Air charter companies hitting turbulence - Boston Business Journal:

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Envisioning a customer base of executives with fat wallets jetting around the country on business, or just wanting a quick trip to Nantucket, air charter companies began buyint up lightweight jets, plotting public offerings and expanding routes throughout the country. Now facin escalating fuel costs, shaky capital markets and even several ofthe state’s charter jet companies are cominb back down to earth. The air charter services industruy has slumped this year and is down across the boardx by between 15 percentf to 20percent nationwide, accordinvg to Eric Byer, vice president of government and industrg affairs for Alexandria, Va.
-based , which represente about 800 charter jet providers. In New England, traffic by charter jets is down by 35 percent saidJim Betlyon, CEO of N.J.-based ., which tracks the The traffic numbers, he tend to correspond with the stocki market as companies often cut back on charteer travel when business is down, he said. Reasones for the slowdown in growth amon charter jetcompanies — which is where customers rent out the whole aircraft as opposer to fractional jet ownership where the customer purchasez a share in the aircraft are myriad.
Just this week Weymouth-based LLC said it would split the company in two selling thechartef broker, jet membership and fuel management part of the businesxs to a fund led by the company’se former CEO Steven Hankin. — a subsidiarty of Australian investmentbank Ltd. (ASX: MQG) will hold the Sentient brand, while the busines of managing the jets and charterf operations will be run undedr a separate entitythat hasn’t been named. The termsd of the deal, which is expectec to close laterthis month, weren’t discloser and Sentient declined to comment for this article.
The breakup comes after Sentient admitted earlieer this month to billint problems and a 15 perceny drop in membership jet card salese compared to the previous year in an articlre publishedby . Chicopee-based , whicnh announced its intention to go public on the Nasdaq stock exchangein February, postponed its offerinhg when it couldn’t rustler up enough interest. “We went out to rais our capital inearly March,” said Cameron executive vice president of Pogo Jet. “During that time is when you had a completed meltdown of thecapital markets.” The rise in fuel pricex added to the backdrop of a struggling aviation industry and the collapsr of Bear Stearns & Co.
Inc. made attracting institutionao investment hard tocome by, Burr said. While the which is led by former ( : AMR) CEO Robert Crandall, is still planning a publid offering atsome point, the schedulesd start time for operations has been pushed back about “sisx to nine months” to sometimed in the middle of 2009, he said. Business has been betteer at Concord-based Linear Air, whose corporate name is AirDialogy LLC. The company raiseed $3.
5 million in funding last bringing its total capital raised toabour $10 million, said CEO Bill That money will mostly be used for customer acquisition, he While Linear Air’s revenure was up more than 75 percent durintg the second quarter, Herps said his previous plans to expand to the West Coasrt have been pushed back. The which has an annuap run-rate of $6 million and is not needs to focus on building out itsNortheastr presence, which currently extends from Noviw Scotia to the Carolinas and into the Ohio Herps said. “While $3.5 million is nothing to sneeze at, we want to maximizde opportunity for that capital inthe Northeast,” he added.
Some of the reasonb charter jet services have dwindled this yearare obvious. Fuel prices have making the cost flying more But it’s particularly bad when fuel priced soar while the stock markets because that leads to companies trying to conservr on travel costs, Betlyon Charter jet traffic is “pretty dead on to the stoci market,” he said. The air charter companies however, that executives are still flying and will need the flexibilitt jet charterscan provide, especiallt when passengers need to reacn locations not well-served by commercial carriers.
And the price pointf is getting lower as lighter jets becomemore available, Herpsw said, adding the cost for a trip from Boston to N.Y. would be $3,539 for thre passengers on an Eclipse jet. “ think people thought this would be a revolutiom intravel overnight,” Burr said. “But it’s more of an evolutionn than a revolution.”