The Marquis Effect on NetJets

[holden1]

Does not make sense

It makes no difference. 800 hours/plane are sold. It doesn't matter if 32 people use it or 4 people use it. 800 hours is 800 hours.

I agree 800 hours is 800 hours - but it appears that these jets are doing more than 800 hours. It has to have something to do with 135/Marquis....yes?

 

[miles otoole]

It makes no difference. 800 hours/plane are sold. It doesn't matter if 32 people use it or 4 people use it. 800 hours is 800 hours.

Tell this to the folks in ops/scheduling. You double the number of owners in an aircraft and you double the potential demand. It's not simply linear.

 

[Sctt@NJA]

The difference is in the number of owners per airplane. More owners with smaller shares means more potential conflicts as to who wants to fly when.

The other difference between right now and 1 year ago is the number of airplanes we operate "unencumbered", which is to say airplanes that aren't completely sold off into fractions. The more unencumbered airplanes we have the easier it is to meet all of the owners and card holders needs. Last year we had lots and lots of unencumbered planes, this year we have very few. This is good for cash flow but bad for operations.

 

[justacfii]

It's the same thing at Options with the Jetpass card. 32 cards (25 hrs ea) = 1 airplane (800 hrs) The COO is all excited about selling more cards...The problem is, one new airplane can't possibly provide service to 32 card-customers. Short-term cashflow = operational nightmare

 

[WrknStff]

800 is just a marketing gimmick. I was under the understanding that these airplanes are averaging well over 1200 hours a year, at least on the Flops side. I can't see NJ doing much less with thier planes.

 

[some_dude]

I believe the 800 hours refers to 800 "occupied" hours. With deadheads, that could easily be 1200 total hours.

800 is just a marketing gimmick. I was under the understanding that these airplanes are averaging well over 1200 hours a year, at least on the Flops side. I can't see NJ doing much less with thier planes.

 

[Some guy]

When RS came up with the concept in the 80's, he figured that the average acft would be used approx 1000 hours per year. 1 full share = 800 hours...The remaining 200 hours are used for repositioning trips and maintenance check flights. I believe the owners are aware of this when they are signing on the dotted line. As far as I can tell from where I sit, we are averaging 1000 hours per year on each aircraft.

 

[Flightbag]

To answer a question earlier in this thread:

25 hour card

Falcon 2000 $259,900.00
G-IV-SP $299,900.00
G-V $339,000.00

Flightbag

 

[G4G5]

To answer a question earlier in this thread:

25 hour card

Falcon 2000 $259,900.00
G-IV-SP $299,900.00
G-V $339,000.00

Flightbag

Thank you very much

 

[ghostrider64]

They way I see it on the front lines is that Netjets may be trying to rid itself of owners all together and going all Marquis....Why? More $ More $ More $ and far fewer complaints....

 

[G4G5]

I tend to agree, my boss would rather purchase a Marquis card instead of getting involved with the lengthly and costly commitment associated with a quater share.

Think about it, why would someone pay $13,560 an hour for a g5 when charters run almost half of that.

 

[mzaharis]

I tend to agree, my boss would rather purchase a Marquis card instead of getting involved with the lengthly and costly commitment associated with a quater share.

Think about it, why would someone pay $13,560 an hour for a g5 when charters run almost half of that.

I've always wondered that - why? You have explained why a Marquis card may be preferable to a fractional share to some (less "skin in the game"/long term capital investment), but why is it preferable to a regular charter? No repositioning costs and "hidden fees?" Higher quality of service?

 

[ghostrider64]

I've always wondered that - why? You have explained why a Marquis card may be preferable to a fractional share to some (less "skin in the game"/long term capital investment), but why is it preferable to a regular charter? No repositioning costs and "hidden fees?" Higher quality of service?

Airplane availability....fleet of 400+ to use. I think that might be a big selling point. Hard for a small operator to match it. Don't know the response time but scheduling is flexible and tries to work with pop ups....

 

[G4G5]

I've always wondered that - why? You have explained why a Marquis card may be preferable to a fractional share to some (less "skin in the game"/long term capital investment), but why is it preferable to a regular charter? No repositioning costs and "hidden fees?" Higher quality of service?

From what I have been told, it's because of the reposition fees. With the Marquis card you pay for 25 hours and you get 25 hours of flt time. When you charter through a broker you pay for the reposition time. Which for our company it runs a few dollars less on average then the 13k/10k an hours.

Since their are no G5 or F2000's for charter on the field, we are always paying for repositions. The added feature of the Marquis card is consisancy in the product.

 

[Publishers]

Somewhere along the line, the piper of residual value has to be paid off.

The average non fractional corporate type mid size jet may fly 350 hours a year,,not 1200. For many years the average corporate jet had no depreciation other than against the value of the dollar.

The Marquis cards are short term stimuli and I do not know if they benefit Netjets more than any other owner or are they in fact a tougher owner due to the demands on aircraft.

There will always be pressure on Netjets to produce results for the BH group and while some of these things work short term, it will be interesting to see in the long term/.

 

[Ace-of-the-Base]

Most Fractional users do so because of repositioning and dead-head charges. I have set up 3 of these for friends of my boss.

Most pilots who fly for the fractionals do so because they don't (and don't want to) live in N.Y. or L.A. where they would have to if they wanted to get a good corporate or charter gig (why else would they work such long days, take lower pay and have to AIRLINE all over the place).

Ace

 

[NJAowner]

Marquis vs Ownership

Just a few differences:

1. Marquis hours must be used in a year. With ownership you can borrow or lend from year to year over the contract. So hypothectically, a 25 hour year card, and you can fly up to 25% more hours at no additional charge in any year. So if in some years you need 30 hours and others 20, ownership is preferable.

2. Ownership expended (MMF and OHF) are locked in for 5 years subject to certain increases as well as the right to continue to fly in the fleet as long as you own your share and the plane type is in the fleet. With Marquis, the costs may (probably will) go up each year without any lock in. For example, 5 years after you buy your share, you may renew for another 5 years at the then prevailing rates. No new capital required (but your share will continue to depreciate). If new plane costs are up significantly, the price of a Marquis card 7 or 8 years from now will reflect the cost and depreciation in value of a new plane then. For an existing owner, a 7 year old Excel may not depreciate much between years 7 and 8. Both people would be flying in the same fleet. Marquis onwers would be paying the price as if it was an all new fleet.

Neither one is better than the other. It depends upon your needs. If you need 50 hours, or flexablity over a 5 year period, or if you know you will be flying for 5 years, it is better to own a 1/16th share than buy 2 25 hour cards each year for 5 years. On the otherhand, if all you need is 25 hours per year (before the private flying addicition kicks in and takes hold) or you are not sure of your needs a few years out, the card makes more sense.

From what I hear, many, many card owners move up. Marquis is just a stepping stone. It is easier to get someone to part with $100K for a year to try it, than have a long term commitment. Once hooked it gets tough.

Fky safe.

 

[holden1]

BB says Marquis "Leases" aircraft,....no purchasing (registration under Netjets Sales). He also said a 25 hour card holder vs. 1/2 share owner are currently treated the same.. He did mention that there will be changes to the marquis program due to the high demand over the holidays by creating "black out dates" to give the owners the first right.

Interesting post. I would imagine that with potential "Black Out" dates, Marquis would most likely have to look at other conflicting scheduling areas. For instance, how much time is required to get a jet with Marquis (I believe it is 10?).

Thoughts?

Holden