Jet Card Programs--Who's Still Standing?

It's been a rough year for the jet card programs. A lot of companies have ceased operations and many customers have lost deposits they put down.

Here's the current landscape: The major fractionals are still operating card programs: Net Jets, Flexjet, Flight Options and Citation Shares.I don't have any information that tells me any of these companies are not going to make it through the recession. Then you have the next tier which is companies that are the middle man between you and a charter company. The largest of these include Sentient and Delta Air Elite.

For a buyer, it's decision between accessing a fractional fleet and having a company determine which charter operators are safe and reputable. Typically, those companies that use charter aircraft will be cheaper than the companies that access a fractional fleet. They will also give you more choices and not lock you in to one type of aircraft.

If you're currently looking at jet card programs, ask about financials and safety. Don't assume everybody is the same. They're not.

Aircraft Fractional Ownership: A Good Choice?

The usage models for business aircraft look something like this:

Flying hours per year                           Aircraft Recommendation

0-50                                                    Charter, Jet Card

51-200                                                Fractional Ownership

201-400                                              Purchase Used Aircraft

401+                                                   Purchase New Aircraft

The determining factor is multiple use. Do you ever need access to 2 aircraft in one day? If the answer to this question is 'Yes', you may need a combination of different choice: for example a fractional share and a jet card. Most companies will let you buy a card from them and a fractional share and get multiple use. Or, you can buy from different companies.

More options. More choices.

What's Happening with Fractional Ownership of Airplanes?

This past month, we've seen Rich Santulli resign from Net Jets and Jet Republic cease their European operations.

What does this mean for the future of aircraft fractional ownership?

In my opinion, a few things:

• Jet Republic started operating at a very difficult time--namely last fall. I would surmise their funding dried up (as is happening to funding everywhere) and they were unable to proceed with their aircraft order for Bombardier Lear 60's.
• Net Jets has operated for years without making a profit. I  can recall one quarter in the last 10 years where they reported a profit. At the end of Q2, 2009, they were posting a loss of 250 million. There was no way they could continue on this path of 'non profitability'.  I'm sure that's why Rich Santulli resigned. They need to consolidate and cost-cut and an outsider would be more able to get this done.

The flaw of the fractional model is aircraft acquisition. The current environment is much more accepting of a model where you don't own anything.

Private Jet Travel--What's the Best Option?

I think these days, those who travel privately are looking for anonymity above all else. because of the silly stigma that's now attached to private jets, many people are hesitant to be seen getting on or off a private jet.

If you're a CEO, and you own a plane or a fractional share, you're listed with the FAA as an owner. Any snoopy reporter can find out what kind of plane you own. For some companies, being able to fly privately 'under the radar' is a big deal. You can do this by chartering or by purchasing a jet card through companies like Marquis Jet or Sentient Jet. Or, you can simply do 'on demand' charter from a local or national operator.

These options let you enjoy flying privately without owning anything--a benefit in today's gotcha media culture.

Fractional Ownership or a Jet Card?

Normally, usage breaks down this way:

1-50 hours: Charter or Jet Card
51-200 hours: Fractional Ownership
200 + hours: Used aircraft or whole aircraft

It also depends on some other factors:

1. Do you need multiple use? More than 1 aircraft in a day?
2. Do your trip profiles indicate a variety of missions? Short trips of an hour or less, but also trips that are cross country?
3. Do you want an aircraft purchase that shows up on your books or would you rather have it written off as an expense.

Just a few guideline to help you determine what you should buy.

If you're looking for some help as you determine your travel needs, please email me at:
susan @susanadamshome.com.

Jet Card or Fractional Ownership

With all the products available in business aviation, there are always questions about which product or program is better for an individual buyer.

It depends on your needs, but here are a few guidelines:

• If you don't want to tie up the capital required for a fractional share (usually about $300,000 minimum), then a card is the better option
• If you're looking for asset depreciation, fractional provides for this option
• If you don't want to list a tail number with the FAA, then a card is the best choice. Keep in mind, if some nosy person at an FBO takes a picture of you with your tail number, you could be the next person to be villified by the press.

Those are just a few comparisons.

More in a future post.

Susan

Private Jets: A Lot of Scrutiny

Let's face it, the Big 3 did a lot of damage to business aviation. Not because they flew their private jets into DC for congressional hearings. The damage was done by their refusal to defend WHY a private jet is an essential business tool for business executives.

How about...

1. Time savings: the guy(or gal) in your company who makes the most money shouldn't be waiting in the security line at the airport.
2. The ability to have meetings on a plane. Even in first class, you can't gather 4 or 5 people and have a confidential business meeting. On a private plane, you can.
3. Visiting multiple locations in one day. try doing that on a commercial airline. You're lucky if you can visit one city in a day and get home at a decent hour.

Instead of doing this, they drove hybrid cars to DC for their next session. Just what your shareholders want to see. you wasting your time to score points with congress!