Flexjet Aims Higher with ?Red Label? - AIN

[BlueNose]

Flexjet Aims Higher with 'Red Label' - AIN

by Mark Huber
- July 16, 2015, 2:59

Fractional provider Flexjet is aiming to capture a bigger share of the high-end market with a new level of service it is branding as Red Label. Details of the service will be formally announced at this year's NBAA annual convention in Las Vegas; however, Chris Bero, Flexjet vice president of global marketing, shared Red Label's basic elements with AIN.

Kenn Ricci, chairman of Flexjet parent company Directional Aviation Capital (DAC) and a founder of fractional firm Flight Options, began developing the Red Label concept several years ago, according to Bero. When DAC acquired Flexjet in 2013, Ricci saw it as an opportunity to "bring fractional ownership to the next level," said Bero. That meant a war on what Bero refers to as "greige," the hybrid term for not only the interchangeable conservative gray/beige colors that historically have dominated fractional jet interiors but in a larger sense the term for what he characterizes as the ordinary level of service permeating the industry.

Borrowing from the luxury hotel industry and with help from aircraft OEMs and sister company Constant Aviation, Flexjet began developing a new series of aircraft interiors with greater passenger comfort, bolder colors and textures and closer attention to craftsmanship and detail. This became the foundation for Flexjet's LXi-series Learjet 75s, Challenger 350s and G450s. Flexjet envisions three to four different premium interior designs per aircraft type. "It starts with the aircraft first. You will need to be a member of the Red Label program to fly on these select aircraft," Bero explained.

But putting snazzier interiors in newer airplanes is only one aspect of the program. "Red Label has four main attributes," Bero said. The first is "artisan interiors." The second is dedicated crew assigned to a particular aircraft. "That will offer the maximum experience to owners flying on that aircraft. Those pilots will know that aircraft like the backs of their hands, they are comfortable with it, they know how it performs, and they are able to serve the owners and their guests on that aircraft specifically," he said. "The third aspect is offering aircraft that are no more than five years old and in many cases younger." The company-with 85 aircraft in its fleet now-will be taking delivery of 31 new aircraft this year and plans to expand the fleet by at least 50 percent over the next three years. There will be a maximum of 10 owners per aircraft. Finally, the company will guarantee a limited amount of use on the aircraft. "We are not running these things into the ground. We will be using them to the benefit of our fractional owners and not using them for charter or to carry jet-card customers," he said.

Bero said Red Label also will offer customers access to exclusive entertainment events, VIP lounges and upscale ground transportation with an option for armed guards-"some of them ex-Navy Seals"-said Bero. Onboard catering will have a local flavor, with menu items such as deep-dish pizza in Chicago or a lobster sandwich in Boston. Libations will include special Red Label cocktails. Flexjet is looking at branded FBOs at specific locations with special Red Label lounges. The first one is slated to open at the end of the year in Naples, Fla., to be followed by others at Scottsdale, Ariz., Teterboro, N.J., and Van Nuys, Calif.

The company's goal with the service is "to tap into the emotional side of jet travel. It's not just a business tool; it's what a private aircraft represents. We don't want to be [the shared car ride service] Uber. Especially when you are sitting in the cabin of a business jet for six to seven hours on international flights, you want the best of the best," Bero said.

Pricing for Red Label has not yet been established but will vary with the type of aircraft selected. Bero said Flexjet aims to convert at least 25 percent of its customers to Red Label within one year of rolling out the service. "We're not looking to market on price," he said. "We're looking at the luxury component that owners at the top of the fractional chain really want. We know customers will pay more for Red Label. They are looking for differentiation within the fractional space. Given today's great charter rates, we know we have to plus up [fractional ownership] to remain competitive and to stand out in the marketplace. We've taken a whole new approach. It's really a two-horse race [with competitor NetJets]. We're ready for it."
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[GlorifiedCabbie]

No mention of pilot pay?

 

[BlueNose]

So for the Options guys who remember Kenn's promises from the early days of the company, how familiar does this all sound? And is it more likely that the company will deliver the product as promised, or that you'll end up with frustrated owners who feel they never got what they paid for and are seeing the residual value of their asset killed by overuse?

 

[BlueNose]

No mention of pilot pay?

Shouldn't having your own airplane to get to know like the back of your hand, and being part of "the best of the best," be their own rewards? Plus I hear the crews will get their names painted on the side of the cockpit.

And when the planes get old (or appropriately seasoned), they'll be converted to the soon-to-be-announced Flight Options Black Label program. Cheers!

 

[NJAowner]

Frax is already an expensive proposition for private aircraft. As Red Label seems to make it even more expensive but cater to those with a desire for cool interiors -- aren't those people getting closer to a a private a/c and pick truly customize their experience?

 

[Imissmypilot]

Frax is already an expensive proposition for private aircraft. As Red Label seems to make it even more expensive but cater to those with a desire for cool interiors -- aren't those people getting closer to a a private a/c and pick truly customize their experience?

Ding ding ding! Now I know why you're rich - smart and right on the money.

I'm not rich so maybe I don't know good taste but the new interiors I've seen remind me of the "on-the-cheap" design jobs from that trading spaces show. They are very poorly installed as well and not a good indicator of Constant's success without the new revenue stream of red label.

As we've discussed in other threads, there are also serious control and potential safety concerns from the owner side that would negate participation for most owners. Why pay more and have less access to a system wide fleet of both craft and crew? So you can fly in a navy or red scheme instead of 'griege'? So you get a special lounge for your 10 minutes at the airport? Fractional works because you trade some exclusivity for operability and availability. It's obvious Kenn doesn't understand the market. If he truly feels there is a market for this model it should exist under a different brand of managed aircraft not as part of the fractional model.

But what do I know? I just interact with our market in the flesh every day. I'm not the actual market like you. Your thoughts are very appreciated.

Aside from that, considering a large part of the DAC portfolio will remain traditional fractional, the comparison to Uber is unfortunate and not a smart idea to devalue your holdings for a PR stunt. And yet these geniuses will bring DAC to new heights... Yeah right.

 

[NJAowner]

It's obvious Kenn doesn't understand the market

I don't necessarily agree with that -- from the owner's side (not the pilots' slide). Once upon a time NJA was cool, unique, exclusive and personal. KR is trying to get that business which now doesn't have a home on the frax/charter side. However, I do not think there is much "price elasticity" on the up side of pricing. Maybe I have just become spoiled in my many years of frax. Now I look at it as great, safe & dependable - but no longer need the "cool" factor. And BTW - the only time we spend in an FBO is when there is a delayed flight (other than a 60 second trip to the bathrooms). If there service runs as planned and designed, who needs an cool lounge in an FBO?

 

[johnsonrod]

When do the Legacy 500s arrive?

 

[luckydog]

It's obvious Kenn doesn't understand the market

I don't necessarily agree with that -- from the owner's side (not the pilots' slide). Once upon a time NJA was cool, unique, exclusive and personal. KR is trying to get that business which now doesn't have a home on the frax/charter side. However, I do not think there is much "price elasticity" on the up side of pricing. Maybe I have just become spoiled in my many years of frax. Now I look at it as great, safe & dependable - but no longer need the "cool" factor. And BTW - the only time we spend in an FBO is when there is a delayed flight (other than a 60 second trip to the bathrooms). If there service runs as planned and designed, who needs an cool lounge in an FBO?

The pricing I have been told is: Red Label = High acquisition but lower hourly cost due to the warranty; standard FJ = lower buy in because they are used A/C but higher hourly cost.

 

[Imissmypilot]

It's obvious Kenn doesn't understand the market

I don't necessarily agree with that -- from the owner's side (not the pilots' slide). Once upon a time NJA was cool, unique, exclusive and personal. KR is trying to get that business which now doesn't have a home on the frax/charter side. However, I do not think there is much "price elasticity" on the up side of pricing. Maybe I have just become spoiled in my many years of frax. Now I look at it as great, safe & dependable - but no longer need the "cool" factor. And BTW - the only time we spend in an FBO is when there is a delayed flight (other than a 60 second trip to the bathrooms). If there service runs as planned and designed, who needs an cool lounge in an FBO?

You agreed with me without realizing it.

This was a model that fizzled out because there wasn't either a.) Enough demand or b.) Enough pricing opportunity to make it viable.

The days you're talking about are long gone in this industry because frankly the fractional model is old enough and proven enough to stand on its own without bleeding the profits for the cool factor. It just doesn't make good ROI sense to put money in some of these things. Besides, he's not talking about a chance to schmooze with Clapton at a private nightclub event, get in a serve from Federerer or play on a course with Tiger. That i think would ne smart - to bring back that stuff. Instead, he's concentrating on things that don't matter, like the lounges.

Service done right is what has always been Flexjet's claim to fame. It is still the desire of 99% of us here - to give excellent care and attention to our owners above and beyond a safe flight. However, Kenn Ricci's schemes always end up leading to an unhappy, over worked, underpaid workforce. It's hard to be the best when you are on day 7 of 14 hour crammed full days where you don't even have time to get in a decent meal or conversation with your family just so you can get enough rest in to do it again tomorrow.

Mainly, however my comment regarding Kenn not understanding the market was in specific reference to his aethestic. These bespoke interiors are tacky (opinion) and poorly installed (fact). It is cleveland-esque to be honest; He doesn't get the majority of our owners do not share his midwestern preferences. On top of that it is walmart-ish where it looks snazzy in the picture but up close the finish out is cheap and prone to quick degradation.

I enjoy and value your opinion immensely but I still contend he does not understand the market.

 

[Imissmypilot]

The pricing I have been told is: Red Label = High acquisition but lower hourly cost due to the warranty; standard FJ = lower buy in because they are used A/C but higher hourly cost.

Sounds like a wash in the end then doesn't it?

Fact is planes break, even new ones. As an owner the issue I'd have with Red Label is paying extra money to fly "my plane" and then having very little to no control over my options when "my plane" isn't available.

I also would worry about the potential pitfalls of dedicated crewing. In a fractional model I have no say in who my crew is or what else is going on in their work day, i.e. hours, hotel quality etc...

The owner who is truly interested in the "selling features" of Red Label really is not meant to be a fractional customer. They'd be much better off on all fronts, including financial, to just dive into single or partnered ownership.

Now if Kenn wanted to start a completely separate company that did managed care for single or partnered owners I'd be all for it but he is going to drag our company down and devalue the benefits of fractional in his efforts.

Seriously, who is this jackwagon Bero? Does no one see the huge downside in comparing the meat and potatoes of your operations to Uber just to sell a few Red Label shares?

 

[japhy]

Sounds like a wash in the end then doesn't it?

Fact is planes break, even new ones. As an owner the issue I'd have with Red Label is paying extra money to fly "my plane" and then having very little to no control over my options when "my plane" isn't available.

Not saying Red label is good or bad, but you say you work at Flexjet, so then get your facts straight.

An owner doesn't fly on their airplane exclusively. Only the capts are dedicated on the airplane. The owners fly on any airplane just like they do now.

 

[doh]

It's my understanding that a Red Label owner is not going to be tossed onto a regular Flex airplane, but be guaranteed a Red Label airplane. There are vastly fewer of those, so the distinction you are making is not different from what imissmypilot posted.

 

[japhy]

It's my understanding that a Red Label owner is not going to be tossed onto a regular Flex airplane, but be guaranteed a Red Label airplane. There are vastly fewer of those, so the distinction you are making is not different from what imissmypilot posted.

You are correct. I didn't think about how small those fleets are right now. But they will get bigger (that is where all the new planes are going) and it won't be as much of an issue then. But in the mean time, I wonder what a Red label owner will say when a traditional (older) fractional plane shows up to fly them.

 

[NJAowner]

I was told a few months back but the sales team (but not sure it will remain), that on owner will mainly fly on his/her aircraft. I just don't see how that happens regularly or cost efficiently when I want to fly TEB-ACK and my tail is in VNY.

And the "warranty savings" is not much. Whenever a NJ aircraft (or even a FO aircraft) has gone off warranty we are talking about an increase of a few hundred $ per month. Nothing material.

Quite frankly, as some of you have eluded to over the years, fractional has become the "black car service" of the skies. And like black cars, some services use friendlier drivers, newer cars, and/or nicer service. Others are solely low cost operators. If I want my own car, with my favorite interior, not used much, I own my own.

 

[Imissmypilot]

Not saying Red label is good or bad, but you say you work at Flexjet, so then get your facts straight.

An owner doesn't fly on their airplane exclusively. Only the capts are dedicated on the airplane. The owners fly on any airplane just like they do now.

It's my understanding that a Red Label owner is not going to be tossed onto a regular Flex airplane, but be guaranteed a Red Label airplane. There are vastly fewer of those, so the distinction you are making is not different from what imissmypilot posted.

Exactly DOH, thank you. Everything put out says they are guaranteed a red label plane and, whenever possible, their own tail number.

Or japhy do you not understand the implied promises in promoting dedicated crews that will know and cater to the clientele? Or specialized interiors based on customer choices. If pilots and specialized "bespoking" are tied to a tail number, then owners will essentially be too...

I'll wait your brain to catch up to realizing the enormous implications of what it will do to Flexjet's image when we can not possibly carry through on these ridiculous promises, especially after we have trashed traditional fractional as being the Uber car of the skies.

 

[NJAowner]

BTW -- I don't know what some of you mean buy that extra "Flexjet" service (even before Red Label). I flew a decent amount on FJ form 2008-2011 and it was not noticeably different from NJ.

 

[japhy]

Exactly DOH, thank you. Everything put out says they are guaranteed a red label plane and, whenever possible, their own tail number.

Or japhy do you not understand the implied promises in promoting dedicated crews that will know and cater to the clientele? Or specialized interiors based on customer choices. If pilots and specialized "bespoking" are tied to a tail number, then owners will essentially be too...

I'll wait your brain to catch up to realizing the enormous implications of what it will do to Flexjet's image when we can not possibly carry through on these ridiculous promises, especially after we have trashed traditional fractional as being the Uber car of the skies.

If you or anybody else think Flexjet's image is anything what is was then you need to wake up. We are Flight Options now. The only thing left is the logo.

 

[doh]

Even if the red label fleet grows, deadhead must increase. By definition, you are shrinking what was once one fleet into two smaller fleets.

 

[flex*wife]

If you or anybody else think Flexjet's image is anything what is was then you need to wake up. We are Flight Options now. The only thing left is the logo.

Unfortunately you are spot on. A few months ago we had a decision to make.

Without getting into all the details, resumes are out. A few contract jobs have landed good leads. Hoping to get ahead of the curve of the projected mass exodus. It looks like it's finally panning out.

I know for a fact we are far from the only ones. I hear even some of the POC are hunting and a couple have quietly interviewed for the Global/Gulf Stream and Red Label. If that's not a sign of the times I don't know what is.

Good luck Flexjet. I doubt anyone cares anymore.