Shuttle operations: An evolution coming of age

 - December 17, 2007, 11:45 AM

The corporate shuttle. It starts “here,” goes “there” and comes back again on a regular schedule. Not unlike a weaver’s “shuttle,” efficiently pulling the thread back and forth to create a work worthy of the weaver’s craft. And that, in essence, is what the corporate shuttle aircraft does.

But nothing is as simple as it sounds, and the concept of the corporate shuttle has evolved considerably since Ford began regular operations between Dearborn, Mich. and Chicago in the mid-1920s, flying mail and parts in a Ford-powered Stout trimotor.

There are no reliable estimates of the number of traditional corporate shuttle aircraft in service. Even NBAA, which defines the corporate shuttle as “a scheduled rather than on-demand service,” is unwilling to hazard a guess. But there is little doubt that the number is substantial and growing.

Among reasons for the growth of the corporate shuttle are the terrorist attacks of 9/11 and a sagging U.S. economy in recent years. The former created longer lines and lengthy waits as airport security measures became more pronounced. The latter prompted the airlines to reduce or cancel service to destinations producing marginal profit.

As the economy continues its slow recovery, the airlines are beginning to add aircraft and city pairs, but business travelers are unlikely to see much of an improvement in service. And the lengthy lines at airport security chokepoints will only grow longer.

Analysts believe the number of travelers this year will exceed pre-2001 levels. As the number of travelers increases, airports will become more crowded and airlines, clinging to the hub-and-spoke concept, will increase service, creating more and longer delays. The DOT is already reporting that in 2004, one in five flights arrived at its destination 15 minutes or more behind schedule, and that a quarter of all late flights were more than an hour behind schedule. In this environment, business aviation industry observers speculate that as the economy improves and the need for business-related travel grows, companies are going to look more seriously than ever at the corporate shuttle as a means of moving groups of employees around the country on a regularly scheduled service.

At a seminar last year at the NBAA Convention, a lot of companies expressed an interest in a shuttle operation. But at that point they were encumbered by fiscal restraints, said George Reich, a Chicago-based independent consultant to corporate aviation. However, he added, “As the economy rights itself and those restraints are relaxed, these companies and others are going to seriously consider the corporate shuttle.”

And there are more than a few examples for them to emulate.

DaimlerChrysler’s Transatlantic Shuttle

Outside the U.S., DaimlerChrysler launched a long-distance, corporate shuttle five years ago to link its German-based interests with those in Detroit. Today, the company’s Airbus ACJ in shuttle configuration flies five days a week between Stuttgart, Germany, and Oakland County International Airport in Pontiac, Mich. The 44-passenger ACJ is owned by DaimlerChrysler but operated by Lufthansa Airlines. The passenger load is typically 85 percent.

A major East Coast company operates two Brazilian-built Embraer EMB-135s configured for 37-passenger corporate shuttle use, primarily to Eastern and Midwestern cities. The shuttle averages about 20 passengers per flight, and according to a spokesman, “If I talk to you a year from now, it’ll probably be closer to 25 passengers per flight.” Approximately 10 percent of the flights are full, and the dispatch reliability is better than 99 percent, he added.

Penske Jet, a subsidiary of Penske Corp., took delivery earlier this year of a Challenger 800. The Waterford, Mich., company operates the 42-seat twinjet as a corporate shuttle for Penske Racing, carrying Penske teams across the country for the motor racing Indy Racing League and Nascar Nextel Cup Series. The airplane was equipped to meet Part 121 requirements, with the idea that it could be easily converted back to its airline configuration and thereby maintain its residual value.

Elmira, N.Y.-based Corning has been operating two Dornier 328 turboprop twins in a shuttle service for a decade. Monday through Friday, a company aircraft makes a morning and afternoon run between Elmira and Newark, N.J., and twice a week a 328 provides scheduled service to Wilmington, N.C., Blacksburg, Va., Hickory, N.C., Lexington, Ky. and Wilmington, N.C.

Bill Schultz, director of aircraft operations, said the Newark service operates at 70- to 75-percent passenger capacity. “The other runs average a little less–maybe 60- to 65-percent capacity.”

Schultz figures the shuttle service saves the company “a significant amount annually” in terms of direct dollar-to-dollar costs, and as much as 30,000 man hours annually.

Schultz said the company has not considered upgrading to the Fairchild 328Jet version of the Dornier 328 turboprop. He notes that the Dornier 328 is “a very speedy turboprop, and considering the shorter stage lengths, it’s more suitable than the 328Jet.”

The corporate shuttle operation can take several forms. The traditional is that of a company-owned airplane, operated by and for the company. Or the company might own the aircraft but have the shuttle service run in whole or in part by an aircraft management and charter operator. Almost as common in recent years is for a company to enter an agreement with the aircraft management and charter operator to provide the airplane and manage the entire shuttle operation.

One of the most recent shuttle operations is that of Canada’s Platinum Jet Air. The company expects to begin operations in January with a Fokker 100CS. The aircraft will offer shuttle service between Calgary and Toronto. A second aircraft, configured like the first airplane for 48 passengers, is expected to enter service by the middle of next year. Both airplanes are reconfigured by Fokker Services and leased from UK-based Aravco. Priced between $11 million and $15 million, the airplanes will have a range of about 1,800 nm.

Ultimate JetCharters, on the other hand, has found the 328Jet to be ideal for shuttle operations. The North Canton, Ohio, aircraft management and charter operator manages three 328Jets. Two are committed primarily to corporate shuttle contracts on behalf of the owners. The third is managed in on-demand charter service but is used most often as a shuttle for sports teams. One aircraft has auxiliary fuel tanks, giving it a range of about 1,200 nm. The other two, with standard fuel tanks, have a range closer to 900 nm.

328Jet Fills Demand

Ultimate JetCharters owner John Gordon said the company’s first 328Jet, acquired in 2001, was configured for either executive/VIP or shuttle use and could be converted in about 10 hours (60 man hours). When the company discovered that it was converting the airplane from a 29-seat shuttle to executive/VIP configuration only three or four times a year, it ordered the second and third 328Jets purely as shuttles.

Gordon said that of 1,700 dispatches, only two flights have been canceled–one by a mechanical problem and another related to fuel contamination. The corporate shuttle flights average a little less than two hours in length.

According to v-p of sales and marketing Jeff Moneypenny, Ultimate JetCharters had briefly considered Embraer’s Legacy Shuttle. The deciding factor was cabin size. While the passenger capacity is comparable, the 328Jet offers two more inches of headroom, four inches more cabin width and provides cabin access to a 226-cu-ft aft baggage storage bay.

Ultimate JetCharters’ 328Jet fleet is occupied with corporate shuttle work about 85 percent of the time. The other 15 percent is primarily spent in charter work for college sports teams. “We’re definitely keeping ’em flying,” said Gordon. Busy enough that the company hopes to add another 328Jet by year-end.

There is no one aircraft that represents the perfect corporate shuttle, according to NBAA. It depends on the needs of the customer, and aircraft in shuttle service range from Airbus ACJs and Bombardier Challenger 800s to Cessna Citations, Learjets and even Raytheon Beech King Air turboprop twins.

Going to Part 121
Corporate shuttles are typically operated under Part 91 or Part 135, but Aerodynamics, Inc. (ADI) of Detroit has taken a different approach. “The post-9/11 picture has generated a lot of interest in corporate shuttle operations. Some of our clients came to us and asked if we would operate a larger shuttle aircraft for them,” said Brad Bruce of ADI. “We researched the entire idea and came to the conclusion that of the several obvious possibilities, the best was for the client to own the airplane and for us to operate it under a Part 121 certificate.

“It was a question of how much regulatory oversight the FAA would impose, because in such an operation, you are in essence operating your own private airline.”
Bruce said having Part 121 certification “has added to our business, and we now have shuttle bases in about seven different cities. We actually operate schedules to coordinate with a company’s connecting charter flights.

“We now have a combined Part 121 and Part 135 operation,” explained Ultimate JetCharters owner Gordon. “We operate a Jetstream 41 as a corporate shuttle under Part 135, but the Fokker F28 and the EMB-135 are operated under Part 121.”

To meet the requirements of Part 121, ADI also has its own TSA-approved support personnel, at Oakland County International and its other shuttle support sites. In addition, ground support at Oakland also includes several licensed dispatchers, as well as dedicated safety and training directors.

“We’ve looked at the future of corporate shuttle operations and we see it going in this direction,” said Bruce, adding, “We want to be in a position to lead, rather than follow.”

Airlines Get into the Business
After years of seeing profits on their lucrative business-class seats dwindle, a number of airlines have sought to regain losses by creating what amounts to an all-business-class shuttle service, with the business aviation industry as a perhaps unintended beneficiary.

The first was Lufthansa. Several years ago the German carrier took a hard look at the success of the DaimlerChrysler transatlantic shuttle and saw a unique opportunity. In the spring of 2002 the airline launched an all-business-class service as a joint venture with Swiss aircraft charter and management specialist PrivatAir. Using a Boeing Business Jet configured for 48 passengers, the carrier offered an upscale, six-days-a-week scheduled service between Düsseldorf, Germany, and Newark, N.J., keeping the cost of a round-trip ticket the same as that of a business-class seat on one of Lufthansa’s larger, multi-class airplanes, at about $5,000.

The Lufthansa-PrivatAir partnership was apparently successful. The airline has since added two aircraft–Airbus A319LRs with four auxiliary fuel tanks–in all-business-class configurations for Munich-Newark and Düsseldorf-Chicago transatlantic service. (The BBJ is now on a Munich-Newark schedule.) According to a Lufthansa spokesman, load factors on each route are averaging 70 percent, well in excess of the break-even point.

The Lufthansa-PrivatAir partnership is a wet-lease agreement under which PrivatAir provides aircraft, crews, maintenance and insurance. Cockpit and cabin crews receive some training from Lufthansa to ensure continuity with business-class service on its multi-class airplanes. Lufthansa establishes tariffs and manages scheduling and ticketing.

The success has caught the attention of other major carriers and now Swiss International Airlines has entered the fray, also with PrivatAir as its partner. The airline will begin offering nonstop, all-business-class service between Zurich and Newark in January. PrivatAir will operate the 56-seat BBJ under a wet-lease agreement similar to the contract it has with Lufthansa.

“The all-business-class concept has proved to be an outstanding success since we launched our first regular transatlantic routes in 2002 and 2003 in collaboration with Lufthansa, and this new partnership with Swiss is a logical step forward,” said PrivatAir CEO Greg Thomas.

Thomas said he sees a bright future for more such variations of the corporate shuttle theme, and has already talked with a large number of airlines about similar operations, “including all the U.S. majors.”

According to Thomas, PrivatAir brings to the airline environment considerable experience with both the traditional shuttle operation and high- end executive/VIP aircraft service. The Geneva-based company has operated a corporate shuttle, now a Citation II, for 18 years for Colgate- Palmolive. PrivatAir also operates twice-daily shuttles for Airbus Industrie using two 126-seat Airbus A319s.

“We bring to the airline shuttle passenger the same advantages that are found in our typical executive/ VIP aircraft operations,” said Thomas. This includes an enhanced check-in and boarding process, four flight attendants, individual videotape players with about two-dozen entertainment offerings and a cappuccino machine. A Lufthansa spokeswoman said the airline has plans to upgrade the standard business class seat to a more comfortable, fully reclining seat, a full cabin entertainment system and Lufthansa’s FlyNet high-speed Internet connection.

The success of the all-business-class shuttle, combined with the demise of the supersonic Concorde, has encouraged yet another variant of the corporate shuttle. At the Farnborough Air Show this summer, Canadian aircraft manufacturer Bombardier announced that it is launching an on-demand high-speed, fixed- price transatlantic service using the Global Express ultra-long-range business jets from its Flexjet Europe operation. In a subsequent interview with AIN, Bombardier v-p of business aircraft James Hoblyn explained that while the new service is on-demand charter, “We recently did a presentation to a customer for a transatlantic shuttle configuration of the Global Express.

“It’s something we’re actively pursuing,” said Hoblyn. He pointed out that the new Global 5000 derivative of the Global Express might also be considered as a corporate shuttle.

Not everyone is so convinced that an aircraft created specifically to serve the business aviation market would be adequate for the high-demand usage of a shuttle, which typically logs about 1,100 or 1,200 hours a year. Thomas said his company had tried a shuttle operation with a large business jet and saw the maintenance requirement double. “But maybe that was just a bad year,” he added.

Hoblyn, however, pointed out that there are already Global Express operators who “are well north of 1,000 hours a year, and we have successful life-limit tests now of 80,000 cycles, well past the [Global’s] operational lifetime.” He further noted that the airplane was originally designed to MSG-3 airline standards so as to create a more efficient and logical maintenance process.

Airliner Conversions Best Fit for the Mission
While the role of the Global Express as a long-range corporate shuttle remains to be seen, it does appear that corporate shuttles come in a broad range of aircraft types, from King Air twin turboprops to airliner conversions.

If there is any single aircraft type that dominates it appears to be the airliner in a shuttle configuration.

Dow Chemical uses two former airliners reconfigured for shuttle use, a Fokker F28-4000 twinjet and a Jetstream 41 twin turboprop. Echo Bay Mines flies a Boeing 727-100 on its twice-weekly flights from Edmonton, Alberta, to its Lupin mine facilities just south of the Arctic Circle. And Bombardier uses a Q200 on daily runs between its Montreal and Toronto facilities.

Gordon of Ultimate JetCharters believes the most common shuttle niche appears to require a twin turboprop or jet with a seating capacity of 20 to 30 passengers and nonstop range of about 1,000 nm.

Bombardier’s Q200 shuttle between Montreal and Toronto carries 32 passengers in an airline configuration. Hoblyn said the airplane typically flies with about half the seats occupied, which he said is well past the break-even point. Without discussing actual numbers, he said the load factor for break-even is “very, very low.”

In terms of demand, Moneypenny said the market seems to be for aircraft with a passenger capacity of 15 to 30 people and that for Ultimate JetCharters, the 328Jet is filling that niche “very nicely.”

Bombardier’s Challenger 800 is a business jet variant of its highly successful Canadair CRJ regional airliner, and of the 20 Challenger 800s currently in service, 11 are doing duty as corporate shuttles.

Embraer’s corporate variant of the EMB-135 appears to be gaining popularity in a shuttle configuration. A spokeswoman for the company said nearly 25 percent of those being delivered to date have been Legacy Shuttles. “We have a lot of interest from U.S. companies regarding the shuttle concept,” she said.

“The advantage of the corporate shuttle over scheduled airline service is obvious,” said Ron Craig, a shuttle operation chief pilot and co-chair of NBAA’s shuttle group. “It’s door-to-door service, rather than point-to-point, and the company controls all facets of the trip.”

Control is a major factor in choosing the corporate shuttle as a means of efficiently moving groups of employees from one point to another.

“It allows the company control of all facets of its travel needs,” said Craig–costs, schedules, destinations, security and safety.

From an aircraft management and charter operator’s perspective, said ADI’s Bruce, “The idea is to create a shuttle strategy that fits the client’s needs. That means planning a shuttle schedule to meet the company’s needs, rather than planning the company’s needs to meet the airline’s schedule.

“You have to remember that you’re not moving airplanes, you’re moving people. And if you do it right, the corporate shuttle becomes a long-term company asset.”

Doug Schwartz, director of shuttle operations for a major East Coast company, said the corporate shuttle makes perfect sense, in the right place, at the right time, for the right company. “If anything surprises me, it’s that more companies aren’t doing it,” he said.