Fractional Ownership and Jet Cards
Wide-ranging access opportunities are making business aircraft advantages more afford-able and available than ever before, and the best part is you don’t have to own a whole aircraft to gain them. Fractional ownership or a jet card may be just the ticket.
Fractional ownership allows you to buy only as much plane as you need, and instead of being limited to a single aircraft, you gain access to an entire fleet. The concept is simple: You invest in a share of the aircraft of your choice based on the number of annual hours you need. Then you pay monthly management fees for the upkeep and maintenance in addition to a fixed hourly rate, but only for the time spent aboard.
You gain all of the benefits of ownership at a fraction of the cost. You can choose a larger or smaller model for specific trips, or you can use more than one aircraft at a time and wherever you find yourself, you just call and the plane shows up.
Jet cards, aligned with all of the five major fractional providers, make flying even easier. There are no long-term contracts or monthly fees — just one card, one price and away you go, anywhere, anytime. Depending on the program, flight hours or fixed per-hour charges are deducted from the card balance. Although flight-hour charges are higher than those for fractional ownership, out-of-pocket cost is less and there isn’t a long-term commitment. Most providers offer a full refund on unused balances. When time or dollars are used up, you walk away or buy another card.
“Today in business, speed is life. You’ve got to have
access to information and have the ability to respond quickly.
That’s what business aviation does, and the revolution in
connectivity will do even more.”
Clayton Jones, Chairman, Rockwell Collins
NETJETS
NetJets, inventor of the fractional ownership model, is leading the way to globalizing private aircraft benefits. Owned by Berkshire Hathaway, it remains the largest provider in the U.S. with the most comprehensive aircraft fleet mix. With operations in Europe and the Middle East, NetJets is uniquely equipped to accommodate today’s global businesses. Owners in the U.S. have a choice of 15 aircraft models, while in Europe they can select from among 10 specific types.
NetJets Europe Chief Executive William Kelly reports that a growing number of companies on either side of the Atlantic are taking advantage of NetJets’ comprehensive interchange program, which allows them to have an aircraft available here or abroad. They are also buying additional shares or jet cards for that purpose.
“Companies need to be focused on moving their business forward. A business jet allows you to do that,” he says. That’s driving a resurgence of interest, Kelly adds. NetJets Europe is experiencing an uptick in activity as owners seek new marketing opportunities at home and abroad. Kelly points out that companies that once believed business aviation was out of reach are now able to access it through fractional ownership or jet cards. It’s a winning solution in a market where cash is at a premium, credit is tight and value is critical.
While the midsize Hawker 800 has been a mainstay in Europe, two new Dassault Falcon 7X ultra-long-range jets are gaining significant attention. Their popularity underscores the push by businesses in search of profits to stay in touch with customers and opportunities, often in far-flung locales.
Increased international flying prompted NetJets to remove ferrying fees between the U.S. and Europe, and this stimulated an increase in transatlantic flights. NetJets Europe also offers Private and Corporate Jet Cards similar to the Marquis Jet Card in the U.S., which enables travelers to buy NetJets quality, service and selection with a single-cost, 25-hour card.
When it comes to some of the best-known brands in the personal care products industry, no company sells them the way Helen of Troy, Ltd. does. And, when it comes to personally taking care of Helen of Troy customers, it’s hard to beat the efficiency and personal touch of Chairman and Chief Executive Officer Jerry Rubin.
With operations in El Paso, Tex., however, seeing customers presented quite a challenge, says Rubin. “We decided about ten years ago that we wanted to bring in customers so that we could show them our new facilities and sell the merchandise.” He had a customer from St. Louis who flew commercially, got stuck in Dallas and didn’t get home until 2 a.m., causing him to vow that he would never make the trip again. That’s when Rubin turned to NetJets, and since then he’s never looked back.
After five years with just a single jet share, the surprising value prompted another. Now Rubin is using a NetJets Cessna Citation XL and Citation X, which together fly 200 hours annually.
“The economy hasn’t curtailed our flying at all,” he says. “We wanted to go out and see about eight or ten of our customers, which would normally have taken us a couple of weeks, but we could do it in three days using NetJets,” says Rubin. “We can go to these small towns and pick customers up, spend the day with them in El Paso and bring them back home for dinner,” he says. “It changes the whole complexion of selling. Every customer that we bring down ends up doing more business with us.”
CITATIONSHARES
If your trips are mostly regional but occasionally across the nation, CitationShares, owned by Cessna Aircraft, has a great solution. The company specializes exclusively in fuel-efficient small-cabin and midsize Cessna jets including the CJ3, Citation XLS and the coast-to-coast-range Citation Sovereign.
The smaller Citations make access to hundreds of rural airfields with short runways a cinch, and the company’s “CiteLines” program offers streamlined payment options that make jet travel even more affordable and accessible.
With four pricing levels, CiteLines offers significant savings for fliers who can avoid the busiest travel days of the year. The more non-peak travel days selected, the greater the savings. CiteLines also makes budgeting simpler by combining management fees and hourly charges into either a single annual charge or equal monthly payments.
For those needing additional hours, the company’s “Jaunt” program allows customers to buy incremental hours without purchasing an additional fractional share. With “Impromptu,” owners can take short-notice advantage of normally empty positioning flights at vastly reduced rates, and the flights don’t count against regular program hours.
For those in search of value with small out-of-pocket cost, CitationShares’ “Vector JetCard” is one of the most affordable jet cards on the market. Card owners can select from four different aircraft types for any trip, and although per-hour rates are higher than with fractional ownership, the Vector JetCard advantage is a lesser commitment with no hefty capital investment or five-year contract. Rates are all-inclusive, and with a non-peak travel card, owners save an additional 10%.
When the managing partner of this Dallas-based investment firm was negotiating an investment opportunity in Buffalo ten years ago, he found commercial travel impossible. “I couldn’t get there without spending the better part of a day traveling,” he recalls, and with six or seven colleagues on the trip, the time penalty was severe. Charter made day trips possible but, if they needed to stay longer, he incurred the round-trip cost in both directions. Then he discovered CitationShares and was impressed by the consideration for the owner and the focus on safety.
Now he travels on his schedule, not an airline’s, and saves considerably with CiteLines by flying at non-peak times. What he finds truly appealing is the ability to utilize CitationShares’ “Impromptu” positioning flights at a significantly lower cost. E-mail alerts keep him posted, and if a flight nearly matches his planned itinerary, CitationShares will customize a perfect fit. Another innovative CitationShares feature that he likes is the consistent single annual or monthly billing plan, which makes budgeting easy.
“There is no question that we continue to look at investments in places that we wouldn’t have considered because they would be too inconvenient or time consuming to reach,” he says. The comfortable environment aloft is also a tremendous experience for someone you’re doing business with, he says. “It’s a relaxed time to get to know them better, and you can have a relationship-building conversation that you can’t have in an office.”
FLEXJET
Its core focus is fractional ownership, but when it comes to acquiring business aircraft benefits, Flexjet, owned by aerospace giant Bombardier, offers a much more holistic perspective. Vice President of Sales Robert Knebel carefully guides prospects through an array of options, including charter through sister company Skyjet, a Flexjet 25 Card, or even outright ownership in a new Bombardier aircraft.
Flexjet offers shares exclusively in Bombardier jets including the Learjet 40, Learjet 45, Learjet 60, the wide-body Challenger 300 and the larger, intercontinental-range Challenger 605. However, the company’s allure has as much to do with its programs as its aircraft. For example:
- Unique in the industry, Flexjet’s “Versatility Plus” enables owners to sell unused hours or buy more hours as needed without borrowing against future-year usage or adding greater commitment.
- “Anytime Options” offers owners additional guaranteed use of larger or smaller aircraft or multiple aircraft per day. The company also waives ferry fees for flights between the U.S. and Latin America, Canada or the Caribbean, and on Challenger aircraft to or from Europe or Hawaii.
- “Round-trip Pricing” offers a 15% discount for same-day flights or quick-return overnight trips for owners with one-eighth or larger shares.
A walk-away lease plan with an easy 90-day exit provision is another solution for anyone concerned about long-term commitment, capital liquidity and asset value risk, says Sylvain Lévesque, Flexjet’s vice president of marketing and administration.
Then there is the Flexjet 25 Card, which comes in 25-, 30- or 35-hour increments. A split payment plan allows customers to pay half the total cost upfront and the balance later, and with the 25-hour card, they can combine hours in two aircraft types for greater flexibility. Three pricing options for each card offer non-peak travel cost reductions. Lévesque reports that Flexjet 25 Card sales are climbing. Despite the economy he says, “business people need to travel, live their lives and run their companies.”
With a portfolio of manufacturing, real estate and financial businesses and facilities throughout the U.S., southern Canada and Antigua, Leonard Wessell, chief executive officer of W3 LLC, was pulled in many directions. Short on time and busy with hectic travel schedules, he knew a business aircraft could provide significant value. He quickly discovered that Flexjet offered the best solution for his needs.
Now Wessell departs his Boulder, Colo.-based headquarters in his Challenger 300 early in the week and heads directly to numerous destinations across rural America. He can make an investor meeting in New York, visit a property in Antigua, see a company in Ontario and still be home to coach high school wrestling by the weekend.
Flexjet’s range of options make fractional ownership much more adaptable to one’s changing needs. “We’ve taken advantage of downgrades, multiple aircraft use on several occasions, and we sold hours through ‘Versatility Plus,’” he says. “If we want, we can always buy additional hours on a smaller jet. Flexjet makes it easy because, after you buy 50 hours, you can buy additional 25-hour increments.
“You really do create time, but it’s not just in getting to places,” he says. “You also create opportunities that might not be possible.” Flexjet makes his complex schedule doable. “You can plan a really tight itinerary with a high degree of reliability.” For Wessell, that’s money in the bank.
AVANTAIR
As the exclusive provider of fractional shares in the Piaggio Avanti, Avantair is unique. The twin turboprop features a stand-up cabin as large as a midsize jet’s, as well as a fully enclosed lavatory, speeds faster than those of many light jets, and amazing fuel efficiency. Another big benefit is the Avanti’s remarkable short-field capability, which enables access to hundreds of additional airports that many jets can’t utilize.
“Private travel does not have to be expensive,” says Avantair Chief Executive Officer Steve Santo. It seems that Avantair owners agree: The company is experiencing its best quarter ever. Owners are using the planes more, traveling greater distances and making more stops, he says. And with four or five passengers aboard, Avantair ownership is competitive with commercial airfares — and that’s without even considering the value of time saved.
Avantair pioneered the one-time preset billing program that eliminates separate hourly flight expenses. It simplifies budgeting because owners know exactly what they will spend each month regardless of how much they fly.
To make it that much easier to step aboard, Avantair launched the “Edge Card,” which offers all the Avantair benefits without the large upfront cost. Available in increments of 15 or 25 hours at an all-inclusive one-time cost, it is good throughout Avantair’s expanded service area.
Another remarkably innovative program called “Axis Club Membership” bridges the gap between fractional ownership and the card plan. Axis Club members join with a one-time fee, and that enables them to purchase flight time in 25-hour blocks during the three-year membership period. Per-hour flight costs are less than those for the Edge Card even with the membership fee, which also can be applied to a fractional purchase.
For Scott Sibley, partner in the Equis Group, fractional ownership with Avantair is a sure bet. With an office in Las Vegas, multiple clients, projects throughout California and three young children, Sibley was juggling an out-of-control travel schedule. “It become harder to separate home life from work life,” says Sibley. “I was either missing something with the kids or postponing an important business trip. I couldn’t be in both places at once.” Then he discovered Avantair and quickly reclaimed his life.
“Now I can be home with the family instead of spending the night in California after a dinner meeting,” he says. Avantair has made traveling enjoyable again. “You drive up, get on the plane and you go, so it is really a time saver.”
Sibley is also thrilled with the other advantages Avantair offers. “If you need two planes the same day, they’ll do it, so you can fly clients in and meet at the same time.” And his plane can be anywhere in the country whenever he wants it. Hopping off a commercial flight in Miami, Sibley jumped into the Avanti, headed to central Florida and then on to the Bahamas.
Initially he purchased a 50-hour share. “But it wasn’t enough, so I bought a [25-hour] Edge Card, too,” he says. “I’m definitely making more trips and visiting more with clients. It just takes so much stress out of your life because you’re not pressured to wrap things up in time [to make that commercial flight].”
When Avantair announced its Axis Club Membership program, Sibley was totally on board. After paying the initial membership fee, he’s able to buy 25-hour cards at reduced cost for a three-year contract period. As far as his business and family life are concerned, Sibley hits the jackpot every time he flies.
The Small Jet Evolution
Impeccably timed for takeoff in the current downturn, a new breed of small, fuel-efficient jets shows great promise for creating swift, cost-effective market access that will be vital to economic growth. These new, highly affordable small jets include the HondaJet, which is in advanced development, and Cessna’s Mustang, already being delivered to customers. They are creating sky-high opportunities for getting business back on an upward trajectory.
These small light jets are the new heavyweights when it comes to efficiency, versatility and practicality, whether adding utility to a cost-conscious corporation’s long-range fleet, bringing “air power” to small companies, enabling entrepreneurs to be their own company pilots, or showing promise for ambitious air taxi services.
Newcomer and rising sensation HondaJet has achieved profound levels of innovation with a maverick, over-the-wing engine configuration. This new design allows for an exterior no larger than the average small jet, and yet offers an interior with a generously sized cabin.
What started with a flash of inspiration and a quick sketch nearly a decade ago is particularly relevant today in light of its low operating cost and high comfort level. The unconventional jet design defied all conventional engineering wisdom, but has yielded big returns. “My objective was to achieve a large cabin and high fuel efficiency without any compromise,” says Michimasa Fujino, president and chief executive officer of Honda Aircraft Company, Inc., and conceiver and designer of the HondaJet. “We had to achieve both.”
“You know, operating a business jet is not always a pure dollar decision. The toll
commercial airline travel takes on our employees and customers — just the hassle of it
and the time — makes owning a plane like this an absolute necessity.”
Roger Hannay, President, Hannay Reels
Indeed he did. The HondaJet’s interior is designed to maximize comfort and allows two people to face each other without their feet overlapping, plus there’s a fully enclosed lavatory. These are features completely uncharacteristic of the small jet category.
The unique shape of the breakthrough HondaJet also proved to be incredibly aerodynamic. Reduced drag on the airframe combined with a lightweight carbon-fiber fuselage powered by newly designed GE Honda turbo-fan engines allows for speeds of 480 mph and weather-topping altitudes of 43,000 feet. Paired with unprecedented fuel economy and significantly reduced maintenance requirements, this “advanced light jet” is really living up to the Honda name. “From the beginning it has been our goal to bring new value to the field of aviation,” says Fujino.
He projects that the new HondaJet, due to debut in 2010, will not only appeal to small companies and entrepreneurs who fly themselves, but will offer unique benefits to companies with existing large jets that need shorter-range regional jet transportation.
From 30,000 Feet, It’s Clear Skies Ahead
Business aviation remains a critical tool for many businesses even when times are tough and profits scarce, says James Coyne, president of the National Air Transportation Association (NATA).
“When CEOs get on that jet, they are actually increasing sales, making investments, evaluating major projects, delivering speeches, building morale, motivating their troops, making new loans, expanding plants, exploring new markets, finding new resources, beating competitors, attracting investors and saving their company,” he says. “They want to soar, seize the day and build their businesses. Isn’t that exactly what we need to get out of a recession? In fact, we need more personal and business aviation activity now than ever before — it’s the get-the-job-done tool that’s vital for American business.”
But to realize this new growth, companies will have to think beyond the big cities, advises Michael Boyd, head of Boyd Consulting in Rowlett, Tex. “Investment isn’t happening in the major metropolitan areas,” he says. “The investment is happening in Lansing, Moline, Bloomington, Charleston and Montgomery, along with a lot of other medium-size cities,” he adds. “That means managers as well as marketing and sales executives will have to get from Shreveport to Lansing or even from Shreveport to Shanghai.”
“Things are challenging at the moment, but we think the future is very bright,” says Stephen Keeney, Honda Aircraft’s vice president of corporate communications. “There are a lot of opportunities out there, and many of them are in some of the less densely populated areas. Business aviation gives businesses the chance to explore those opportunities.”
“When executives say ‘Look, we’re saving money — we got rid of the airplane,’
they don’t tell how much they’re losing by getting rid of the airplane.”
Bernie Ecclestone, Chief Executive Officer, Formula One Group
While business aircraft increase access, they also decrease travel time. Today, tens of thousands of travelers using business aircraft are transforming daylong marathons into one- or two-hour flights. Frequently, they are at a customer site and back in less time than it would take to board a commercial flight.
“When you combine the need to be productive and efficient, to maintain communications with the office when things are changing rapidly, when you need to reach those communities that are losing airline service or frequency of airline service, it clearly seems that this is the right tool at the right time,” says NBAA’s Bolen.
“Business aviation users will emerge from today’s conditions even stronger than before,” says Cessna’s Jack Pelton. “So pull your aircraft out of its hangar and put it to work. The companies that do will be the very ones that lead the world back to prosperity.”
Written and Produced by Mark Patiky • markpatiky@cox.net
Associate Writer: Shawna Gale
Principal Photography: Paul Bowen
Director of Custom Content, Forbes: Carol Nelson
Editor: Allison Lurker
Designer: Jon Prinsky
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