NetJets Sues Signature and Landmark over Fuel Discounts

[gret]

Today's AIN Alerts
NetJets has filed lawsuits against Signature Flight Support and Landmark Aviation in an attempt to force the two FBO chains to extend contracted high-volume fuel discounts to Support Services clients at NetJets aircraft charter and management arm Executive Jet Management. Announced at the NBAA Convention in October, EJM's Support Services provides flight departments and aircraft owners with a suite of services that offer cost savings via discounts leveraged by the buying power of NetJets and its subsidiaries. In the Landmark case filed in the Franklin County Court in Columbus, Ohio, NetJets said that the FBO chain's San Diego facility refused to provide discount fuel under the contract to a Support Services client last month. On March 22, the FBO chain then informed NetJets that it would not provide the contract fuel discount to any of "NetJets" corporate flight department clientele? at any Landmark location. Though the initial filing against Signature and parent BBA Aviation in the New York State Court is sealed, follow-on court documents suggest a nearly identical complaint against this FBO chain. In both cases, until court hearings start this summer the judges are requiring the FBO chains to provide contract discount fuel to existing, but not new, Support Services clients. While Landmark and NetJets would not comment on pending litigation, Signature sidestepped its usual policy on these matters, saying, "NetJets is a highly valued customer and otherwise it's business as usual" between the two companies. "We have reached an interim agreement for existing Support Services customers," a Signature spokesman told AIN.

Excerpt from Landmark's general counsel to NetJets contained in court filings-

"The EJM "Support Services" program appears to be nothing more than an effort by EJM to sell Landmark?s discount pricing to aircraft owners and operators for whom EJM does little else."
​

 

[cldsfr79]

Today's AIN Alerts
NetJets has filed lawsuits against Signature Flight Support and Landmark Aviation in an attempt to force the two FBO chains to extend contracted high-volume fuel discounts to Support Services clients at NetJets aircraft charter and management arm Executive Jet Management.
[/INDENT]

Good. But this is just really a ploy to force the hand.

Some times I think Signature takes NetJets business for granted. I know NJ actually make up less than 10% of the entire private jet market, but they are still big players.

There are some airports, like MIA/SFO/BOS, where you are forced to go to one FBO (Landmark or Signature), but mostly all the big airports have multiple FBOs. I'm sure all the FBOs (MillionAir, Atlantic, Jet, Etc.) are flooding NJ with calls and emails for business. NJ will get it's discount one way or the other.

Or NJ will just keep opening up their own FBOs. NJ has them in HPN, CMH, VNY, PDK, soon to be PBI, and even TEB, although it's a Landmark, NJ owns hangers and leases space there.

 

[t-bone]

I'm curious about the rationale behind owning/operating your own FBOs. Are you able to get wholesale pricing on fuel? It seems like a huge expense for something that generates little revenue (unless they provide services to non-NJA customers). Do the passengers really care when they drive straight to the plane most of the time?

 

[gunfyter]

I believe the FBOs are only branded netjets but actually operated by real FBOs

 

[gret]

I believe the FBOs are only branded netjets but actually operated by real FBOs

Correct. It is just a way for the company to show that they have some bricks and mortar

The suit is simply the FBO chains to protecting the special pricing that they give to heavy users. They don?t want these preferred customers marketing the fuel agreements to others and collecting into-plane like fees because they have a discounted price. It would be like United offering its fuel price from vendors at a mark up to NetJets.

If it is a bone fide client with substantial other services being provided by NetJets, the FBO chains are saying that?s fine and they will honor the contract.

 

[Sparse]

EJM has around 180 aircraft on its ceritificate. That's not chump change.

 

[NoJoy]

Just give Atlantic more business-if you can. Places like TEB, Signature has all the traffic, and Atlantic has two planes on their ramp. Atlantic bucks going to waste. Jeesh!

 

[gret]

EJM has around 180 aircraft on its ceritificate. That's not chump change.

They qualify...it is those aircraft whose owners are referred to as "Support Services" clients.

They basically piggyback on EJM/NetJets buying programs to obtain discounts on fuel and other services (training, etc.) and not much else. Somebody got cute and thought they had a new idea to make money and Signature and Landmark are saying no way. It is has been tried before and it doesn't work once the terms see the light of day.

 

[rajflyboy]

Just give Atlantic more business-if you can. Places like TEB, Signature has all the traffic, and Atlantic has two planes on their ramp. Atlantic bucks going to waste. Jeesh!

TEB... Signature has all the traffic?

Have you seen Jet Aviation at TEB?

 

[gutshotdraw]

Just give Atlantic more business-if you can. Places like TEB, Signature has all the traffic, and Atlantic has two planes on their ramp. Atlantic bucks going to waste. Jeesh!

It's going to suck when Signature opens at SJC and we have to start going there instead of Atlantic.

 

[NoJoy]

Yes it will. Any idea when that's supposed to happen? Atlantic needs to price match Sig at these places. :beer:

 

[gutshotdraw]

Yes it will. Any idea when that's supposed to happen? Atlantic needs to price match Sig at these places. :beer:

The press release I saw didn't mention opening dates but I would guess before the end of the year. Since Signature has an agreement with NJA to be the "primary" FBO nationwide, even if Atlantic matches the price the only way we'll go to Atlantic in the future is by passenger request.

And I need to get back to SJC soon. I'm ONE Atlantic buck shy of funding my card for this year....

 

[Coool Hand Luke]

They qualify...it is those aircraft whose owners are referred to as "Support Services" clients.

They basically piggyback on EJM/NetJets buying programs to obtain discounts on fuel and other services (training, etc.) and not much else. Somebody got cute and thought they had a new idea to make money and Signature and Landmark are saying no way. It is has been tried before and it doesn't work once the terms see the light of day.

Exactly. I'd like to see more service providers catch on to this scheme.

 

[X-rated]

I'm not sure what the problem is. The difference between fully managed customers and Support Services customers is pretty minor. It's just a matter of who retains operational control. Both customers are directed to the preferred vendor and contribute equally towards total monthly volume. The fact is, the company as a whole has a boatload of airplanes which they can direct to Signature. If Signature is not interested in the business, I'm sure another vendor will be happy to take their place. If I were a Support Services customer at EJM, I would go out of my way not to use Signature, and if EJM/NJA doesn't hold firm with Signature, I'd move my plane to Jet or Tag. It's just business. Do you want it or not?

 

[BoilerUP]

Signature Support Services fuel pricing is NOT as low as NJA/EJM pricing...and quite often is higher than CAA contract pricing.

 

[X-rated]

duplicate

 

[X-rated]

Boiler,

I'm not sure what you're saying. Maybe I'm misunderstanding something.

I'm a Support Services customer with Jet Aviation Business Jets. In addition to being our CAMO, they provide many services for us in addition to giving us access to their fleet discounts. We enjoy the same insurance, fuel, and training group discounts that their fully managed customers get; and why wouldn't we? The fact that we retain operational control has no bearing on how much fuel usage or other business JABJ is able to direct towards their preferred vendors. I assume this is the issue in contention between EJM and Signature. Am I misunderstanding something?

All I'm saying, is I don't know why something like this would go to court unless there is a long term contract in place and the terms are in dispute. EJM/NJA can negotiate for their entire fleet including their Support Services customers. If Signature or Landmark doesn't like it, another vendor will be happy to take all of the unwanted business including the managed and fractional fleets. If EJM/NJA doesn't want to push the issue, I think they will lose a fair number of Support Services customers to the other major management companies who do offer fleet discounts. I, for the life of me, don't know why Signature wouldn't want the extra preferred business, but everyone gets to make their own choices.

 

[BoilerUP]

What I'm saying is this:

NJA Support Services fuel pricing is NOT the same as NJA or EJM fully managed fuel pricing. In fact, NJA SS fuel pricing is substantially higher than NJA/EJM fuel pricing.

At most airports with a CAA preferred FBO, CAA fuel pricing was cheaper than NJA Support Services fuel pricing.

I know this because we're Part 91 CAA members who were looking at joining Support Services, and I was given EJM/NJA fuel prices by a third party and compared first-hand between a number of typical GA airports (TEB, IAD, PBI, MDW, DAL, PDK, VNY, etc).

Support Services did offer a substantial discount at FSI relative to what they've been willing to negotiate with me (still more expensive than CAE) and having ramp/GPU fees waived is a major (I'd argue the main) benefit to being a Support Services member.

In the end, Support Services didn't make financial sense for us...but for many operators it would, regardless of fuel pricing.

 

[X-rated]

Gotcha. Thanks

 

[gret]

Boiler,

I'm not sure what you're saying. Maybe I'm misunderstanding something.

I'm a Support Services customer with Jet Aviation Business Jets. In addition to being our CAMO, they provide many services for us in addition to giving us access to their fleet discounts. We enjoy the same insurance, fuel, and training group discounts that their fully managed customers get; and why wouldn't we? The fact that we retain operational control has no bearing on how much fuel usage or other business JABJ is able to direct towards their preferred vendors. I assume this is the issue in contention between EJM and Signature. Am I misunderstanding something?

All I'm saying, is I don't know why something like this would go to court unless there is a long term contract in place and the terms are in dispute. EJM/NJA can negotiate for their entire fleet including their Support Services customers. If Signature or Landmark doesn't like it, another vendor will be happy to take all of the unwanted business including the managed and fractional fleets. If EJM/NJA doesn't want to push the issue, I think they will lose a fair number of Support Services customers to the other major management companies who do offer fleet discounts. I, for the life of me, don't know why Signature wouldn't want the extra preferred business, but everyone gets to make their own choices.

My guess is that you are a Jet Aviation charter management client which is different from the EJM Support Services product. Here is a summary of the three programs offered by JA-

http://www.jetaviation.com/index.php/latestnews/2220

Here is the EJM Support Services page that describes the program-

http://www.executivejetmanagement.com/aircraft-management/support-services/

The EJM program doesn?t require you to place the a/c on their certificate and fly charter. The EJM program is essentially a way for them to get closer to the flight department/owner and hopefully sell additional services. The product's major benefit is obtaining the discounts that NetJets/EJM have with various vendors.

EJM sells it by saying??pay us $XXXX per month and it won't cost you anything as you will save at least that amount thru our discounts you?ll get, so nobody gets hurt"?except of course the vendors.

Landmark and Signature are saying this is a scam and won?t let people simply sign up with EJM for minimal services and get the discounts. If they did, everyone would do it simply for cheaper gas.