18/06/2008 - 22:00

Private jets more for go than show in boom

18/06/2008 - 22:00

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Western Australia's resources boom has fuelled the emergence of one of the more visible signs of growing affluence - corporate jets.

Private jets more for go than  show in boom
OPTIONS: Retailing at about $US2 million, the Eclipse 500 is considered the world’s lowest cost twin jet.

Western Australia's resources boom has fuelled the emergence of one of the more visible signs of growing affluence - corporate jets.

Often thought of as a status symbol for the mega-rich, corporate jets are increasingly being seen as a useful business tool, especially with an increasing range of charter options making them more accessible.

According to the Australian Business Aircraft Association, the number of registered business jet aircraft in Australia has increased significantly over the past four years, from 80 in 2004 to120 in May 2008.

And while the numbers of corporate jets sold in WA is still only small - only a handful each year - industry sources say they have noticed a significant increase in sales over the past few years.

"We've had more [corporate] aircraft sold in the past five years that we have in the previous 25 years," one told Business Class.

"Its not just a rich man's toy; for some people it is, but for the most part people who have them are pretty hard-nosed and wouldn't have them if they couldn't justify their use."

Jets of choice in the local market include the popular 10-seater Cessna Citation Sovereign, priced at a little over $US20 million, and the 10-seater Bombardier Challenger 604 for roughly the same price.

About $US12 million will buy you a new Hawker Beechcraft 900XP, with Kerry Stokes' Australian Capital Equity having bought one of these.

Further up the scale, about $US30 million will secure a Gulfstream G-IV. This is Burrup Fertilisers chairman Pankaj Oswal's ride of choice (the aircraft was registered through a subsidiary, Garuda Aviation Pty Ltd, late last year).

Outside the jet market, sales of light piston engine or turboprop corporate aircraft, such as the 10-seater Cessna 402 and six-seater Beechcraft Baron, have also performed strongly in the local market.

The growing demand has brought a number of new players into the sector.

In recent years, two companies - Wellard Aviation and Maxem Aviation - were established to provide a full management and charter service, with a third local company looking to enter the market later this year.

Melbourne-based Executive Airlines plans to establish an executive jet facility at Perth airport later this year.

Tim Roberts' AvWest is one of the sector's dominant players, boasting an extensive corporate jet and private terminal at Perth Airport.

AvWest general manager Mick Rowbottom says while the growth in corporate jet sales is a reflection of the wealth being created by the resources boom, it also reflects the changing nature of doing business.

He says corporate jets allow executives to set their own schedule, avoiding the delays and queues at the domestic airports. It also affords high-profile businesspeople extra privacy and discretion while travelling.

On board, passengers have access to fold-out boardroom tables, as well as internet, phone and fax, allowing them to do business anytime.

"It's really about the itinerary. A lot of people want the ability to work in comfort while flying in private surrounds and sleep if required, and not to schedule through major airports to get to their destination," Mr Rowbottom said.

Avwest has experienced strong growth over the past 18 months. Bringing its first aircraft online in 2003, the charter fleet now comprises four wide-bodied corporate jets, including a Challenger 604 and Gulfstream IV, two corporate helicopters and two Cessna 208s.

Of those aircraft, three jets, one helicopter and one small aircraft were bought in the past 18 months.

It is currently looking to buy another two large corporate jets, one outright and one on behalf of a client.

Maxem Aviation started in 2005 and has been responsible for the management of Cessna Citations, a Falcon 900 and a Learjet 45 for both domestic and international operations.

It is currently managing the purchase and service operation of a Challenger 601 jet, a Cessna Citation, and a Pilatus PC12.

Managing director Peter Nadilo said the increasing frequency of business travel and amount of time spent going through commercial airport terminals had made a corporate jet an attractive proposition for time-poor executives.

"It's basically a time machine - how quickly you can get from A to B," he said.

"But it's not for the faint-hearted. The capital costs and the operating costs are definitely at the high end."

While the purchase and running costs remain too high for most, a new fractional ownership service could lower the cost of jet ownership.

Co-founded by former Skywest chief executive Bill Meeke, JetGroup offers a stake in a corporate aircraft for about $10,000-$11,000 a month, plus pay-as-you-use charges.

The company launched its Private Class service in May last year and will take delivery of its first aircraft, an Eclipse 500, later this year to service its first Perth-based syndicate.

The Eclipse is considered the lowest cost twin jet in the world, retailing at about $US2 million.

Mr Meeke said the release of the Eclipse was exciting for the industry in that it significantly reduced the cost of ownership of corporate aircraft.

"People who can't just buy a full jet can get access to one," he said.

"It's more of a working than a luxury aircraft."

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