Publishers
Well-known member
- Joined
- Sep 20, 2002
- Posts
- 1,736
It is always nice to see peoples perception of the business they are in and how different it might be from the perception of people who look at it as a business from afar.
The Netjets business model depends on a number of things coming together in a way that produces a profit. First, they must order aircraft in significant numbers to drive the price down. They then package that aircraft and sell the individual pieces that sometimes make more than the whole.
They must arrange maitenance and various supplier contracts to drive down the cost which make up for the inefficiencies of their flight profile. In order for this to work, they make guarantees to the owners for service. All of this comes at a pretty penny. Lastly they have to hope that the market for used aircraft remains stable enough for the gurantees that they were talking about at the beginning hold true 5 years or so downstream. Obviously a maturing labor force is also part of the cost equation.
While the general concept of fractional ownership will continue to be a major element of the business, Netjets would well become the United Airlines of the fractional world, eaten up in the end by competition with significant cost advantages.
The Netjets business model depends on a number of things coming together in a way that produces a profit. First, they must order aircraft in significant numbers to drive the price down. They then package that aircraft and sell the individual pieces that sometimes make more than the whole.
They must arrange maitenance and various supplier contracts to drive down the cost which make up for the inefficiencies of their flight profile. In order for this to work, they make guarantees to the owners for service. All of this comes at a pretty penny. Lastly they have to hope that the market for used aircraft remains stable enough for the gurantees that they were talking about at the beginning hold true 5 years or so downstream. Obviously a maturing labor force is also part of the cost equation.
While the general concept of fractional ownership will continue to be a major element of the business, Netjets would well become the United Airlines of the fractional world, eaten up in the end by competition with significant cost advantages.