XOJet Light & Midsized Jet Outsourcing Deal with TMC

[johnsonrod]

So, XOJet is getting out of the light & midsized jet market. That actually sounds quite rational considering TMC can operate at a much lower cost (given the low salaries and poor schedules). You can't be everything to everyone... Sounds like a solid well considered strategy - stick to what's profitable for you.

Would larger Gulfstream/Falcon/Global jets be next for XOJet to appeal to the highest end, or do you think CL300s will be the largest jet operated by XOJet?


XOJET Creates Alliance with Travel Management Company to Expand Fleet with Light and Mid-Size Jets

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San Francisco—February 11, 2013— XOJET, Inc., the leader in private aviation services, today announced an alliance with Travel Management Company (TMC) that will effectively expand XOJET's fleet to include TMC's fleet of 24 Hawker 400XP light jets and 30 Hawker 800XP mid-size jets. The agreement allows XOJET to commercially integrate the TMC fleet and provides for operational cooperation between TMC and XOJET. XOJET clients will now have seamless access to the largest floating fleet of light, mid-size and super-mid-size private jets dedicated to on-demand charter.

"We are proud to team with Travel Management Company," said Brad Stewart, CEO of XOJET. "Scott Wise and his colleagues at TMC have built one of the most-respected operations in the industry. Moreover, TMC and XOJET are the perfect complements. Our fleets, operational capabilities, and business approach align perfectly. This alliance is another key step on our quest to create the highest-quality integrated service platform in the industry."

"XOJET is one of the premier brands in private aviation and has been a fantastic customer of ours over the years," said Scott Wise, General Manager of Travel Management Company. "TMC is excited to expand our business opportunities with XOJET. With the largest privately owned fleet of Hawker 400XP and 800XP jets, TMC's fleet will perfectly complement the XOJET fleet of super-mid-size jets allowing XOJET customers to choose the best aircraft for every flight."

For XOJET clients, the TMC fleet will essentially become an extension of XOJET's own fleet, making even more aircraft available for XOJET fixed-price charter flights between 22,000 popular airport pairs as well as for custom charter flights. Fixed-price charter pricing for all three plane types for flights to the most popular private aviation destinations is available on xojet.com. In addition, clients requesting quotes will be presented with pricing for all three plane types so that they have the option to choose which option will best suit their needs.

The extended fleet of light, mid-size, and super-mid-size jets will also be included in the popular XOJET Preferred Access™ program. "XOJET Preferred Access is the most flexible program available to sophisticated private fliers," added XOJET's Stewart. "Giving Preferred Access fliers access to three fleet types in the same program—with no interchanges fees and the ability to use the plane they need, when they need it—makes XOJET Preferred Access the easiest, most comprehensive program in the industry."

As part of the agreement, XOJET will sell its fleet of seven Hawker 800XP aircraft to TMC in order to focus on the growth and continued enhancement of its customized fleet of super-mid-size Citation X and Challenger 300 aircraft. The XOJET Hawker 800XP pilots will remain with the company and will transition to its growing fleet of super-mid-size aircraft. XOJET will continue to expand its fleet of Citation x and Challenger 300 aircraft and is set to add an additional four super-mid-size aircraft over the next several months.

"We launched our Hawker 800XP program a little more than a year ago and it has exceeded our expectations," said David Cox, XOJET's Chief Operating Officer. "I am so proud of our incredible team of people, from finance to operations to pilots, who worked together to make it a success. This success enabled us to craft our alliance with TMC, a company that shares our high standards for performance, reliability and safety."
About XOJET

XOJET, a TPG portfolio company founded in 2006, has become one of the fastest-growing private aviation companies in history, serving more than 5,000 customers worldwide. Our unique business model combines flexible private jet programs, and fixed-price charter with a singular focus on providing the highest level of customer service at every point of the client's experience. XOJET's commitment to safety leadership has earned the highest safety ratings in the industry. XOJET is the only business aviation provider to rank either #1 or #2 in all twelve ARG/US Platinum safety rating categories. XOJET is the first and only private aviation operator to enable its entire fleet of Citation X and Challenger 300 jets with complimentary in-flight Wi-Fi Internet connectivity. XOJET is also an active member of the National Air Transportation Association (NATA) Presidents Council. For more information, please visit www.xojet.com.
About TMC

Travel Management Company (TMC) is a privately owned, full-service air charter company that owns and operates a fleet of 55 luxurious aircraft, strategically positioned throughout North America. With an ARG/US Platinum safety rating, TMC operates light and mid-size jets, including the industry's largest privately owned fleet of Hawker 400XP and Wi-Fi enabled Hawker 800/850XP aircraft. TMC blends newer aircraft and excellent service at a competitive price for both one-way and round trip destinations.
Press Releases

2013

• February 11, 2013XOJET Creates Alliance with Travel Management Company to Expand Fleet with Light and Mid-Size Jets

 

[NoJoy]

What does this mean for the pilots at XO? A good thing or not?

 

[propsarebest]

The Hawkers were sold to TMC last week. All of the hawker pilots are either now in the schoolhouse, in line for the schoolhouse, or are flying the line in the X or 300. There were NO layoffs.

The 300 is going to be the biggest airplane that we operate for a long, long time. We do have a Challenger 605- it doesn't fly very much.

 

[brokeflyer]

two bottom feeders working together. Not a new story.

 

[BushwickBill]

two bottom feeders working together. Not a new story.

Ooooooh! Oh no you didn't!

 

[Praetorian]

Ooooooh! Oh no you didn't!

Oh yes. Yes he did.

 

[CALRepublic]

Ooooooh! Oh no you didn't!

You don't think Xojet is a bottom feeder?

They've drooped their prices so much that they're loosing money, and they did that to gain customers. What would you call that?

I hope they don't pull a Mesa on the fractional industry (race to the bottom)

 

[gret]

I don't understand Xojets strategy either...I do know that the owners of the company are incredibly sharp business people and don't like to lose money.

I'm sure they must have a grand plan, what it is is beyond me.

 

[X-rated]

Who said they're losing money? I can see how some of you may wish they were, but it's not the case.

There is plenty wrong there these days, but they were in fact profitable in 2012.

 

[cldsfr79]

two bottom feeders working together. Not a new story.

I might disagree with this statement. XO and TM is like a mini merger without being a merger, maybe more like a code share. And it might spell trouble for the rest of the industry.

Southwest Airlines for a couple of decades got railed on for being a bottom feeder airline. Playing unfair with their low fares, their pilots were not making anywhere near what the trunk carrier pilots were making, and now look at them. They are such a large size, they can keep selling low fares and make tons of money and do it while paying their pilots the highest pay in the industry. Today, some pilots would give anything to get a job with them.

We all bash on XO Jet, but they really could be the next up and coming thing. All us "Trunk Carriers" (NJ, Flex, and even Options) may see the rug pulled out from beneath us. We could start seeing a loss of market share.

The wealthy are not foolish with their money. If they can get the same plane and nearly the same service for far less they will do it.

 

[208starcheck]

Southwest Airlines......They are such a large size, they can keep selling low fares and make tons of money and do it while paying their pilots the highest pay in the industry. Today, some pilots would give anything to get a job with them.

That's funny. Whenever I search, SWA is never the cheapest by a wide margin. They are usually on the more expensive end of the list. No question about it being a sought after job.

 

[billybob]

TM is a sh!t bag joint and most people know it. I have respect for the guys I know there but not the mgt. looks like xo is going the same way?

 

[billybob]

Ps SWA is about 20% more than united now.

 

[X-rated]

I don't understand Xojets strategy either...I do know that the owners of the company are incredibly sharp business people and don't like to lose money.

I'm sure they must have a grand plan, what it is is beyond me.

gret,

You're a smart guy, and I agree with and enjoy most of your posts. I'm pretty sure if you were a bit more objective, you would have no problem seeing the light.

1. XO IS profitable
2. XO has more than doubled in size since the economic downturn began.
3. XO is gaining market share while most of the fractionals continue to shrink.
4. By operating their own planes as a business, they are able to take full advantage of the tax befits you were talking about on another thread. They can pass those savings on to their customers whether they are flying for business or pleasure even into ASE on weekends and holidays. No need for the customer to open an office near their second home or worry about IRS scrutinization.

They offer a superior (or at least equal so as not to start a fight) product for significantly less cost on the most frequent and profitable routes. They prefer not to actively seek more expensive short and out of the way flying, but they are happy to accommodate those customers for a higher more appropriate cost. They have realized a straight hourly fee punishes the best customer and subsidizes the others. Their target customers are responding, and like it or not, they are changing the industry. It's no wonder you and other frac pilot's don't like or maybe not even understand what XOJET is doing. Your companies will either have to adapt or lose your most profitable flying.

From what I hear from current pilots, it's not nearly the company it was pre 2009. In my opinion, the arrogance of a small few will likely result in a union drive at some point. But, arguing with the business model while working at a true frac is a bit short sighted.

 

[ProFracPilot]

But, arguing with the business model while working at a true frac is a bit short sighted.

I would proffer that "true frac" is now extinct at all the providers. NJ, FflOps, Flex, CA - they're all offering an array of products other than straight fractional ownership, down to and including charter. Each continues to find new and creative ways to sell access. I will also argue that we're NOT all equal in how our product ("service") is delivered, and that "service" will be a key differentiator in sales. Each company will need an array of airplane types in which to deliver this service, but the manufacturer of the airplane and new vs old matters less and less to what is now an educated target demographic.

And FWIW, I think the XO/TM strategic alliance (or whatever you call it) is the beginning of necessary consolidation in our market segment.

Pfp

 

[X-rated]

I will also argue that we're NOT all equal in how our product ("service") is delivered, and that "service" will be a key differentiator in sales.

I couldn't agree with you more, but I didn't want to start a fight.

Otherwise, insightful post. Have you considered when the fractionals began to offer those other products and why??? I stand by my statement that XO is changing the industry. Or, do you think the timing was coincidental?

 

[gret]

gret,

You're a smart guy, and I agree with and enjoy most of your posts. I'm pretty sure if you were a bit more objective, you would have no problem seeing the light.

1. XO IS profitable
2. XO has more than doubled in size since the economic downturn began.
3. XO is gaining market share while most of the fractionals continue to shrink.
4. By operating their own planes as a business, they are able to take full advantage of the tax befits you were talking about on another thread. They can pass those savings on to their customers whether they are flying for business or pleasure even into ASE on weekends and holidays. No need for the customer to open an office near their second home or worry about IRS scrutinization.

They offer a superior (or at least equal so as not to start a fight) product for significantly less cost on the most frequent and profitable routes. They prefer not to actively seek more expensive short and out of the way flying, but they are happy to accommodate those customers for a higher more appropriate cost. They have realized a straight hourly fee punishes the best customer and subsidizes the others. Their target customers are responding, and like it or not, they are changing the industry. It's no wonder you and other frac pilot's don't like or maybe not even understand what XOJET is doing. Your companies will either have to adapt or lose your most profitable flying.

From what I hear from current pilots, it's not nearly the company it was pre 2009. In my opinion, the arrogance of a small few will likely result in a union drive at some point. But, arguing with the business model while working at a true frac is a bit short sighted.

I think you may have misinterpreted my comment.

I don't know if Xojet is profitable or not, but knowing TPG and Bonderman, they aren't going to lose money so my presumption would be that Xojet is profitable, or at the very least has positive cash flow.

My point was that I'm not bright enough to know how you do it in today's economy...they are.

BTW...have they maintained the strategy of having others own the aircraft and paying them for the use, or does Xojet own all or part of the fleet?

 

[X-rated]

Thanks for clarifying.

I'm not sure if any of the few original owners still retain ownership or not, but the vast majority of the planes are now owned by the company.

 

[SDCFI]

There are a few things to consider here. From what little info is out there regarding pay/benefits XO is lower than both Flex and NJA, so cost advantage there. Also as X-rated said XO is able to offer bargain basement prices on high density routes (LA-NY) because the DH is low and utilization is high. Flex and NJA are obligated to take the owner from BFE to BFE and that is expensive and has to be built in to the contracts, so in effect the people that fly "efficient" trips are overpaying while those that fly "inefficient" trips are underpaying. Can't speak for NJA but I know Flex is developing strategies to even out the costs and provide a price benefit to the customers. Through the downturn the owner retention at Flex has been at historical highs, however those owners are flying less. In a lot of cases they're downgrading their share size and going to places like XO and straight charter for the cheap flights, and using the shares when they need multiple aircraft or have an inefficient itinerary. If the true fracs like NJA and Flex can get their pricing more competitive with the charter and XO types you'll see a lot of those customers migrating back I think. There will always be a segment of customer who is loyal to their frac and will stay regardless of price. Then there are those who will always shop for the lowest price and go there. Somewhere in the middle are the folks who are willing to pay a premium for the fractional product, to a point, as long as the value matches the cost. These are the folks they are targeting by trying to reduce their cost of ownership on those efficient trips. I'd bet these innovations would've occurred anyway as the fractional business model evolved, but no doubt the advent of XO and others forced operators to start sooner than they would have naturally.

 

[Fresh Air]

Sounds like XO decided to go with the "major airline" model: Fly the most profitable routes yourself with larger aircraft, and farm out the low profit margin short haul stuff to scuzzball regional outfits.