Five "Inefficiencies of Fractional Ownership" According to XOJet CEO

[t-bone]

This idea is already conceived...its called Executive Jet Management, been around for years...

When we first started and only had 2 10s, we actually were on EJM's certificate. We were the client that was referred to in their adds that made $3 million in revenue in a single year.

We never left home base without a paid round trip when we flew NetJet selloffs...and we flew home empty from all over the country all the time when NetJets didn't have anything for us. Not exactly what I'd call efficient, on EJMs part. It was great for us, $3,000,000 later!

 

[NJAowner]

Fractional inefficiencies

A few of you have PMed me for my response on the inefficiciencies of fractional. Here are some of my comments, and this is not to be torn apart as a complete doctoral thesis. Just my comments of the moment.

Fractional is not necessaily intended to be the most efficient program. It is designed to get me, the owner, where I want to go when I want to go there. Those are major reasons to fly private. Other than on peak days, of course it would be more efficient on some days to fly two hours earlier when a plane may be available instead of flying one in, or flying to an airport 40 minutes away instead of one 5 minutes away. But convenience and coordination with MY schedule, not the service provider's, is a major reason to fly private.

As a fractional owner I get to fly when I want to fly. Period. In the XOJet model, as a charter customer, they will take me when they have room. If many of their owners want to fly on a given day, I am out of luck. Not so with fractional.

Cost savings. Before the holidays I requested a charter quote from XOJet, as I have read its literature and am in need of a few more hours this year. XO's hourly fee was about equal to the NJA occupied hourly fee and pro rata share of the monthly management fee for a Citation X. This is a mre attractive procong option than fractional where I also have the depreciation to deal with. However, I had deadhead flight time of approx. 50% of my actual flying time to get the plane to my departure point from XO's base and back to the base from my destination. In other words, I was quoted 2 hours deadhead time on a 4 hour flight. The "cost savings" for me as a charter customer was rapidly disappearing.

I note that I was only looking at it as a charter customer. I have not analyzed what happens if I am an owner of a full XO jet. Of course what they do not say in the article is that if they do not have the charter revenue they expect for my plane, I will not necessarily be getting that large check from them every month.

Fleet size. I actually like a large fleet. I use everything from the Ultra to the Falcon 2000 depending upon my mission (I note that I rarely use the Hawker 800XP, but do use the others). It is quite nice to be able to downgrade to an Ultra if I am just flying my wife to see her mother, or her mom to see us. This is much more efficient than using a Citation X in the XO article.

Just my 2 cents.

Fly safe.

 

[t-bone]

NJAOwner,

Thank you for taking the time to provide us with some constructive criticism. Your words will be more effective in refining our product than simply telling us that what we're doing will never work and that our schedule sucks...as has been repeated several times on this forum.

Happy New Year,

T

 

[t-bone]

Here's the link to the full article.

http://www.aviationweek.com/aw/generic/story_channel.jsp?channel=busav&id=news/bca0108p3.xml

 

[On Your Six]

Here's the link to the full article.

http://www.aviationweek.com/aw/generic/story_channel.jsp?channel=busav&id=news/bca0108p3.xml

That's a very interesting read. I highly recommend others read it - very informative about XOJet and its unique model.

 

[jonjuan]

That's a very interesting read. I highly recommend others read it - very informative about XOJet and its unique model.

Interesting, but full of fluff. I am sure the fracs would love to defend the "there has been dissatisfaction in the fracs with peak periods, missed pickups, etc. They do nothing differently than most of the major fracs. NJA, Flex, CS, and FLOPs all have recently introduced options for whole aircraft ownership in which an owner buys the entire plane, allows the company to fly it when not used by the owner and in turn the owner receives a significantly discounted operational rate. Most of XOjets recent business has been selling 100 hours and less. A far cry from the original business model to only have 3-4 owners per plane, i.e. NJA and their QS tail.

 

[NJAowner]

Having kids and living on a school calendar, I fly several peak days per year. With one exception, I have never had NJA ask me to change the time of my flight. The one exception was in 2003 or 2004 when New Jersey got hit with over 24 inches of snow in one day. I was scheduled to fly back the day the airports were reopened (which was just after President's Day) and I was asked if I would a few hours later in return for a future complimentary upgrade. I ended up flying home a few days later when everything was back to normal (not just flying).

I have also never had a no show or missed pick up.

Fly safe.

 

[CALRepublic]

he just started his business and already talking s***?? As far as the fractional model "not working", people have been saying that for 20 years, and here we are.

He should worry about his company not the competition. XOJet flew a lot of NJ trips last year, that helped his financial results, I guess he forgot to mentioned that....

 

[On Your Six]

he just started his business and already talking s***?? As far as the fractional model "not working", people have been saying that for 20 years, and here we are.

He should worry about his company not the competition. XOJet flew a lot of NJ trips last year, that helped his financial results, I guess he forgot to mentioned that....

I think he mentioned he stopped flying NJ trips. Their impressive growth in undeniable and they have some very wealthy financial backers who are pretty business savvy... Here's another blurb about XOJet from AIN Online:

[FONT=Verdana, Arial, Helvetica, sans-serif]XOJet today said it achieved record revenue and customer growth last year. The company, which placed $2.5 billion worth of aircraft orders at the NBAA Convention for Bombardier Challenger 300s and more Cessna Citation Xs, saw an 80-percent climb in revenue and a fivefold increase in the number of customers purchasing more than 100 flight hours a year. XOJet reportedly flew more than 1,000 customers to 513 airports in 34 countries last year.[/FONT]

 

[Ultra Grump]

...[FONT=Verdana, Arial, Helvetica, sans-serif]saw an 80-percent climb in revenue and a fivefold increase in the number of customers purchasing more than 100 flight hours a year.[/FONT]

Something's wrong with those figures. They had a 500% increase in customers, but only an 80% increase in revenue? Huh?