NetJets Europe offers jet cards as its frax ops gain traction

 - April 2, 2007, 7:13 AM

NetJets Europe has launched a new NetJets Corporate Card program to market smaller blocks of flight time in its fractional-ownership fleet without the need to acquire an aircraft share. At the same time, it has rebranded Marquis Private Jet Card as the NetJets Private Jet Card, with NetJets having taken control of the London-based Marquis Jet Partners Europe operation.

The idea behind the new Corporate Card is to attract companies that are not ready to take the leap into aircraft ownership, with all its capital-outlay issues. At the same time, it is intended to offer greater flexibility and benefits than the Private Jet Card–albeit at prices that are about 5 percent higher.

Corporate Card customers can purchase 25 occupied flight hours, or more in increments of five hours (unlike the Private Jet Card program, which is available only in 25-hour blocks). There is no upper limit, and customers have 24 months to use these hours (versus 12 months under Private Jet Card terms). There is also a 10-percent discount for round-trip flights so that if a firm bought 25 hours and used all of these for single-day round-trips, it would get an additional 2.5 flight hours for no extra cost. Finally, NetJets also provides these clients with software that allows them to analyze their flying activity to assess whether the program provided them with sufficient value.

Currently the Corporate Card is available for six aircraft types at the following rates for 25 hours: Citation Bravo, €115,000; Citation Excel, €170,000; Hawker 800XP, €191,000; Falcon 2000 €271,000; GIV-SP, €285,000; and GV, €340,000. The price for the Falcon 2000EX has yet to be set. Customers are guaranteed access to an aircraft with 10 hours’ notice and can request flights anywhere within the NetJets Europe operating zone, which now extends east into Russia.

At face value, NetJets Europe’s all-inclusive, hourly rates seem markedly higher than equivalent ad hoc charter prices, with the important proviso that they strictly are for the hours in which the aircraft are occupied by passengers. Charter customers are generally charged for all hours flown by an aircraft to complete a booked itinerary, including positioning flights before and after the occupied leg of the mission.

Rate Comparison

AIN asked leading executive charter broker Air Partner International to provide average ad hoc hourly charter prices for the same types of aircraft offered through NetJets Europe Corporate Card. Generally speaking, the NetJets occupied rates were about twice as much as the equivalent “all hours” charter rates.

But in charter operations it is not always the case that for every occupied hour flown there has to be a fully paid positioning flight hour. Sometimes a suitable aircraft may be less than an hour’s flying time away or might not need to fly an hour to return to its base after the flight. In other cases, positioning flights are offered at discounted rates. According to Air Partner, about one-third of all executive charter flights are empty legs.

But NetJets Europe isn’t just selling on flight hour price. It is guaranteeing the availability of the customer’s chosen aircraft type or a superior model either from its own fleet or from an audited charter operator. An average of 3 percent of NetJets Europe flights are now made by chartered aircraft, according to the firm, although this figure increases during the peak summer period.

The company also guarantees that all its flight crew are trained to standards that are above regulatory requirements and have elevated minimum levels of flight experience. According to the company’s CEO, Mark Booth, “Many businesses find that choosing charter simply leaves too much to chance.”

Air Partner refuted the suggestion that the ad hoc charter sector is inherently less reliable. It insists that Europe has a readily available supply of high-quality charter operators and that it, too, audits safety factors such as crew training to exacting standards.

Gaining Steam

That said, NetJets Europe’s core fractional-ownership program does appear to be gaining momentum, having for several years struggled to take root after its launch in spring 1996. According to Booth, it expects to sell 15 to 20 complete aircraft this year, having doubled the size of its business in each of the past three years. And it is finally expected to turn a profit next year.

This year has seen NetJets introduce new aircraft types to its European fleet, which is registered in Portugal under a commercial aircraft operator’s certificate (AOC). The new jets include the GIV-SP and the GV, with the first examples of these types having been added to the AOC last month. In September a pair of Falcon 2000EXs is due to arrive, at which point NetJets Europe will offer a minimum of four long-range aircraft in Europe.

The typical NetJets Europe flight is now about one-and-three-quarter hours in duration. This year the company has extended the zone in which clients can fly without incurring supplementary charges. It now includes eastern Europe, Russia and Turkey. The expansion two months ago of the European Union into former Eastern Bloc states, such as Hungary and the Czech Republic, is spurring western European companies to increase their business links into a region that is still poorly served by scheduled airlines. This is expected to be a significant driver of demand for business aircraft.

NetJets has also abolished the ferry charges previously attached to transatlantic flights in GIVs and GVs. This applies to any flight originating or terminating in the continental U.S. and is intended to encourage interchange use of aircraft between the North American and European programs. Corporate Card customers can also use NetJets aircraft in North America.

Meanwhile, the renamed NetJets Europe Private Jet Card offers exactly the same terms as the former Marquis Private Jet Card. For example, 25 occupied hours in
a Citation Bravo costs €109,000. The Marquis operation in Europe has now been fully absorbed into NetJets, which decided it no longer wished to operate a different brand for its prepaid flight-hours offering.

According to Booth, a sea change in NetJets’ approach to marketing and running its programs was necessary to make them successful in Europe. When the former television executive took the reins in 2001, he found a company still largely run from the U.S. that had not grasped Europe’s distinct business cultures and trading cycles.
The London-based management team of NetJets Europe now has almost full autonomy and it has devised its own marketing materials in numerous European languages.

In Booth’s view, NetJets has become more attuned and responsive to the European marketplace over the past couple of years. For example, a few months ago one of his friends called him from the exclusive French ski resort of Chambery to say that the place was packed with wealthy individuals grumbling to each other about what miserable scheduled airline journeys they had had to get on the piste. Booth was down there in just a few hours and had sold thee aircraft shares before the day was out.