Each month, LuxeSF profiles a member of The Luxury Marketing Council. This month we talked to Robby Phillips, Sales Director, Jet Card Sales at Bombardier. Phillips delivers the low-down on a high-flying segment of the luxury landscape that is growing at warp speed, and provides insight into the mindset of the affluent consumer who can afford to enter the category at a minimum purchase of $100,000.

LUXESF: Let’s commence with background on Bombardier.

PHILLIPS: Bombardier Inc., is a global corporation headquartered in Canada. We’re the world revenue leader in the manufacture and sale of business jets -- including the Learjet, Challenger and Global lines. We are unique in that we are the only company offering the entire realm of private jet travel solutions, from full and fractional aircraft ownership to the jet card programs and on-demand charter offered by Bombardier Skyjet.

LUXESF: Let’s just take those piece by piece.

PHILLIPS: On-demand charter is the “pay as you go” option. Skyjet’s on-demand service is ideal for the person who flies fewer than 25 hours annually. It’s a great way to experience private jet travel and you just pay for it on a flight-by-flight basis. And with a company like Skyjet arranging your travel, you have the benefit of someone carefully vetting the operators and aircraft. However, if you fly 25 hours or more a year, a jet card like the Skyjet Card is the best option. It offers guaranteed availability and a guaranteed hourly rate.

LUXESF: The jet card is like a debit card ...

PHILLIPS: Yes. You deposit funds and start flying the jet you want when you want it. The Skyjet Card offers travel on a wide variety of aircraft sizes, from light, super-light, mid-size to large business jets. You just pick the right jet for your specific trip.

Fractional ownership, which Bombardier offers through Flexjet, provides customers with many of the traditional benefits of whole aircraft ownership, but at a lower cost. You just divide the aircraft into shares, starting at a 1/16 th share, which equates to 50 hours of flying annually. Of course that doesn’t mean you own one wing or two seats and a seatbelt. You actually own a portion of that asset for a period of time and you realize value at the end of your contract.

LUXESF: And Bombardier also sells entire business jets to individuals and companies?

PHILLIPS: Absolutely. With full ownership, you own the jet and you’re responsible for the insurance, the storage, the crews, the maintenance, etc. It can be a hefty commitment, but certainly justified if you fly a lot. The rule of thumb is that if you’re flying more than 200 hours a year, you might want to entertain the thought of whole aircraft ownership.

There’s a kind of evolution that takes place. A lot of wealthy clients will grow tired of the hassles of flying commercially, especially when they are traveling between more than one home or place of business, or both. They’ll charter a few times but find there’s not as much consistency as they’d like. They can’t always get a jet when they want it, and the pricing and deadhead charges can be confusing. As a result of that experience, they might move up to a jet card with guaranteed availability and rates. They might choose a Skyjet card and fly a mix of light and mid-sized jets, depending on the specific trip. Then one day, they realize that they don’t want to fly on anything except a Learjet 45, for example. So they might buy into a jet card program like the Flexjet 25, which offers 25 hours on a specific aircraft. Then they might anticipate flying 50 hours annually for at least the next five years, so they’ll graduate to Flexjet fractional ownership

LUXESF: Depending upon the type of aircraft, what price range are we talking about with Bombardier’s jet card programs?

PHILLIPS: The Skyjet Card offers two price options, $100,000, and $250,000. The only difference in those two deposits is there is an “hours per day” minimum in terms of use of the plane. The quarter million dollar deposit gets you 1.2 hour per day minimum. That’s inclusive of taxi time. The industry standard is to add six minutes for takeoff, six minutes for landing. The $100,000 deposit gives you a 2 hour per day minimum. Once you’ve made the deposit, then you choose your aircraft type based upon your trip. We have two different categories, “Elite”, and “Value”. With Elite, the average aircraft age is very young – about four years. Some people want to pay a premium to be on new aircraft. With the Value program you’re flying on aircraft that are younger than the overall charter fleet, but have been in service longer – about 12 years or so. After that, it’s a matter of choosing an aircraft size under each program – including light, super light, mid-size and large. We also have price options for one-way and round-trip travel; the latter basically provides a cost break for the customer who typically flies to and from the same airport, for a short stay or same day return.

LUXESF: How would you define your responsibility?

PHILLIPS: I’m the Northwest Sales Director for Bombardier Jet Card Sales. Essentially what I do is oversee the sales of the Skyjet Card and the Flexjet 25 jet card programs for Bombardier in the Northwest. My territory is Northern California , which is my primary market, San Jose and Silicon Valley . I also have Oregon , Washington , Alaska , Idaho , Montana , Wyoming and the four western provinces of Western Canada ( British Columbia , Alberta , Saskatchewan and Manitoba ).

LUXESF: Is it fair to say that the jet card business is booming right now and showing a lot of promise?

PHILLIPS: Yes. We are seeing monumental growth in that specific segment.

LUXESF: Why is that?

PHILLIPS: Because it’s the easiest way to fly privately without a long-term commitment, but still offers a level of service quality people want. Aircraft ownership is a big commitment. Charter is not as consistent as people would like. So the jet card is the perfect solution in the middle. It’s a very attractive alternative.

Let me put a plug in here. W ith Bombardier, our reputation is going up in the air with you. With the Flexjet 25 jet card, you’re traveling on a jet card provided by a company that designed and built the jet, maintains and services the jet, and hired and trained the pilots. On the charter jet card side, Skyjet was the first company of its type – celebrating its 11 th anniversary this year – and is the only major provider that requires its operators pass a full on-site audit by an approved third-party aviation authority.

LUXESF: Do you own the planes?

PHILLIPS: With the Flexjet 25 jet card, you are traveling on the Flexjet fractionally based fleet of aircraft. Skyjet operates with a different model, called block charter. Skyjet utilizes a carefully selected network of charter operators who have met or exceeded Skyjet’s standards in safety and service quality. There are perhaps close to a thousand operators out there and only a little more than 10% of them meet our hurdles. When it comes to safety, the only acceptable standard is perfection.

LUXESF: With Skyjet, the possibility exists that I’m going to get an older plane?

PHILLIPS: Yes. But again, Skyjet only utilizes aircraft in the charter fleet that meet its standards. It would not be uncommon for Skyjet to have an approved operator but only accept maybe six of that operator’s 10 aircraft. It’s the vetting of operators and aircraft that makes a big difference in the charter jet card segment. If someone tells you they have a pool of 1,400 jets, that’s not necessarily a good thing. That just means they are pulling from any and all aircraft in the entire North American charter fleet.

LUXESF: You’re essentially utilizing unused inventory from that source of a thousand charter operators?

PHILLIPS: I would characterize it as Skyjet utilizing available inventory, but, again, only inventory and operators that meet our requirements. Keep in mind that an operator might own two jets and manage 10 jets that are owned by companies and wealthy individuals. And eight of those 10 managed aircraft are available for charter, because the owners want that revenue. There are some very nice jets in the charter fleet. Of course the Flexjet 25 jet card is a different business model. It’s not the charter fleet. You’re traveling on the Flexjet fractionally based fleet of aircraft.

LUXESF: But it’s on a card basis.

PHILLIPS: Right.

LUXESF: And with newer planes?

PHILLIPS: Yes. With Flex Jet 25, we have the newest aircraft. The average age of our aircraft is less than four years, and those jets are among the fastest in the world, so they can deliver a lower cost per trip.

LUXESF: And no restriction on type of plane that I can use?

PHILLIPS: The Flexjet 25 jet card currently offers hours on our Learjet 40, Learjet 45, Learjet 60, and our Challenger 604.

LUXESF: Any flexibility?

PHILLIPS: Absolutely. You can buy time on whichever plane you like, and you can upgrade to a larger jet for a specific trip if the need arises.

LUXESF: Why is the card sector booming?

PHILLIPS: It begins with all the headaches associated with commercial airline travel. It’s also a productivity issue. For example, a corporate executive and his team of people can get from Seattle to San Francisco for a meeting, run over to Utah, go back up to Boise, Idaho, and be back at home with family in the evening on a private jet. And it’s really accessible to all markets. With the wealth in the country today, I think a lot of people are finally realizing that it’s worth the price, and not as expensive as they might have thought.

LUXESF: Who is the ideal customer for a jet card?

PHILLIPS: Top corporate executives, private business owners, entrepreneurs, and those in the financial sector. But a lot of my customers, more than 60%, buy it for personal use. We have business executives, celebrities, sports stars and corporate flight departments. We even see whole aircraft owners who purchase jet cards for what we call supplemental lift; meaning, if you own a plane, and it’s in use or out for service, you’ve got your jet card for supplemental lift or back up.

LUXESF: Are there baseline economic demographics to somebody coming into the jet card category?

PHILLIPS: Not really. You have to be wealthy to a certain extent. With Skyjet, I find that I sometimes sell to people who have never flown privately. And, believe me, once you start you really never go back. And they evolve. They fly on a Citation XL and a Learjet 45. Then a year later, and they’ll say, “Listen, Robby, I don’t want to be on a Citation XL anymore. I just want to be on a Lear 45.”

LUXESF: A super light will take how many?

PHILLIPS: The super light Learjet 45 in our Flexjet 25 jet card program is configured to take eight passengers.

LUXESF: From the perspective of the jet card, the use is primarily personal?

PHILLIPS: That’s what I’m finding to be the case.

LUXESF: Personal defined as?

PHILLIPS: The client has a house in Aspen or a house in Palm Springs , and wants to fly from San Francisco to there with his wife, his children and his dog. But there is also often a blending of personal and business travel, so it is sometimes difficult to characterize.

LUXESF: How are you marketing the card? How are you getting your leads?

PHILLIPS: Well, we get quite a few leads from the Flexjet fractional program. We get those people who aren’t quite ready to make the commitment to fractional ownership, but are impressed with Flexjet and impressed with Learjet and Challenger aircraft. Direct mail is important to our marketing mix and we advertise in a variety of appropriate publications such as the Robb Report, Boat International, The duPont Registry, Forbes and Business Jet Traveler. Another big component is events.

LUXESF: Such as?

PHILLIPS: Well, we just did the Ft. Lauderdale Boat Show and participated in a number of charity events. We have a presence at the Concours d’Elegance collector car events. We attended Art Basel in Miami Beach . A lot of our marketing is done through partnerships locally. We also see leads from news coverage and customers who research options via the Internet. But a big source of my clientele is referrals from very satisfied customers.

LUXESF: I know there’s no such thing as an “average customer,” but when you are dealing with a first-time customer who is buying into a jet card, what’s their demeanor like?

PHILLIPS: First time customers often are skeptical. They think it’s too expensive. It’s my job to educate them. To answer your question directly, just making them feel comfortable, giving them all the information they need. When you deal in the world of private aviation, there are many different options. My job is to explain the pros and cons of one versus the other. It’s really just peeling back the onion and listening to the client, understanding their travel patterns.

LUXESF: What objections do you normally get?

PHILLIPS: Price. That’s a big one, obviously.

LUXESF: You said there are a lot of first-time buyers who have to overcome the hurdle of not believing that they deserve the luxury of flying private.

PHILLIPS: Yes. That’s another obstacle.

LUXESF: That’s not an economic issue. That’s not, “I’m spending too much money.” They just don’t feel psychologically that they deserve that luxury.

PHILLIPS: Yes, but that doesn’t come into play too much.

LUXESF: How do you pre-qualify a buyer? What’s to prevent me from coming in and wasting your time?

PHILLIPS: I get into price immediately. There’s really nothing that we need to hide in private aviation

LUXESF: And if they blanch?

PHILLIPS: We know they’re not right for the category. And that’s happened a lot. There’s a television documentary on private aviation that airs periodically and always generates calls from people who definitely could never afford it. Our target market is corporate executives, high net worth individuals, professional athletes and celebrities. There is a huge marketplace in the Bay Area – private equity guys, vineyard owners, technology entrepreneurs, wealthy retired people, flight departments and travel departments with major corporations, and whole aircraft owners.

LUXESF: Do you see the product becoming so commoditized that there will be price suppression?

PHILLIPS: No. It’s only going to go up. It’s going up 4 to 5% on fractional cards per year. The jet card market is growing 30-40% a year. The fractional market, about 5 to 10%.