Private jet travel soars still higher

From The Sunday Times

December 23, 2007

Farnborough airport wants to cash in by expanding and is calling for restrictions on flights to be eased

Dominic O’Connell

YOUR driver eases the Bentley past the security barrier, up a short access road and into a parking bay in front of a streamlined silver terminal. Uniformed staff greet you, and there’s time for a quick coffee in the lounge, which looks like the lobby of a five-star hotel. A short walk across the tar-mac to your plane, and you’re off.

For those enduring the hell of British airports during the Christmas getaway, this version of air travel must seem an impossible dream.

But for those well-heeled enough – or whose companies value their time sufficiently – this is the experience at TAG Aviation’s operation at Farnborough airport in Hampshire.

TAG, a Swiss-based private aviation company controlled by Saudi tycoons the Ojjeh brothers, took over the corporate aviation side of Farnborough – famous as the site of Britain’s first powered flight in 1908, as well as the home of the eponymous air show – in 1997.

The Swiss group has since built a slinky terminal, which has become the hot venue for high-powered business meetings. Rather than the traditional negotiations in a drab Heathrow hotel, tycoons now jet into Farnborough, use one of the terminal’s private rooms to hold their talks, and then fly off again in their private planes.

As well as the terminal, there are three hangars grouped under a distinctive wave-shaped roof. Farnborough is now the base for 46 corporate aircraft, ranging from small twin-propeller planes to top-of-the-range jets able to fly direct from the Hampshire airport to the west coast of America. A hotel will open next summer.

TAG’s investments have been well-timed. Over the past two years Britain has been at the centre of a boom in private jet travel. Several factors – the rise of fractional ownership schemes, a surge in purchases of aircraft by wealthy individuals, and a boom in the City – have combined to take the number of flights to historically high levels (see panel on right).

The airport is now working at almost full capacity. This year the number of flights has grown by a fifth to about 26,500. Under its current planning permission, the airport cannot handle more than 28,000 flights a year – and must close on Christmas Day and Boxing Day.

But this is not the only constraint on its growth. Flights at weekends and over bank holidays are limited to 2,500 a year – TAG wants to increase this to 5,000, staying within the overall limit of 28,000.

Earlier this year a request from TAG to increase the airport’s capacity was turned down by the local council. The company appealed, and a public inquiry followed. The decision now rests with Ruth Kelly,

secretary of state for transport, and Hazel Blears, secretary for communities and local government. An announcement is expected soon.

“We have significant demand in excess of the 2,500 flights over weekends,” said Brandon O’Reilly, chief executive of TAG Farnborough. “It is an artificial constraint on our operations, and we feel 5,000 would be more appropriate.”

TAG is dangling the carrot of more investment if it gets its way over weekend flights. “Our board has given approval for the construction of another set of hangars, but that is conditional on receiving approval for the increase in weekend flights,” said O’Reilly. If permission was not granted it would be “very frustrating”.

“It would not be making the best use of existing capacity, which is one of the government’s policy goals for aviation. As well as contributing greatly to the UK economy because of the type of travel it facilitates, Farnborough is taking the pressure off larger airports, which are then free to concentrate on commercial flights.”

Easing of the weekend restrictions is not the limit of TAG’s plans for growth. It is in the process of drawing up a “masterplan” for the airport’s development that is likely to propose an increase in the total number of flights permitted annually. The plan will be published for public consultation in the first three months of next year.

Even if its plans are frustrated, TAG is unlikely to pack up and leave. A fortnight ago it bought the freehold for the 581-acre site from the Ministry of Defence for an undisclosed sum.

“There was always an understanding when we took the head lease in 2003 that if the operations were successful we would take full ownership at some stage, and this was the right time. It removes any uncertainty about the future of the airport – people were aware that the freehold was with the Ministry of Defence and some assumed they might take it back at some stage, but that has now been ruled out.”

The change in ownership does not, however, mean an end to the air show. Part of the freehold deal is that TAG leases space to the Society of British Aerospace Companies, which organises the biennial jamboree.

BOOM WILL GO ON

THE SUBPRIME crisis may be cutting a swathe through the banking community and threatening recession in America, but there is – so far – no sign of slackening in the recent extraordinary growth in private jet travel.

According to Honeywell, the American aerospace company, almost 900 jets were delivered last year. This year the figure will rise to 1,000 and over the next decade Honeywell expects 14,000 new aircraft to come into service, the same number that are currently in the world’s entire fleet.

Despite some industry caution, a rapid growth in the number of high-net-worth individuals and a reluctance among some companies to see top executives tied up for hours at commercial airports makes a downturn anytime soon seem unlikely.

“The whole tenor of the market has changed,” said one charter broker. “We are now busy all the time, and it is increasingly difficult to find aircraft to meet demand.”

Wealthy’s desire for luxury rises unabated

By Sharlene Goff

Published: December 10 2007 03:20 | Last updated: December 10 2007 03:20

Wealthy people’s taste for luxury has been untarnished by the recent economic slowdown according to new research, which found more people were willing to splash money on private jets, concierge services and personal shoppers.

The latest survey from Barclays Wealth says that rich people increasingly want to buy luxury services to save them time and stress.

Barclays said the use of private jets was set to increase significantly. More than half of the survey respondents in the US and Canada, Italy, Singapore and Portugal said they planned to fly privately rather than first class on airlines.

Gerard Aquilina, head of international private banking at Barclays Wealth, said the use of private jets had increased in popularity as they enabled people to bypass airport and security delays. “The idea of wealth goes further than the ability to buy goods and services. It also provides a sense of empowerment and control,” he said.

The survey shows that more wealthy individuals plan to take advantage of personal shoppers, fitness trainers and concierge services.

Barclays said for many wealthy people the biggest luxury was having more time. Two-thirds of respondents believed their wealth had brought them more leisure time, mainly because they enlisted the help of a number of people to run their day-to-day lives.

Mr Aquilina said there had been a “dramatic” rise in the number of wealthy individuals using family offices to manage everything from their investment portfolios to travel arrangements.

“There is a growing desire among the wealthy to have something unique and something that to some extent allows them the freedom to control time,” he said.

Of the respondents with assets of at least $3m (£1.47m), almost 80 per cent employed a butler and a chef, more than three-quarters used a personal stylist and more than half consulted a personal shopper, personal trainer, dietician and travel consultant.

The survey showed there was a rapidly rising demand for bodyguards around the world, particularly in some parts of continental Europe, Asia, South Africa and the Middle East.

Barclays found that people’s perception of wealth had changed.

More than a third of the respondents thought people needed liquid assets of at least $10m before they were considered rich.

Barclays said the rising cost of luxury goods and services meant people needed this much wealth to feel secure and able to enjoy their money.
● Storm clouds may be looming over the rest of the property market, but wealthy buyers are queuing up for rural estates in Scotland, Andrew Bolger reports. CKD Galbraith, the property consultant, estimates the overall estates market in Scotland has about 100 potential buyers on a “waiting list” who are ready to spend collectively about £300m. Most of the interest came from continental Europe.

Copyright The Financial Times Limited 2007