XO Jet

[captain dad]

I just read the interview with Paul Touw from XO Jet in AIN. He mentioned a lot that is commonly known in the industry. Then he said this:

""We're flying [each jet] 1,240 hours a year." claiming 97% are revenue bearing.

Does he really think he will get that much out of an airplane every year? He is flying Cessnas.

"Fractional is about 1,200 business jets, so they're less than 15 percent of the market and dropping because the prices are higher than buying a jet."

I didn't realize the fractional market was dropping? Fractional means less than the whole...I'm confused.

"I think he's a huge believer. I read something about Branson to the effect that it starts with the employee, not the customer."

He is quoting Sir Richard on employee relations. Wow!


No flame, and I like a little chest pounding from the new monkey on the block, but come on!

He's on crack right? Good luck with all that. Time will tell.

 

[t-bone]

I have no problem admitting that you've got a great thing going over there at NetJets, but I really find it amusing that NetJet guys are typically the first to point out that what XOJet is doing isn't going to work.

I really find it interesting the NetJet employees even spend any of their time thinking/talking/reading about little old XOJet.

Why do you care?

 

[Willy21]

I read about XOJet because I follow aviaiton. I read the article in AIN. For the most part I thought it wasa good article.

The one thing that raised a caution flag for me was your CEO's comment about TAG's certificate revocation. He said that the FAA picks
"on a couple of big guys and it's a lot easier to pick on one with foreign ownership than on Richard Santulli."

What is he trying to say?

 

[captain dad]

I care because I don't bury my head in the sand or wear blinders thinking my way is, and always will be, the best way. I am very open to someone showing me a new way of doing things. In short I am willing and teachable.

I'm really not slamming this guy, I just don't think what he is trying to achieve is maintainable. I think he is like most start up types; seeing what's on paper and thinking that's the way it works. Planes break, schedules change and ultimately compromises have to be made. The smaller and fewer planes you have, the bigger the hit to the bottom line. The numbers look great until you stop expanding and have to start paying the piper.

This guy is very openly taking shots at NJA, RTS, our business model and has stated he is trying to steal our customers. Your boss is the one trying to throw down. He has a good rap, but when you look below the surface I don't see his plan holding water. I could be wrong but I have some serious doubts.

If you disagree, which is perfectly OK, than convince me. That's all I am looking for.

 

[t-bone]

Planes break, schedules change and ultimately compromises have to be made. The smaller and fewer planes you have, the bigger the hit to the bottom line. The numbers look great until you stop expanding and have to start paying the piper.

If you disagree, which is perfectly OK, than convince me. That's all I am looking for.

We fly Citation 10s, therefore we have maintenance issues all the time. But with that being said, we are making our business model work. We already deal with these issues you point out, and as we're growing, we're getting better at recovering efficiently.

As for the 97% revenue legs...this is one place where we are different from NetJets. (and please correct me if I am wrong) If you are flying an empty plane, your company isn't collecting revenue, right? We, on the other hand, rarely fly a leg that hasn't already been paid for by one of our on-demand charter clients. That doesn't mean that 97% of our legs are occupied, it just means that 97% of our legs are paid for by someone other than XOJet. We had a plane fly empty from Bogota last week, but it was paid for by the client. Who pays for the empty legs at NetJets?

 

[Willy21]

The ferry charges at NetJets have been done away with for the most part. That is a good thing for the customer. We carry the burden to get the airplane to them so they don't have to pay for an airplane to be brought to them. With the size of our fleet the goal is to have an airplane nearby and not spend alot of money getting one to the customer.

 

[captain dad]

That doesn't mean that 97% of our legs are occupied, it just means that 97% of our legs are paid for by someone other than XOJet. We had a plane fly empty from Bogota last week, but it was paid for by the client. Who pays for the empty legs at NetJets?

Thanks for the info. I was sure how you guys do things, but I am glad that you confirmed it. It's semantics. Ultimately, our owners and card holders cover the costs for everything same as you. If they didn't we wouldn't make money. It is simply broken down in a different way.

You seem a bit hostile. I really don't mean disrespect. I am just really curious to see if your plan holds up. We could argue all day long who has the least costs, most convenience, better model,...blah blah blah. If you look at the latest numbers, and the forecasts for business turbojet aircraft, they all but guarentee a bright future for all of us. There is no reason to be uncivil. I just think it's funny to read the grandiose boasts and bravado from a guy that claims he has reinvented the wheel. I know he is trying to drum up business and make a big splash, but arrogance is not a desirable trait. It breads contempt and shows a level of disrespect for those you have blazed the trail.

I am very interested to see how things go. I wish you good luck.

 

[hyflyin]

I have no problem admitting that you've got a great thing going over there at NetJets, but I really find it amusing that NetJet guys are typically the first to point out that what XOJet is doing isn't going to work.

I really find it interesting the NetJet employees even spend any of their time thinking/talking/reading about little old XOJet.

Why do you care?

I don't care and I work for Netjets. Just had some down time and taking a peak. Good luck, I too once worked for a guy who reinvented the wheel, 30 days later he was on the run from the feds. It was to funny.

Times are good, quit worrying about each others business and thank God your not working for an airline. And if you know anyone who just lost their job do everything you can to help them find a good job.

Cheers, big hugs for everyone.:nuts:

 

[X-rated]

Thanks for the info. I was sure how you guys do things, but I am glad that you confirmed it. It's semantics. Ultimately, our owners and card holders cover the costs for everything same as you. If they didn't we wouldn't make money. It is simply broken down in a different way.

I am very interested to see how things go. I wish you good luck.

Thanks for your good wishes. Since you genuinely sound interested, and appear not to just want to throw stones, maybe this will help.

It is not semantics; It is quite different. I believe you are missing T-Bones point, and you illustrate the difference perfectly when you say,"Our owners and card holders cover the costs for everything same as you. If they didn't we wouldn't make money".

That is precisely the difference. Our owners and Fleet Exchange Lease Customers (similar to your card members) do not cover the empty leg costs. That's where Charter is utilized to get someone else to pay to move the airplane from where it finished one owners' trip to where it will pick up the next owner. What T-Bone was saying, I think, was that a charter customer may pay for some, all, or often "all and then some" of a repositioning leg. (ie. the double dip) Thats how the company can legitimately claim 97 percent revenue legs. It's not that we never fly empty because we certainly do. However, charter quotes often include return to base empty leg costs. Often, we can get to where our next owner needs us in less flight time than we would have spent returning to base resulting in excess revenue to offset or pay for other non-compensated legs.

The result is lower costs to our owners and increased profitability to the company.

Continued success to you at Netjets. You have a great product and your pilot group has once again raised the bar for all of us. Let's all keep it going.

 

[captain dad]

So do you fly specificlly between certain cities only when repositioning / charter flights? I mean do you only reposition when you have a charter to fill it? Do you only fly between bases or certain cities? Am I making myself clear? I mean you must not fly to BFE North Dakota and fill a charter to get the plane out, so how does that work? Or do you simply charge the charter customer next in line the repo fee?

Thanks for the info.

 

[skiandsurf]

So do you fly specificlly between certain cities only when repositioning / charter flights? I mean do you only reposition when you have a charter to fill it? Do you only fly between bases or certain cities? Am I making myself clear? I mean you must not fly to BFE North Dakota and fill a charter to get the plane out, so how does that work? Or do you simply charge the charter customer next in line the repo fee?

Thanks for the info.

I think what he is saying is ...

if a charter flight comes up from AUS to TEB and the closest plane is in PHX, that 3 hr charter flight, is now a 5 hr charter. The repo flight gets added to the charter flight. (these hrs are for easy explanation).

 

[Ultra Grump]

What T-Bone was saying, I think, was that a charter customer may pay for some, all, or often "all and then some" of a repositioning leg. (ie. the double dip) Thats how the company can legitimately claim 97 percent revenue legs. It's not that we never fly empty because we certainly do. However, charter quotes often include return to base empty leg costs. Often, we can get to where our next owner needs us in less flight time than we would have spent returning to base resulting in excess revenue to offset or pay for other non-compensated legs.

Sounds like fraud, and a lawsuit waiting to happen.

 

[gunfyter]

Sounds like fraud, and a lawsuit waiting to happen.

No

Sounds like a management company.

You own a plane and fly it 500 hrs a year. YOu let the management company charter it the other 700 hrs it flies every year .. reducing oour costs and providing income to the managment company off other people's assets.

Just like a bank uses the money you hve deposited by loaning it out to other people ... when you are not using your money ... instead of leaving it stored in the vault.

You cant do this with fractional owners because there are MANY owners per plne nd you have to do THEIR trips no matter what.

But with full ownership or even half shares ... there are only few trips that HAVE TO be done. You then pick and choose what charter trips you can do ... that also get your airplanes near to where you need them for the next owner trip.

 

[skiandsurf]

No

Sounds like a management company.

You own a plane and fly it 500 hrs a year. YOu let the management company charter it the other 700 hrs it flies every year .

But I think that the XOJet owners only get 200 hours a year. Which allows XOJet a lot of available charter time.

 

[brokeflyer]

I think what he is saying is ...

if a charter flight comes up from AUS to TEB and the closest plane is in PHX, that 3 hr charter flight, is now a 5 hr charter. The repo flight gets added to the charter flight. (these hrs are for easy explanation).

so it's a regular charter company. Thanks for clearing that up. I thought they were trying to enter the fractional market.

Hope they can do better than the 20,000 other charter operators out there.

 

[t-bone]

so it's a regular charter company. Thanks for clearing that up. I thought they were trying to enter the fractional market.

We do both. Our first priority is our program members, and the surplus time on the airplane is made available to the charter market. When all of our program members are using their airplanes, we raise our charter rates (simple supply and demand economics) as the charter availability goes down. On the days when our program flying is slow, we can lower rates and increase our outside charter availability. So instead of limiting our program members on peak demand days, we simply turn off the outside charter. This eliminates the need to contract with outside charter companies to provide supplemental uplift. When we need to get an airplane into position for a program flight, we can discount the repo leg all the way down to DOCs to the charter market, but sometimes we just have to eat that cost. Luckily, that doesn't happen very often.

A full owner gets 400 hours per year. The airplanes average 1200 hours per year, so there is 800 hours per year that we have to either Lease out or sell to the charter market.

For years now, companies have either been pure fractional, or straight charter. We are combining the virtues of both. For the pilots, it really doesn't matter who we are flying. Everything is done under part 135, and we treat everyone as if they were an owner. It's all the same to us.

 

[gunfyter]

It would be like this:

I park my BMW at the airport 18 days per month it just sits there,

Instead, all these days I am away, I let Hertz rent out my car. They make money do the maintenance and when i return from my trip ... deliver my car to the FBO and i drive home.

In the XO profile ... they have solved they scheduling problem which everyone knows is the weak link in fractional... By changing the problem...

They don't have to schedule 10 owners per plane. Just 4. Owners presumably don't get sold off during Christmas and Thanksgiving or spring break. They just dont do any charter flights then.

 

[landlover]

Sounds like fraud, and a lawsuit waiting to happen.

just about every on-demand cargo comapny does this at some point. some do it on every trip(like the one i work for). its very simple, you don't like the price. go shop elsewhere.

 

[NJA Capt]

Instead, all these days I am away, I let Hertz rent out my car. They make money do the maintenance and when i return from my trip ... deliver my car to the FBO and i drive home.

And you would permit them to use your car for free??? You buy the car and they get the profits....I don't think so.

This is why NeJets does not do outside charter trips. The planes belong to the owners, if NJA was to use "their" plane, they would expect NJA to pay them a percentage of the earnings. It seems dishonest to expect someone to "buy you a plane" and then you don't give the "owners" a percentage of your charter revenue. I believe as XO grows and the participants pay more attention to this detail, they will not be as interested or they will demand their share of the charter revenue.

Interesting that XO only allots 400 hrs/yr to owners in comparison to NetJet's 800/yr to full owners. It appears that charter is the majority of the business, otherwise the owners' usage would be greater than 50%.

 

[Diesel]

Trip from TEB to PBI is a charter, then a pickup at PBI back to TEB for an XO owner.

Charter trip shows up late, shocking i know.

Not just late but a couple of hours late.

What does XO jet ditch the charter? Ditch the owner?

Please don't tell me they send another XO jet plane there this isn't enough of them, yet.

So who gets screwed the owner or the charter?