Gibraltar: Executive Aircraft – Toy Or Tool?

In this month's article, I thought I'd take a somewhat different tack. In recent columns I have examined why Gibraltar is becoming an increasingly attractive location to business people – tax, infrastructure, ease of doing business, high quality multi-lingual staff etc. I also referred to the fact that we have our own airport and, it is to be hoped, that the current airline route map will be extended when the brand new terminal opens later this year. But that set me thinking about the sheer logistics of getting to Gibraltar from other airports around Europe from where it is unlikely that there will be scheduled services any time soon.

Since the implementation of the Córdoba Agreement in 2006 – when restrictions were removed to permit direct flights from Spain – Gibraltar residents may have noticed an increasing number of small, private aircraft using the airport. We have certainly seen an increase in corporate jet activity and I expect to see this increase when the new terminal opens. I understand there will be services dedicated to the business aviation industry based from the terminal, so that is another reason to look forward to its completion.

But how, in these economically strained times, can such "toys" be justified? Surely this is yet another example of the type of corporate excess that should have been consigned to history. A number of large companies certainly seem to think so – they have either sold or downsized their aircraft fleets in recent years. But is there any place for expensive business aircraft in the post-crisis economic world in which we now find ourselves?

In my opinion, there is. Executive aircraft come in all sorts of shapes and sizes and there are many ways to own or operate them from full to fractional ownership, or simply chartering on an ad hoc basis. Under the right circumstances, the sensible use of a private jet – however this is done – can not only be economically justified, it can be a very attractive option both to business people and the companies they represent. Read on.

Consider this example. Imagine you are in Gibraltar with five colleagues and you need to get to Nice for a meeting. There are no direct flights from here and although Málaga is only a hundred miles up the coast, surprisingly there are no direct flights to Nice from there either. Our party of six business executives is now faced with a dilemma and at least two flights – first to London or Paris, then an onward connection. How much more simple it would be to charter a business jet for a direct flight from Gib to Nice – and presumably back again, although of course that may not be necessary.

The advantages speak for themselves. The party simply turns up at the airport very close to departure time and, in this example, the round trip could easily be achieved in just one day. Naturally the formalities remain but they are generally easier to complete and there's no need to arrive up to two hours before departure as with commercial trips. A direct flight straight to the airport closest to where you want to go could be just what your company needs. There will be a considerable saving of down time and any of the usual difficulties one can encounter when using scheduled airline services – cancellations, overbooking, delays – will be avoided. In addition, confidentiality is assured and, because the fellow passengers are likely to be colleagues or associates, the flight time can be spent more profitably.

What is the likely price for such convenience? As always this can vary widely but, as an example, local private charter firm GibJets ( charges around £2,500 per flying hour. Divide that between the six passengers that its aircraft might typically carry, and one can start to appreciate the commercial sense of using this option. Add to that the fact that executive jets can use a much greater range of airfields than those available to commercial airliners, then the expense becomes even easier to rationalise. Business jets can land at airports with limited facilities and very often – depending on the type of aircraft – they can be operated by just a single pilot.

So much for the theory. In these days of economic austerity what is the state of the market for business jets? They range in price from the so called "Very light Jet" or VLJ (sometimes referred to as "Entry Level Jets") to airliners such as the four engine Airbus A340 used by a very select band of billionaires and royalty for their private, or executive, use. The price tags match this wide range, starting at a couple of million dollars but easily rising to US$100m or more for the airliner-size versions.

My colleagues at Register An, Sovereign's aviation division, report that the sector has certainly seen a noticeable downturn since the onset of the global economic crisis. The use of business jets as a corporate tool was much criticised at the height of the crisis; who can forget the outcry over bankers and automakers flying to Washington in their private jets to testify at congressional hearings into the massive government bailouts they were receiving?

As the economic situation stabilises, at least in certain countries, the use of corporate jets is once again becoming more acceptable for many international businesses (and more importantly their shareholders). The business case for such use has not changed – the time and money saved, together with more confidentiality and better use of time spent flying. What has changed is the perception of the press and the public in relation to the "Jet Set".

The business jet charter market is certainly recovering; we are seeing a number of these aircraft landing at Gibraltar on a more regular basis. And it is interesting to note that, while new aircraft sales in Europe are still slow, business has been increasing in other parts of the world. In particular, dealers are reporting higher levels of interest in the Middle East, India, China and South America – especially Brazil where a local manufacturer, Embraer, has developed into a world leader.

So as we all look forward to using our own brand new airport terminal later in the year, I hope to see even more of these remarkable aircraft flying into and out of the Rock. Next time you see one, rather than seeing it simply as a toy for spoiled executives, consider instead that it might just be a serious business asset that is adding to the bottom line in clear and demonstrable ways.

Aircraft landing and taking off at Gibraltar will of course fly over the marinas where super yachts seem to be perpetually moored. Pleasurable these vessels undoubtedly are; practical, sometimes, maybe. But one cannot drift on an executive jet. They are designed to get one from A to B far more efficiently than commercial flights. That is the difference and the reason why I, for one, believe that given the right circumstances they can be ideal business tools. This is also why I am looking forward to welcoming them to Gibraltar in ever greater numbers. And the wealthy people they carry, of course!

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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