Owning vs. charter vs. airlines

Mike Rapoport wrote:

"Mike" wrote in message
...

On Fri, 1 Apr 2005 01:21:11 -0600, "Scott Jensen"
wrote:


There is usually a point where it is cheaper to do it yourself than have
someone else do it for you. What I'm wondering is what would that point
be
when it comes to trans-world air travel. When does buying your own jet
and
employing your own pilots make economic sense than using an airline? Or
will the airlines always be cheaper?

More specifically, let's say you have a number of employees in Fiji. Each
gets four round-trip flights to anywhere in the world each year as part of
their benefit package. Most will want to use at least one of those for
the
Christmas season to spend the holidays with family. There would also be
an
expected heavier usage of their flight options during the summer. The
question I have is: How many employees would one need to have where buying
a
private jet and employing pilots would make economic sense? Would there
also be a span between these two options where chartering a private jet
would make economic sense?

Scott Jensen

I am pretty sure that private jet ownership will lose in a pure cost
comparison. However, to make a fair comparison, one would have to
consider many factors. What is the passenger's time worth? Is there
convenient regular scheduled service? etc. A round trip first class
ticket from the US to Europe can be upwards of $10,000 if purchased at
the last minute. Or you could buy your own Boeing Business Jet for
$40,000,000. Even if only used for one trip, the BBJ could have a net
lower cost. If the passenger takes the commercial flight for $10,000
and the airline gets him there late and he loses the $4 billion dollar
deal, then you can see why he would be better off spending the money
for the BBJ.


How would the BBJ have a lower cost?


With BBJ: $4,000,000,000 income from deal
-40,000,000 cost of BBJ
--------------------------------
$3,960,000,000 net income to company

Without BBJ: $ 0 income from deal
-10,000 cost of airline ticket
-------------------------------------
$ -10,000 net income (loss) to company

Net cost to company of not owning BBJ: $3,960,010,000

These numbers aren't typical, but then again these days they're
not unreasonable.

Rich Lemert

Corporate and private jets are never about saving money. They
fulfull many strategic needs. Can you own a car cheaper than take the
bus? Never. There are other reasons you pay for that car or two you
own -

Ego - It's mine
My schedule
My space
Security
Point to point travel where the bus doesn't go
etc.

You pay dearly to own a car and do it yourself($15 to $30 per day).
People that buy corporate arcraft do the same. They are just on a
different level than the rest of us. If you were a citizen of a third
world country living in a shack, that fat cat that drives by in a Jeep
looks to him like the guy in a corporate aircraft looks to you and me.
I't just a matter of prospective.

I'm in the business of putting people in private jet aircraft and it's
not about hauling a bunch of people either. The average load factor
for all Gulfstream GV/G-550's is 3.5 even though most have 12 to 14
pax seats. This aircraft has a range of 6,700nm and the average stage
length is 1.6 hours.


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"Mike Rapoport" wrote in message
k.net...

"Matt Barrow" wrote in message
...

"Alan Street" wrote in message
...

$4 billion dollar deals are pretty rare.

Not any more! Wal-Mart alone does 100 of those each year.




Name one.

Kimberly Clark, RubberMaid...

In article , Matt Barrow
wrote:

€ "Alan Street" wrote in message
€ ...
€
€ $4 billion dollar deals are pretty rare.
€
€ Not any more! Wal-Mart alone does 100 of those each year.
€
€
€

That would imply about $400 billion a year turnover. According to
WalMart's financial statements, their total turnover was $259 billion
last year. ( http://finance.yahoo.com/q/is?s=WMT&annual ).

"Alan Street" wrote in message
...
That would imply about $400 billion a year turnover. According to
WalMart's financial statements, their total turnover was $259 billion
last year. ( http://finance.yahoo.com/q/is?s=WMT&annual ).

Hey Alan... Didn't know that you frequent this group also... What's up? No
diving in San Diego this weekend? Up here the water has visibility as bad
as New Orleans and it's cold to boot...

"Adam Weiss" wrote:
Add to that marketing (or lobbying) value. What better
way to win over a b2b client's business or a congressman's
vote than to give them a free ride in a corporate jet?

Now I would think this is a very good point. If the Fiji business were
needing to impress a little over 200 clients a year and these clients would
always want to travel to the business' location to personally inspect the
facilities, wouldn't a private jet greatly assist in this? The clients
being from all over the globe and at least half not from a major city. Each
client would always be accompanied by two assistants on these inspection
trips. However, they could be grouped together to come with other
three-person client groups and all these scheduled well in advance.

Also, each year the company would fly in its Board of Directors and they
would be spread over different continents. Wouldn't offering to fly them in
on the company's private jet be another enticement for them to want to sit
on the board? Or at least make the hassle of the trip less of a hassle thus
not as big of a negative against them joining the board?

Then again, would offering to fly the above two groups first-class be just
as good of a way to impress them?

And what about offering employees the option of trading in their four annual
vacation coach-class round-trip anywhere-in-the-world airline tickets for
one first-class round-trip anywhere-in-the-world airline ticket? Or, saying
it was going their way to do one of the above two types of trips, one
round-trip flight in the corporate jet? If they decide to take just one
vacation a year, I could see them trading up for this.

Scott Jensen
--
Like gumshoe detective stories? Like free comics?
If so, Private Eye Butterfly is the webcomic for you!
http://www.users.bigpond.com/toonerfish/peb.html

"Alan Street" wrote in message
...
In article , Matt Barrow
wrote:

? "Alan Street" wrote in message
? ...
?
? $4 billion dollar deals are pretty rare.
?
? Not any more! Wal-Mart alone does 100 of those each year.
?
?
?

That would imply about $400 billion a year turnover. According to
WalMart's financial statements, their total turnover was $259 billion
last year. ( http://finance.yahoo.com/q/is?s=WMT&annual ).

Okay...they do 65 of them.

Read Sam Walton's biography how he changed the way of dealing with vendors.

Those are suppliers, not "deals".

Mike
MU-2


"Matt Barrow" wrote in message
...

"Mike Rapoport" wrote in message
k.net...

"Matt Barrow" wrote in message
...

"Alan Street" wrote in message
...

$4 billion dollar deals are pretty rare.

Not any more! Wal-Mart alone does 100 of those each year.




Name one.

Kimberly Clark, RubberMaid...

"Mike Rapoport" wrote in message
k.net...
Those are suppliers, not "deals".


And just how do they manage to "Supply" the company without working out a
deal?

"Matt Barrow" wrote in message
...

"Mike Rapoport" wrote in message
k.net...
Those are suppliers, not "deals".


And just how do they manage to "Supply" the company without working out a
deal?


Walmart has never signed a single $4B deal AFAIK. Period. Furthermore I
doubt that *any* supplier has ever lost Walmart as a customer because they
could not arrive somewhere at a particular time.

Mike
MU-2