Robbo Posted February 15, 2008 Posted February 15, 2008 Global Express $61MThe boardroom takes to the sky Author: Story by ANGUS GRIGG Australian Financial Review Magazine -------------------------------------------------------------------------------- BUSINESS AS AUSTRALIAN BUSINESS EXTENDS ITS REACH ACROSS THE GLOBE, OWNING A MULTI-MILLION DOLLAR PRIVATE JET IS A MUST-HAVE FOR THE NATION'S CORPORATE ELITE. TECHNOLOGY NOW ALLOWS EXECUTIVES TO DO BUSINESS AT 45,000 FEET IN WHAT'S BECOME THE NEW FIRST CLASS Kerry Stokes, tie loosened and collar bent, stands at the door of his Falcon business jet. He pauses, surveys the Sydney afternoon and descends onto a perfectly placed square of red carpet. Two mini-steps on the tarmac later and Australia's eighth richest man is beside one of three spit-polished BMWs - all dark glass and gleaming wheels. Stokes chats with an airport official, leaning in close to overcome the aircraft noise, as his son Ryan steps off the $41 million jet sporting a wireless earpiece and sharp suit. The billionaire's wife, Christine, and a friend follow with shopping bags. Pleasantries are exchanged, then father, son and their female companions step into separate cars and are off across the tarmac. The whole scene takes five minutes and is repeated all day every day at jet bases across Australia. This is the new first class. There's no mixing with the public - even the business or first-class public - or queuing for a taxi, in this world. It's one into which no amount of frequent-flyer miles will buy you entry and it's a class that an increasing number of Australia's super rich - swelled by a decade of prosperity - are choosing to fly. For many of these frequent flyers, handing over $30 million for a set of wings is not a stretch. The sharemarket has never been better, more than doubling in the last three and a half years, and the country now boasts a record 131 people worth more than $300 million and an economy approaching $1 trillion. This wealth has pushed the nation's private jet fleet past the 100 mark this year, nearly double the number five years ago. For these businessmen, the private jet has become the 21st century equivalent of the car-and-driver. But there's a lot more to this trend than just a penchant for the latest, biggest and fastest - although this being the alpha-male world of serious wealth, that inevitably plays a part. More generally, business - and the fortunes that accrue from it - are now truly global. Frank Lowy's empire stretches from the United States to Europe, Australia and New Zealand. James Packer has just sunk $540 million into Macau, has gaming interests in the UK and investments in the US. Eddie Groves of ABC learning is scaling up in the States and, unfortunately for Multiplex, it has Wembley Stadium in London. These men, and the growing number of others like them, need to be in easy reach of their far-flung assets and flying commercial is not considered 'easy'. When George Roberts came in from New York to lob a $17 billion takeover bid for Coles Myer, he was certainly not flying commercial. The banker from Kohlberg Kravis Roberts & Co flew his jet into Melbourne in the early morning, outlined his proposal, and left after lunch. But, unlike in the US, where 85 per cent of the Fortune 500 companies operate their own aircraft (often multiple aircraft), in Australia the corporate jet remains largely the prerogative of private companies - less than 5 per cent of the ASX 300 own a jet. Private jets are still considered a luxury item that any board would rather not have to justify to pensioners at the annual general meeting. It is partially about money. At most major airports, landing fees alone will set you back more than the cost of an airline ticket to London. Then there's the mandatory two pilots, catering facilities and a fuel bill that would support a small South Pacific nation. Nonetheless, in an era when time may be inching ahead of money in the old ranking, the savings of private air transport are hard to argue against. There's none of that getting to the airport three hours before a flight, no more lining up at check-in and, barring extreme weather, you get to fly when you want. Even the curfew at Sydney Airport no longer applies to most corporate aircraft. David Lowy, a high-order enthusiast, concedes that the costs are hard to justify when compared with a regular airfare but their contribution to efficiencies is in another league. He should know. Westfield Group has owned aircraft since 1980 and its most recent annual report declares two jets valued at $100 million - both of them Bombardier Global Expresses. LFG Holdings also has a jet - a Challenger 604 - which it bought from Westfield last year for $28 million. The property giant is one of the few public companies in Australia that not only has its own aircraft, but is also happy to talk about them. Overall, Lowy's a little surprised that other listed Australian companies don't own their own aircraft. He believes his father Frank could not have built Westfield into a global property giant without one. "You can't have a meeting in Qantas business class or even first class," he says. "The big advantage of a corporate aircraft is that you can turn a long-haul flight into work time." They are your 24-hour boardroom, complete with satellite phone, fax and the internet. "You can also leave a meeting when you're finished, rather than cut it short to catch a plane," he says. Westfield's annual report shows the Global Express costs roughly $4,200 an hour with Lowy senior's 75 hours a year in personal flights costing $315,000. But, as his son emphasises, what is the cost to shareholders of having their highly paid chairman - he earned $13.3 million last year - stalled in airport lounges on company time? For all that convenience and efficiency, however, in this country a stigma still attaches to the company-owned private jet as Brian Gilbertson's experience attests. When the South African was forced out of BHP Billiton in January 2003, one of the chief conflicts between himself and chairman Don Argus was the CEO's Global Express. The board said the jet was more about ego than necessity. Gilbertson called that attitude small-minded Australian parochialism. The board won and BHP Billiton, with operations spanning the globe, sold the jet and closed its flight department. To this day, the company prefers to hire, when necessary, rather than own. The stigma attaching to corporate jet ownership is a hangover from the days of failed corporate adventurers such as Alan Bond, Christopher Skase and John Elliott. Elliott had the flying beer can, a Boeing 737 painted in Foster's blue and gold. It was handy for travelling the globe but more often ensured that he rarely missed a Carlton game. Skase's Qintex had a Falcon business jet, once owned by King Hussein of Jordan, which often ferried fresh flowers from Melbourne to Brisbane. Bond and Robert Holmes à Court had Boeing 727s, while Bruce Judge at Ariadne had three Falcon jets at his disposal, worth $35 million, or 10 per cent of his shareholder funds. It's an era that has long passed. These days a jet needs to be explained. Even James Packer has felt the need to justify his $61 million Global Express, which he took delivery of a few months after his father Kerry died. Packer has made good use of the jet, spending weekends with friends in Fiji and the winter in Europe. But as his Nine Network was very publicly cutting costs and retrenching staff earlier this year, he took the unusual step of commenting on his jet, owned by Consolidated Press Holdings, the family's private company. In the process Packer, who was playing polo in England at the time, took a shot at the largesse of News Corp chairman Rupert Murdoch. "My plane is similar to the one John Hartigan [News Ltd chairman] has in Australia and much smaller than Rupert's," he said. This is no longer the case. News Ltd shipped its Gulfstream IV back to the US earlier in the year and Hartigan is now joking about the hardships of commercial airline travel. "I'm now telling everyone they have to toss a Mintie back to seat 55D," he said in July. No such problems for Murdoch though - his Boeing Business Jet (BBJ) is the size of a small commercial airliner. News Corp's filings with the Australian Stock Exchange indicate that Murdoch uses the company aircraft for all travel due to 'security reasons'. News's chief operating officer Peter Chernin and finance director David De Voe also endure this hardship, which has cost shareholders $US1.1 million ($1.47 million) over the past three years in personal travel. Not that this has rated a mention in the US. So common are private jets there, a recent profile of News in The Wall Street Journal avoided the issue entirely, saving its outrage instead for the information that shareholders were paying $US50,000 a month for Murdoch's New York apartment. In this country, the shyness about private jet usage extends even to government. Although all the noise around the federal government's fleet of five new jets has fallen away since their purchase, John Howard remains wary of being snapped emerging from his near-new BBJ. As the country's most-travelled leader, he is seen by Boeing as a great ambassador for the jet, but the purchase of the new fleet, two BBJs and three smaller Challenger 604s, in 2000, was a decision that cabinet agonised over for nearly two years. It was debated three times in 15 months and is said to have taken more time than reforming the tax system or selling off Telstra. Back then, it was not considered a good look for the PM to be jetting around the world in what Boeing describes as a 'floating hotel'. But Australia looks to have moved on a little since then. The reality, as the growth in plane numbers suggests, is that the old game of cutting down tall poppies in mid-air is giving way to the sheer necessity of following your own timetable rather than an airline schedule. Those in the industry like to call them 'time machines'. It's a catchy sales term dreamed up by creatives but the descriptor does have some merit. Private jets not only fly higher and faster than commercial airlines, but in doing so they make a mockery of distance. Billionaire wine and coffee pioneer Bob Oatley is a great advocate of the private jet. Oatley reckons his $22 million Citation X, the fastest non-military aircraft on the market, can get from Sydney's Bankstown Airport to his Mudgee property in just 12 minutes. His sons Sandy and Ian say it's more like 20 minutes, but it hardly matters. Oatley, who ran his Rosemount Estate Winery from the company's private jet for years, has been spotted on tarmacs from Queensland's Hamilton Island to Sardinia. For him, the private jet is mostly business with a little pleasure on the side. During last year's Sydney Hobart Yacht Race he got special permission to fly low over his Wild Oats XI as it crossed Bass Strait on the way to taking line and handicap honours in the big race. When grapes were in short supply in the mid 1990s, he secured supply contracts by picking up growers in the jet and taking them off for a few days' holiday on the coast. Dick Smith is equally pragmatic with his flying time. Smith got his first aircraft in 1976 while expanding his chain of electronics stores. "I could not have done it without a plane as I was going to lots of regional areas where there were no regular flights," he says. Smith soon moved up to jets and since then has had three, his latest a $9 million Citation CJ3 he picked up in the US earlier this year. Like many aircraft in the smaller Citation range, Smith's jet can fly non-stop to most places in Australia, but is not built for long-haul flights. Getting his new purchase home entailed the sort of adventure we've come to expect of Smith. He teamed up with another pilot and flew the jet back to Sydney via Seattle, Anchorage, Siberia, Osaka, Guam and Thursday Island. The whole journey took three days. Despite this lack of range, the smaller Citations made by Cessna remain the country's most popular aircraft. If there is such a thing, they are the 'everyman jet'. Edwards Coaches from Armidale, NSW, took delivery of a $5 million CJI in April and North Queensland builders JM Kelly have a $7 million CJII. Michael Gordon, who cashed out $130 million from selling his Peppercorn child-care centres to Eddie Groves, has an $8 million Citation Bravo, and the Ingham family, a Citation VII. For Smith, his CJ3 is part passion, part practicality. He's got investments in Tasmania, Coffs Harbour and outside Canberra. To inspect these interests, Smith will helicopter from his Sydney home in Terrey Hills to Bankstown Airport. From home to his property near Canberra takes less than an hour. "If I had to drive to the airport and get on a commercial flight, it would take half a day," he says. Unlike most owners, Smith flies both the chopper and jet himself. An avid air safety campaigner, he is quick to espouse the merits of modern aircraft over turboprops (propeller-driven planes). He cites the case of the late Peter Menegazzo, once the country's largest cattle baron, who was killed when his Piper Chieftain went down during a storm in December 2005. Smith, who almost sold his old Citation Bravo to Menegazzo, says an accident like that would never happen in a jet. "I can't think of the last time we had a corporate jet accident in this country," he says. He points out that most jets fly above the weather at 45,000 feet and that "in a jet, you will never fly into a storm, as you can see it on the radar". Kirolf Ainsworth, the son of poker-machine giant Len, whose family is worth $1.9 billion, believes Australians are gradually starting to realise the benefits of buying modern aircraft. "If you want to be a player internationally, the smart thing to do is get a new jet," he says. "There comes a time when you get fed up with Qantas and their attitude and say: 'Bugger it, I'm going to buy a decent plane'." Ainsworth, who has just sold his Citation Bravo and traded up to a $22 million Hawker 4000, says it's nearly as economical to take his own jet to Europe as fly commercial. "If I am going to take my family plus a nanny, then it's going to cost me a least $50,000," he says. "You can get to London and back on a private aircraft for the same price." Ainsworth, who runs 15 service stations in regional Australia, says: "Going to multiple destinations in the one day is only possible on your own aircraft." And those multiple destination opportunities don't have to be just within Australia. When Alex Waislitz, son-in-law of Dick Pratt, took a group of fund managers on a global tour in the family's $61 million Global Express, they took in four cities in 10 days. The group saw companies in India and St Petersburg, spent a weekend in Prague and stopped off in the Maldives for 'fuel'. The Pratts, it seems, can't live without a jet. When their Global Express, which comfortably sleeps seven, was out of service for two months' maintenance, the country's third richest family (estimated wealth $5.2 billion) leased one from the US. But not everyone has felt this need. Janet Holmes à Court has done away with the jet. In 1994, she sold the Boeing 727 that her late husband Robert had used for much of his life as a corporate raider, replacing it with a modest Citation V. Her son Paul, who now runs the family's Heytesbury Holdings, said the Citation went in 1998 and had not been replaced. "I think unless you have a far-flung empire, then it's not really necessary to have one," he says. Far-flung empires are why Transpacific founder Terry Peabody has always been a jet owner and industrial property mogul Greg Goodman took delivery of a Challenger 604 in March to replace his old Learjet 60. Both run billion-dollar public companies with operations across Australia and off-shore and neither jet is company owned. Goodman declined to be interviewed but stressed through a spokesman that his $30 million aircraft was privately held. Peabody also declined to speak, but has previously talked about "aircraft normalisation". Soon after listing his Transpacific Industries in May 2005, Peabody talked at length during a profit briefing about selling his old jet. This was box-ticking in the extreme for the local market. The waste management boss made a big deal of selling his Gulfstream for $11.8 million and even boasted of making $100,000 on the foreign exchange. The market was pleased. Peabody, however, was not to be without a jet for long - an entirely sensible call given much of his business is in remote Australia and New Zealand. Three months after selling the Gulfstream, his private company Brenzil picked up a $35 million Falcon 2000, which is often seen on the tarmac near his Craggy Range Winery in Napier, New Zealand. For Eddie Groves, who bought himself a $7.5 million Citation CJ2 in November last year, the issue is even more sensitive, as the child-care entrepreneur has government subsidies to thank for much of his $325 million fortune. Stepping out of a private jet would not be a good look. So Groves, remembered for crashing his helicopter into the Brisbane River, has kept his recently purchased aircraft - a Citation CJ2 - pretty quiet. Such publicity aversion has led to many corporates preferring to charter rather than own. Sydney alone reports a near doubling in business over the past four years. In Western Australia, where the mining boom is running into its fourth year, charter is also preferred. David Lowy can't get too excited about corporate jets. "They're a business tool," he says. "Every aircraft is a compromise. It's a bit like choosing between Holden and Ford." Lowy talks about convenience, security and efficiency and acknowledges the importance of having access to them for business. Table : The new jet set Rupert Murdoch Boeing Bus Jet $74 million News Corp John Howard (RAAF) Boeing Bus Jet $74 million Prime Minister Reg Grundy Boeing Bus Jet $74 million Investments Dick Pratt Global Express $61 million Visy Industries Frank Lowy Global Express $61 million Westfield Group James Packer Global Express $61 million Publishing & Broadcasting Ltd Solomon Lew Global Express $61 million Retail, investments Graeme Hart Global Express $61 million Burns Philp John Gandel Global Express $61 million Property Peter Lowy Global Express $61 million Westfield Group Lindsay Fox Global 5000 $46 million Linfox Greg Norman Gulfstream 550 $60 million Golf, clothing, wine David Lowy Challenger 604 $30 million LFG Holdings Greg Goodman Challenger 604 $30 million Macquarie Goodman Tim Roberts Challenger 604 $30 million Multiplex Peter Lew Challenger 601 $10 million Retail, investments Kirolf Ainsworth ¿ Hawker 4000 $22 million Retail, investments Kerry Stokes Falcon 900 $41 million Seven Network Lang Walker Falcon 900 $41 million Walker Corp Terry Peabody Falcon 2000 $35 million Transpacific Industries Paspaley family Falcon 900 $41 million Paspaley Pearling Peter Scanlon Lear 45 $14 million Investments (former Patrick) Robert Gerrard Lear 60 $16 million Clipsal Bob Oatley Citation X $22 million Hamilton Island, wine Eddie Groves Citation CJ2 $7.5 million ABC Learning Dick Smith Citation CJ3 $9 million Property Ingham family Citation VII $14 million Poultry, racing George Kepper Citation Sovereign $20 million IT, agriculture, property Michael Gordon Cessna Bravo $8 million Investments (sold Peppercorn) Mick Doohan Cessna $3 million Former F1 motorbike champion Baillieu Myer Hawker Beejet 400 $9.2 million Retail, investments On order. All prices are for new jets, based on August figures from Business & Commerical Aviation Source: http://www.jetcorpaustralia.com.au/blog ... 58531.html
Tim E Posted February 16, 2008 Posted February 16, 2008 What sort should we get Robbo? Citation X sounds great to me...do you reckon we should house it in the hayshed here in Moyhu or down the Prom or out at Essendon? :P :lol: p.s..maybe forget the first two sites..would hate to watch an air crash investigation show finding a tiger snake coiled up in the throttle gear as the cause of a prang!
Guest g_i_jack029 Posted February 16, 2008 Posted February 16, 2008 Citation X sounds good but a gulfstream 550 is the way to go, i love the gulfstream 550, such a beautiful aircraft. also know as the Gulfstream V SP. Can fly 12500km, nice looking, fairly new. Cruise speed 408knots (904 km/h)!!! Well it has 2 RR turbofans (BR-710 if ur wondering) which give 15,385lbf each!!! oh yeh!!! :D But like all aircraft it costs alot to fly it, maintain it, house it, fuel for it and you don't wanna crash it :)
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