which plane? which service?

Hi Ross.......!!

FWIW.......

One of my clients has used an Avanti for a few years now. He says it gets great fuel economy, when it flies.....but it has a terrible maintenance history as it is always in the hangar. He is trying to sell it now......bought a new Citation to replace it.....and he said would never touch a Piaggio again.

 

Ross, the first thing you need to do is define your flight missions: How far and where too, how often, how many people, with what notice, etc.
Then you should find a good consultant to help you choose how to satisfy those requirements. Most likely chartering, or fractional is the
best way to begin. You should probably not buy anything until you have done either of those for a while.

 

NetJets is generally the best, at least in the US. You pay a lot, but you get what you pay for, and they are very consistent.

I know they have a European operation.

An Avanti would probably be a fine airplane for travel around Europe, as would a King Air. There is an Avanti fractional in the US, but I don't know if they are in Europe or not.

The advantage of the fractionals is minimal hassles. You just write a check and go-- maintenance, pilots, etc. are not your problem.

 

Ross,

I have been in the VIP aircraft business for over 25 years. My first piece of advice - don't do anything as an acquisition or contract (Net Jets/fractional) immediately. Second piece of advice - be very, very careful who you trust to give you honest advice.

Teak360 is correct that you need to give a hard look at where you want to fly to, how often you will fly, how many people are on the trips.

You probably need to start by chartering. You may want to try different types of aircraft since you may find that you develop personal preferences on a type, size category and ammenities. With London and Geneva as base points there will be a decent selection of operators that you can choose from. You will also be able to experience the difference of each operator's way they conduct business and how the flight crew interacts with you.

An item you need to recognize is that there is a very substantial cost difference between running an aircraft in Europe and the US; Europe is higher.

donv is correct that with a fractional you are trading money for convienece. You will own a fraction of an asset (be careful about the list price upfront cost and backend residual calculations), get a monthly management bill and have occupied seat hour charges. For all this cost you get an aircraft on the ramp when you want it; no hire/fire of crew, no maintenance issues. What you don't get is any say in what you want for the interior or features. I had a long conversion some years ago (in a social setting) with a US Net Jets fractional owner (G-IV and Citation X) where he accepted the trade-off of cost for convienence and an interior of their chosing but recognized if he moved up to a VIP Boeing he was going to want a completely personalized interior that reflected him.

Outright ownership can have good advantages. In the US the typical crossover point that justifies ownership is around 300 hours. Other considerations can be how often you need to travel and what amount of notice there is for when you need to leave. A typical in-house US flight department can have a 2 hour minimum notice (call to owner arrives and departs). If you use these quick departures frequently then the ability to charter out the aircraft will be compromised (charter brokers and end clients want aircraft to be available for their scheduled flights and if they are taken away by the owner's flights they will stop working with that source).

Rarely will chartering out your own aircraft make a financial return. Mostly what you get is a contribution that can be used to offset some of the fixed costs.

If you wish to understand more please send a pm.

Jeff Kennedy

 

Ross,

In the US there are major 3 fractional companies: Net Jets, Flex Jets (Bombardier), Flight Options (just sold by Raytheon). Net Jets has a European operation and I am pretty certain that Flex Jets has one too; don't think that Flight Options has one. If is matters Net Jets keeps threatening to start something in Asia.

Net Jets has a large mix of aircraft from Gulfstream, Falcon, Cessna and Hawker. Since Flex jets is owned by Bombardier they are exclusively LearJet and Challenger. Flight Options has a more limited fleet of Hawkers, Citation X and Embraers. They all have from small light jets to top end large corporate jets. By the way Net Jaets no longer offers the fractional program for the Boeing BBJ, they may have one or two left that are available for charter only.

You may want to check with Jet Aviation as they may have some in-house programs that will work in Europe and the US. They have a London based operation at Biggin Hill and then all the major places in Switzerland.

The basic business model for all the fractional companies is:
Asset - the fractions are 1/8, 1/4, 3/8, etc. They will charge you the fractional allocation of "full retail" for your selected type. Be careful here since they all get massive quantity discounts that they do not want to share. On the back end of your agreement term be careful about the residual value. Net Jets specifically runs a huge amount of hours (1,500 per aircraft per year versus typical corporate operators of 300-400 hours) so when their aircraft are sold they have to be discounted to the market.

Monthly Management Fee - This is a fixed monthly fee whether you use an aircraft or not. The fee is set in the agreement and will escalate according to the type aircraft.

Flight Hour Cost - Per hour charge based upon your flight. This escalates according to the aircraft type. A Gulfstream or Challenger costs a lot more to operate than a little Citation or Lear.

Other things to look for/look out for:

1. What kind of interchange rates are there to go up or down in aircraft size from what you have a fraction in? You may want to buy a fraction of the bottom end aircraft since there will be a lot of trips with 4 or less people for 2 hours or less but with 8 people a mid size or large aircraft may be worthwhile so people do not feel cramped. On longer flights even with only a couple of people you may want more ammenities like a private lavatory, entertainment, food service, flight attendant, phone, internet.

2. What is the interchange rate for using your European hours in the US? There should be a reduced per hour charge or more hours available for the same/equivalent aircraft. When in the US you could need a bigger aircraft not for size but more range if going between the coasts.

3. Be very careful about some of the European destinations you may have need to go to. In the past there have been extra fees for certain countries. The argument from the fractional companies is that in those places they can not get another flight without a major repositioning of the aircraft. I don't know if it is still true but at one time the "extra charge" countries included Scandinavia.

4. If you have specific preferences for specific food or beverages this needs to be brought up. Executive aircraft catering bills can be astronomical so you need to know how they may or may not bill you.

5. The amount of minimum notification time from your call requesting a flight to an aircraft being available will vary according to aircraft type and the size of your fraction.

6. Make the companies explain their idea of equivalency of aircraft type. There will be occasions when they charter other aircraft because one of their fleet is not available to make your flight. Larger, smaller, how old, etc.

7. What happens if your are standing on the tarmac waiting for the aircraft and it doesn't show up? A billionaire in Los Angeles had this happen twice and he was ab le to cancel his entire Net Jets contract.

Please do not take this at all to be a negative report on the fractional operators. I just want you to be able to be informed going in. I believe the standard term is 5 years (at least in the US) and it represents a substantial monetary commitment.

You should be able to make them provide demonstration flights in the type of aircraft you are interested in so you can experience the aircraft and the typical level of service. They should charge not greater than standard charter rate for the flights; maybe you can get it applied against any fractional contract you might execute.

Don't be afraid to charter from Jet Aviation or someone like Jet Club (had some dealings with the owner about 7-8 years ago). Both have locations in London and Geneva. You can make them show the cost difference for charter versus the fractional. It may be an interesting comparision, depending upon your usage may even be cheaper.

Flying corporate is absolutely superb! If you are early to the aircraft you depart early (airport slot dependant - some European airports are touchy on this), arrive late and this is the new "on time" departure (some warning about some airports). If you have favorite liquor, wine or food preferences then miraculously they will be there on the aircraft waiting for you. Probably the greatest business use will be how you can openly discuss sensitive business issues and review documents without worrying who in some nearby seat may be listening in.

I have a story that perfectly illustrates what a business aircraft can accomplish. Some years ago I traveled with a client on his Gulfstream during one of their business trips. The chairman/founder/owner, his president, the CFO, another executive and the assistant to the chairman were all on board. They needed to add some more production capacity for their product but since they did no manufacturing themselves they were going to visit 4 different candidate companies. They were out of Manhatten and the aircraft was in nearby Teterboro, New Jersey.

In the morning we left Teterboro and went to St. Paul, Minnesota. Not the commercial airport Minneapolis/St. Paul but the smaller corporate airport in St. Paul. They all went off and did their meeting for a couple of hours then returned. As we headed to the next stop they discussed their thoughts about the company and the people they had just met with. The next stop was Fon du Lac, Wisconsin. A nice quaint area (neare Road America raceway - a wonderful sports car track) but remote for airline service. Again, they all went off and met with the potential vendor for several hours and then returned. Same type of conversation on board the aircraft during the flight and most likely they also did other general business discussions. Next stop for the evening was Benton Harbor, Michigan. We stayed overnight there and their meeting was in the morning.

Benton Harbor is another one of those "can't get there from here" spots that had limited airline service on commuter aircraft that came from probably only one or two hub airports. In the morning they went off to do their meeting and then came to the aircraft later in the morning. Next stop was Columbus, Ohio. Finally a normal place one can get real airline service at. Same story of they go off and do a meeting for a few hours then return to the aircraft. Now we head back to Teterboro, New Jersey. After landing the chairman collects his girlfriend and the two of them head to the Bahamas for the weekend.

The business portion of the trip was took most of 2 days. If it had of been by airlines it would have been taken all week long. Fewer people would have gone since it would have been a miserable trip. During the flight they held very confidential business discussion that could never be done in a public or semi-public place, certainly not in first class on an airliner. On one of the flight segments they had been particularly impressed with the most recently visited vendor and then went into a discussion on what manufacturing equipment would be needed to make their product, how much would that equipment cost, and on what terms they would be agreeable to loan the capital at. They were all able to do this on the spot, while their impressions were clear and not wait for some executive meeting to be scheduled at the office the following week.

Ross, let me know if you need more information.

Jeff Kennedy
[email protected]

 

Very helpful information Jeff. Is there a market where you can buy someone's NetJets share directly at the depreciated rate and just fulfill their obligations? We operated a Lear 60 for 5 years after we were upgraded when our Lear 45 was grounded . It was a very expensive proposition indeed . I may be in the market for a fractional share as the deadhead leg costs with charter prove very expensive when I am in Miami or Cabo.

 

Adam,

I understand that there is a marketplace to take over someone's unexpired fractional obligation. The problem is I'll will need to find out from some friends how to fnd the resale marketplace.

Realize that you will still need to pay the continuing monthly management fee and the standard occupied hours rate. Not sure if the current fractional contracts "backstop" the residual value or not. At least in the earlier years there was no protection and clients were getting badly burned when they were expecting residuals based upon the "historical corporate" market prices with 300-400 hour/year aircraft (1,500 - 2,000 hours after 5 years) and now Net Jets drops 5 year olds with 7,500 hours in the market. This situation may have resolved itself but it if a seller doesn't grasp this you might have a hard time getting the proper underlying asset value agreed to.

You may need to look at your destinations in a fracgtional program. Domestic US is generally not a problem but internationals can come with significant extra charges. Their reasoning is that the aircraft will need to be positioned to the "remote" location to pick you up or they need to dead head it back to a convient location that gives them access to the the broad range of their other fractional owners. Cabo could easily be such a location. The specific terms on some of these details will vary between NetJets, Flex Jet (LearJet and Challengers only) and Flight Options. since Flight Options was just sold they might be ammenible to more negotiations than the others right now.

You must be staying in Miami and Cabo for a long enough duration that the charter operator wants to reposition the aircraft back home. For a few days or a week they should not be doing this to you - yes, you will have to pay to put up and feed the crew for the duration but that is less than Jet A fuel. Private operators will sometimes let the aircraft stay on the ramp and send the crew home on the airlines.

Did you have an early 45? You owned it outright? Early production aircraft, doesn't really matter from who, always have entry into service problems problems - some worse than others. [Warner Brothers never bought early aircraft even when they signed up for a new aircraft early because of this - nothing less than serial number 20 on their G-IVs and G-Vs] The Lear 60, at least, was a mature aircraft that should have been fairly reliable.

Depending upon the amount and duration of international travel you may have an problem with any of the fractional programs. [from one of my NetJet friends that is part of their remaining BBJ program - NetJets could sell the fractions of BBJs without a problem but then they all want to do international travel which kills the easy repositioning/nearby user concept that the fractional business model is built on]

I'll check for remarketing for fractional shares but you may find that your usage would justify outright ownership with charter to defray your fixed costs. At least in South Florida there should be a high level of charter opportunites to support putting an aircraft out for charter.

Jeff

 

Jeff, thanks for your insight. We owned an early 45 which was grounded for several months for a horizontal stabilizer issue. Bombardier quickly upgraded us to one of their demonstrator aircraft which we wound up purchasing at a very favorable price. My idea of attempting to buy another Netjets user's share was to pay below the current new price and still enjoy the percentage wise depreciation over a shorter time. I understand that while an owner occupies the plane the flights are considered part 91 and are not subject to the charter taxes of a part 135 flight? I have homes in both Miami and Mexico so I often stay extended periods. Charter does usually necesitate sending the aircraft back across country on my dime. I am no longer interested owning an aircraft , as I don't use it more then 150 hours per year and the charter pool thing never worked out for me.

 

Out of curiosity what is the monthly and hourly costs of a Netjets BBJ?

 

They only charter now. Last I knew the asking was around $15,000 hour but their good customers got a break from that. The original BBJ program when it started should have have an asset value based upon $49-50M. today that seems like a bargain since used BBJs, even of same 98/99 vintage, are being offered to the market at $60-65M.

If you want want to look at the possibilities of Boeing type VIP operation that is my strongest expertise and detail knowledge. I was in charge of BBJ #11 for the owner throughout its entire outfitting process.

Jeff

 

I just found a website - www.fractrade.com does has remarketing listings. I do not know these people, have no information if they are good, bad, indiferent and never heard of them before finding them a few minutes ago.

Jeff

 

Another option before making a big commitment on a fractional ownership is to go with a company like marquis jet which sells blocks of hours on Netjet aircraft in 25 hour increments. It offers you all of the benefits of being a fractional owner until you are ready to make the commitment. I just don't know if its available in europe.

 

You should also watch out where you fly...

If it's GVA-LON or PAR or FRA, forget it, commercial will probably be better, as it's often tough to get a decent landing slot with a short schedule...

 

I don't know about Geneva alternates but for London the corporates can use Luton, Farnborough, Biggin Hill, and a couple of others. I do not know about the slot situation for London City. Heathrow is bad but can be done with enough notice.

Some flight crew friends were talking about one of their clients (noted Hollywood type) was always notoriously late for his scheduled flights. In Europe he already knew which airports were flexible so he could continue his late tendencies but he also knew which ones were strict on slot schedules. At the airports with strict schedule he would show up amazingly on time.

Jeff

 

TO: Tiara 4300 and Ross

I you would, for my own curiosity, let me know if you end up doing anything.

Do you have further questions that I may be able to help with?

Jeff

 

The marquis jet card does the 25 hours of NetJet at a time.

 

csiman,

Last I knew the 25 hour cards have not been implemented in Europe yet. tiara4300 has a destination issue that if the fractional company (NetJets, Flight Options, Flex Jet, Citation Shares) have then the "card" will have too.

Jeff

 

OK, I'm curious now...

What's the smallest/least expensive fraction you can buy? How much would that be a year? Extra costs?

I'm talking about for someone well-heeled to cart a family around in, but not stupid rich.

???

 

Kinda curious too. What's the "base entry fee" to sample this travel without getting in over your head?

 

The smallest commitment outside of a single charter would be a 25 hour jet card. The cheapest for 25 OCCUPIED hours of a small jet aircraft would be in the $100k range for a Lear 31 or Hawker 400. The price seems high but you only are charged for flight time not ferrey time like on a charter. The jet card usually includes things like reasonable catering and no fuel surcharges.
The cheapest fractional plan utilizing brand new planes woule be from Flexjet. a 1/16 share in a Lear 31 will run $600k ,your monthlies will run $7k and occupied hours (you get 50) are $1400, there are some fuel surcharge allowances built into the purchase agreements so read carefully. You will be charged only for occupied flight time and my experience with Flexjet is that you will be upgraded to Lear 45s most of the time.

 

Jeff I haven't done anything yet. There is no hurry as I am of the opinion that as the economy weakens the jet market wil return to being soft. I had the opportunity to travel in a Falcon 2000 for the first time and was very impressed. Quiet ,roomy cabin with very reasonable fuel burn for her size. I am interested in hearing about your experience with BBJ operations. I'm curious about the mindset of someone, other then a major corporation ,requiring such a large aircraft when a G5 has the range and most luxuries.

 

This has been an interesting thread. As a pilot with a much smaller plane(s) (Baron 58 and Beech Duke) (but looking at Citations, probably a Sierra Stallion Citation), I notice that the cost of operation for slightly larger planes is estimated at about 4k per hour. The actual cost of operation of one of these planes (without a pilot) is closer to 1k per hour, so I guess that if you want the convenience, you will pay. Europe is much more expensive to operate a plane than the US. Indeed, if you are flying a jet over there, there are numerous requirements: higher insurance minimums, much higher crew requirements, etc.)

You might want to look around Europe, and see if there is someone that you know, who has a plane that they have been chartering, and perhaps they (the plane owners) might be willing to work an arrangement out. A lot of people with these planes do not charter them, and allow them to sit, and might welcome some usage, especially if they know you. Just a thought.

Art

 

Tiara,

The Falcon 2000 is certainly a really nice aircraft. A friend of ours from the West Coast is planning to move up to a new 2000.

The 2000 is the same width as the 900 but shorter; still has long range just not as much as a 900. The quality of the interior finishing is usually quite high and it should have a good entertainment package as well as a galley that can provide a high level of service.

The 2000 is considered fairly high up the "food chain". In the Net Jets world only the Falcon 900 and the Gulfstreams are higher up.

The 2000 you flew on was it privately owned or a fractional?

Jeff