Defying the sluggish U.S. economy, three business jet manufacturers on Friday separately announced fleet orders worth as much as a combined $3.5 billion. Fractional provider NetJets was the biggest shopper on the block that day, placing a firm order for $1.9 billion worth of Gulfstream G450s and G550s that will “significantly expand” its large-cabin fleet.
Signature Aircraft Engineering at London Luton Airport has been awarded contracts to provide scheduled maintenance for Dassault Falcon 2000s in the European and Middle Eastern fleets of Executive Jet’s NetJets fractional-ownership programs. The contracts were awarded by Dassault to meet the terms of its guaranteed maintenance cost commitments to Executive Jet and will run through the end of 2004.
The demise of Avolar before it really got started is not an omen for the fractional aircraft provider industry. Introduced with much fanfare a year ago, Avolar was barely off the ground when its parent, UAL Corp., pulled back the power and shut off the fuel. Avolar failed for the most part because it wasn’t able to muster the significant upfront investment needed to launch a fractional operation, not because the fractional market is waning.
Flight Options’ foundation since its launch in October 1998 has been the tenet that a fractional share in a pre-owned jet makes better financial sense than one in a new jet, and it is a notion some 750 owners have embraced in the past 3.5 years. Now, however, Flight Options’ marketing people are tasked with convincing potential buyers that the Cleveland-based operator is also the best place to buy a share in a new airplane.
With the consummation of the Flight Options/Raytheon Travel Air merger on March 21, the fractional ownership business is “a two-horse race between Flight Options and NetJets, relegating the other providers to boutique markets.” So says Flight Options CEO Kenn Ricci, characteristically confident in the future of the frax operator he founded in 1998.
NetJets owner Warren Buffett told The Wall Street Journal he expects fractional sales will double in Europe to 200 shareowners this year, although he said the enterprise will still lose money this year. To help reach that goal, Buffett hosted several meetings last summer in Europe to convince guests that buying a share of a NetJets aircraft makes good business sense.
3i, a UK-based investment holding company, is reported to be the front- runner in the race to buy Swiss-based Jet Aviation, according to a report in TheDeal.com. The online business publication wrote that Warren Buffett’s Berkshire Hathaway, which also owns NetJets and FlightSafety International, had made a one-time, take-it-or-leave-it offer of $480 million for Jet Aviation.
It’s nearly as certain as death and taxes. As soon as a manufacturer introduces a new airplane, NetJets announces orders. Last month’s NBAA Convention was no exception. The Columbus, Ohio-based fractional jet operator placed orders (including options) for 200 of the newest business jets introduced in Orlando, Fla., by Cessna and Gulfstream, transactions that have a potential value of nearly $2 billion.
The zero-based budgeting of the 1970s has transformed this year into ground-zero-based budgeting. When aviation faces economic crisis, it returns to basics–productivity, time saving and security. These core values of business aircraft remain the bedrock. All else is changeable.
German airline Lufthansa has ordered two Cessna Citation CJ3s and two Citation XLS+s for its Private Jet service, which offers connections and point-to-point travel to first-class passengers in Europe. With regional jet conversions and reallocation of previously ordered aircraft, this will bring to nine the total number of aircraft available for Lufthansa Private Jet.