The future of netjets.

[Publishers]

It is always nice to see peoples perception of the business they are in and how different it might be from the perception of people who look at it as a business from afar.
The Netjets business model depends on a number of things coming together in a way that produces a profit. First, they must order aircraft in significant numbers to drive the price down. They then package that aircraft and sell the individual pieces that sometimes make more than the whole.
They must arrange maitenance and various supplier contracts to drive down the cost which make up for the inefficiencies of their flight profile. In order for this to work, they make guarantees to the owners for service. All of this comes at a pretty penny. Lastly they have to hope that the market for used aircraft remains stable enough for the gurantees that they were talking about at the beginning hold true 5 years or so downstream. Obviously a maturing labor force is also part of the cost equation.
While the general concept of fractional ownership will continue to be a major element of the business, Netjets would well become the United Airlines of the fractional world, eaten up in the end by competition with significant cost advantages.

 

[hammer2]

Gfyter said they are getting 757s. I bought a type last week uknow a 2 day course and I got my resume ready.

 

[realityman]

Ummmm.......Publishers? What, exactly, are you talking about? Cost advantages from competitors? How so? We operate basically the same equipment, but NJA generally makes bigger orders so odds are we have the lowest costs there. Same with fuel costs. Probably same with maintenance costs, catering costs, ground transportation, etc........Yes, we have the highest labor costs now, but as been pointed out over and over and over and over ad nauseum, labor costs are actually one of the smallest portions of the overall expense pie. Combine that with the fact that sales are still sky high, we're still expanding like crazy in foreign markets, NJA keeps spending money on really silly things (think inflight medical help for Thurston and Lovey's poodle), and we charge the most, and I see about as decent a future here as anywhere in aviation (better really).
Now, if you're gazing into your crystal ball say, 20 years down the road, well, who knows? Heck, I couldn't accurately predict how Southwest will be doing in 20 years. Or American. Or UPS. Maybe things will pile up on us and we'll go extinct in 10 years, or maybe 20 years from now we'll be the only major fractional in the business.
For now though, NJA seems like a good bet and that's about all anyone can look at.

 

[notaNJApilot]

Something is fishy because management says the company isn't making a daily profit and they haven't hired anyone new on the corporate side for a couple months.

 

[Sctt@NJA]

I was at recurrent training a couple weeks ago when Santulli came in to chat with the pilots. Very interesting meeting. He squashed a bunch of rumors. (tilt rotors, interest in aquiring other fracs ect.)

He shared his vision for the future. He sees a limit on the the growth potential for this market. He threw out the number of 650 planes, but said that was just a made up number. He ruled out interest in VLJs. He would love to see SSBJs.

He shared his thoughts on who our customers are. They aren't the folks who are pinching pennies, they are the folks who want to belong to an exclusive club. He is going to focus on building up that exclusive club notion. When we are maxed out on growth he figures there will be a waiting list to join.

He saw national infrastructure as the limit on growth potential. (He commented "How many more planes can fit on the ramp at TEB?")

He said that the biggest problem right now is not having enough pilots. We have airplanes sitting uncrewed. The next problem is we have oversold our planes especially with Marquis. Charter selloffs are designed to be around 5%. There are too many selloffs right now.

Our prices are going up this year and again next year.

His ideas of who our customers are were very interesting. He has specific ideas of what they want and what we need to give them. Our customer base is not everyone who might use business jets. Just a subset. A high end subset at that.

 

[NJAowner]

NJA keeps spending money on really silly things (think inflight medical help for Thurston and Lovey's poodle), and we charge the most, and I see about as decent a future here as anywhere in aviation (better really).

A few facts here. NJA is not the most expensive. In the few fleets I looked at (Excel and Sovereign), CS is more expensive. In comparing to Flight Ops, NJA is not more than a meal a month more expensive than FlOps.

As far as the pooch, it is a great idea which probably will not cost the company much. Since many owners do travel with their pets, how do you find a good vet in a strange town. This is just an expention of what American Express does with the Platinum Card and NJA does with the Mayo clinic. And for the pilots, better to call an 800 number than try to line up a vet for Mrs. Thurston Howelll III's poodle while you are trying to fly and be attentive.

Fly safe.

 

[Stealthh21]

True. Additionally, as has been pointed out before, the company also spent a lot of money buying up vendor time in anticipation of a strike. It seems to me that they could have saved everyone a lot of time and money if they had just used those dollars to help make the first TA acceptable.

Hey I remember that. That's when the "scab" term was tossed over to the 135 pilots.

 

[realityman]

Ah, NJAOwner, my apologies if I offended you in any way. Mostly, we enjoy Thurston and Lovey's pets on the aircraft. Most seem to have very sweet dispostions, and I do like animals (although I know of one owner who muzzles his german shepard and advises the crews to let him know before we go back and use the lav because he'll want to hang onto the dog. that one doesn't give me case of the warm and fuzzies).

But I stand by my statement that it's not very practical, and even if it doesn't cost much, it's still NJA blowing good money on, at best, a mediocre idea.
What if something happens to an owner's pet while we're flying? The crew or the owner can call the pet medline, or whatever they're calling it. But then what? Guess what? NJA isn't stocking the aircraft with any sort of medications or things along those lines for pets. I'm not sure how well the AED would work on Rover, but I'll be the first to admit it might be fun to find out . And good luck getting fluffy to keep the nitro pill under her tongue! And while we do strive for the best service we can possibly provide here at NJA, I think you'll be hard pressed to find any of our crews willing to perform mouth-to-mouth on junior's pet python "squeezy".

As for finding a reputable vet in a strange town, not sure how well the veterinary community is connected, unlike the human medical community where we can call the Mayo Clinic and find a good doctor anywhere. Maybe it'll help. Or maybe we'd be better off just asking the airport folks, or even the local yellow pages, where the nearest and/or best vet in town is.

It's a nice effort on NJA's part to provide a higher level of service to our clients, but overall it just seems like someone back at HQ trying to justify why they should keep drawing a salary.

Thanks for putting me straight about NJA not being the priciest (sp?). All said and done, I thought we were the most expensive. Good to know someone else can make that claim.