Private Jet Business Keeps Growing at Hayward Airport

APRIL 29, 2004

Want to avoid the madness and congestion at the airport and the hassles of taking off your shoes and belt to get to your flight? Company executives looking for more privacy, security and productivity when flying on business are turning to private corporate air travel if they can afford it, and new hangars are being built at Bay Area airports to accommodate the demand.

The "sheer agony of going on airlines" is driving the business, says Jim Rutherford, vice president with San Jose Jet Center, a fixed-base operator providing hangar space and maintenance services for corporate planes at San Jose International Airport. "Anybody that can afford to buy a charter or buy a fractional ownership of a plane is doing so," Rutherford said.

Booming business pushed San Jose Jet Center to develop a new 47,000-square-foot hangar, set to open in June. With the new facility, the company will now offer 200,000 square feet of hangar space in five buildings housing 60 to 70 planes.

Corporate air travel entails either using a charter service, buying a fractional ownership of a plane, or purchasing and maintaining a company plane -- the route chosen by many venture capitalists, investment banks, and major public companies. Safeway Inc., PG&E Corp., and Bechtel are among the companies that store their airplanes in hangars at different Bay Area airports.

Oakland International, San Jose and San Francisco International airports all provide hangar space for private planes in sections apart from where commercial carriers operate. Smaller airports in Hayward, Livermore, Concord, and San Carlos offer less congestion for private flying since no commercial flights go in or out.

Generally speaking, to fly an executive on a commercial operator like Southwest Airlines from the Bay Area to Los Angeles might take three hours of one-way travel and waiting time at a cost about $100 on average. By using a charter service at Silicon Valley Aviation in San Carlos Airport, it will take 10 minutes for an executive to get from his car to the plane and another couple minutes to take off.

The total trip will take less than half as much time, and when the executive arrives in Los Angeles, a car will be waiting for him as soon as he steps off the plane, says Michael Reich, owner of Silicon Valley Aviation. The cost? Between $600 and $1,000 for a one-way flight, even a last-minute one.

At Hayward's airport, a new $7.2 million, 60,000-square-foot hangar called Park Avion opened in December to allure the top-end of corporate plane owners looking to expand their fleets or move out of the area's commercial airports. Owned by Ascend Development, Park Avion features six individual bays that can each accommodate one large jet such as the Gulfstream IV or Falcon 900, or four to five groups of smaller aircrafts.

The hangar serves as a base for Bay Area companies to store their planes for travel and also as a landing pad for corporate jets flying into the region from elsewhere. Three additional hangars are planned for the site, totaling 75,000 square feet, at a cost to develop of around $8 million. Set to open by the end of 2005, lease commitments are in place for half the space, and the current hangar can accommodate several more planes, says Gary Briggs, president of Ascend Development. When the expansion is completed, the site expects to house a total of 30 corporate airplanes.

Park Avion's selling points include state-of-the-art security, including 24-hour hangar surveillance via a secure Web site, along with ease of travel and the services of Trajen Inc. -- a leading airplane service provider for the Department of Defense and many Fortune 500 companies.

There is no automobile traffic congestion getting into Hayward Executive Airport, and once inside, cars can be parked inside a secured parking lot that requires an access code. A camera photographs and stores a picture of visitors entering the secured lot. "It's a way that people doing business can move efficiently and not waste significant amounts of time waiting in airports," Briggs says.

To store a medium size jet, which flies about 8 passengers, costs $2,500 per month at Park Avion. Typical corporate planes run anywhere from $2 million to $35 million.

Despite the common thought that airplanes are burdensome money-losing assets, corporations that own planes for company use can recoup their costs by also renting their planes out as charters. Almost all of the companies at Silicon Valley Aviation employ this method and use tax advantages to create profits, Reich says.

Current tax law lets a company buy a new plane and immediately depreciate 50 percent of its value, so long as it is placed in service by the end of 2004.

Source: ANG Newspapers (Oakland Tribune)