Buffett's Baby Is Taking a Bumpy Ride

[Cavpilot]

Does scheduled airline travel suck? Yes.
Will it continue to suck? Yes.
Will ultra high dollar passengers ride airlines? No.
Will fractionals cater to those passengers? Yes.
Will fractionals survive? Some will, count on it.

Could not agree more. Great summation.

 

[NJAowner]

Good analysis. And GF is right. Just like in automobiles -- everyone loses their shirt in leasing and everyone but the manaufacturers have stopped leasing vehicles. They need to continue in order to sell the shares.

NJA will probably be the only non-manufacturer to remain (of the larger players). The others wil move to a model which rewards a fractional owner who later purchases a jet from the manufacturer. I.e, become a fractionalowner in a Challenger 300 and at the end of years you can apply your entire original share purchase price to the purchase of a new jet. It will become their feeder marketing systems, just like the jet cards presently feed the sahre purchases. An amazing number of Marquis owners move up to become NJA share owners.

Fly safe.

 

[Publishers]

The points they make are right on.I think the Marquis card probably impacted them more than they ever thought it would. They need to get them to move up because they were killing them at the beginning. Down the road from here, I still think that their will always be danger in the pilot contract getting to where it impacts them as to how competitive they are with others.

 

[gunfyter]

The new, more efficient pilot contract is probably why we wll save over $100 Million in selloff costs that they were talking about.
And he says we will make a profit THIS year
Very efficient...Already this year am within 35 flight hours of what I flew ALL of last year. Its like I am doing 2 times the work.

 

[notaNJApilot]

I don't think it is necessarily the contract that will save money in selloffs, but rather the hiring of a lot of pilots. I doubt the resume pool ever got dry so the 600 or whatever it is pilots probably would have still been hired. Unless of course you are referring to the increase in productivity of current pilots, which I'd like to see the numbers to know if there really has been a decrease in sick days or planes needing maintenance.

 

[gunfyter]

Here is what i am talking about.

The new contract has me working 14 more days on the new 7/7 than the old 7/7.Ave 4 hrs a day in a CE-750 times 14 days is 56 hrs. Times say $5k/hr in selloffs is $280K savings on selloffs due to the new schedule. Combine that with the FIRST DAY utilization ability the new CBA provides because schedule can be done night before instead of a showtime given a week ahead...Say 2 hrs average for 20 tours... another 40 hrs that don't need to be sold off.Thats another $200k. $480K potential savings per two CE-750 pilots... new CBA vs old CBA. Obviously more than offsetting the cost of the new CBA.Thats why RTS knows we will make money this year... and he will save $100M in selloffs compared to last yr.

 

[notaNJApilot]

That's good info. Thanks for setting me straight.

 

[gunfyter]

The name of the game is efficiency in scheduling to Realize those potential savings. Also the numbers will be lower for smaller airplanes with lower charter costs. And I do not really know what NJA pays per hour for charter. But 5K must be somewhere in the ballpark

 

[Publishers]

I indicated that I was talking downstream. One of the things not talked about was the writedown which indicates the degree which residual values effect the companies. Of course some of this is the result of the hours put on the aircraft in Netjets versus corporate environment. As far as the contract, it will not be the salaries but the work rules that have the effect. This too can effect the number of pilots and the hours put on aircraft, the strain on crewscheduling, and the other aspects of the business.
There are other things as well. Interest rates, fuel prices, that effect the new sales through ownershhip costs. The point was made in the article that they thought mass would overcome compeitition. They are not going to be correct on that I suspect. That is airline thinking and look where that got them.

 

[gunfyter]

work rules.

How many hours of flight time is enough?

Scheduling has adopted quickly to 91K and all crew Duty and Rest rules. I thought my flight hours would be reduced but they HAVE NOT. Hours have increased. They figure it out. Necessity is mother of invention. As time goes on they will learn to be even more efficient within the rules.

The change in work rules has enabled OPS to fly me MORE hours per year... while enhancing crew rest... AND COMPLYING WITH FAA DUTY AND REST RULES ... thanks to the new CBA.

This increase in hours flown by pilots means less selloffs and thats why RTS knows we will make a profit.

How to save 100 Million on Charter

Increase flying in in-house fleet. The article said high charter usage was due to pilot shortage. If each of the current pilots increased flying by just 20 hours per year. 20 hours times 1000 crews would be 20,000 hours not flown by charter selloff.

20,000 hrs times $5k per hr is $100 milllion!

This is offset by pilot salaries and operational costs of operating your own fleet by some amount.

I expect to surpass MY last years flight hours sometime during July. The rest of the year is basically Selloff Reduction relative to last year.


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The new CBA will enable this savings.