Comments on: More On NetJets – Can they make it work?

By: Allen Howell

Allen Howell — Thu, 06 Jan 2011 23:43:09 +0000

Thanks for weighing in on this post. As the author I run a 28 year old aviation services company that includes 31 aircraft in part 91 and part 135 service. The comment from Rob Dore was his and not set up when I wrote the post. I allow anyone to comment on our site as long as they observe common respect.

Feel free to comment anytime.

Allen Howell

By: Quirino

Quirino — Thu, 06 Jan 2011 20:55:49 +0000

what an obvious attempt to get jet booking direct into the spotlight. Gimme a break. Trying to put down NJA and make yourself look untouchable. You guys wont be around in 3 years, guaranteed. NetJets will be back to former glory and brand name shortly and your customers will then go over to NetJets when you close your doors.

By: Steve Smith

Steve Smith — Tue, 30 Mar 2010 16:17:38 +0000

Regarding A. Howells’ observation that it is the inability of smaller operators to operate at a profitable margin that inhibits their overall financial progress, this is exactly what plagues every aspect of aviation. Airlines have been suffering as a result of this since deregulation and private aviation is suffering now as their market became saturated with competition over the past 10 years. Not sure what the answer is barring some unity umong operators that would prohibit operating at a loss to gain market share.

By: Allen Howell

Allen Howell — Tue, 02 Mar 2010 12:25:12 +0000

I agree with both comments in that the Netjets model is inflexible because it does not offer the customer anything better than the charter model provided by brokers or direct from the operator to the customer.

I am not sure how many small operators are in the black at present. Most whom I speak with are still stuggling, of not because of demand, maybe more because of the inability to price trips at a decent margin.

By: LeRoy Young

LeRoy Young — Mon, 01 Mar 2010 17:32:05 +0000

May be if NetJets would accept alternative revenue streams, they could be profitable. There are many small 135 operators who are in the black.

By: Rob Dore

Rob Dore — Mon, 01 Mar 2010 14:06:17 +0000

It’s true to say that global aviation has seen a massive downturn both in the commercial and private arena, thanks to the global recession and in part to the continued negative media attention. It seems that poor judgement by a few individuals coupled with the media’s ability to spin negativity as they see fit can be enough to see many companies losing money and even closing. However, there is still a lot of demand for private jets and many parts of the industry continue see profits.

The entire NetJets fractional ownership business model seems to me to be dated and inflexible. Aren’t they lucky to have the Berkshire money keeping them in business. There is so little on offer from them to their true investors – their customers. Comparing the offering to other card or flight account options on offer, I can see little or no benefit to investing a huge amount of money into fractional ownership when in reality there is no return on the investment made. The result of joining NetJets is not that the hourly jet rates are so much lower than your alternative options, it’s not that you can depart any quicker than your alternative options and it really doesn’t offer any more prestige or value than your other options.

It seems that those doing very well at the moment are the established brokers such as Jet Booking Direct. They are using their buying power with their preferred operators to ensure that their customers are flying in the right aircraft, when they want to fly and at a cost which is highly competitive.

The broker model seems to be winning hands down in capturing the new business in the market and over the last year or so has seen uptake from some of the existing flyer market place. Clients are moving away from their relationships with operators and fractional ownership schemes like those offered by NetJets. More so in the European market, the majority of clients are large corporations that have a varied flight requirement. There may be 2 passengers departing from London one week and 10 departing from Moscow the next. This is where NetJets have very little to offer and their static pricing structure lets them down. Brokers are able to locate the right aircraft in or near the right place reducing positioning costs and offering clients the aircraft flexibility that’s required – a lear 45 today and a G550 tomorrow.

Many of the brokers are now also offering jet cards or accounts giving clients the option to pre-pay for their flight hours at reduced rates and with the ability to be airborne within 2 hours.

Where these corporations are publicly owned it’s hard at the moment to justify ownership or fractional ownership to their shareholders but easy to justify the use of private jets. Again the flight account makes so much more sense, there are no up front costs or investment, there are no monthly fees (in most cases) and yet they still gain all of the benefits of flying privately compared to flying commercially.

What do NetJets offer that is any better than that?