Is less more at Flight Options?

 - February 5, 2007, 4:32 AM

Taking a quasi-Southwest Airlines approach, Cleveland-based fractional provider Flight Options last month announced a “go-forward” plan to rationalize its fleet over the next three to five years with the goal of simplifying operations, increasing fleet reliability and reducing overall costs. The move is a big gamble, however, since roughly half of the company’s shareowners are up for renewal in the next 18 months.

Flight Options, which is 78 percent owned by Raytheon, said it will gradually pare the fleet from 11 types to four–the Beechjet 400A/Hawker 400XP (light category); Hawker 800XP (midsize); Citation X (super-midsize); and Legacy (large). This amounts to one type per aircraft class and effectively lays the foundation for an eventual fleet of new (or newer) aircraft, versus a mixture of brand-new and older pre-owned airplanes.

The company’s current fleet of more than 215 aircraft includes King Airs, Beechjet 400As/Hawker 400XPs and Hawker 800s, in addition to the CitationJet, Citation V, Citation 650 (III, VI, VII), Falcon 50, Citation X, Challenger 601, Legacy and Gulfstream IV.

The new strategy is a swift about-face from the fractional provider’s announcement at the NBAA Convention last fall that attributed the company’s success to a “breadth of programs and the depth of one of the largest fleets in the industry.” Not surprisingly, a diverse fleet also translates into higher maintenance and crew-training costs, especially when it is composed substantially of pre-owned aircraft with no avionics commonality. This complicated spares provisions and necessitated pairing crews to specific airplanes. The company has discontinued the latter practice with the newer aircraft, which have more common flight decks.

Interestingly, the new line-up doesn’t include Raytheon Aircraft’s newest jets–the super-light Premier I and super-midsize Hawker Horizon. When Raytheon Travel Air merged with Flight Options in March 2002, the combined company said it would add Premier Is and possibly Horizons to the fleet. Apparently, these aircraft don’t fit into the frax provider’s current plans.

According to COO and acting CEO Michael Scheeringa, Flight Options will honor all existing fractional-jet contracts until they expire, though the company is offering customer incentives to accelerate its long-term strategy. “Share-owners in an aircraft fleet that is being retired will continue to fly under their current agreement until their contract expires,” he said. “We will then work with them to find an alternative Flight Options aircraft that best suits their mission.”

Rebranding Effort Under Way
In conjunction with its “go-forward” plan, Flight Options has changed its marketing tactics to emphasize safety, customer service and newer airplanes, as opposed to the company’s previous campaign of selling shares of used aircraft at “a 30-percent saving over competitors.” Scheeringa said his company will “strengthen its commitment to an “owner-centric environment” this year, “providing the highest levels of safety and service in the industry.”

On the service front, Flight Options is rolling out a host of programs aimed at keeping customers happy. Over the past two months it has launched a fuel-hedging program called “Fuel Club,” as well as a customer-referral incentive program.

Addressing the soaring price of fuel over the past year, the Fuel Club–available for owners of 1997 or newer Beechjet 400As/ Hawker 400XPs, Hawker 800XPs, Citation Xs or Legacys–allows owners to pre-purchase fuel at a discounted, locked-in rate for up to 12 months. Flight Options said the fuel surcharge rate is discounted 20 percent from the prior three-month average fuel price published by ARG/US.

Since two-thirds of Flight Options’ new business comes from referrals, the company created the referral-incentive program to spur more sales. It is based on “closed referral hours,” which apply to shares sold or hours bought through JetPass, the company’s jet-card program. Incentives include additional flight hours, short leg and ferry waivers or flight time donated to the Corporate Angel Network on the customer’s behalf.

Other initiatives for this year include increasing operations staff by 20 percent to provide a higher level of service; making a multimillion-dollar investment in service training, including “planeside manner training for flight crews;” rolling out a nationwide campaign to improve the quality of catering; and offering bonuses for all employees based on the company’s success.

Speaking of success, Scheeringa noted that December year-over-year sales were up 19 percent. And while shares were sold only in the four “go-forward” aircraft types, it’s too early to tell whether the increase is because of the new corporate strategy, a recovered economy or a combination of the two.