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Saturday, Feb 24, 2024

High Fuel Costs Cause Changes

When the economy does well business clients aren’t clamoring to use the propeller-powered planes offered by Sun Quest Executive Air Charter. But when the economy takes a dive suddenly that turboprop doesn’t look too bad. Company President Mark Smith found that out recently as passengers used to flying in the luxurious cabins of private jets are opting for a turboprop that costs half the price. “It is like people getting out of an SUV and into a Prius,” Smith said. Whether a vehicle has four wheels and stays on the ground or has two wings and flies, skyrocketing oil prices are causing headaches. The pain at the pump is not restricted just to those driving cars, as the air charter and management companies across the country have learned in the past six months. The National Business Aviation Association reports that purchases of fuel for turbine jets is down 10 to 20 percent while aviation gas purchases for piston planes dropped by 30 to 40 percent. The plunge in fuel sales results in a drop in takeoffs and landings at some general aviation airports. Pilots have also switched their fixed-base operators based on the prices charged for fuel; are flying at slower, more fuel-efficient speeds; and taking more direct routes to their destinations. As the major air carriers incur billions more in fuel costs, they make up for it with increased fuel surcharge fees, new fees for checking baggage, and by more carefully maintaining aircraft to make the engines run more efficient and repair dings and dents that may cause drag. For years, charter operators have included a fuel surcharge fee, a percentage of the hourly cost to operate an aircraft, because they are reluctant to raise the price of charter flights. “The reason they do that is when the fuel price goes down, they can relax the surcharge,” said Mike Baslock, director of flight services for Pentastar Aviation, which has a facility at Van Nuys Airport. In the greater Valley region, Van Nuys operator Clay Lacy estimated his eponymous fixed-based facility has been selling 25 percent less in fuel to private owners, compared to a year ago. In Camarillo, Steve Lassetter of Sun Air Jets, reported an increase of $1.60 per gallon in the cost of jet fuel since January. Baslock put the increase in jet fuel at about $3 since January. Still, there is no concern that rising price will significantly reduce charter requests. What the operators do expect to see is a change in habits in the type of aircraft that clients request. Lacy’s firm made its name in chartering large jets, such as those made by Gulfstream, but there has been a noticeable shift toward mid-size and light jets. Adding in the fuel surcharge fee, the cost of chartering a mid-size jet compares to what a Gulfstream used to be before the rise in fuel, Lacy said. “[Clients] are going to be cost conscious,” Lacy said. “A $6,000 or $7,000 transaction becomes big money.” By not competing against the larger charter companies such as Lacy’s, Smith said he has positioned Sun Quest in a unique niche that allows it to attract more business in a down economy. There will always be those chartering aircraft for which money is no object, but for those counting costs, Smith finds ways to pass along cost savings. For example, by convincing passengers bound for Las Vegas to bypass McCarran International Airport and instead land at nearby Henderson Executive Airport where ramp space and fuel is cheaper. For those flying to San Francisco, landing in Oakland becomes a cost-effective alternative. When passengers want to get picked up in Santa Monica, persuading them to come to Van Nuys instead produces a savings of about $600, Smith said. “That kind of stuff helps us sell the trip,” Smith said. At Sun Air in Camarillo, Lassetter detects no drop off in business. In talking with pilots, he said, he hears they are becoming more judicious by purchasing the amount of fuel needed to get to a destination and shopping around for the least expensive fuel. For its part, Sun Air maintains the price of fuel it sells by topping off its 70,000-gallon capacity storage tank and fuel trucks before another increase takes place. There may be grumbling about fuel prices but private plane owners and corporate flight departments continue to fly. As commercial air carriers face their own financial woes that result in over-booked flights, reduced routes, infrequent service and high fares, the business traveler has nowhere else to turn. “In spite of fuel prices the airlines have been our best advertising,” Lassetter said.

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