There is no question about it, with its idea of running a business jet service in direct association with one of the world's top airlines, UAL has come up with one of those attractive ideas which feels right and quickens the pulse. One might wonder: "Why didn't somebody think of this before?"
That question is easy to answer. General aviation, whose top end consists of those who operate private jets, has - until now - always been culturally separated from the airline world. One catered for what was, until the late 1980s, considered to be a tiny and hugely wealthy elite; the other covered the travel requirements which ordinary mortals, even prosperous ones, were prepared to pay for.
It took the fractional ownership concept to broaden the choices at the top end of business travel. While airline executives focused on a rapidly expanding but increasingly competitive market of their own, there was no way they could come up with concepts as far removed from their immediate task of winning customers as fractional ownership in business jets. This had to be done by specialist entrepreneurs, and it was.
UAL's United Airlines says that it will offer corporate travel services of all kinds, but primarily in fractional ownership. Now that the concept has been developed successfully by others, it is perhaps no longer scary for either customer/investors or for airlines like United to venture into.
The apparently late arrival of big airline muscle into the business jet world seems like a natural, evolutionary step, both for airlines and for the corporate travel industry. It will definitely open up a new world of opportunity for many of the players in the total air transport game. Meanwhile, across the Atlantic, and based in a very different kind of market as far as corporate travel is concerned, British Airways is boosting the same winners by going into partnership with an existing executive travel provider.
The unquestionable winners are numerous. They will be business jet manufacturers, top-of-the-range business travellers, pilots looking for high quality non-airline work, the pilot training industry and, finally, regional airports. There are others too, like the specialist completion centres who kit out the aircraft to the bespoke demands of the operators.
The potential winners will be the risk-takers - in this case UAL shareholders. If they win, there will be no outright losers.
There will, however, be those who have to adjust. That is the airlines, including United itself. There is a question as to whether this scheme is creating a new market, or will rob airlines - especially in the USA - of premium cabin passengers, especially in first class. No-one has really been able to quantify the effect that the growth of the fractional ownership business has already had on airline premium fare earnings, but these have certainly been dropping. Has that drop been caused by the economic "slow-down", or what? If this new move will have an effect on business class cabins, will the numbers who move to business jets be significant enough to make a damaging difference? Only time will answer these questions.
Then there is the other risk, which is that United, bringing a 200-aircraft fleet into the admittedly very healthy-looking fractional ownership marketplace, has arrived too late and will find itself surplus to requirements. Of course it has the choice of the rate at which it introduces its fleet, which will probably enable its venture to be a success. Backed by a brand name and resources like United's, it will certainly feel to customers like a considerable variation on the existing product. British Airways, in its deal with Air Partner, is dipping its toe into the pool which United proposes to dive into. This is probably wise, given the very much smaller market for corporate travel that Europe has been shown to represent.
As for all those winners, some of them represent limitations, at least on the rate at which the new business can expand. A serious shortage of quality pilots is dogging the airlines at present, let alone the business jet operators, and the specialist completion centres are already turning down work because they do not have the staff. So UAL may be venturing into new seas, but it will not all be plain sailing.
Source: Flight International
