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NJA and Marquis Press this week....

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holden1

Well-known member
Joined
Mar 29, 2005
Posts
73
I am sure most of you saw this - I have not been on the board in a few weeks due to crazy scheduling.

Looks like the cat is officially, publicly out of the bag on NJA and others regarding overusage of aircraft. Kind of funny that it took this long.

holden1

Private-Jet Travel
Loses Some of Its Luster
Heavy Use, New FAA Rules
Trigger Delays and Hassles;
Labor Strife at NetJets

By AVERY JOHNSON
Staff Reporter of THE WALL STREET JOURNAL
May 24, 2005; Page D1


When John Moriarty flew to Florida from Boston this month to attend a memorial service, he planned to catch a quick flight back. Instead, his return trip was delayed so long that, eventually, he had to get a hotel room and stay overnight.

Though that is the kind of hassle regular travelers face all the time, Mr. Moriarty figured he would be safe because he was flying on a private jet. "To be delayed that long -- I could have done that flying commercially," says Mr. Moriarty, who runs a general contracting company in Massachusetts and who has spent $2.5 million so far for shares in private jets through NetJets and Flight Options, two companies in the fast-growing business of selling partial ownership of jets.

As new fractional-jet offerings make access to a private plane less costly, the pool of people with access to them is mushrooming. There are 4,862 fractional owners today, up from 1,903 in 1999, according to AvData, a research firm that tracks the business. All these jet owners are flying more, too: David Strauss, aerospace analyst at UBS Investment Research, says fractional owners used their planes 25% more last year than in 2003.

The fast growth is exposing customers to the hassles many of them were trying to escape by buying part of a private jet in the first place. In some cases, private jet owners are being forced to book their flying time somewhat earlier, complicating the ability to take trips on short notice. In part because traffic was so heavy last year during peak times at airports such as Grand Junction, Colo., in-bound private jets sometimes had to request landing times nearly three days in advance, compared with little or no advance request in the past.

In addition, this spring the Federal Aviation Administration started enforcing new rules that limit fractional pilots' flying time to no more than 14 hours a day. One effect is that fliers occasionally might see their flight delayed if their pilot has to go off the clock. Making last-minute changes to an itinerary can get trickier, too, because the new rules mean that pilots can't be contacted about scheduling while they're off duty.

The FAA says the changes were necessary to keep the industry safe for travelers as it grows quickly. "Previous regulations did not adequately define [fractional ownership] programs and did not clearly allocate responsibility and authority for safety and compliance with FAA regulations," says FAA spokeswoman Alison Duquette.

Driving the growing congestion: In the past year, companies such as NetJets, Flight Options and Bombardier's Flexjet have started offering increasingly smaller and more-affordable slivers. For instance, in March CitationShares started selling a card good for 20 hours of flying time a year for $75,995. (Previously, the cheapest card would set you back around $95,000 for 25 hours.)

A month ago, Marquis Jet -- which sells time on NetJets planes -- launched a "combination club" letting buyers mix and match planes: 12.5 hours on a long-range jet, and 12.5 hours on a lighter, less-expensive plane for shorter hops. Another option: leasing and financing programs similar to what car dealerships offer.

The heavy demand is increasingly taking a toll on service. In the past few months, delays for passengers have become more of a problem, especially during peak hours like holidays and weekends, according to Adam Webster, co-founder of the air-charter directory at www.rsvpair.com1.

Traditional airlines are eager to pick up business from these lucrative travelers. After all, people who can afford to fly on private jets are highly desirable customers, willing and able to pay full-fare for first-class seats and last-minute bookings. For instance, late last year UAL Corp.'s United Airlines unveiled a new series of transcontinental flights, called PS, directly targeted at top-dollar travelers with perks like more legroom and "lie-flat" seats in first class.

Complicating matters: NetJets, the largest fractional company, has been embroiled in an acrimonious contract negotiation with its pilots. At the annual meeting of NetJets' owner, Berkshire Hathaway last month in Omaha, Neb., some pilots picketed. NetJets' CEO, Richard Santulli, says the contract dispute isn't affecting service in the "vast majority of cases."

Nick Reyer, the business agent at the International Brotherhood of Teamsters 1108, says it is showing up in morale, with some pilots showing up five minutes late or refusing to fly the last leg of the day. "We're telling the guys, 'We're flying just right to the book. We're not taking any chances, or doing any favors,' " he says.

Because some fractional companies don't always have enough planes to keep up with demand at peak times, there is also an increasing likelihood that owners will end up traveling on a charter plane, rather than a plane owned by one of the fractional companies themselves. Michael Green, head of Delta Air Elite, a subsidiary of Delta Air Lines that does some charter business, says its revenue-flight hours increased 50% in the first quarter of 2005 versus the first quarter of 2004.

For travelers, there is nothing wrong with flying a charter aircraft. Still, some customers don't like the practice, particularly because they are spending hundreds of thousands of dollars and may expect a specific type and age of plane.

Garry Kief, president of a Los Angeles-based marketing company and owner of NetJets, CitationShares and Marquis Jets planes, says he has been increasingly put on charter planes this year. One recent example: a quick hop last month between Los Angeles and Las Vegas.

"I really believe in NetJets and their safety program, and I am sure the charter companies have the same standards, but I personally feel more comfortable seeing the NetJets colors and uniforms," he says.

NetJets says it thoroughly vets all the charter companies it uses and has told customers that during peak days it needs to supplement its fleet in this way. Mr. Santulli of NetJets says the company has accelerated its purchase of new aircraft this year, adding five more than originally expected. NetJets' fleet totals about 550 aircraft.

NetJets isn't the only company with clients grumbling about being placed on charter aircraft. Greg Savettiere, president of a New Jersey-based gym-equipment company, has owned a share in Flight Options for seven years and recently switched to a Marquis Jet card. Over the past year, he says, Flight Options started putting him on charter planes -- which he says he refuses to fly, because the $810,000 he has paid the company over the years should entitle him to a specific plane.

Cameron Gowans, chief marketing officer at Flight Options, says that in 2004, his company flew 98% of owner trips on Flight Options-owned planes. Mr. Savettiere's problems occurred on the busiest weekend of the year for the company, a spokeswoman said.

To address the fast-rising demand at NetJets, CEO Mr. Santulli says that starting June 1, he plans to start placing more restrictions on owners of Marquis Jet Cards (which are sold by Marquis Jet but are good for travel on NetJets aircraft). Holders will be required to book further in advance on a greater number of the busiest days of the year. In response to increasing incidence of people buying cards and then trying to fly shortly thereafter, NetJets will now require the cards to be purchased some 60 days in advance for peak travel.

Still, for some owners, the conveniences of owning part of a plane still overshadows the problems. Tom Werner, chairman of the Boston Red Sox, whose family lives in Los Angeles, says that NetJets has been "the best thing in my life." He recently was able to attend a 7 p.m. game on the East Coast, and still get home for his daughter's 17th birthday. "You just can't do that any other way," he says.

Write to Avery Johnson at [email protected]2
 
I also found this online about Marquis Jet. Anybody hear that NJA may actually go through with an acquisition of Flight Options in order to handle future Marquis customers?

New Limits Placed on Marquis Jet Cards

Holders of the Marquis Jet Card will have new restrictions requiring that they book flights further in advance during peak travel times due to unexpected growth in flying hours by NetJets share owners over the last year, according to NetJets chairman Richard Santulli. Marquis flights are operated under Part 135 by NetJets, or NetJets-approved charter operators, and Marquis owns about 10 percent of the NetJets’ fleet. Santulli told AIN that NetJets is flying about 20 percent more than expected year-to-date and that’s putting “significant pressure on [NetJets’] fleet.” To relieve this pressure during peak travel periods, which results in delays and using outside charter aircraft, several new rules will go into effect. Starting next Wednesday (June 1), Marquis card holders will have to book five days in advance (one more day than the current requirement) to travel on peak days, which are being increased to between 15 and 20 days per year, versus 10 days for NetJets shareowners. To prevent the “tremendous influx” of card purchases just before peak period days, Marquis owners wishing to fly in a peak period must own the card 60 days in advance. Card holders will also no longer be guaranteed their selected airplane model on peak days, rather only one in its size group. Finally, “On peak travel days we will also have the right to move a [card holder’s] trip three hours either way,” Santulli said. “What we’re trying to do is manage our demand and know what it is going into the peak travel days better than we did last year.”
 
SafetyTheSeat said:
So I guess selling the CORE Fleet was a BIG, BIG, Tactical error on the Air Force Academy Grads part.

Can you explain that to the unwashed masses?
 
We had a number of aircraft that were owned entirely by NetJets and were used to cover the extra demand on peak days. One of the first things BB did when he got here was to start selling shares in those aircraft. They are still here but now we have additional owners to support and no extra aircraft.

The company is facing a shortfall of nearly 100 aircraft by this fall just to service existing owners and Marquis card customers. This was caused entirely by them cutting deliveries of aircraft 2-3 years ago and renegotiating all the contracts to extend delivery times. Now they've gone to those same manufacturers and asked them to ramp up production for us and the answer has been something along the lines of "Go To Hell."

The sell-offs and miserable service we've been delivering has partially been caused by the current labor problems but the biggest contributor to it has been the lack of aircraft and crews to cover the flights.
 
Starman said:
We had a number of aircraft that were owned entirely by NetJets and were used to cover the extra demand on peak days. One of the first things BB did when he got here was to start selling shares in those aircraft. They are still here but now we have additional owners to support and no extra aircraft.

The company is facing a shortfall of nearly 100 aircraft by this fall just to service existing owners and Marquis card customers. This was caused entirely by them cutting deliveries of aircraft 2-3 years ago and renegotiating all the contracts to extend delivery times. Now they've gone to those same manufacturers and asked them to ramp up production for us and the answer has been something along the lines of "Go To Hell."

The sell-offs and miserable service we've been delivering has partially been caused by the current labor problems but the biggest contributor to it has been the lack of aircraft and crews to cover the flights.


This is really interesting. It does make sense then that NetJets might attempt to purchase Flight Options in order to gain capacity. Your estimate of 100 a/c "short" along with putting pressure on manufacturers lends me to think this may be more than a rumor.

Thoughts?

holden1
 
holden1 said:
This is really interesting. It does make sense then that NetJets might attempt to purchase Flight Options in order to gain capacity. Your estimate of 100 a/c "short" along with putting pressure on manufacturers lends me to think this may be more than a rumor.

Thoughts?

holden1

Your theory would assume that there are nothing but idle airplanes at FLOPS. We have had the same problems as NJA. The first quarter of this year we blew through our charter sell-off budget. Why? Not enough planes, amongst other things. Things have improved dramatically, but we are far from having the excess capacity that they would need. If there is a merger it is because RTS wants the owners. Remember, people that can afford private jet travel are a scarce resource. Cheers.
 
Frac Daddy said:
Your theory would assume that there are nothing but idle airplanes at FLOPS. We have had the same problems as NJA. The first quarter of this year we blew through our charter sell-off budget. Why? Not enough planes, amongst other things. Things have improved dramatically, but we are far from having the excess capacity that they would need. If there is a merger it is because RTS wants the owners. Remember, people that can afford private jet travel are a scarce resource. Cheers.

My thoughts are similar to yours.

Also I do not believe solving any labor problems will improve the selloff situation very much. We have had massive selloffs in the past I think 1999 to 2000 timeframe. They have to stop selling planes until they have the aircraft and crews to man them on the property.
 
Modern day Corporate America is trained to only think of today’s profit and loss statement. They will never be content with an average growth and/or profit over a period of time. Hence the delay of delivered aircraft on the part of NetJets-at the slow down- had there been a visionary in the PIC seat in place of the now “Widget Man” NetJets would had been in the position for explosive growth. Instead the company’s hiring of UNION busting consulting firms was a higher priority.



It is Sad, very sad that the service for which NetJets is world renowned has gone into the toilet over a pay raise for one of its hardest working assets, an asset that management refused to accept as the reason for its success. The pilots-in the past- corrected the shortfalls of its daily operations now that we don’t the result is obvious. To many years and broken promises has forced this phenomenon, at the cost of service and market share.

Very Sad indeed..........
 
SafetyTheSeat said:
Modern day Corporate America is trained to only think of today’s profit and loss statement. They will never be content with an average growth and/or profit over a period of time. Hence the delay of delivered aircraft on the part of NetJets-at the slow down- had there been a visionary in the PIC seat in place of the now “Widget Man” NetJets would had been in the position for explosive growth. Instead the company’s hiring of UNION busting consulting firms was a higher priority.



It is Sad, very sad that the service for which NetJets is world renowned has gone into the toilet over a pay raise for one of its hardest working assets, an asset that management refused to accept as the reason for its success. The pilots-in the past- corrected the shortfalls of its daily operations now that we don’t the result is obvious. To many years and broken promises has forced this phenomenon, at the cost of service and market share.

Very Sad indeed..........

Can you lighten up on the melodrama??? You sound like yoda in the latest star farce movie.....

And your statements are contradictory....you cant say "Modern day Corporate America is trained to only think of today’s profit and loss statement" and then blame the managers for the current sell offs. If they were only thinking of today's profit/loss statement then they wouldnt be selling off millions today.

Then you are suggesting that companies be content with average growth and then chastizing them for not being ready for explosive growth???? What do you want?

The simple fact is that excess planes are very expensive to just keep around and make payments on waiting for a buyer. The number of aircraft you keep (inventory) needs to be carefully managed. You dont keep building inventories when there is no sign of a turnaround in the economy. And who could have predicted the huge surge in demand once the election was over?

Again, you want to sit in the backseat and second guess the people making the decisions, but you dont have the cahones to step up to the plate and compete for some of the open manager slots.....
 

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