Netjets and 200/barrel oil

[Mach92]

SWEET! I just left a 10 year upgrade for NJA!!!!! WTF.

Not a prob though 1st year pay here is better than 10 capt. Pay on reserve where I left.

Lets hope I wrong. I am so sick of watching all these so called "experts" on CNN CNBC FOX Business about oil will NEVER hit 100 it did. NEVER hit 115 it did. Never hit 125 it did. I am convinced nobody knows how high it might go.

NJA will be OK IMHO but like I said things will slow unless the economy picks back up and soon.

 

[learflyer]

anyone see that show last night about running out of "gas?" some scary stuff. 24 hr news and the internet is the worst thing to happen to this world. Even though i'm an FI junky.

 

[CALRepublic]

What happens when oil hits $200?

Our very wealthy owners pay for it.

Yes, it is that simple.

I wish it was that simple.

I fly for NJ, I think and hope NJ will be around for many, many years. But to think this won't affect Netjets or the frax is plain ridicoulus.

As far as the 10 year upgrade at NJ, give it a couple of years.....

 

[johnboy99]

What happens when oil hits $200?

Our very wealthy owners pay for it.

Yes, it is that simple.

And I guess you still believe in Santa Claus, the Easter bunny and even more importantly the tooth fairy. NJA is a great place but don't think for a minute your owners will continue to pay whatever the price increase is forever. Some owners still have to justify spending money to the shareholders. If money is not coming in like it used to something must go. It is like the food chain, if there is nothing coming in on the bottom it doesn't matter how big you are at the top you could get hungry. It is that simple Cap Daddy.

 

[RCA]

And I guess you still believe in Santa Claus, the Easter bunny and even more importantly the tooth fairy. NJA is a great place but don't think for a minute your owners will continue to pay whatever the price increase is forever. Some owners still have to justify spending money to the shareholders. If money is not coming in like it used to something must go. It is like the food chain, if there is nothing coming in on the bottom it doesn't matter how big you are at the top you could get hungry. It is that simple Cap Daddy.

One could also say more companys will need to buy fractional shares to increase productivity.

Another consideration, companys that may have a tought time justifying whole airplane ownership may trade down to a fraction of an airplane.

The individual owner is paying $5,000/hr+ for this luxury. I doubt adding another 1,000 or so dollars will cause people to return to airline travel.

While the fractional model is not unbreakable it's very solid.

 

[HA25]

Just curiuos if anyone has any thoughts on how this oil situation will effect the fractionals. I'm considering applying, as I no longer feel that there is a future at Blue. I have thought about NetJets for a long time, but had a hard time giving up the Airline thing. I don't like the slow upgrade at NetJets, but still think it might be worth it. With oil going up and up, I am wondering what the higher ups over there are predicting.

The rich get richer and the rest of us get poorer.. The people riding on the NetJets fleet couldn't care less what they pay for fuel.

Why do you think that while the rest of this industry is in turmoil and airlines are failing left and right, NetJets, FO and XOJet are still growing like gangbusters?

Take the job... if security is what you're worried about.. but be prepared to do the "Ass Kissing and Bag Totten" that they'll demand from you. This isn't the A320 anymore my friend.

 

[CastofThousands]

Make no mistake about it, flying at all fractional companies and by and large nearly all charter companies is down significantly in 2008 vs 2006 and 2007.

Analysis shows a 15% to 20% decrease in private aircraft revenue movements in 2008 vs 2006 and 2007. This is a result of the economy, decreased [individual or corporate] cash flow, and higher variable costs. The financial markets have dried up and the major institutions are extremely reluctant to loan money to operators in our segment of the industry. XO Jet had to go to the Middle East for additional high risk leveraging where in fact the investors bet against XO Jets success through super accelerated depreciation – in hopes they would recapture assets worth far more than the residual balance owed by XO Jet.

At $200 a barrel it only gets worse for everyone… Nobody is invincible and the notion that NetJets is invincible is naiveté. NetJets is simply more durable than the others (economy of scale and financial backing). At $200 a barrel BOHICA (Bend Over Here It Comes Again) and buckle up it's going to be a bumpy (ups and downs) five (or so) years.

The healthiest and most viable company with the strongest customer/brand loyalty will gain market share in a down market. NetJets must improve to assure it's standing or it will loose ground to the competition. The healthiest company is then positioned to capitalize [the most] on the upside.

IMHO,

 

[fly4ever]

Make no mistake about it, flying at all fractional companies and by and large nearly all charter companies is down significantly in 2008 vs 2006 and 2007.

Analysis shows a 15% to 20% decrease in private aircraft revenue movements in 2008 vs 2006 and 2007

Source please?

 

[captain dad]

I respect everyone's opinion to the fuel price question, as opposed to some. I actually had a conversation with a major CEO owner prior to taking him to the BH shareholder's meeting. I posed this very question. He said he couldn't care less about fuel fees. He wanted access to the large fleet and premium benefits that NJA provides. Will it effect some? Sure. Will it drastically effect NJA? I doubt it, but we will see that's a given.

 

[CastofThousands]

Make no mistake about it, flying at all fractional companies and by and large nearly all charter companies is down significantly in 2008 vs 2006 and 2007.

Analysis shows a 15% to 20% decrease in private aircraft revenue movements in 2008 vs 2006 and 2007

Source please?

Just remember what I wrote above and do a look back in 5 years (2012). The market is changing as is owner/cardholder flying patterns.

2008:
Flex - Near breakeven (at the pilot group's expense) with no growth.
CS - Another $30 to $40 million loss with marginal to no [net new] growth.
FO - New HGI aquisition cooked books with more than $50 million (real money) in losses. *Could have* made positive numbers with a fair labor agreement.
NJA - Will make between 2006 and 2007 numbers with approx. 75 net new planes.

2009 and 2010:
Go back to 2003 and 2004 new owner sales and retention data...

5 year industry segmant cycle with NJA hitting 800 planes and just over 4,000 pilots [best case] year end 2012. If NJA doesn't have 800 planes and just over 4,000 pilots by year end 2012, the industry segment will be down to 3 [true] industry segmant competitors. NetJets owner/card retention will be base on product delivery and customer service (brand loyalty). Fine print: acts of God, war, terrorism, and/or a major a/c accident make the WAG null and void.

Other major concerns: 1) will private jet travel become the next Hummer enviro negative stigma (cost of carbon off sets per EU), 2) [growing] State by State private (fractional) jet taxation (per CA), 3) FAA funding and how private jets are assessed/taxed (User Fees), 4) ATC Next Gen and potential slots (per EU), 5) foreign ownership (does Lufthansa [as one exmple a la Jet Blue] buy or startup a fractional provider in the US with a major cash infusion and compete with existing fractional providers [Virgin maybe]?).

I could go on - the economy, fixed and variable operating costs, public perception for public companies, and competitive market are different than we have ever seen over the past 10 and 20 years. Add to the list above, if the economy turns around, [more] Private Equity parts supply chain, infrastruction (FBO), and OEM acquisitions.

It's all about brand loyalty (safety, product delivery, and service)!!!

That's my [very] educated forecast.

 

[CastofThousands]

I respect everyone's opinion to the fuel price question, as opposed to some. I actually had a conversation with a major CEO owner prior to taking him to the BH shareholder's meeting. I posed this very question. He said he couldn't care less about fuel fees. He wanted access to the large fleet and premium benefits that NJA provides. Will it effect some? Sure. Will it drastically effect NJA? I doubt it, but we will see that's a given.

At the top of the flying food chain they will stay "all in." The market as a whole is no longer a top of the food chain market; individuals, private companies, public companies who keep making the money.

Every fractional now has a significant cardholder market base. These individuals/companies can now pull out in months, not years. In addition, cardholders are by their nature cash flow based puchasers.

Every fractional has at least 20% (one more than 50%) cardholder based revenue. Very dangerous, but some fractional providers went to the renvue they could (cards vs charter option) to make it this far, during good times.

A fractional company can now, for the first time, easily see a one year 10% to 15% drop out rate between owners and cardholders who don't/can't renue.

Again, IMHO,

 

[fly4ever]

CoT,

You have not provided evidence to back up your numbers therefore it must be pure speculation on your part. Obviously that's the beauty of this board - people can speculate all they want. Have fun with that.

 

[CastofThousands]

CoT,

You have not provided evidence to back up your numbers therefore it must be pure speculation on your part. Obviously that's the beauty of this board - people can speculate all they want. Have fun with that.

The good news is we are all speculating about $200 a barrel oil and its affect on the industry.

Some think it will have no affect to our industry segment, while others believe it will.

Nothing like oil speculators - my point is simple, no company is invincible - and due to economic cycles they all get tested - time will tell.

 

[captain dad]

I don't think the cost of oil is the real issue. I think the effect the cost of oil is having on the airlines is a more significant issue.

Our owners and card holders have few options. Throw in the on demand nature of our business and those options get very few indeed.

Going back to the airlines with 95% load factors and increasing labor problems, etc..., go to a charter, have their own A/C, or stay with us. Given the option and our increasing focus on premium service and massive fleet structure, I don't think we will be saying goodbye to too many.

I flew on Eagle the other day. Paid premium last minute price for the ticket mind you. Delayed as usual, jammed packed as usual, far less than professional FA (to the point of imbarrassment), and filthy uncomfortable aircraft. I just smile thinking that when this is the major alternative, my future is very secure.

Just one example, but a significant one.

But you are right, we will see. I have put my money on NJA. I think this pony has legs!

 

[CastofThousands]

But you are right, we will see. I have put my money on NJA. I think this pony has legs!

I put my money on the NetJets pilots. Who knows what mid and upper management will do....

 

[Ultra Grump]

CoT,

You have not provided evidence to back up your numbers therefore it must be pure speculation on your part. Obviously that's the beauty of this board - people can speculate all they want. Have fun with that.

I'm pretty sure he knows what he's talking about.

 

[fischman]

Cast of Thousands,

While I agree with you concerns, Dan Rosenthal has a different one that I share.

He says the biggest threat to NetJets is the Fractional industry becoming a commodity, much like the airlines have become. There is no brand loyalty!

The good news is that our pilots continue to demonstrate their magic on every flight, and in the short term the danger seems negligible.

The challenge is going to be maintaining our enthusiasm!

 

[HiSpeedFlyer]

[quote=fischman;1588927]Cast of Thousands,

While I agree with you concerns, Dan Rosenthal has a different one that I share.

He says the biggest threat to NetJets is the Fractional industry becoming a commodity, much like the airlines have become. There is no brand loyalty!

The good news is that our pilots continue to demonstrate their magic on every flight, and in the short term the danger seems negligible.

The challenge is going to be maintaining our enthusiasm![/quote]

Now the fact I was sitting next to you when that was said remains to be seen....:beer:

but the MAN has a point... we can be as enthusiastic as possible, any feel we are invincible, but if the lower tier owners/cardholders dry up the funds, then its a whole new ballgame.

"no company is invincible - and due to economic cycles they all get tested - time will tell."

Need he say more.

Me thinks we can whether this storm with a minimal amount of damage to our lifestyle... but it will take a little more effort and a concerted effort from some of our colleagues to insure this. The battle has to be shifted from anti management (pre -2005... some still hold a grudge, and hell, i dont necessarly blame them.) to positive team concept ( by the contract and only by the contract so some of you cant try to rip into me)... and quickly. It depends on our and theirs livelihood.


'nuff said on this.. Howz about Lester's No No tonight
!!

 

[fischman]

Now the fact I was sitting next to you when that was said remains to be seen....:beer:

You were hogging the table too!

 

[CastofThousands]

Cast of Thousands,

While I agree with you concerns, Dan Rosenthal has a different one that I share.

He says the biggest threat to NetJets is the Fractional industry becoming a commodity, much like the airlines have become. There is no brand loyalty!

The good news is that our pilots continue to demonstrate their magic on every flight, and in the short term the danger seems negligible.

The challenge is going to be maintaining our enthusiasm!

Brand loyalty is critical to all fractional providers - IF DR said differently he is sadly mistaken. Brand loyalty doesn't exist with a commodity (price driven) based business ... Brand loyalty does exist with a brand, product, and/or service based business.

Final note: The commodity based business comment comes directly from Warren Buffett and his comments referencing his error in the US Air stock purchase. Warren further expanded on the issue with his purchase of NetJets in 1998 where he made it clear NetJets was nothing like an airline and therefore the purchase of NetJets is nothing like US Air.

Respectfully,

http://en.wikipedia.org/wiki/Brand_loyalty
Brand loyalty
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Brand loyalty has been proclaimed by some to be the ultimate goal of marketing.[1] In marketing, brand loyalty consists of a consumer's commitment to repurchase the brand and can be demonstrated by repeated buying of a product or service or other positive behaviors such as word of mouth advocacy.[2] True brand loyalty implies that the consumer is willing, at least on occasion, to put aside their own desires in the interest of the brand.[3]
Brand loyalty is more than simple repurchasing, however. Customers may repurchase a brand due to situational constraints, a lack of viable alternatives, or out of convenience.[4] Such loyalty is referred to as "spurious loyalty". True brand loyalty exists when customers have a high relative attitude toward the brand which is then exhibited through repurchase behavior.[2] This type of loyalty can be a great asset to the firm: customers are willing to pay higher prices, they may cost less to serve, and can bring new customers to the firm.[1][5] For example, if Joe has brand loyalty to Company A he will purchase Company A's products even if Company B's are cheaper and/or of a higher quality.
An example of a major brand loyalty program that extended for several years and spread worldwide is Pepsi Stuff. Perhaps the most significant contemporary example of brand loyalty is the fervent devotion of many Mac users to the Apple company and its products.
From the point of view of many marketers, loyalty to the brand - in terms of consumer usage - is a key factor:
Contents [hide]
0. 1 Usage rate
0. 2 Loyalty
0. 3 Industrial Markets
0. 4 Portfolios of Brands
0. 5 Market Inertia
0. 6 Examples of Brand Loyalty Promotions
0. 7 See also
0. 8 References
0. 9 External links

[edit]
Usage rate
Most important of all, in this context, is usually the 'rate ' of usage, to which the Pareto 80:20 Rule applies. Kotler's `heavy users' are likely to be disproportionately important to the brand (typically, 20 percent of users accounting for 80 percent of usage -- and of suppliers' profit). As a result, suppliers often segment their customers into `heavy', `medium' and `light' users; as far as they can, they target `heavy users'.

[edit]
Loyalty
A second dimension, however, is whether the customer is committed to the brand. Philip Kotler, again, defines four patterns of behaviour:
Hard Core Loyals - who buy the brand all the time.
Soft Core Loyals - loyal to two or three brands.
Shifting Loyals - moving from one brand to another.
Switchers - with no loyalty (possibly `deal-prone', constantly looking for bargains or `vanity prone', looking for something different).

[edit]
Industrial Markets
In industrial markets, organizations will regard the `heavy users' as `major accounts', to be handled by senior sales personnel and even managers; whereas the `light users' may be handled by the general salesforce or by a dealer.

[edit]
Portfolios of Brands
Andrew Ehrenberg, then of the London Business School said that consumers buy 'portfolios of brands'.[citation needed] They switch regularly between brands, often because they simply want a change. Thus, 'brand penetration' or 'brand share' reflects only a statistical chance that the majority of customers will buy that brand next time as part of a portfolio of brands they favour. It does not guarantee that they will stay loyal.
Influencing the statistical probabilities facing a consumer choosing from a portfolio of preferred brands, which is required in this context, is a very different role for a brand manager; compared with the - much simpler - one traditionally described, of recruiting and holding dedicated customers. The concept also emphasises the need for managing continuity.

[edit]
Market Inertia
On the other hand, one of the most prominent features of many markets is their overall stability - or inertia. Thus, in their essential characteristics they change very slowly, often over decades - sometimes centuries - rather than over months. This stability has two very important implications. The first is that if you are a clear brand leader you are especially well placed in relation to your competitors, and should want to further the inertia which lies behind that stable position. This will, however, still demand a continuing pattern of minor changes, to keep up with the marginal changes in consumer taste (which may be minor to the theorist, but will still be crucial in terms of those consumers' purchasing patterns - markets do not favour the over-complacent.). But these minor investments are a small price to pay for the long term profits which brand leaders usually enjoy. Only farm-hands make a career out of milking cows, and only fools jeopardise the investment contained in an established brand leader.
The second, and more important is that if you want to overturn this stability, and change the market (or significantly change your position in it), then you must expect to make massive investments to succeed. Even though stability is the natural state of markets, however, sudden changes can still occur and the environment must be constantly scanned for signs of these.

[edit]
Examples of Brand Loyalty Promotions
0. Pepsi Stuff

[edit]
See also
0. Affective marketing
0. Brand architecture
0. Brand aversion
0. Brand equity
0. Brand management
0. Customer engagement
0. Employer branding
0. Evangelism marketing

[edit]
References
0. ^ a b Reichheld, Frederick F. and W. Earl Jr. Sasser (1990), "Zero Defections: Quality Comes to Services," Harvard Business Review (September-October), 105-11.
0. ^ a b Dick, Alan S. and Kunal Basu (1994), "Customer Loyalty: Toward an Integrated Conceptual Framework," Journal of the Academy of Marketing Science, 22 (2), 99-113.
0. ^ Oliver, Richard L. (1999), "Whence Customer Loyalty?," Journal of Marketing, 63 (3), 33-44.
0. ^ Jones, Michael A., David L. Mothersbaugh, and Sharon E. Beatty (2002), "Why Customers Stay: Measuring the Underlying Dimensions of Services Switching Costs and Managing Their Differential Strategic Outcomes," Journal of Business Research, 55, 441-50.
0. ^ Reichheld, Frederick F. (1993), "Loyalty-Based Management," Harvard Business Review, 71 (2), 64-73.
0. P. Kotler, 'Marketing Management ' (Prentice-Hall, 7th edn, 1991)
0. D. Mercer, ‘Marketing’ (Blackwell, 1996)
0. Jacoby, J. and Chestnut, R.W., 1978, Brand Loyalty: Measurement Management (John Wiley & Sons, New York).Arindam ghosh(MBA ,iipm)

[edit]
External links
0. D. Mercer, ‘Marketing’ (Blackwell, 1996)