The recession has dealt an enormous blow to the fractional share industry. Rapidly declining used-aircraft prices and fewer flying hours have affected the industry to the point that most fractional operators have shrunk during the past year, deferred new aircraft deliveries, cut staffing and explored new ways to keep flying. Business has been so bad at the fractionals that some pundits are questioning whether the business model is broken.
There are still white tails sitting on the ramps, but the numbers are dwindling. The inventory of used aircraft for sale remains staggering, but it too is shrinking. The skies aren’t filled with business jets, but as of July–the last month for the which data is available–the number of takeoffs and landings was rising.
Business aircraft flight activity for Part 91 operators appears to have bottomed, according to data released yesterday by aviation services company Aviation Research Group/U.S. (ARG/US), while a similar recovery for Part 91K fractional and Part 135 charter operators is not far behind.
The fractional jet industry is undergoing a “major transformation,” according to business aviation consultant Brian Foley Associates. “Regrettably there’ll be more turmoil in the charter, air taxi and fractional arenas before year-end,” said company president Brian Foley.
Jet Republic, which last year announced a plan to buy up to 110 Bombardier Learjet 60XRs and launch a fractional-share business in Europe, has suspended operations at its Portugal subsidiary. As a consequence, Bombardier “terminated its firm and conditional order purchase agreement with Jet Republic.” The company’s first Learjet 60XR was to have been delivered in October.
Before new fractional company Jet Republic declared insolvency late last month, lawyers for the firm were seeking to lift a legal injunction secured by established provider NetJets Europe that prevented it from hiring NetJets employees. A court in Portugal granted the injunction in July 2008, before Jet Republic was officially launched.
In a major management shake-up at fractional provider NetJets, company founder, chairman and CEO Richard Santulli on August 4 unexpectedly resigned, effective immediately. Credited as the “father of the fractional aircraft industry,” Santulli said he plans to remain with NetJets as a consultant for at least a year.
In a seismic event for the business aviation industry, NetJets founder, chairman and CEO Richard Santulli yesterday resigned his position at the company, effective immediately. Santulli, credited as the “father of the fractional aircraft industry,” said he will remain with NetJets–a Berkshire Hathaway company–as a consultant for at least a year.
Even as other well-established and larger fractional ownership operations are quietly laying off employees and reducing aircraft delivery rates in response to the economic crisis, Avantair is hiring and adding to its fleet of 53 Avanti twin turboprops as quickly as Italian manufacturer Piaggio can deliver them.
New European fractional ownership provider Jet Republic says it is capitalizing on the downturn in both air transport and business aviation. The company, which in September is due to take delivery of the first of up to 110 Bombardier Learjet 60XRs for which it has orders and options, said it is receiving more inquiries than it had anticipated from people who previously owned their own aircraft.