Air Charter Industry Volatile

November 4, 2005
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While some West Michigan charter air companies are seeing a decrease in chartered freight due to the sagging automotive industry, others are seeing an increase in passenger travel due to perceived risks in commercial airline travel.

Jacques Dumont, chief pilot at Rapid Air Services, said the year was slower than usual for the charter plane company due to cutbacks in the automotive industry.

With 80 percent of its business coming from chartered business flights throughout the Midwest and the other 20 percent from freight, Dumont said there has been a decrease in automotive industry travel, which has affected both passenger and freight travel. Many automotive manufacturing plants the company used to serve have gone out of business — or moved to Texas and Mexico, too great a distance for the company’s planes.

Dumont said business from the automotive industry had been slowing since 2001, when many plants decreased production. Now much of the freight in the industry is bid out in a system in which smaller companies have a harder time competing, Dumont said. Rapid Air Services, which currently has four twin-engine planes running and two in storage, is not able to take longer flights without return cargo.

“You could die of old age waiting for a load home,” he said of waiting for return cargo.

The company, which is more than 50 years old, employs three part-time pilots and Dumont, the only full-time pilot.

Dan Dunn, owner of Aargus Air Charter, said the automotive industry closing plants and moving production out of the Midwest has created both challenges and opportunities for charter companies. Though there are fewer suppliers in the area, Dunn said companies are keeping fewer parts in stock — and therefore have to make more special orders that require chartered planes. But Dunn said that increase in special orders doesn’t outweigh the decrease in suppliers.

“By far, the negative effect of the supplier moving out of Michigan overrides the inventory issues,” he said.

Dumont said that despite a slow year, the company still has regular clients who use the service once a week or once a month. Many of the flights are to small airports in Wisconsin or around Chicago. It takes about 45 minutes to fly across the lake to many destinations, Dumont said, and the smaller planes can bypass the large airports and land at smaller strips closer to the client’s destination.

“People don’t want to waste time,” he said.

When a company charters the plane, it is renting the whole plane, not just a seat. Dumont said the savings are most apparent when customers are flying several employees. The smaller airplanes can be chartered for less than $700 to Chicago, plus landing fees, which vary from $35 at a small airport to almost $200 at a hub like O’Hare International.

Dumont said that with a chartered flight, companies can cut costs like rental cars, day parking, multiple plane tickets and smaller costs that add up. It also can save time because travelers can choose their departure times, instead of working with set airline schedules.

“A lot of it is productivity,” he said of the conveniences of chartering a plane. “Keep the people working.”

Ronda Hilldore, Tulip City Air Service charter sales representative, said the Holland-based company has seen a 25 percent increase in business. The company travels throughout the southern, Midwestern and eastern United States, using everything from piston airplanes to mid-size jets.

“One part of me thinks that the economy is doing a little bit better,” she said.

Hilldore said there has been a notable increase in personal travel, which she attributes to the strikes and security issues with commercial lines.

“More and more people are finding that it’s economical to put more people in a charter airplane,” she said.

For customers who have to drive to Grand Rapids before even boarding a flight, chartering a plane may save an overnight stay on a business trip, she said.

“Most of the time they can complete their business in a day, so time is the biggest benefit, and that’s what we really try to sell,” she said.

With more risk of commercial flights being delayed or canceled due to strikes or security, Dunn said he believes more people are choosing to fly chartered planes.

“Those ‘maybes’ are now kind of in larger numbers,” he said. “That’s been helping us, I think, more than any single thing.”

Dunn said that despite the ebb and flow of the economy, he is optimistic about his industry.

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