EBACE Convention News

Unique charter program debuts

 - November 30, 2006, 8:18 AM

UK operator Club328 (Booth No. 1672) has introduced an intriguing way to market charter flights through its new SkyBond program. Customers hand over £1 million ($1.75 million) to be put in an escrow-protected bank account in Club328’s name for a six-year period. Club328 gets the interest earned over this time and the customer gets 25 flight hours each year (that is, 150 hours in total) in one of the company’s Raytheon Premier Is.

After six years customers are guaranteed to get their £1 million back, even if Club328 were to go bankrupt. The flight hours are provided with no additional charges and without any aircraft positioning fees. Bondholders do not have any shared ownership in the aircraft so there is no depreciation amount to be accounted for.

Club328 CEO Mike Farge said SkyBond will be attractive to some customers because it assures completely fixed flight hour costs over six years. Customers relinquish the interest that could have been earned on the £1 million, but also avoid paying the tax that would have accrued.

EBACE Convention News’ research into UK retail bank’s savings account rates suggests that the £1 million could earn up to £340,000 in interest over the six-year period. Divided between the 150 hours offered by SkyBond, this equates to a flight-hour cost of around £2,267 ($3,967). However, Club328 maintains that, factoring in the tax that would have been due, the per-hour rate is actually closer to £1,600 ($2,800).

Farge said that Club328’s main motive for introducing SkyBond is to build a solid customer base which it can use to obtain funding from banks to finance fleet growth. He also explained that SkyBond customers who want to fly more than 25 hours a year can either buy more ad hoc hours or join the operator’s SkyClub block charter program.

Club328 currently has two Premier Is–low-time (about 50 to 100 hours each) pre-owned models it bought directly from Raytheon–and intends to add two more by the end of this month.

SkyClubBlock Charter Packages

The Southampton-based company also operates a pair of British Aerospace Hawker 800s and one Hawker 700, as well as a 15-seat Dornier 328Jet and a 12-seat 328 twin turboprop. It is now seeking to add at least one more 328Jet to its fleet, after having acquired the assets of bankrupt manufacturer AvCraft Aerospace last December. The operator is also considering the Hawker 800XP as a possible further addition.

In January Club328 launched SkyClub, a block charter program that offers 10-, 25- and 50-hour blocks of time in the Premier I, the Hawker 800/700 and the 328Jet. Rates are all-inclusive, with no positioning costs or management fees.

The entry-level package includes 10 hours in the six-seat Premier I for £3,000 ($5,250) per flight hour. In the 328Jet, 50 hours is priced at £5,500 ($9,625) per hour. Club328 is also willing to quote block rates for customers with more complex flight profiles who might require time in a mix of aircraft types.

SkyClub customers are required to give 72 hours’ notice to guarantee that their aircraft type is available, although Club328 said, in practice, aircraft would likely be available with just 24 hours’ notice. If the chosen type is not available with 72 hours’ notice, Club 328 will offer a free upgrade or a smaller aircraft at a reduced hourly rate; the same terms apply to SkyBond customers.

Flight hours are bought on an annual basis, but there is no limit to the number of unused hours that can be rolled over into the following year. The flight hours are billed on a gate-to-gate basis, including taxi time.

Farge said Club328 is looking to sign up about six SkyBond clients for each of its Premier Is. It will also likely restrict SkyClub membership to approximately six customers per aircraft to assure sufficient charter capacity.

Support Deal Boosts 328s

Meanwhile, the operator’s new 328 Support Services subsidiary is tapping fresh demand to refurbish and support Dornier 328s. Farge said because prospective 328 operators are now assured the support infrastructure is available, they are proceeding with aircraft purchases following Club328’s acquisition of AvCraft’s assets in December.

Based at the former Dornier/AvCraft plant at Oberpfaffenhofen in southern Germany, 328 Support Services is contracted to refurbish seven 328Jets that regional airlines had parked in the desert. The client for the refurbished jets is said to be a private company looking to remarket the aircraft. At the same time, an unnamed Danish client is said to be negotiating to take another 10 aircraft.

The new subsidiary offers repair and overhaul for the roughly 220 Dornier 328Jets/turboprops in service worldwide, as well as providing spare parts, refurbishment and other engineering support functions. Club328, which has provided jobs for about 100 former AvCraft employees, now holds the type certificates for both the 328Jet and 328 twin turboprop models. The new support operation works alongside Club328’s existing sister company Jet Engineering Technical Support (JETS), which already holds European approvals to provide base and line maintenance for 328Jets and turboprops.

The AvCraft assets purchased also include two other 328Jet airframes that are almost complete and Club328 intends to take these for its own fleet. There are three other partially complete aircraft at Oberpfaffenhofen, but these will be scrapped for parts. The new company, 328 Support Services, has moved all remaining jigs and other hardware out of the main AvCraft final assembly hall and into the adjoining flight shed.

According to Farge, he is looking to help owners remarket the almost fifty 328Jets/ turboprops parked worldwide (most of them owned by U.S. airlines). Club328 may take three more of them, he said. Farge also mentioned that operators can communicate with each other through a new dedicated Web site for Dornier operators: www.dornierclub.com.

Club328 plans to base one or more of its charter fleet at Oberpfaffenhofen, which would allow the UK operator to be more competitive in bidding for flights in the heart of mainland Europe. The airport is located in one of Germany’s wealthiest regions.