With Wheels Up’s recent listing on the NYSE, a significant and very public expansion of the business jet industry is officially underway.
While the heavily regulated business jet industry isn’t a perfect fit for a typical gig economy takeover, the publicity accompanying the NYSE announcement generates more opportunities for jet owners seeking to list their aircraft in emerging charter marketplaces. How profitable that could be depends on the owner’s flexibility and risk tolerance.
But first … can the business jet charter industry be “Uberized” – made open to any aircraft and pilot? Not at all. Taxi drivers across the world protested as Uber dumped thousands of non-commercial drivers and cars into their local territories, ignoring state and municipality permitting laws, and using its “largesse to change the laws it was breaking” (Vice, September 11, 2019). But aircraft operations are far more complex and federally regulated to ensure international operational safety. So a web-based marketplace offering independent non-compliant aircraft for hire simply won’t work.
Here’s why: with that regulation comes intense scrutiny, more so since the rise of online charter marketing activity. Consequently, the FAA has stepped up enforcement actions against the recent increase in illegal charter and illegal flight-sharing services. (Listen to the BAA Above & Beyond Podcast: “Illegal Charter – Is It Worth the Risk?”). In 2019, the FAA’s Safe Air Charter Operations task force started issuing civil penalties against flights operated without a commercial license (i.e. Part 135 certificate), and warned pilots of the risks to their own licenses for providing “ride-sharing” via online marketing platforms. The FAA has made it clear that non-commercial flight operations are not allowed to operate aircraft for hire.
But for those aircraft owners listed on a legal, Part 135 certificate, charter marketplaces could offer new opportunities to sell hours and offset some aircraft costs. Despite recent industry consolidation efforts, there are still nearly 1900 individual charter companies, operating almost 5,700 fixed wing turbine aircraft, according to Argus International. The industry remains highly fragmented. Inexperienced consumers need a place to research and browse aircraft in their geographic area, and book with ease, with assurance that the flight will be operated by a safe, properly credentialed charter service.
The crux of a successful business jet marketplace is attracting enough buyers and suppliers in one place to transact travel arrangements. Online charter marketplaces today fall into three categories:
- Broker-operator marketplaces,
- Retail-operator marketplaces, and
- Hybrid marketplaces.
Broker-operator marketplaces provide zero transparency to retail charter buyers as these sites are restricted to charter brokers and certificated aircraft operators who match client flight requests with aircraft available on legal FAA charter certificates. Retail-operator marketplaces allow fleet operators to list only the aircraft on their certificate, so the charterer can buy directly without a third-party broker intermediary. Hybrid marketplaces offer the charterer access to owned and managed fleet operators and to non-operating charter brokers. This last seems to offer the most flexibility, variety, and availability to consumers.
So what is the most effective, efficient way for owners whose aircraft are operated on a Part 135 certificate to take advantage of the growing demand for business aircraft charter? It depends on their goals.
For owners looking for maximum charter hours and potential access to a larger fleet, enrolling with an aircraft management company heavily involved in marketplaces is key. The fewer owner-dictated restrictions, the more potential revenue. Owners who want to limit pets – or rock bands – on board, or who want to have final approval on each trip, or limit when the aircraft is available for charter, will find it much harder to build hours on their plane.
As demand for business aircraft travel grows, and more brokers and retail operators join the marketplaces, aircraft owners seeking to offset costs via third party charter revenue must make the transaction as direct and uncomplicated as possible. BAA