European fractional to offer shares in pre-owned aircraft
A new European fractional ownership program that will begin operations this month is offering shares in pre-owned Cessna Citation CJ1s. UK-based European Business Jets (EBJ) was launched through a $3.7 million share flotation on the London Stock Exchange’s AIM small companies market in April. It expects to operate a fleet of five CJ1s by year-end and to double that number by the end of next year.
Aircraft share purchase prices for the program vary slightly according to the actual value of each used jet. A one-sixteenth share will cost approximately $230,000.
In addition, clients pay management fees and an occupied hourly rate, which the company has declined to detail, citing competitive reasons. However, for a one-sixteenth share, which entitles the owner to 37.5 flight hours per year, the total combined charges are $153,000, (equating to $4,094 per hour). The rate for a one-eighth share is $290,450, ($3,872 per hour). The rates are the same for round-trip and one-way journeys.
EBJ guarantees owners flights with 12 hours’ notice. The minimum flight charge is for 30 minutes–half the standard one-hour minimum of rival services.
Clients can get out of their five-year contracts after 18 months. If they wish to leave sooner, they are committed to paying any remaining management fees due up to the end of the 18-month period. At the end of the contract, customers are entitled to the current value of their aircraft share and can opt to apply this to another used model.
According to EBJ founder and CEO Graeme Deary, the company won’t be buying CJ1s more than five years old or with more than 1,400 flight hours. All aircraft will be backed by power-by-the-hour support terms and maintained by Cessna-authorized service centers.
Each CJ1 will be operated by two pilots employed directly by EBJ. The first group of pilots has been recruited from the UK and is now undergoing training. Captains are required to have at least 3,000 flight hours’ experience, but, in fact, most of the initial recruits average between 5,500 and 6,000 hours.
The first aircraft will be based at EBJ’s Cambridge Airport headquarters in eastern England. They may spread farther afield if the new frax program’s customer base broadens.
Carrying four passengers out of a central European location such as Zurich, Switzerland, the CJ1 can fly as far as Dublin, Ireland, in the west; Oslo, Norway, in the north; Warsaw, Poland, in the east; and Madrid in the south. With just two passengers on board, its range will take it farther afield to Helsinki, Finland, or Lisbon, Portugal.
Appealing to a ‘True’ Corporate Market
Until two years ago, Deary was sales director of NetJets Europe. He argued that fractional ownership has grown slowly in Europe because companies have offered the market aircraft that are too large and on terms that are too costly. “It doesn’t make sense for businesspeople to use a Rolls-Royce when a Mercedes will do the job,” he told AIN.
In his view, both NetJets Europe and block charter program Skyjet International (formerly Flexjet Europe) are focused more on the upscale leisure market than on true corporate customers who require more value for money.
The smallest aircraft in the NetJets Europe fleet is now the Raytheon Hawker 400XP. A one-eighth share in that aircraft costs $800,000, with monthly management fees of $15,080 and occupied hourly rates of $2,924. The total cost per flight hour is $4,774. All NetJets shares are sold in new rather than pre-owned aircraft.
Skyjet International’s entry-level block charter product is a Learjet 31 priced at an all-inclusive occupied-hour rate of $6,494.