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Elite Traveler – ET Insider – November 16, 2010

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ET Insider – November 16, 2010

Elite Traveler Insider –

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November 16, 2010

Elite Traveler Insider

By Douglas D. Gollan, President and Editor-in-Chief, Elite Traveler Magazine  

Welcome to the latest issue of Elite Traveler Insider, the bi-weekly newsletter designed to update our top partners on trends in the private jet lifestyle. This information is provided to offer a better understanding of how to target these globetrotting elite travelers, their impact on your business and other trends that affect you. Remember, private jet travelers are paying up to $10,000 per hour to fly by private jet, so these super rich consumers could be and should be your best customer. We talk about them and how you can get more of them and more from them.

In this issue:

1. Brandweek: The ‘Aspirational’ Consumer: R.I.P.

2. GM Execs Can Fly Privately Again; The Chairman Never Stopped

3. Private Jet Travel Grows 10 Percent in October

4. American Affluence Research Center: Focus on Top One Percent

5. China Will Ease Controls on Private Jets

============================================================ Not another magazine or newspaper in that stack of unread mail: With over six private jet trips every two months, that’s at least six chances for wealthy private jet travelers to see your advertisement in Elite Traveler. And even better, share it with friends on the jet! ============================================================

1. Brandweek: The ‘Aspirational’ Consumer: R.I.P.

Robert Klara’s sums up the state of the aspirational consumer in his recent article in Brandweek:

It wasn’t very long ago that marketers were assured that most consumers were still willing to trade up. You remember, don’t you? Average Joes and Soccer Moms splurging for that extra “little” something — be it a $6 latte or a $300 Coach handbag — just because they worked so hard and deserved some of life’s finer things. A good many starry-eyed marketers predicted that, even in a recession, this be-good-to-yourself dynamic would somehow hold true.

It hasn’t. While no headlines have announced the official passing, it’s become clear that the “aspirational” consumer — that cherished demo of marketers everywhere — is dead.

According to a just-released study by the American Affluence Research Center, the spending habits of the utmost tier of earners remains robust, but everyone below has cut back and plans to stay there. “If you look at the 10-15 percent [sales volume] declines for upscale retailers and brands, it was [due to] people spending beyond their means and not being able to sustain it,” said AARC president Ron Kurtz. Even within the sphere most would consider well-off ($250,000 average annual household earnings), 41 percent reported they’re making a conscious effort to reduce expenditures for the next 12 months.

Isolated data? Hardly. Consumer Edge Research recently found that skipping top-shelf brands in favor of lower-end ones is most common in households with incomes of $100,000 or higher. A study conducted by PriceWaterhouseCoopers / Kantar Retail earlier this year revealed that 93 percent of shoppers say they’ve changed their shopping behavior — with 17 percent opting for cheaper brands. “Although we’re starting to see signs of shoppers getting tired of trading down, they remain cognizant of today’s economic realities,” said a Kantar official in a statement. These findings are in-line with last year’s McKinsey study, which revealed 41 percent of consumers think that premium brands are “not worth the money.”

So much for life’s little indulgences. In fact, the whole affordable luxury pitch has lately been the target of various poison arrows, such as one recent post on Families.com: “Aspirational marketing is a technique in which the goal is to sell items to people who can’t afford it.” Ouch.

“Marketers have long known that we have an aspirational society, and they’ve gone heavily after those consumers,” observed Claire Ratushny, a brand-positioning consultant based in Eastford, Conn. “Now, ‘aspirational’ is a dirty word.”

It was nice while it lasted.

============================================================ With 41 trips per year, including 11 intercontinental trips and 3+ principal residences, we know where you’ll find elite travelers: in their private jets and in private jet terminals. It’s why we’ve invested in providing BPA audited circulation to private jets and private jet terminals in over 100 countries. ============================================================

2. GM Execs Can Fly Privately Again; The Chairman Never Stopped

Yes, there was that ‘incident’ where the automaker CEOs showed up in Washington, DC looking for taxpayer money, arriving on their private jets. According to The Wall Street Journal, General Motors executives have been cleared for takeoff again.

“The automaker has been given the go-ahead by the federal government to use chartered aircraft as early as Thursday to ferry managers on a “road show” promoting G.M.’s public stock offering, according to government and company officials who declined to be identified… ‘G.M.’s corporate travel policy allows charter flights when supported by a business rationale,’ said the spokesman, Tom Wilkinson. ‘This is consistent with our requirements under TARP and our Treasury loan agreement, as our shareholders know.’

“G.M. did not provide details on what type of jets would be used in the road show or how much they would cost.

“For years, G.M., Ford and Chrysler maintained large aircraft operations for both domestic and global travel, often reserving specific jets for individual senior executives. Ford, which did not need a federal bailout, kept its planes even after the uproar in 2008 led G.M. and Chrysler to give them up.

“Tired of taking commercial flights to his Texas home on weekends, one G.M. executive found a way to cope with the ban. Edward E. Whitacre, chairman of the G.M. board and until recently its chief executive, flew home on private planes paid for by his previous employer, AT&T, as part of his retirement package. Or Mr. Whitacre simply paid to charter his own plane.”

============================================================ Spotting Fakes: How can you be sure that a publisher is really sending out the number of copies he or she says? How can you make sure they are actually putting copies on private jets? Ask for the BPA or ABC audit statement. You can find our BPA statement here. ============================================================

3. Private Jet Travel Grows 10 Percent in October

Aircraft activity continues its rebound in October. ARGUS TRAQPak data indicates October private jet aircraft activity was up 10.4% over the previous month. Looking at market categories, increases were seen across the board with the fractional segment showing the greatest rise, up 13.1%, Part 135 charter activity was up 11.3%, and Part 91 corporate increased 9.2% over September.

Reviewing aircraft categories, all were up from the previous month (led by large cabin aircraft, which were up 14.7% from the previous month). The mid-size cabin market saw an increase of 11.8%, and the small cabin market saw an increase of 10.0% from September. The individual market segment with the greatest increase over September 2010 was the large cabin fractional group at 27.4%.

============================================================ Would you buy a diamond without a certificate? Would you fly on a plane that hadn’t been certified as safe to fly? Would you buy milk in the supermarket that didn’t have a ‘sell by’ date? Before you buy advertising, next time a publisher says they have distribution on private jets or in private jet terminals, ask for their Circulation statement from ABC or BPA. Ask for them to show you the number of copies going to private jet travelers. You can find our BPA statement here. ============================================================

4. American Affluence Research Center: Focus on Top One Percent

What’s the Reader Household Income of the media you are using? If the majority of the audience is under $300,000 you will want to read the latest research report from the American Affluence Research Center.

It was a message I doubt most luxury brands wanted to hear. One thing is clear: over the past decade most luxury brands have become dependent on a dual audience of Ultra High Net Worth and Aspirational Consumers. While the big houses are posting nice financial numbers on the back of China, the aspirational consumer in the U.S. is still in a coma according to the latest research by the American Affluence Research Center. Clearly for any luxury marketing executive, the idea of a mechanical watch on every wrist seems much more lucrative than having to fight it out for the deep pockets of the ultra wealthy. However, more and more the signs are that the road ahead for luxury brands is to make sure they intensively market to the Ultra High Net Worth consumer. The good news is not all will go this way making the competition somewhat easier.

For those companies that can afford to chase both, there is no problem. For those that have to make a choice on where to place their marketing dollars, take heed of the AARC’s 18th twice-yearly survey of consumers with an average household income of $290,000.

Similar to the Conference Board’s September consumer confidence index for the general public, this new survey of the wealthiest 10% of US households shows the affluent have a relatively negative 12 month outlook for business conditions and their personal income.

The Fall 2010 Affluent Market Tracking Study #18 is representative of the 11.4 million households that account for about half of all consumer spending and represents the estimated potential purchase during the next 12 months of 1.8 million autos, 1.7 million home remodeling projects, 2.7 million cruises, 353,000 vacation homes, and 673,000 primary residences.

Special questions in this survey reveal which segments of the affluent are making a general effort to reduce or defer expenditures, and the reasons for doing so, and which segments are continuing to spend at a strong pace. This survey included questions on specific spending plans for Christmas and Hanukkah gifts.

The Affluent Market Tracking Study #18, a survey of the wealthiest 10% of U.S. households, predicts slightly lower spending during the next 12 months reflecting their skeptical outlook for the economy and personal household income. Given the very negative rating of current business conditions by the affluent, their modest expectation of some improvement during the next 12 months is not particularly optimistic. They also show little enthusiasm for anticipated changes in the stock market and their personal household income.

Changes in spending plans for 8 major items and 17 different categories of products remain soft compared to prior reports in this 9 year series of twice-yearly surveys. This reflects continuing caution and concern among some affluent.

• The composite ACE 12-month Economic Outlook Index (which is the average of the 12- month outlook for business conditions, the stock market, and household income) declined by 15 points from the prior Spring survey and moved into slightly negative territory (97).

• The absence of plans for major expenditures during the next 12 months (“none of the above”) had been relatively stable (43%-46%) prior to the Spring 2008 survey. Since then, the absence of plans for a major expenditure has ranged from 55% to the 60s. In the current survey 61% say they have no plans to make any of the major expenditures during the next 12 months (a 6 point increase from the prior survey). • None of the 17 spending categories is in positive territory (i.e., index of 100 or more). With the exception of dining in casual/family restaurants and recreational activities, the index for all of the categories was down from the prior Spring survey, typically by 3 to 5 points. This suggests some retrenchment from the increased spending plans that seemed to be associated with evidence of “frugal fatigue” in the Spring survey.

• In 13 of the categories, 25% or more said they plan to spend less during the next 12 months than they did during the prior 12 months.

• In 12 of the categories, two-thirds or more plan to spend the same or more during the next 12 months.

• About 41% of the affluent say they will make a conscious effort to reduce or defer expenditures.

• A design specialist was named most often as the primary source for most of the purchases for a major kitchen or bathroom remodeling project. Home Depot, followed by Lowe’s, was the second most frequently named source.

This report is based on the responses from 439 men and women in households with an average annual income of $290,000.

============================================================ With 41 trips per year, including 11 intercontinental trips and 3+ principal residences, we know where you’ll find elite travelers: in their private jets and in private jet terminals. It’s why we’ve invested in providing BPA audited circulation to private jets and private jet terminals in over 100 countries. ============================================================

5. China Will Ease Controls on Private Jets

According to a recent article by the AFP, China plans to ease restrictions on low-altitude flights in a move expected to boost the country’s fledgling private aviation sector, state media reported on Monday.

The government and Central Military Commission pledged in a joint circular to “make maximum use of low-altitude airspace resources”, the People’s Daily said. Trial programs will be carried out in some regions before 2011 and expanded throughout the country by 2015, said the newspaper, the ruling Communist Party’s mouthpiece.

It gave little detail on the plans. Current regulations require private pilots to apply for hard-to-get approval to fly in low-altitude airspace.

State press reports indicated the change could further open the skies for private jets.

China is widely viewed as a potentially rich future market for private and leisure aviation. China now has the world’s second largest number of dollar billionaires after the United States, according to Forbes magazine.

However, it remains difficult to obtain pilot licenses and other government approval, the People’s Daily said.

The reform of low-altitude airspace regulation is expected to encourage more people to own private jets and give a boost to other civil aviation missions such as the use of medical and disaster relief helicopters, it said.

By the end of 2008, China had just 898 general-purpose aircraft — private planes and those serving purposes other than security, military and public transportation — according to state media.

All the best,

Douglas D. Gollan Group President and Editor-in-Chief

 

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