Flying in face of adversity
The charter industry is in decline but the rich can still afford private planes
Perhaps, if it had not been for events such as the Indian Premier League cricket, the rugby tour by the British and Irish Lions and the Fifa Confederations Cup, things would have been worse.
As it was, foreigners were still coming to South Africa and renting planes, at least in the first half of the year. ‘It was fortunate, all those events,” said Ettore Poggi, managing director of the South African operations of the ExecuJet Aviation Group. ‘If they had not been there ... maybe it would have been really bad.”
ExecuJet saw a decline of about 20% in its charter business, measured in number of hours flown. Poggi also credited the drop in the fuel price, which can make up half of the charter cost, for a slower decline than economic circumstance alone may have dictated.
It was not just the nationality of the clients that changed, however. Poggi said that the company saw an increase in the number of clients who sought ways of reducing costs.
Even so, the drop-off in planes was worse in the sizes that serve routes within South Africa, with longer-range craft still popular. ‘You can charter an aircraft that will get you to Lagos with four or five stops to refuel,” he said, ‘but that destroys the convenience you are paying for. We still see lots of flights to Luanda, Nairobi, Abuja.”
Some of these flights are for wealthy individuals, who either don’t see their way clear to rubbing elbows with the hoi polloi or just value their time more than they do the cost of the charter—even if a big part of their net worth may have evaporated with the plunging world markets.
Some are for travelling executives, or groups of executives, and it is here that Poggi can make his best argument for value. ‘If you are going somewhere that is not serviced at all or does not have regular scheduled flights, then charter makes sense.
If it is not serviced by a reputable airline, then it makes sense. It also makes a lot of sense for business executives who can meet on board prior to their meetings with other people, or have debriefings afterwards.
You can’t do that on a commercial airliner, you can’t just discuss sensitive financial issues around other people. Companies see that.”
In the United States and Europe it is a brave executive of a publicly listed company who uses a private plane these days, especially after the evisceration of American car company chiefs who arrived in Washington, to beg for bailouts, by private plane.
Shareholders are out for blood and profligate spending is just about a hanging offence. Poggi said his company has seen a certain amount of anxiety from corporate clients on how their use of charters may be seen, even if the reasons were eminently defendable, but added that not everybody has been hit with the poverty hammer.
‘In Europe, the Middle East, in the US, we have seen this huge impact. In this part of the world it has not been that bad. The mining houses are taking a lot of strain, but there are lots of places where business is still booming.
In Angola and Nigeria people are making a lot of money and they can spend money to make money there.”