Avantair "Big Announcement"

[Cavpilot]

O.K. Avantair guys, this is not a slam, but I don't see it either. It has nothing to do with your company, but everything to do with the VLJ product. Without getting into specifics, it appears that the numbers just don't add up to make money with VLJs. This is why the current major players in the fractional market have not ordered any.

If someone can explain to me how a microjet can make money in the fractional market, I'm all ears.

 

[RTRHD]

Why not the same way an Citation does.

 

[Sctt@NJA]

I am sure VLJs could work fine in a fractional model. Since they hardly even exist yet it would be a pretty bold statement to say they wont work.

I know NetJets is not interested in them but we have our segment of the market and other operators have different segments of the market.

 

[gunfyter]

I heard there is a Avanti jet coming out in partnership with another manufacturer

 

[Cavpilot]

I am sure VLJs could work fine in a fractional model. Since they hardly even exist yet it would be a pretty bold statement to say they wont work.

Bold? No, just simple mathematics. Crew costs alone make VLJs a non-viable fractional aircraft. The monthly management fee would be almost the same as other small cabin aircraft in the fractional market. So apart from a lower initial investment the costs would be the same as a larger aircraft. I believe that this is the same reason that Flight Options decided to get out of the King Air business.

I'm sure someone will try it though, using cut-rate crews.

 

[Sctt@NJA]

Crew costs? That makes no sense to me. There is a fractional Pilatus operator thats seems to be doing fine. They pay pretty well, better than NJA till recently. Saying "cheap airplanes don't work because you need to pay pilots" doesn't make any sense to me.

After you pay the pilots you are still left with an airplane that is cheaper to purchase and cheaper to operate. And if that airplane fits your intended mission then you can't do better than that.

 

[gunfyter]

The plan for the VLJ's is this:

professional Fractional pilots simply ferry the plane to the Fractional Owner operators. This is part of the ab-initio program as well.

Once turned over to the owner... the owner can "solo" or request a safety pilot go with him.

thats the plan....

You collect class 1 pay plus Line Check Airman pay for being safety pilot.

 

[Cavpilot]

Sctt,
You obviously did not read my entire post. I agree with you that the initial investment would be much less. My point is that the monthly management fee would be prohibitive. As far as the initial investment is concerned; it is mostly depreciated anyhow, therefore making that particular cost of the transaction less of an issue.

In the end, the proof is in the pudding. If there was money in VLJs, every fractional operator would have orders for them. The fact is, they don't. Our "segment of the market", appears to be any aircraft RTS can get his hands on. I've heard it said that Mr. Santulli has never met an aircraft he didn't buy. That is , until now.

 

[Sctt@NJA]

Well I am not talking about VLJs at NJA. Thats not our customer base. We have a niche. There are all kinds of niches.

One niche is turbo-prop fractionals. They exist

The next niche would be VLJ fractionals. They will exist.

The next higher niche is the traditional business jet fractional. Thats us.

I would like to see the figuring that goes into saying a VLJ fractional can't work because of monthly management fees. Why do those fees have to be so high as to make a VLJ unworkable?

Short answer of course, is that they don't. Cheaper airplane, cheaper operating costs, cheaper monthly management fees = good deal for someone for who a VLJ makes sense.

 

[Cavpilot]

Sctt,

Straight from the NetJets web page:

Monthly Management Fee - The monthly management fee covers indirect operating costs including pilot salaries, training, hangaring, insurance, and Owner Services support.

Now I know what you are going to say, "I said that this is not NJA's nitch, so why are you using NJA's program?" That is because this is the way ALL of the fractional imitators do it. Pilot salaries are the one and only variable in monthly management fees.

Let me reiterate that I agree with you that the acquisition cost and the hourly occupied fee (which is where the direct operating costs exist) will be lower. However, the monthly management fee will be restrictive for a successful VLJ operation.

There is no doubt someone will make a run at a VLJ fractional. But there will have to be some kind of compromise (one that you and I would find unacceptable) in the operation to make it work.

 

[johnsonrod]

Sctt,
You obviously did not read my entire post. I agree with you that the initial investment would be much less. My point is that the monthly management fee would be prohibitive. As far as the initial investment is concerned; it is mostly depreciated anyhow, therefore making that particular cost of the transaction less of an issue.

In the end, the proof is in the pudding. If there was money in VLJs, every fractional operator would have orders for them. The fact is, they don't. Our "segment of the market", appears to be any aircraft RTS can get his hands on. I've heard it said that Mr. Santulli has never met an aircraft he didn't buy. That is , until now.

Obviously operating the P180 is working for Avantair. Operating the PC12s is working for PlaneSense/Alpha Flying. The Phenom does not look like an Eclipse jet - it looks bigger (certainly the 300 is bigger than the 100). Perhaps these heated negotiations will yield some price breaks for Avantair - you never know.

At the end of the day, there are more people who can afford "cheaper" VLJs than people who can afford Citation Xs, CL300s and Legacies. Avantair is targeting a bigger market and it has already proven that it can penatrate that specific demographic market (small companies and the non-zillionaires you wouldn't find at Netjets or Flexjet) with the P180 (note Avantair's rapid growth). It is building the infrastructure and the reputation it needs to compete effectively. Should be interesting to watch.

 

[Noodles]

From what I've read of the new Embraer VLJ's, it seems to me that it's going to have the same problem as the Piaggio. You can take people or fuel, but not both. An article in AIN said the smaller Embraer would have an 1100 mile range with 4 people and 1 pilot. How's that different than a Piaggio, other than being a pure jet? Seems like a mistake to me.....

 

[Number$Cruncher]

Frankly, that's a bit of a condescending attitude. Avantair seems to be a successful niche operator thusfar. It is initially focusing on a much larger segment of the flying public - those people who can't afford shares in bigger jet aircraft but still want/need private aircraft flexibility/productivity. ...I won't suggest that Avantair will do as well as Netjets, but it will be interesting to watch. Avantair's market is a lot larger than Netjets market (due to more people who can afford cheaper aircraft). Technological advances make it easier and cheaper for people to enjoy the benefits of private air travel that only super-rich people used to enjoy... I think Avantair is trying to take advantage of that - only time will tell.

Not sure what you're basing your arguement on...the Avanti is $6M airplane. That's more than the CJ1, CJ2, and on par with the Beechjet. The Phenom 100 is going to be priced at less than half the price of an Avanti. People buy the Avanti for the uniqueness, big cabin and relative operating economies, and for Avantair's rather unique pricing.

The only way to make a small jet like a VLJ to work in a shared environment is to significantly limit the range of service. People tend to fly short revenue legs on smaller jets, and if the operator has them flung all over the country they'll simply have too low an occupied rate to be sustainable. That will be true until they get a VERY significant fleet...200+ airplanes in the type.

 

[SabreFlyR]

The Phenom 300 is no VLJ

Obviously operating the P180 is working for Avantair. Operating the PC12s is working for PlaneSense/Alpha Flying. The Phenom does not look like an Eclipse jet - it looks bigger (certainly the 300 is bigger than the 100). Perhaps these heated negotiations will yield some price breaks for Avantair - you never know. quote]

We looked at the 300 and it has a cabin about the size of a Lear 40 and externally it is a little bigger than a Beechjet. Although they did not have specifics yet, using the range and payload they are advertising the gross weight will be in the neighborhood of 17000 pounds. Power is the P&W 535 @ 3200 lbs of thrust. Basic price $6.65 mil, add things like T/R's, DME's, ADF, vnav, etc and we were in the $7.4 mil range.

We decided against it primarily because we need to upgrade sooner than December 2009 and we felt the Garmin avionics were not up to par with this class of jet.

 

[wolfpackpilot]

Frankly, that's a bit of a condescending attitude

Thats because DO thinks he's a 600 pd gorilla walking around in a kindergarten class with a union pin on. It's his way (which is the union way) or no way.

Of course airline history certainly proves his theory worked very well for companies like...


Pan Am
Eastern
Braniff
TWA