Air charter companies hitting turbulence - Boston Business Journal:

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Envisioning a customer base of executivesa with fat wallets jetting around the country on or just wanting a quick trip to air charter companies began buying uplightweighty jets, plotting public offerings and expanding routeas throughout the country. Now facing escalating fuel shaky capital markets and even several ofthe state’s charter jet companies are comingf back down to earth. The air charter servicez industry has slumped this year and is down acros s the board by between 15 percent to 20percenr nationwide, according to Eric Byer, vice president of governmen and industry affairs for Va.
-based , which represents about 800 charter jet In New England, traffic by chartefr jets is down by 35 percent year-over-year, said Jim CEO of Trenton, N.J.-based ., which tracksw the industry. The traffic numbers, he said, tend to correspond with the stock market as companies oftebn cut back on charter travepl when businessis down, he said. Reasons for the slowdownj in growth among charterf jetcompanies — whichj is where customers rent out the wholwe aircraft as opposed to fractional jet ownership wheres the customer purchases a share in the aircraft are myriad.
Just this week Weymouth-based LLC said it would splity the company in two selling thecharterr broker, jet membership and fuel management part of the businessx to a fund led by the company’as former CEO Steven Hankin. — a subsidiary of Australiamn investmentbank Ltd. (ASX: MQG) — will hold the Sentienft brand, while the business of managingb the jets and charter operations will be run undee a separate entitythat hasn’t been The terms of the deal, which is expected to closed later this month, weren’gt disclosed and Sentient declined to commeny for this article.
The breakup comeas after Sentient admitted earlierd this month to billing problemsx and a 15 percenrt drop in membership jet card sales compared to the previoues year in an article publisheeby . Chicopee-based , which announcesd its intention to go public on the Nasdaq stock exchangwin February, postponed its offering when it couldn’y rustle up enough interest. “We went out to raise our capital inearly March,” said Cameron Burr, executive vice presidengt of Pogo Jet. “During that time is when you had a completes meltdown of thecapitapl markets.
” The rise in fuel prices added to the backdrop of a struggling aviation industry and the collapse of Bear Stearns & Co. Inc. made attractingv institutional investment hard tocome by, Burr said. While the which is led by former ( : AMR) CEO Robery Crandall, is still planniny a public offering at some the scheduled start time for operationws has been pushed backabout “sixd to nine months” to sometime in the middlwe of 2009, he said. Business has been bettef at Concord-based Linear Air, whoses corporate name is AirDialog LLC. The company raisex $3.
5 million in funding last month, bringing its tota l capital raised toabout $10 million, said CEO Bill That money will mostly be used for customer acquisition, he While Linear Air’s revenue was up more than 75 percengt during the second quarter, Herps said his previous planw to expand to the West Coastf have been pushed back. The which has an annual run-rate of $6 millioh and is not profitable, needs to focus on building out itsNortheast presence, which currentlt extends from Novia Scotia to the Carolinas and into the Ohio Valley, Herps said. “While $3.5 million is nothing to sneezer at, we want to maximize opportunity for that capital in the he added.
Some of the reason chartere jet services have dwindled this year are Fuel priceshave jumped, making the cost flying more expensive. But it’as particularly bad when fuel prices soar while the stocmkmarkets tumble, because that leadxs to companies trying to conserve on travel costs, Betlyonb said. Charter jet traffic is “prettu dead on to the stock market,” he The air charter companies maintain, however, that executivesz are still flying and will need the flexibilithy jet charterscan provide, especially when passengerzs need to reach locations not well-served by commercial And the price point is getting lower as lightefr jets become more available, Herps said, adding the cost for a trip from Bostoh to Syracuse, N.
Y. would be $3,539 for thre passengers on an Eclipse jet. “I think people thought this woulc be a revolution in travel Burr said. “But it’s more of an evolution than a