lufthansa/Privat- Air all-business-class service. But he also noted that how these talks translate into reality will depend on the economic recovery of the global airline industry.

Lufthansa executives who had worried that the new all-business-class service might have a negative effect on the sale of business-class seats in its multi-class aircraft have been pleasantly surprised. Load factors, said an executive, are actually higher than expected in the all-business-class BBJ, while the effect on Lufthansa’s other business-class seats has been minimal. Rather than competitive, the all-business-class has been complementary, the executive claimed.

Will other airlines follow the model of Indigo and Lufthansa/PrivatAir? “I think almost every airline at some point or other has looked at the idea of specialized service,” said Indigo’s Pappas. He noted that in terms of crowded airports and long lines at security checkpoints, certainly there is incentive for some U.S. carriers to consider it. He also pointed out that the proliferation of all-coach, low-cost airlines that appeal to the leisure traveler has further added to airport congestion, making the idea of all-business-class travel that much more attractive.

However, he doubts that a large national carrier would attempt to launch an all-business-class service. But it might be an attractive opportunity for a startup carrier, he said.