Delta builds ‘elite' private jet service

It may seem an odd market for a large international carrier to pursue, but Delta Air Lines has turned its attention to a narrow niche of travelers -- the few who are able to afford to travel by private jet.

“Airlines are losing the upper end passenger” said Robert Herbst, the airline pilot behind the website www.airlinefinancials.com. “They’re up against a lot of competition.”

But only Delta has chosen to take on the competition by getting into the private jet business, and it is offering would-be passengers the kind of incentives that even established private operators can only dream about.

While most private business jet companies like NetJets and CitationAir offer their customers luxurious journeys that can include transportation right to the door of the aircraft and specially prepared meals on board, Delta AirElite’scan go even further. Its link to Delta allows it to grant automatic status in the international airline’s frequent flyer program. When AirElite customers fly commercial they are entitled to other amenities like club room use and priority boarding.

“From a Delta standpoint we have an advantage over anyone else, because we have private and commercial under one umbrella,” said Jim Seagrave, president of Delta AirElite. “This is a way to preserve the client at this level and all the business is effectively in-house.”

Over the past decade, the number of people choosing to travel by private jet has grown, with people either buying a fraction of a share of an airplane, or a jet card that guarantees a set number of flight hours. Delta AirElite’s new push into this area of aviation came in January when the airline acquired Seagrave Aviation, effectively doubling the size of its business jet fleet. Increasing dissatisfaction with commercial travel by those with the means to do something about it is affecting the market.

“There are a lot of airlines that are cutting service and a lot of cities are not being service by large jets,” said Rebekah Biddle, spokeswoman for Delta AirElite. Since regional jets often do not have first class sections, these flights were “distorting” the flight experience, Ms. Biddle said.

Pursuing the high-end traveler makes good business sense, industry insiders say.

“Premium passengers represent 8 percent of total traffic but more than 20 to 25 percent of all revenue,” said Steve Lott, spokesman for the International Air Transport Association. “There is a disproportionate relationship between their numbers and revenue they bring in the door.”

Delta AirElite is based in Cincinnati, where the parent airline long had a secondary hub, and does not own most of the 50 business jets it flies. It uses privately owned airplanes that it has contracts to maintain and operate, creating another revenue stream.

Although no other big U.S. carrier has moved into the private jet business, two private jet companies recently announced partnerships with foreign carriers. CitationAir of Greenwich, Conn., will market its services to British Airways customers, and Texas-based Flexjet has a promotional arrangement with Korean Air. Both hope they can expand their customer base as their airline partners tout their services to the first class and premium travelers.

NetJets inked a similar agreement with Germany’s Lufthansa in 2005. Lufthansa cut its ties to NetJets in 2008 to begin its own service, Lufthansa Private Jet.

“The idea is you don’t have the typical first class passenger anymore,” said Martin Riecken a spokesman for Lufthansa. “Sometimes they travel with their families in economy, the next day they go on a private jet trip for business. We need to offer the full range of aviation options. It’s an extension of the shopping basket we offer to our customers.”

Even with the stalled global economy and what Mr. Riecken called two “difficult” years, Lufthansa plans to stick with this service for the airline’s premium customers in hopes passengers will return the loyalty.

“A high number of people who use our service, use it regularly. We also tie them closer to Lufthansa,” Mr. Riecken said.

Delta AirElite’s new focus has a similar goal. And though other major U.S. carriers say they have no similar plans, Joseph Moeggenberg, president of the aviation information company ARGUS in Cincinnati, says airlines are watching Delta with interest.

“The airlines are studying this business. They want to control the flight from beginning to end.”