Bangkok, Thailand-based charter group OrientSkys recently announced a new strategic business alliance with Beijing Airlines (formerly Air China Business Jet). Beijing Airlines, which Air China established in 2003 as the state-owned airline’s private charter arm, operates a Bombardier Challenger 605 and a Global Express XRS, as well as a Gulfstream G450 and a 28-seat Boeing Business Jet for charter.
The sudden collapse in August of fractional ownership startup Jet Republic probably convinced anyone in Europe who still failed to accept that business aviation’s bubble had burst.
Former employees of Jet Republic complain of being betrayed and misled in the sudden collapse of the European would-be fractional ownership company. Speaking to AIN on condition of anonymity, the staff has claimed that the company breached its contractual obligations by failing to give formal notification that they were being laid off, so preventing them from claiming unemployment benefits in their countries.
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.
According to the management of Jet Republic, the overriding reason that the company suddenly ceased trading on August 20 was because “the aviation asset finance market has completely dried up, making it much more difficult for potential clients to take out and obtain financing for fractional ownership of jets.”
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.
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.
Bombardier Aerospace announced today that it has “terminated its firm and conditional order purchase agreement with Jet Republic.” The cancellation removes 25 firm orders for Learjet 60XRs worth $340 million from Bombardier’s backlog. Jet Republic launched a European fractional-share company last year with an order for 110 Learjet 60 XRs and financing by Austria’s Euram Bank. Deliveries of the first airplanes were to have begun this October.
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