Five "Inefficiencies of Fractional Ownership" According to XOJet CEO

[Number$Cruncher]

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

Revenue and expense from aircraft sales and similar front-loaded fees at most fleet operators (like fractionals and XOJET) is amortized over the life of the contract. That is, if you make $1m in profit in December from a sale with a 5-year contract, only 1/60th will be recorded in that year. In the following year you'll see 1/5, and so on.

Monthly and hourly revenue is recognized in the month it is billed.

 

[Ultra Grump]

I'm no CPA, so you'll have to speak slowly here. If you have 5x as many customers, you should be bringing in 5x as much in monthly mgmt fees and hourly fees, and 5x as much monthly in the amortized sales contracts, right?

 

[NJAowner]

XOJet reportedly flew more than 1,000 customers to 513 airports in 34 countries last year.

While the increase may be impressive, isn't that what NJA does in 2 days??

I have been looking at XOJet from 2 perspectives -- (1) charter about 125 hours a year, and (2) whole plane ownership. Thus far, neither has made a convincing story for me (but every owner has different needs). I am sort of the "bread and butter" of the NJA operation.

Fly safe.

 

[rumrnr78]

The point, I think, is is that NJA owner, is not concerned with the bottom line as much as he is concerned with convienience and safety.
I hope to be in his position one day! rum

 

[Number$Cruncher]

I'm no CPA, so you'll have to speak slowly here. If you have 5x as many customers, you should be bringing in 5x as much in monthly mgmt fees and hourly fees, and 5x as much monthly in the amortized sales contracts, right?

Yes and no. For the monthly fees it depends when they join. If they signed on toward the end of the year, then no. Many of their offerings have no monthly fees. The same is true for hourlies, which also vary with how much people fly.

 

[Whale Rider]

I think it is a nice thought process and a lot of hoping, but the reality of it is something else. Next time he is quoted he might want to really study the other business models out there before going on record. I have seen many, many aviation businesses come and go, everyone trying to rewrite the business model. Wright Brothers flew over a hudred years ago on piston power and jets first appeared over sixty years ago in WWII. Not a whole lot has changed. Good luck.

P.S. this is not a dig at XO pilots

I don't think XOJet would acquire $600 million in investment capitol based on hoping. You need to understand that reality. You might want to study his business background before you talk.

 

[NJAowner]

I am concerned with the bottom line. However, I have yet to see savings shown to me thus far. 2 of the big reasons are (1) the cost charged to me for positioning and repositioning the aircraft which XO charges, and (2) using the wrong aircraft for the mission (using a X when all I need is an Ultra or Ecxel for a short flight wih 2 people). The model may be a little different for someone who needs or wants to fly and X 90% of the time. I need an X-type a/c about 60% of the time.

Also, it does not make sense from the bottom line perspective for me to buy an entire X and put it into the XO fleet.

Like I said, different programs fit different flyers needs. Does not mean anyone is right or wrong but just "better suited for a particular person".

Fly safe.

 

[Rokit88]

I can't speak about the X, but according to Bombardier, the CL30 is cheaper to operate (DOCs) per hour than a Lear 60.

 

[Ultra Grump]

Yes and no. For the monthly fees it depends when they join. If they signed on toward the end of the year, then no. Many of their offerings have no monthly fees. The same is true for hourlies, which also vary with how much people fly.

I understand that if they all joined at the end of the year, the figures would be skewed, but that's pretty unlikely. Even so, the numbers for 2007 should then be at least 5x the numbers for 2005, right? Even if their offerings have no monthly fees, they still need to be paid one way or another. Unless of course they're counting "customers" who haven't actually paid anything yet. Again, not too likely but whatever. They can crunch the numbers however they want, just sounded fishy to me.

 

[VVJM265]

I am sort of the "bread and butter" of the NJA operation.

So glad that folks like you are out there to keep us in business! Thanks.
:beer: