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