Best Positioned Fractional

FastJP4

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With the stock market taking a dump, the financial industry, housing industry, fuel costs through the roof etc. etc. etc. all looking bad with seemingly no end in sight - I am curious as to whom you think is the best positioned Fractional to ride this out. And more importantly - WHY you think that particular Fractional is better positioned.

This is NOT meant to be a pom-pom toting thread, or a slam on any fractional - just an educational thread if that is possible on this site.
 

jtf

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I would guess NetJets would be best positioned since it is the biggest and owned by Berkshire Hathaway. It's been managed fairly well and has current labor peace, but most importantly it has the deepest pockets and can bleed the longest if that's what must happen.
 

brokeflyer

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flight options......they're already broke so they got nothing to lose....:)
 

glasspilot

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Avantair flies Piaggio Avanti aircraft.

The aircraft flies just under 500 miles on around 80 gallons of Jet A in one hour.

It has a stand up cabin and is very quiet.

Movie stars, bankers and oil execs love it.

I work there now and even turned down a NetJet interview. I have certainly put my money where my mouth is so to speak.

This is my opinion and I endorse this post.
 

FastJP4

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I would guess NetJets would be best positioned since it is the biggest and owned by Berkshire Hathaway. It's been managed fairly well and has current labor peace, but most importantly it has the deepest pockets and can bleed the longest if that's what must happen.

At first I thought NJ as well. But when things are tough in any business - sometimes the biggest is not always the best. More aircraft to pay for, more salaries & benny's to pay for and more overall overhead.

If live flights were down 10% across the board - the biggest will have the largest hit to cash flow. (I realize the frac model has monthly mngmt fee's and other sources of revenue, but you get my drift)

Berkshire is definately a good placed to be backed by - but Bombardier is also no small potato.

Dunno the answer. Curious for different and objective opinions.
 

brokeflyer

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good post.....the advantage that NJ has IS cash flow. All they really do is just deposit checks every week. Tha amount of currency they TRY to hide would blow your mind. Why else you think it cost $25,000 for a Ultra type rating fom FSI?
 

Voice Of Reason

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NJ is to Merrill Lynch as Flops is to ING

Merrill Lynch and Lehman Bros are the best positioned...all they do is rake in the dough....


....oh...wait.... :erm:
 

rigger

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Actually, they are all pretty well positioned. That said Netjets, Citation Shares, Flex have been and will still be the best positioned. They all have the same but slightly differing business models, they all play with the most wealthy (not the almost wealthy that the some of the prop folks play with) folks worth more thn 50 Million each do not care about an extra 1-2K in fuel for the flight.

The market is on a roller coaster at the moment. This is a short term hiccup, as we have seen so many times. The folks who buy the fraction have the money to sit this out and just wait. The way the contracts are written the frac's are better off not flying at all. In-fact we joke that pilots should be paid a screw off bonus (the more we screw off and not fly the more money the company makes)

Also as the market turns down a bit and the TSA continues it's assult on the "regular" folks the industry is seeing a resurgance of "135" Marquis, vector type cards instead of a whole fractional share. This opens the door to keep the planes flying with a whole "new" clientel that when the money begins to flow more smoothly again will create more "new" owners.

Lastly the emergance of Managed aircraft into the mix is a great opportunity to tap into a market left alone....the one where the folks already own A/C but can now not worry about a flight department, hanger space, insurance and when they feel likeit make a return on the A/C by sub-leasing it back to the fractional company.

As I said the industry is pretty well positioned! I'm glad I'm not fighting this in the airlines any longer.

(The above post is very subjective and just the opinion of the author. Who if anyone knows him will attest is an idiot)
 

rigger

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Actually, they are all pretty well positioned. That said Netjets, Citation Shares, Flex have been and will still be the best positioned. They all have the same but slightly differing business models, they all play with the most wealthy (not the almost wealthy that the some of the prop folks play with) folks worth more thn 50 Million each do not care about an extra 1-2K in fuel for the flight.

The market is on a roller coaster at the moment. This is a short term hiccup, as we have seen so many times. The folks who buy the fraction have the money to sit this out and just wait. The way the contracts are written the frac's are better off not flying at all. In-fact we joke that pilots should be paid a screw off bonus (the more we screw off and not fly the more money the company makes)

Also as the market turns down a bit and the TSA continues it's assult on the "regular" folks the industry is seeing a resurgance of "135" Marquis, vector type cards instead of a whole fractional share. This opens the door to keep the planes flying with a whole "new" clientel that when the money begins to flow more smoothly again will create more "new" owners.

Lastly the emergance of Managed aircraft into the mix is a great opportunity to tap into a market left alone....the one where the folks already own A/C but can now not worry about a flight department, hanger space, insurance and when they feel likeit make a return on the A/C by sub-leasing it back to the fractional company.

As I said the industry is pretty well positioned! I'm glad I'm not fighting this in the airlines any longer.

(The above post is very subjective and just the opinion of the author. Who if anyone knows him will attest is an idiot)
 

jpeace02

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I have nothing to add to this post except to say it's been a while since I've seen someone post a thoughtfull question and recieve so many good responses. God it's good to be out of the airlines.
 

Flyingdude

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I would have to say it would be NetJets, and not because of many of the same reasons already stated. It is because of Berkshire Hathaway, not really because they just have deep pockets, it is mainly because of Warren Buffett.

If you know the histroy of Birkshire, it was built by Warren Buffett when the markets have been in the toilet. That is his entire investment strategy. He buys under valued stocks that are worth more than the going rate. Birkshire/Warren Buffett actually does better when the market is down, that is their bread and butter.

During this time Birkshire will position itself to take advatage of this market situation, therefore, putting NetJets in a even more stable position.
 

Publishers

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This is difficult because on the surface only Netjets has a really profitible model and has finally appeared to have figured out the European aspect of the business.
Shares and Flexjet are there as part of the overall marketing of a produced business jet. Avantair and the others have yet to really show they can make a consistant profit..
This is also a case of the easy fruit has been gotten. The ability to profit from remote customers is tough. It is going to be a rough ending to the year all around.
 

notapilot

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I think all the big players will survive the economy. It would be other reasons that cause any one to fail. That being said, Flexjet is lean and mean. This does not allow for all the daily perks those at Netjets enjoy, but Flexjet has much lower crew ratios and hardly any unsold shares. On the other hand Netjets has much higher unsold shares and higher crew ratios but can bleed losses for a longer period of time. The leader will end up being the company that continues to provide excellent customer service and provide a reliable value to the owner.
 

theskyking

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Good questions that will effect us all.

I would love to see some references to the amount of shares sold and unsold at FJ and NJ. Not disputing your claim, but this is FI after all. It would be enlightening to see some actual numbers for the various players.
 

CALRepublic

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Netjets' charter/management division seems to be doing very well. Here's an article I found.


As major airlines suffer, Executive Jet Management continues to thrive. Based at Lunken Airport and part of Berkshire Hathaway's NetJets, the nation's largest private jet charter is cashing in on well-financed business and other travelers looking to skip the hassle at major airports.

OAS_AD('ArticleFlex_1');

With fares starting at $2,500 per flight hour (most U.S. destinations can be reached in 1 to 4 hours), the price is right for passengers that save money by saving time. While renting an eight-passenger plane can easily run five figures, chief executive Ben Murray argues that can be very economical if you're flying a team of engineers to several stops and don't want to pay to put them up in hotels.
CAN YOU explain your business model?
Executive Jet Management has three engines to its growth: aircraft management, its charter business and aircraft maintenance. Aircraft management is where owners have us handle their aircraft for them - we provide the pilots, maintenance, hangaring, and broker a sale if they want to upgrade. When an owner is not using his airplane is where our charter business comes in - we rent it when it's not being used, which defrays the cost for owners and it serves customers that travel more sporadically and don't need to own a private jet. Our aircraft maintenance operation has two bases - one at Lunken, the other at West Chester (County) Airport in White Plains, N.Y. - and two rapid response teams that go anywhere in the world and put jets back into service.
HOW DOES THE tough climate for commercial flying affect your business?
More commercial fliers are looking for alternatives and the current state of flying is making life difficult for more business travelers - especially if flying to and from remote locations. If you fly out of CVG, you're taking two hours out of your schedule to arrive early. If you have a 9 a.m. flight with us, you can pull up at 8:59 - if you arrive at 9:15, the plane's still there because it's your flight. We often have passengers leave at 8 a.m., hit three different cities and get back home by 6 p.m. in time for their dinner and kid's ballgame. It's rare you can do that flying on a commercial airline.
WHO'S THE TYPICAL customer catching a flight?
We don't have a typical customer. Some are executives with publicly traded companies, others are middle management, professionals and entrepreneurs of local businesses and there's a nice blend of leisure travelers.
WHERE DO YOU FLY and what's your most popular destination?
We can fly to more than 5,000 private airports in the U.S., compared with the 450 airports used by commercial carriers. There isn't a "most-popular" destination - so far this year, we've flown into 962 airports in 62 countries.
HOW'S BUSINESS?
Our gross revenue growth was 25 percent last year - we're approaching $500 million in revenues. We employ 645 people, including 350 at Lunken. We're looking to grow our staff as much as 20 percent in the next year. We're working with local universities and the city of Cincinnati to hire pilots, sales associates, administrative and finance staff plus aviation professionals, such as dispatchers and schedulers. Our fleet has 116 jets - 40 percent more than this time last year. We're targeting to manage 200 jets by 2010.
 

FastJP4

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Very good point by all. Not sure if the lean and mean Flex model is better or the largest market share model of NJ is better.

One thing that comes to mind though. I would imagine NJ is making some very good coin on the long range stuff overseas and around the globe - they are definately leaps and bounds ahead of all in this area. Flex has the Challengers, but I think they only do a fraction (no pun intended) of long range trips compared to NJ. CS and Flops really don't have the equipment for the long range model.

I wonder if the new guy at Flex was brought in to attempt to gain a larger share of the international flying that NJ's currently owns the market on. Wasn't Reids forte setting up the Alliance program at Delta?
 

jonjuan

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Very good point by all. Not sure if the lean and mean Flex model is better or the largest market share model of NJ is better.

One thing that comes to mind though. I would imagine NJ is making some very good coin on the long range stuff overseas and around the globe - they are definately leaps and bounds ahead of all in this area. Flex has the Challengers, but I think they only do a fraction (no pun intended) of long range trips compared to NJ. CS and Flops really don't have the equipment for the long range model.

I wonder if the new guy at Flex was brought in to attempt to gain a larger share of the international flying that NJ's currently owns the market on. Wasn't Reids forte setting up the Alliance program at Delta?
The longer range intl trips typically have lower margins than the shorter domestic trips, in part due to deadhead. It's not uncommon for many 6+ hour deadheads to pick up/drop off a G-V owner in Bali, for example.
If FlexJets or any other frax starts to operate the GLEX, many of their new owners will certainly come from NJI.
 

BoeingBaller

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Avantair flies Piaggio Avanti aircraft.

The aircraft flies just under 500 miles on around 80 gallons of Jet A in one hour.

It has a stand up cabin and is very quiet.

Movie stars, bankers and oil execs love it.

I work there now and even turned down a NetJet interview. I have certainly put my money where my mouth is so to speak.

This is my opinion and I endorse this post.
Who dey?
 

cherry20's

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Wow an educated post with no verbal bashing, yet...

I am impressed though and wish I could add something to the conversation, but I haven't been in this business long enough. Good luck to every fractional company though. It sure beats the hell out of the airlines or freight flying!
 

RNObased

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The longer range intl trips typically have lower margins than the shorter domestic trips, in part due to deadhead. It's not uncommon for many 6+ hour deadheads to pick up/drop off a G-V owner in Bali, for example.
If FlexJets or any other frax starts to operate the GLEX, many of their new owners will certainly come from NJI.
Ok jonjuan,

I'm going to question you again??? Where do you get your information??? Making it up again or just guessing???

So you think that if Flex gets bigger jets then NJI is in trouble?? Man, you crack me up.

If/when Flex gets longer range jets probably a lot of the owners would come from Flex, because most of the time current owners are given first shot at new equipement. But then you would know that if you knew anything about fractionals. I also doubt that NJIs planes would be empty.

As for repo costs, there is a time and place where a 6 hr ferry happens, but when you reach a certain size then there are jets always a lot closer.

Sorry for the negitive post folks, but Jonjuan is the king of making stuff up.
 
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