Biz Jets Outpace Commercial Air Ops
Silicon Valley
businesses are slowly, cautiously, putting their executives and
salespeople back into the air in order to meet with clients or woo
new ones. However, many are turning from commercial airlines to
private corporate jets -- their own and, increasingly, someone
else's. While commercial business traffic is off about 20 percent
at Mineta San Jose International Airport since the Sept. 11, 2001
terrorist attacks, corporate jet traffic has increased. Exact local
numbers aren't available, but corporate jet traffic was up 25
percent nationwide in 2003 and locally accounted for nearly one in
every three flights taking off or landing in San Jose.
"We see a business jet resurgence in the West," Amanda North,
regional vice president for Executive Jet Management, which opened
an office at the San Jose Jet Center recently to take advantage of
Silicon Valley corporate jet traffic, told the San Jose Business
Journal.
Plans are already underway to expand or build three new
facilities for corporate jets and their clients. The three projects
will take over most of the airport's western edge, south of the air
traffic control tower. San Jose State University also has been
contacted by companies wanting to know the availability of its
five-acre Aviation Department center on the airport's western edge,
says Scott Yelich, an SJSU assistant professor of aviation.
"Jet Blue and Southwest are profiting on business travel on the
low end and corporate jet traffic is increasing on the top end,"
says a corporate jet manager for a large Silicon Valley company who
spoke on the condition that neither his name nor his company's is
mentioned. "We charter our plane out to get maximum use of it."
The secrecy surrounding corporate jet travel is increasingly as
rapidly as the traffic. One company contacted by the Business
Journal threatened to sue the paper if its name was mentioned in
relationship with corporate jet traffic.
"There is still that stigma of luxury," Ms. North says. "There
is a worry that it won't seem like it is the best use of corporate
funds. There is worry about shareholder concern."
While corporate jet traffic will never be as cheap as commercial
travel, when the value of an executive's personal time and
convenience is factored in, private corporate jets can become cost
effective, Ms. North says.
Charter service is
gaining in popularity as smaller companies seek ways to take
advantage of idle corporate jets. While companies such as Intel
Corp., Oracle, Hewlett-Packard, Apple Corp. and others own their
corporate jets either outright or through a wholly-owned
subsidiary, many smaller companies opt for fractional operations.
Companies like Ascend and NetJet, of which Executive Jet Management
is a subsidiary, often keep these planes housed as far away as
Fresno and fly them in when a company needs them. The Jet Center
provides maintenance and fuel for these aircraft. Executive Jet
Management and Silicon Valley Express at Mineta San Jose and others
nationwide help these companies rent out either their wholly-owned
or fractional aircraft when the planes aren't being used.
"For the owners, it allows them to get a bigger bang for their
buck," Ms. North says. "For those chartering, they get the
advantage of a corporate jet without the hassle of ownership."
Increasingly, that hassle is where to store the aircraft. There
are long waiting lists to get corporate jets into a Mineta San Jose
facility. Businesses are expanding and new ones are moving in to
handle the load. The San Jose Jet Center has 65 corporate airplanes
using its facilities -- including General Electric, Oracle, and
Apple Corp. -- and has at least 40 more on a waiting list. The Jet
Center has begun construction on a new hangar that will increase
its footprint to 22 acres, from its current 15 acres.
ACM Aviation Inc., now located on the Mineta San Jose's
southeastern edge, has plans to construct a modern
59,186-square-foot corporate jet facility on Mineta's western side.
It is scheduled to open in 2005. ACM has 35 planes in its hangars
with more on a waiting list. Meanwhile, AvBase, which would become
Mineta San Jose's third corporate jet service provider, has
submitted plans for 96,000-square-foot hangar as part of a new
five-acre westside facility. Some planners have begun eyeing the
100 acres on the airport's northwest side -- now dedicated for
future air-cargo services -- for corporate jet services. However,
that would take a change of the airport master plan and likely
would face stiff neighborhood opposition.
"SJJC has remained at
or above capacity for the past three years, in spite of a soft
regional economy," says Dan Ryan, president and chief executive
officer of the San Jose Jet Center. "We've seen the demand for
business air travel continue to increase considerably, especially
in the aftermath of Sept. 11. Demand for our hangar space remains
high and we've already taken deposits on space in the new
facility."
The new construction shows that corporate jet traffic is only
going to increase, says Carl Honaker, chairman of the San Jose
Airport Advisory Commission.
"It's a signal that corporate jets are getting more popular,"
Mr. Honaker says. "As more corporations are seeing the advantage of
owning their own airplanes, the demand is only going to
increase."
Corporate jet traffic has become increasingly popular in Silicon
Valley as security concerns has made commercial airport traffic
more cumbersome, says John McLemore, a commissioner on the
Metropolitan Transportation Commission.
"It's critical to the lifeblood of Silicon Valley businesses to
be able to jet back and forth," says Mr. McLemore.