Corporate jet use

Mutual of Omaha and Valmont Inc. are selling their corporate jets after decades of flying executives, staff members, clients and others for business.

For Mutual, the decision followed the closing of its operating centers in communities in South Dakota, Oklahoma and South Carolina that aren’t close to commercial airline hubs.

For Valmont, the change came after a travel analysis showed that many of its flights use routes that don’t include Omaha.

Other Omaha companies are keeping their aircraft, and national figures show that corporate jet ownership has been fairly steady over the past decade, aside from a dip during the Great Recession. Federal Aviation Administration records show 24 other aircraft owned by large Douglas County companies whose main businesses aren’t aviation.

Kiewit Co. has eight Learjets, ConAgra Foods has seven Learjets, Union Pacific Railroad has three Falcons, Werner Enterprises has two Falcons, Gavilon has a turboprop and three other companies have one jet each — Lozier Corp., Scoular Co. and HDR Inc.

Corporate aircraft can be controversial because of the image of jet-setting executives being tempted to use company planes for personal pleasure. But they also can be time-saving tools well worth the cost of pilots, insurance, maintenance, hangars and the planes themselves.

Mutual and Valmont are selling their Challenger 604 jets, manufactured by Canadair, a division of Bombardier Aerospace of Montreal, Canada. Mutual’s aircraft is listed at $7.25 million. Valmont’s is listed at $5.25 million.

Prices for high-end airplanes can vary depending on their coming maintenance schedules and individual features, an aircraft broker said.

The two planes are housed at an Eppley Airfield hangar that Mutual owns on land that it rents from the Omaha Airport Authority. The company is “exploring its options” for the hangar, spokesman Jim Nolan said.

The company decided late last summer to end its aircraft program at the close of 2015.

“It’s a pretty straight-up cost-benefit analysis,” Nolan said. “Usage of the aircraft declined significantly over the past year or two. It just didn’t justify the investment that it represents.”

The company had phased out its customer service operations in Woodward, Oklahoma; Aberdeen, South Dakota; and Gaston, South Carolina. When those offices were active, the nine-passenger Mutual jet saved considerable time and money for people traveling to and from Omaha, Nolan said. Mutual’s plane also would bring clients and officials from financial rating agencies to Omaha.

Now Mutual’s only significant operation outside Omaha is a bank office in Phoenix, which has direct commercial flights from Omaha.

Nolan said Mutual is using commercial flights, although charters might be used for certain circumstances, and the company is checking into fractional ownership or “jet card” systems.

With fractional ownership, a buyer owns part of an aircraft’s time but leaves management of the plane to a third party. Jet card systems charge travelers by the hour for flights on a group of aircraft in a managed network of planes owned by others.

Mutual’s plane is parked, awaiting new owners, but Valmont’s Challenger 604, also housed at Mutual’s hangar, will keep flying until it sells, Valmont spokesman Jeffrey Laudin said.

He said the company’s travel needs haven’t changed, mostly between its manufacturing facilities in several U.S. locations and elsewhere in the world. The company makes irrigation systems and infrastructure equipment such as light poles.

Laudin said a recent in-house flight analysis showed that having a single plane based in Omaha isn’t an efficient model because many of the trips are by people going from one plant to another without hitting Omaha.

“We don’t fly enough in and out of Omaha to justify having a central plane in Omaha,” Laudin said. Instead, the company is looking into fractional ownership or jet cards.

“It’s like a taxicab from wherever you are,” Laudin said. “It all comes down to the hours you use.”

The decision whether to own a business airplane or use other travel options is complex, said Jet Tolbert, president of American Aircraft Sales in Boca Raton, Florida.

A business jet generally can be flown about 800 hours a year, and many businesses use them for their own travel — about 300 to 450 hours. That leaves hundreds of hours of idle time, so some owners offer their aircraft for charters or other flights.

Charter revenue reduces the cost per hour of the company’s flight time, Tolbert said, making it more affordable and in many cases cheaper than fractional ownership or jet cards.

But sharing a plane also can raise scheduling problems, blackout periods and delays, he said. “There’s nothing more flexible than owning an aircraft.”

Business air travel is affected by the economy, said Dan Hubbard, a spokesman for the National Business Aviation Association in Washington, D.C.

Average hours flown by business jets dropped 28 percent from 2006 to 2009 and have slowly increased since then as the economy has improved, FAA figures show. The agency’s latest count of corporate aircraft totaled 11,900 in 2014.

“As the economy improves, we see all the metrics inch up a little bit,” Hubbard said, including new aircraft purchases, flight hours and fuel.

The recession also taught businesses that they need to develop international markets in case the U.S. economy turns sour, he said. For many businesses, that means having a large, long-range jet that can fly to foreign destination on a moment’s notice.

But ownership decisions are company by company, he said. Some use their aircraft every week. Some use it only occasionally, but those trips are “mission critical” so that an aircraft and crew are “a must-have,” Hubbard said.

Lozier Vice President Bob Braun said the Omaha store fixtures manufacturer uses its Cessna Citation Excel for business about 20 percent of the time and offers the other hours for charter flights.

Company flights typically go to Lozier plant locations in Indiana, Pennsylvania, Alabama, Missouri and Texas, mostly locations not close to airports with commercial flights, Braun said. The company also can bring customers to Omaha to see custom-designed products.

“We can pick them up in the morning, have them here and look at the product and have a tour, and then have them back home that evening,” Braun said. “The whole question is, how do you value people’s time and being home with their families instead of being on the road?”

Company engineers may need to visit four or five remote plant locations in two days, which isn’t possible using airlines and rental cars, he said.

Gavilon spokesman Pat Burke said the commodities company’s seven-seat Beech B200 flies about 250 hours a year, mostly between Omaha and its 140 grain-elevator locations around the country, from North Dakota to the Gulf of Mexico, from the West Coast to the Midwest.

“We have so many locations and facilities that aren’t readily available by normal commercial airlines,” Burke said. “We’re landing a couple minutes away from our locations instead of flying to Chicago, renting a car and driving for four hours. The time and cost make a whole lot of sense.”

The 20-year-old plane isn’t built for luxury, he said, but it’s convenient for executives, managers, employees and clients to fly in and out of Omaha.

Gavilon doesn’t offer its plane for outside charter flights because it may want to take a short-notice flight, Burke said.

Aircraft management companies such as Jet Linx of Omaha and NetJets, a division of Berkshire Hathaway Inc. of Omaha, hire pilots, schedule maintenance and handle other details.

NetJets offers both fractional ownership and jet card services, and Jet Linx has shifted from fractional ownership plans to strictly jet cards, a faster-growing option, CEO Jamie Walker said.

Jet Linx added 30 aircraft to its managed fleet last year and now has 65. “It’s a healthy economy when it comes to whole aircraft ownership,” Walker said, partly because the aircraft can offset some of its costs by earning revenue hours when the owner isn’t using it.

He said videoconferencing and other methods of long-distance communications aren’t denting the business travel market. “The personal handshake and going out to dinner haven’t been replaced by videoconferencing.”

The Omaha World-Herald Co. is owned by 
Berkshire Hathaway Inc.

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An earlier version of this story referred to Jet Linx as Jet Lynx.

Contact the writer: 402-444-1080, steve.jordon@owh.com

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