as the economy lurches from bad to worse news, the aviation industry is holding its breath, waiting to see how this downturn will affect the business jet market and elements of that market such as the fractional share business.
A substantial majority of fractional aircraft share owners indicated that they are satisfied with their current program. According to the latest Fractional Aircraft Ownership Experience Study, conducted for the fifth year by Aviation Research Group/US of Cincinnati, 92 percent of fractional aircraft customers are satisfied with their current program and program provider.
The only really successful helicopter fractional operator is not in the U.S. as one would expect, but rather in South America–or, to be more precise, in one city in Brazil. That city is São Paulo, the financial capital of the wealthiest state of Brazil. With nearly 20 million people, São Paulo is the most populous metropolitan area in South America and, according to some census compilations, the fourth largest in the world.
“What’s the difference between fractional helicopter operations and fractional business jet operations?” asked one fractional sales professional rhetorically. “Well, it’s like comparing a rare tropical orchid with dandelions. The orchid can grow and prosper in only a special and rather rare environment, while the dandelion sprouts up just about anywhere there’s sunlight and water.
At first glance, the fractional industry, like the alien menace in a sci-fi thriller, appears to be morphing into a menagerie of hybrids. But in reality these hybrids are essentially sales and marketing programs of existing operations, both fractional and charter.
Executive Jet Aviation owner and CEO Richard Santulli brought the fractional-ownership concept to the business aviation community in the mid-1980s. Santulli created a program called NetJets, selling aircraft in shares ranging from 1/16ths to halves.
According to Aviation Research Group/US (ARG/US) of Cincinnati, the great majority of fractional aircraft share owners are satisfied with their program and plan to renew. According to ARG/US president Joseph Moeggenberg, 82 percent of fractional customers indicate they are satisfied with their current fractional program and 80 percent intend to renew with that same program. provider.
Cleveland-based Flight Options came full circle late last month when it named company founder Kenn Ricci chairman, ending months of speculation that he would again take the helm of the fractional provider. In addition, Flight Options appointed Mike Silvestro the new CEO, replacing former chief executive S. Michael Scheeringa, who will remain an investor in Flight Options and a “strategic advisor at the board level,” a spokesman said.
Four months after John Nahill, former v-p of corporate strategy and development at Raytheon Co., took charge of Flight Options from its founder and then chairman and CEO Kenn Ricci, Raytheon in mid-June completed a “financial recapitalization agreement” in which it now owns approximately 65 percent of the world’s second-largest fractional aircraft ownership company.
The growth of fractional aircraft share sales has cooled recently, reflected by delayed and canceled orders for new aircraft by fractional providers (AIN, May, page 1). Another apparent reflection of the downturn is the sharp reduction in total pilot hiring by the major fractional providers.