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The
Bombardier Challenger CL-600 chartered jet carrying
employees of New York-based private equity firm Kelso &
Co. was barreling down the runway of New Jersey’s
Teterboro Airport at almost 127 miles per hour en route
to Chicago when the plane failed to lift off.
The
pilots hit the brakes and thrust reversers, sending the
two-engine jet skidding across US Route 46. It wound up
almost halfway inside a clothing warehouse after ramming
through the building’s brick wall.
More
than three years after the February 2005 crash, which
injured all 11 people aboard and three on the ground,
controversy is still raging over the charter jet
industry and its methods for ferrying well-heeled
passengers.
The US
Department of Transportation, Federal Aviation
Administration and National Transportation Safety Board
(NTSB) are zeroing in on brokers and other
intermediaries in the $8 billion-a-year US charter
business.
These
unlicensed, lightly regulated companies don’t fly the
planes, much less own them. They make their money by
arranging flights and charging as much as 20 percent of
a trip’s cost, which can soar to more than $9,000 an
hour, according to prices quoted on Teterboro-based
Freedom Jets Inc.’s web site.
In
contrast to the luxury trappings of private jets,
charter brokering is a bare-knuckle trade in which
companies can scramble for profits and poach each
other’s clients and employees. The stock promoters for
one broker, Austin, Texas-based Connect-A-Jet.com Inc.,
were sued in March for fraud by the US Securities and
Exchange Commission. The case was pending as of
mid-August.
“Folks
are going to go out there expecting it to be just like
getting a ticket on American Airlines or Delta,” says
James Hall, NTSB chairman from 1994 to 2001, referring
to the difference between the charter industry and
commercial airlines. “The safety standards are not
there.”
Once
limited to Wall Street executives and Hollywood
celebrities, charter flights have become accessible to
anyone with deep pockets and a computer mouse—in no
small part because of brokers. Individuals and
corporations who can afford private aircraft supply the
raw material for the burgeoning industry.
Many
owners take delivery of their new jets and turn the
planes over to charter companies to defray costs, Hall
says. This creates fertile ground for brokers. Whether
the wealthy hedge fund managers and other passengers get
what they think they’re paying for is another matter.
In the
Teterboro accident, the broker was New York-based Blue
Star Jets Llc., named for the fictional airline in
Oliver Stone’s 1987 movie Wall Street. Blue Star
arranged the flight and vouched for the safety of the
operator. (Bloomberg) |
