Most expensive fractional?

[MALSR]

Just curious, who is the most expensive fractional from an owners perspective? Anyone know?

 

[fischman]

NetJets is.

BTW, we have the largest market share as well.

 

[Some guy]

You have to define most expensive. Every fractional owner has their own perspective when it comes to what they value in a service. What are you looking for in a fractional? If you are talking price only, then NetJets is probably the most expensive in dollar amount. What are the recovery times of the fractionals when you have a mechanical? If you have a mechanical, and operator A can recover your flight in 10 hours versus operator B who can recover in 1, then A could be the most expensive if you are trying to make it to an important business meeting.

A better question might be "Which fractional has the best value for my money?"

SG

 

[FR8DOG777]

Flops

For sure it is Flight Options CUZ IF WE AIN"T LATE WE AIN"T COMING.

 

[SKYLAWYER]

NetJets is. [/e quote]

Not true. Prices may have recently changed, however, 12 months ago CS was more expensive than NJ's on all similiar aircraft types. A share on an XL or Sovereign at CS would have cost you more than a share at NJ. I saw this market research on paper by an independent market analysis team. NJ has a wider fleet and so I believe they can command and do command top dollar for all of thier unique fleet types. I also agree that they would have the best percieved market value due to PHENOMINAL recovery times. (This was also present in the market analysis) Prices may have recently changed as this research is about a year old, but NJ is not always the most expensive when comparing similiar a/c types.

 

[jonjuan]

NetJets is.

Who told you this? Management? Not accurate.

 

[SKYLAWYER]

BTW, I was once told CS was able to pull this off by being extremly accomodating to owners on schedule changes. This went out of the window when we implented hard written duty rules for the flight crews. CS used to very accomodating to the owners at the exspense of the QOL of the flightcrew.

 

[jonjuan]

You have to define most expensive. Every fractional owner has their own perspective when it comes to what they value in a service. What are you looking for in a fractional? If you are talking price only, then NetJets is probably the most expensive in dollar amount. What are the recovery times of the fractionals when you have a mechanical? If you have a mechanical, and operator A can recover your flight in 10 hours versus operator B who can recover in 1, then A could be the most expensive if you are trying to make it to an important business meeting.

A better question might be "Which fractional has the best value for my money?"

SG

Exactly and to further this, which fractional has a larger demand placed on its fleet by more users. Remember, demand increases exponentially when owner demand increases. Owner demand increases when aircraft are increasingly divided into more parts. Operationally, it's much more difficult to manage 32-owners per aircraft (25-hour cards) than 16 (fractional) as each demand event potentially has a repositioning event (both crew and aircraft), mechanical, and recovery. Age of fleet also factors in significantly as well as overall dispatch reliability of a particular aircraft type. A 13 year old CX or Ultra certainly has a lower dispatch reliability (which in turn drives last minute recovery) than a 2-3 year old Gulfstream, for example. One reason why FLOPs is moving toward newer aircraft. They found their older aircraft (and newer beechjets) had a lower dispatch reliability rate. NJA is moving toward that as they now keep aircraft in their fleet for 13 years. Older aircraft simply break more frequently which leads to more tail number changes communicated to owners (which many don't like).

 

[pilotyip]

That is why they call us when they can't meet their owners demand. USA Jet to the rescue. They must like us a lot they are coming back for their renewal inspection.

 

[fischman]

Not true. Prices may have recently changed, however, 12 months ago CS was more expensive than NJ's on all similiar aircraft types. A share on an XL or Sovereign at CS would have cost you more than a share at NJ. I saw this market research on paper by an independent market analysis team. NJ has a wider fleet and so I believe they can command and do command top dollar for all of thier unique fleet types. I also agree that they would have the best percieved market value due to PHENOMINAL recovery times. (This was also present in the market analysis) Prices may have recently changed as this research is about a year old, but NJ is not always the most expensive when comparing similiar a/c types.

Who told you this? Management? Not accurate.

I'm not going to argue you guys on this.

It is accurate.

 

[glasspilot]

The major airlines used to be big on recovery times too. They would keep spare aircraft sitting around at locations so they could quickly recover if there were a mechanical.

Of course that costs extra money to do but that was worked into the cost of the operation.

Then along came the LCC's and the consumer was presented with a choice; pay more for better product (spare aircraft, onboard amenities, nicer boarding areas ect) or save money with a no frills Low Cost Carrier.

They consumer has spoken and the majors are busy ripping out first class seats and figuring out how best to charge you for a Coke or a window seat.

How does this relate to corporate aviation? I'm not so sure. But I wouldn't be too quick to spout out that corporate customers will always be willing to pay a premium for hard to quantify intangibles like recovery times.

If asked of course they'll want it...but at what price?

 

[gunfyter]

I have had several pax tell me, "I don't care what it costs... I want my Citation X."

A half hour or 1 hr or 2 hr delay in Recovery time...

Well what's one hour of MY time worth. Well sccording to our payscales its worth about $100.

What if 1 hr of Bill Gates's time worth? Or Tiger Wood if he is going to be late to a Golf Tournament?


Going with the lowest bidder does not make sense. You go with THE BEST... and PAY what it costs.

These people are not drinking Sam's Club COLA instead of Coca Cola.

 

[Galaxy]

For sure it is Flight Options CUZ IF WE AIN"T LATE WE AIN"T COMING.

Nice...whats the latest motto..We give you more
.....Because we pay less....

 

[Willy21]

How does this relate to corporate aviation? I'm not so sure. But I wouldn't be too quick to spout out that corporate customers will always be willing to pay a premium for hard to quantify intangibles like recovery times.

As long as the customer views their time as money they will pay.

Comparing the corporate customer to an airline customer is apples to oranges. They are not the same.

 

[jonjuan]

I'm not going to argue you guys on this.

It is accurate.

Nope, partner. Not going to argue with you (in some cases). CS CJ3 AND FLEX LR40XR are MORE than NJA 400XP, Ultra and Encore. CS XLS is MORE than NJA XLS. CS Sovereign is MORE than NJA Sovereign. FLEX C300 is MORE than NJA CX and G200. That's 2/3 of the fleet comparisons.

 

[fischman]

OK big man. You win...

 

[jonjuan]

OK big man. You win...

Not trying to "win" big man. Simply telling the truth which you somehow refuse to grasp. Don't think everything you believe.

 

[kevin_p]

I'm curious if anyone has any real numbers to back up their statements or all of this is purely hearsay.

For you guys who seem to know exactly who costs the most for each aircraft, please post the costs of each fractional...I would be interested in seeing what the exact numbers are.

 

[Some guy]

Not sure what the exact numbers are. Let's change the question a little bit.

All bias aside, if you have enough money to buy into a share, where would you spend your money?

 

[Bruce Dickenson]

That is why they call us when they can't meet their owners demand. USA Jet to the rescue. They must like us a lot they are coming back for their renewal inspection.

If I was a NetJets owner, I would be Thrilled to be put in a 40 Year old USAJet with its DUI and accident prone pilots! Can I buy an ugly old rustbucket DC9 share? Can we share the cabin space with car parts going to ELP? Sweet!

 

[pilotyip]

All wrong

If I was a NetJets owner, I would be Thrilled to be put in a 40 Year old USAJet with its DUI and accident prone pilots! Can I buy an ugly old rustbucket DC9 share? Can we share the cabin space with car parts going to ELP? Sweet!

Wrong, it was the 25 yr old DA-20 used by Ford Motor and GM. BTW you show you know little about USA Jet Airlines. NJ likes our pilots hires lots of them. USA Jet is the finest DA-20 operator in the On-Demand business. But on-demand is a tuff business for a candidates’ life style. But we offer many things beyond QOL for a potential candidate to consider. We feel our training program is good enough to train anyone who has basic flying skills. USA Jet does all of its training under Part 121 N & O; the DA-20 has 5 weeks of full time ground school prior to starting sim training, which runs one week and 25 hours for F/O's. All DA-20 F/O's receive 25 hours of supervised IOE prior to being released to line operations, we observe 100 min time in seat for pairing restrictions and in the past have turned down trips because of only low time pairs available. We have not hired a Captain off the street since 1998. Our safety record speaks for it self and is the standard for the industry. No training is done in airplanes on ride along legs. We have had pilots go to major airlines and tell us, except for fancy bells and whistles, the USA Jet training was as good as they got at their major. No USA Jet pilot has failed training at his next job. At an unnamed national passenger operator, 50% of the new hire pilots washed out of DC-9 training, USA Jet pilots had a 100% pass rate based upon their USA Jet Training. Some pilots hired by a large player in the business waived all testing and sim evals for USA Jet pilots, because of the known quality of their USA Jet Training.

While in full time ground school you are paid full pay of $34 K per year on the first day of ground school. Pilots also receive a $300 advance per-diem check the first week, and are given a room at a local motel for 15 days while looking for a local residence. We have program on track for 6-figure pay in 6 years for all Captains. There are 10 hard days off every 28-day bid period. While in a duty status, you have to live in the immediate YIP area. Pilots are expected to assist in loading and unloading cargo.

Benefits are good with a Blue Cross/Blue Shield plan you would be eligible for after 90 days. 401K is available with a 50% matching on the first 5% of your pay. Tuition reimbursement is available, and two weeks vacation after the first year. Pay goes up for F/O’s $2/hr in the 3rd year. Company covers all hotel costs on the road and gives the pilots $1.83 per hour pre-diem while away from YIP to cover meals.

 

[SKYLAWYER]

I'm curious if anyone has any real numbers to back up their statements or all of this is purely hearsay.

For you guys who seem to know exactly who costs the most for each aircraft, please post the costs of each fractional...I would be interested in seeing what the exact numbers are.

It is incredibly difficult to find exact numbers in the fractional business. Purchasing a share is somewhat lke purchasing a car. Two people could have the exact same share in the same aircraft type and pay different prices. Some of the things that influence the price are company longevity (sometimes owners who have been with the company from the get-go have nicer contracts than new owners), celebrity status (huge discounts because most people in thier field can also afford a share and are likely to talk about how great the service is), flexibility in charter, (some owners have hard limits on how much charter they can be forced into per contract. The less charter the more money) and finally strengh of negotiation. Fractional shares are not like ipods on a shelf at Apple. The price is very much negotiable depending on the terms you are willing to agree to.

 

[SKYLAWYER]

Not sure what the exact numbers are. Let's change the question a little bit.

All bias aside, if you have enough money to buy into a share, where would you spend your money?

The company who gave me the best terms for the best price based on the needs of my company. If I own an international empire then I would have to go with NJ and probably swallow whatever prices they gave me. If I own a small domestic US operation then I would do my shopping. Recovery times are good, buts what even better is guaranteed recovery times. NJ historically has great recovery times, however, if the terms of my contract only guaranteed me recovery within 3 hours and someone else guaranteed me recovery within 2 hours it would be a huge bargaining point. I would also look at how well the model I was purchasing held its value. The safety factor would be a mute point because I think the fractional industry as a whole has a pretty good safety record. All the fractionals have a pretty good customer basis because we all provide a percieved value to our owners.

 

[mzaharis]

When calculating price, how much can you speculate on resale values? I know that you're depenent on the market for the plane at the time of sale, but do particular fractionals give particularly good values, or do they "lowball" the resale price, and pocket the difference (beyond the 7% or so "brokerage" fee)?

 

[jaybird]

It is incredibly difficult to find exact numbers in the fractional business. Purchasing a share is somewhat lke purchasing a car. Two people could have the exact same share in the same aircraft type and pay different prices. Some of the things that influence the price are company longevity (sometimes owners who have been with the company from the get-go have nicer contracts than new owners), celebrity status (huge discounts because most people in thier field can also afford a share and are likely to talk about how great the service is), flexibility in charter, (some owners have hard limits on how much charter they can be forced into per contract. The less charter the more money) and finally strengh of negotiation. Fractional shares are not like ipods on a shelf at Apple. The price is very much negotiable depending on the terms you are willing to agree to.

I don't believe thats the case. I sat in on a ststic demo, and the sales rep told the customer everyone pays the same amount, (i can't remember the name of the clause.) from GE, that owns 16 quarter shares, to someone that gets a single 1/16 share.

Obviously the marquis card holders pay more due to the marquis management fees.

 

[Fozzy]

I don't believe thats the case. I sat in on a ststic demo, and the sales rep told the customer everyone pays the same amount, (i can't remember the name of the clause.) from GE, that owns 16 quarter shares, to someone that gets a single 1/16 share.

Oh in that case it must be true. Salesmen are known for their honesty.

 

[Publishers]

I think that there are so many factors that one has a great deal of trouble making broad generalities at to which is the most costly.
One could argue that the cost of Netjets raises considerably with your hours used. Example, a customer that has a higher yearly requirment and has a tax liability at a certain level may well be better off owning the aircraft outright and contracting with a charter company when his us unavailable. If you only have a need for 100 hours a year, then maybe Netjets works out best. 50 maybe a Marquis card. The people I deal with that come out of these programs usually come out because there was no sense of ownership, as one said," I like to leave my toothbrush there and have it there when I get back on." The XO model seems to work fairly well so far is an inbetween model. Expense always seems to break down to: after tax net cost to fly per hour factored by personal control.

 

[holden1]

He's Right

Nope, partner. Not going to argue with you (in some cases). CS CJ3 AND FLEX LR40XR are MORE than NJA 400XP, Ultra and Encore. CS XLS is MORE than NJA XLS. CS Sovereign is MORE than NJA Sovereign. FLEX C300 is MORE than NJA CX and G200. That's 2/3 of the fleet comparisons.

Flex is more....especially when you factor it up into fully-loaded costs.

 

[NJAowner]

Here is some fairly hard info. I am not digging back for actual numbers. But about a year ago when we were renewing on of our shares we were looking at alternatives. Below is just objective criteria -, i.e., price - not subjecive criteria such as level of service or training or recovery times etc. It also does not quantify the ability to upgrade or down grade.

On the Excel, NJA was about $100K less per 1/8 than CS (about $1.3MM vs $1.4MM). The hourly and monthly fees were close but CS was slightly more on both.

On the X, FLOPs for a used X was a few hundred thousand less, but roughly the same for monthly and hourly fees.

On the G200, the Flex CL-300 was much more - $2.65MM for an 1.8 vs $2.2 for a NJA G200. The monthly was the same and the NJA hourly was $200/hr less than Flex. Plus, Flex hit you with many more extras for catering, etc. Furthermore, in my many years in the G200, we spend about 50% of our hours on a fee upgrade to the DA-2000.

In our opinion, we have not seen any real objective cost savings with any of the NJA competitors. Plus, recovery time, flexibility, etc., is not even comparable.

However, Flex and others do have some programs whre you can trade unsued hours, etc., and NJA does not have this.

NJA does not negotiate price. They may negotiate some upgrades, spares, etc. This is acutlaly good since every owner feels that they areimportant and does not want to know that others get a better price. A good friend of ours (who introduced us to NJA) is one of the first 50 owners (if not lower) and was an very, very senior executive at a company which was and is one of the largest NJA owners. I thought they would get some break but in the same year they paid the same for their 1/8th of an Excel as I did. From what I hear, CS, FLOPS and Flex will aggressively negotiate price and terms.

Just my 2 cents.

Fly safe.

 

[Publishers]

Perhaps owner can address residual value issues on these same companies. Obviously one of the bigger differences in ownership of the whole aircraft is the usage versus fractional usage and hence one would assume a different valuation of the residual. With any capital asset you only determine your cost at salvage or sale.