NetJets and FlightSafety report profits for 2004

[FamilyGuy]

Family Guy are we getting to you? Why are so scared to tell us your real job? You don't have the guts to even tell us what you do. So, why would we even begin to listen to you?

LOL....actually, I think I'm getting to you.....why else would you devote so much time with the personal attacks?

Start dealing in facts and ideas and maybe you'll have more success....I'm still waiting for an intelligent response from you to the many questions I've posed....

 

[Some Dude]

If you don't tell us what you do then how can we respect your opinions? You have no facts just union busting 101 crap. Smell ya later.

 

[Diesel]

Rustyfan what in the world does that mean? I guess it was a dig of some sort but who knows.

 

[pilotyip]

Again this is a pilot board, it does not deal in reality.

 

[FAcFriend]

profit or no profit who cares. X amount is what the pilots cost. We fly the planes it's their job to figure out how to pay us.- diesel


There is validity to this argument and I know the casino guys dont want to hear it. But if customers dont want to afford to pay the fees associated with paying pilots and the pilots don't want to fly for the wages they get, then fractional as a business does not work.

I have said this before on this board and everyone laughed. Perhaps too many customers who are mariginally wealthy are trying to fly fractional - these people cant really afford it and the industry has to be reserved for the ultra rich. They need to go back to flying commercial.

Less marginally wealthy customers = Less pilots=more pay per pilot..
less support staff, and so on.

 

[El Chupacabra]

Hey I agree with this. But lets focus on one thing. Management Fees. Thats where pilot salaries come from. Looking at all the books is a waste of time.

When you have an airplane there are fixed costs.... one of those costs is the salaries of the crew.... This cost exists regardless of the financial performance of the company. If you want to crew 5 pilots per airplane... make sure the management fees adequately cover this cost. Simple.

 

[Hogprint]

I agree with the above two posts. If you have to ask, you can't afford.

What started out as a little plan for Mr. S to get some of his less wealthy friends down to FLA, now has turned into an 800 lb gorilla. Now that the genie is out of the bottle he can't contain him, much less reel him in.

The little shell game never accounted for the time/wear & tear and lower value that the big M brought to the table. Now the owners are getting concerned that there will be no return on their investment like the Wunder of Woodbridge had promised.

Instead of reselling planes, now we have to keep buying into new airframes so we can still claim we have the most modern up to date fleet. Not the 10k pigs we are seeing out on the road.

I have long thought we should limit the discount side of the aisle here. At least have a dedicated fleet for marquis.

 

[FAcFriend]

Less marginally wealthy customers = Less pilots=more pay per pilot..
less support staff, and so on.

Ok, so now that we agree that the pilots are correct and there is a flaw in the basic business plan-

We will have too many pilots and too many employees. I am not willing to resign because this business plan is too tight. You know how the saying goes- easier to get a job while you have a job-

The union will get much smaller- will it even be needed?
Droves of pilots are now out looking for jobs?

Lets see how many resign in the coming weeks- 5% turnover rate is nothing - until we are seeing 25% turnover rates noone will get excited.

 

[FamilyGuy]

I agree with the above two posts. If you have to ask, you can't afford.

What started out as a little plan for Mr. S to get some of his less wealthy friends down to FLA, now has turned into an 800 lb gorilla. Now that the genie is out of the bottle he can't contain him, much less reel him in.

The little shell game never accounted for the time/wear & tear and lower value that the big M brought to the table. Now the owners are getting concerned that there will be no return on their investment like the Wunder of Woodbridge had promised.

Instead of reselling planes, now we have to keep buying into new airframes so we can still claim we have the most modern up to date fleet. Not the 10k pigs we are seeing out on the road.

I have long thought we should limit the discount side of the aisle here. At least have a dedicated fleet for marquis.

IMO, NetJets is a luxury product and as such its potential market size is inherently limited. There is merit to FAcFriend's idea that the marginally wealthy segment may not be able to afford or justify the increased salaries that the pilots are seeking. If this is the case, then it will simply curb the growth of the program, thereby limiting it to the truely rich.

I dont think this indicates that there is a basic flaw in the business plan, just that it is limited in size. Dont forget that fractional has been around for 20 years now....it is a viable business model, it just may not be scalable to 10,000+ people.

As for Marquis, hours are still hours. They buy 25 hours at a time and use it the same as regular owners....there is no additional wear and tear than a regular owner's 25 hours. Where I think Marquis does cause problems is that they add to the pre-existing peaks and increase the likelyhood of demand exceeding supply.

As we all know, everyone and their brother wants to fly on the sunday after thanksgiving....If you sell a full share, then that owner is going to spread out his flying over the entire year, if you sell a half share then that owner has 400 hours to spread out over the year, but odds are that he will also want to fly on the same peak holiday periods as the full share owner...same as the 1/8th owner and the 1/16th owner....and same as the 1/32nd (marquis) owner....this is where we have problems... the new restrictions on marquis that were recently announced hopefully will help control that demand.

 

[Ace-of-the-Base]

profit or no profit who cares. X amount is what the pilots cost. We fly the planes it's their job to figure out how to pay us.

I see my raise go out the window in waste every day.

Pay us or close the doors.

Diesel, You're right on with this one.

It costs X amount to buy fuel for the planes, so they pay it. It costs X amount to run your maintenance department, so they pay it. Catering, taxes, ramp fees, etc. They pay them. They have to pay everything it takes to make the birds fly. Now, they're a business, so they'll negotiate the best price they can on everything. Even pilots. Good luck!

Now, just as a little joke, I must point out that none of us in the 91 world have to deal with this stuff. We have no union so if we want more money, we just ask (and we usually get it, sometimes not, but there's always another gig waiting around the corner if you play your cards right).

Ace

 

[VmaxFlyR]

Quote:
Originally Posted by VmaxFlyR
Not sure about heresy, but how about a little of accuracy?

1) I lost that post from a "fellow pilot" regarding the 23%-40% raises so I can't post a link, but what you DON'T include in your recollection of that post is that the 40% raises are connected to a 6-6 schedule, which is about 7% more duty days that a current 17 day schedule...If one works more they SHOULD be paid more, no?

Suddenly that 40% becomes 33% comparing "apples-to-apples."



Correct me if I'm wrong, but isnt 50% of the current schedules 7-7, which works out to the same number of work days as the proposed schedule of 6-6?




Sorry...my Bad.

I meant 6 on-4 off schecule would require 7% more work days, recuding that 40% to an effective 33%...

Take into account COLA, what's left?

 

[Hogprint]

As for Marquis, hours are still hours. They buy 25 hours at a time and use it the same as regular owners....there is no additional wear and tear than a regular owner's 25 hours. Where I think Marquis does cause problems is that they add to the pre-existing peaks and increase the likelyhood of demand exceeding supply.

.

Hours are not hours....They pay a premium I agree, but they are not paying any hourly fees or maint fees. It is just block time they pay.

I also disagree that there is no more wear & tear on the airframes. I think Marquis card holders have surpassed actual owners or getting very close (I'm not privy to any hard numbers, but I think I heard this in Recurrent) . If this is the case, now the hours flown has doubled. You know as well as I there are concerend owners out there. There is a lawsuit pending, hence the adjusted rules for Marquis.

I do agree with the rest of your analysis though. I have heard from the BB himself that they would like a dedicated marquis fleet. Don't have a clue how they would do this, but I guess that has been floating around the Death Star.

 

[dsptchrnja]

Diesel, You're right on with this one.

It costs X amount to buy fuel for the planes, so they pay it. It costs X amount to run your maintenance department, so they pay it. Catering, taxes, ramp fees, etc. They pay them. Ace

Diesel and Ace

You analogy only has legitimacy if pilots control their fees as do the vendors you mentioned. If that were the case then NJA pilots would just raise their fee for their flying services. But it doesn't work that way because you are an employee. Your guys are starting to talk as if you work for the union instead of the company.

NJA flight crews negotiate salary, they don't charge for services. The fact that it has taken this long is simply showing the ineffectiveness of having to do so (whether intended or not). You are witnessing the system at work the way it was designed, like it or not [insert sound of EVERYONE saying "not"].

 

[FamilyGuy]

Hours are not hours....They pay a premium I agree, but they are not paying any hourly fees or maint fees. It is just block time they pay.

I also disagree that there is no more wear & tear on the airframes. I think Marquis card holders have surpassed actual owners or getting very close (I'm not privy to any hard numbers, but I think I heard this in Recurrent) . If this is the case, now the hours flown has doubled. You know as well as I there are concerend owners out there. There is a lawsuit pending, hence the adjusted rules for Marquis.

I do agree with the rest of your analysis though. I have heard from the BB himself that they would like a dedicated marquis fleet. Don't have a clue how they would do this, but I guess that has been floating around the Death Star.

I was under the impression that the Marquis fees included everything but the capital cost of the aircraft....hourly fees, maint, etc.

Given how savvy Mr. Santulli is as a businessman I doubt that he'd sell a product and not cover his operating costs...

 

[FAcFriend]

I also disagree that there is no more wear & tear on the airframes. I think Marquis card holders have surpassed actual owners or getting very close


Marquis does not add anymore wear and tear to an airplane than any other owner. I keep trying to explain this concept here and noone is getting it.

I am an owner, I let my brother in law fly 1/2 of my hours, my aunt susie fly 1/4 of my hours and I fly 1/8 and my son flies 1/8. This equals one share.

Marquis is the same concept. No more hours than any other owner. No more wear and tear.

 

[Hogprint]

I also disagree that there is no more wear & tear on the airframes. I think Marquis card holders have surpassed actual owners or getting very close


Marquis does not add anymore wear and tear to an airplane than any other owner. I keep trying to explain this concept here and noone is getting it.

I am an owner, I let my brother in law fly 1/2 of my hours, my aunt susie fly 1/4 of my hours and I fly 1/8 and my son flies 1/8. This equals one share.

Marquis is the same concept. No more hours than any other owner. No more wear and tear.

I agree with your airframe breakdown, but I was talking about overall volume.

They are pushing over 100 marquis cards a month if the marquis sales guy is to be believed. We are selling off 25-30% flights every day?! Over half my flights now are Marquis.

I see the common denominator here as the big M. Bring me back to the fold FacFriend if I've strayed.

 

[El Chupacabra]

That is how it is supposed to work but... my CONSPIRACY THEORY is...

The shares sold as cards are not new airplanes purchased but that is how we sold off the Core Fleet and resold the Buybacks in used airplanes. The increase in flying is GREATER than the increase in airplanes.

Also it is absolutely correct what I think Dispatcher said.... The more the shares are broken up into smaller pieces... there are more folks wanting to fly on the peak periods. this compounds the PERCEPTION of the situation

 

[FAcFriend]

but I was talking about overall volume.

Not sure what this means, hoggie. But the overall volume does not change the problem comes (see El's next post) on peak days when everyone wants to fly at the same time.

This has been changed. Marquis cards only last a maximum of 12 months. So with the new marquis rules some of the problems with this growth will be short lived.

The good part of the program is it offers a great opportunity for growth. Gets NJ into markets they would never be in otherwise. Really it was a genious idea and has been duplicated in yachts already.

El- I believe you are correct that NJ sold off the core fleet as demand rose. Now NJ has a new core fleet on order. The choice was- cease selling to new customers for awhile or sell off the core fleet.

What would you have done?

 

[El Chupacabra]

What would you have done?

I would have given the pilots a raise.

But besides that I would not take the ludicris position that business is so good we are losing money on selloffs and we can't afford pilot raises... because we sold more than we can deliver.

 

[FamilyGuy]

Not sure what this means, hoggie. But the overall volume does not change the problem comes (see El's next post) on peak days when everyone wants to fly at the same time.

This has been changed. Marquis cards only last a maximum of 12 months. So with the new marquis rules some of the problems with this growth will be short lived.

Friend - I hope the new marquis rules will help with the capacity problems. The increased peak period days is a good start, but you still have the fundamental problem that 1 half share owner = 16 marquis card holders. Odds are that when that 1 half share owner wants to fly over thanksgiving weekend, 8-12 of the marquis owners will also want to fly.....that's where the strain on the system becomes evident. Bottom line is that a 12 month limit doesnt eliminate this problem....increased peak period days helps, but it remains to be seen how much.

The good part of the program is it offers a great opportunity for growth. Gets NJ into markets they would never be in otherwise. Really it was a genious idea and has been duplicated in yachts already.

Agreed. The program is revolutionary, and was a boon to us during the slow period from 2002-2003 and the first half of 2004. But in a period of high demand - last half of 2004 - I think it caught us flat-footed.....

Even though its popular on this board to expect management to be omniscient, in all fairness I think it really is hard to manage inventory in this market segment.....think about it...you have to order planes 2-3 years out, yet your demand can turn on or off in a couple of months....add in the fact that your basic product costs tens of millions of dollars, and it gets really scary to order hundreds of planes at a time and hope that demand will materialize....

El- I believe you are correct that NJ sold off the core fleet as demand rose. Now NJ has a new core fleet on order. The choice was- cease selling to new customers for awhile or sell off the core fleet.

What would you have done?

There's the other problem....as a company we've never learned to tie sales to the aircraft deliveries.....its always been sell as fast as you can. Now we are in a situation (like 1999-2000) where demand exceeds supply.

It is hard to say no to a sale....in 99-00 we didnt have Marquis and were able to overcome the negative impressions from increased sell-offs because we had a 5 year contract to make things up to an owner....with Marquis, owners are forming their opinion in 25 hours and deciding based on that experience whether they want to renew or not.....

 

[FamilyGuy]

I would have given the pilots a raise.

But besides that I would not take the ludicris position that business is so good we are losing money on selloffs and we can't afford pilot raises... because we sold more than we can deliver.

El - When did the company take the 'ludicrous position' that they couldnt afford raises?

We all know that the company has already offered raises...the debate is over the size of the raises....

while your response plays to the populist opinions on this board it doesnt address the original question and problem - should NetJets cease selling to new customers for awhile or sell off the core fleet in the face of increased demand?

 

[Diesel]

actually a 105k with no bennies, 401k, yada yada means a DECREASE in pay.

 

[FAcFriend]

I would have given the pilots a raise.

Lol...good darn answer....when all else fails give the pilots a raise.

Now I say that somewhat tongue in cheek and somewhat seriously.

Ever try to get some work done at the house? Want the gardener to go above and beyond the call of duty- want a few extra bennies? Want them to work harder and get the job done no matter what the wife and kiddos are saying?

Pay them more.

You have made your point- well done.

 

[FAcFriend]

actually a 105k with no bennies, 401k, yada yada means a DECREASE in pay. Diesel


good point- your current total compensation package is over 6 figures. This is a good comparison point when looking at other positions.

a book- Passages at 100k plus- John Lucht. Good book for negotiating at these compensation levels.

BTW-
This is personal opinion only -
small point- but mngt would not do away with 401k for pilots at any salary comp level. They may alter the co. match (some cos. offer no match) but it makes no sense that they would not offer the program at all...federal rules offer too many bennies to mgt. for this program. Read the book.

I am sure it was just a negotiation point that never had a chance to come up.