More 'personalized' service is goal of new frax operation
JetLimited, the new fractional aircraft ownership program from Rifton Aviation, believes it sets itself apart from other regional and national frax programs in several ways, all intended to result in more personalized service to its target Northeast U.S. customers than other frax operations.
Rifton initially is retaining at least a 25-percent (quarter-share) ownership in each of the four aircraft in the program, giving the company a “vested interest” beyond merely a management role. Shares for other buyers will be officially available for less than quarter segments, but customers will be steered to acquire at least quarter portions to limit the maximum number of share owners to just four per airplane (including Rifton, which could retain more than 25 percent to maintain a maximum of four owners). This small ownership pool, Rifton said, ensures that customers will more often be flown by the same crew and in the same airplane in which they have invested than with a larger fractional owner. Fewer owners also means fewer total airframe hours, which should have a positive effect on airframe resale value, said Rifton.
Another unique aspect of JetLimited is its charter-revenue sharing element, wherein unused hours remaining from a shareholder’s total allocated hours are returned to the customer in the form of a charter allowance (see accompanying charts). As a minimum, JetLimited “guarantees charter income on 50 percent of unused allocated annual hours.” Rifton said this arrangement, which can reduce the overall annual costs for the shareholder, is not available from other frax providers. The normal practice is to allow customers to roll over a certain percentage of unused hours to the next year.
The frax airplanes will be used for charter under Part 135 when they are not being used by the owners under Part 91. Some chartering hours are built into JetLimited’s program because, as a quarter share owner, Rifton expects to use its 200 allocated hours primarily for charter. This arrangement also will help to reduce annual deadhead flights, claimed Rifton.
If an owner schedules a trip after its airplane has been assigned a charter flight, the charter passengers would be accommodated with another acceptable aircraft so that the owner would be assured of getting into its airplane. Swiss-based PrivatAir, which includes the former Flight Services Group in Connecticut, is Rifton’s preferred supplier of supplemental charter.
JetLimited is starting out with the four airplanes Rifton currently owns and operates: a 1999 King Air 200, a 2000 Citation Excel, a 2000 Falcon 2000 and a 1991 Gulfstream IV. All the aircraft have similar paint schemes, with N numbers ending in BC, for Bruderhof Communities, the parent company of Rifton. The 80-year-old parent company, an international Christian community formed in Germany in the 1920s, started using small airplanes for its own transportation needs in the 1940s. In 1992 it launched charter operations with a Gulfstream II based at Teterboro (N.J.) Airport.
A frax airplane, guaranteed to be available on six hours’ notice, will be limited to buyers whose home base is within a two-hour flight radius of JetLimited’s home base at Stewart International Airport in Newburgh, N.Y. Flights, however, may be scheduled to anywhere in the world (minimum deadhead, repositioning, waiting time and crew layover costs may apply). Rifton emphasized that the JetLimited contract is not a “cookie-cutter agreement,” but is customized to consider each owner’s specific travel patterns to limit additional fees.
Rifton noted that although there are no core airplanes in JetLimited’s fleet, the percentage of times that an owner would not get into its own airplane is significantly lower than in a larger fractional program, where an owner might be sharing its airplane with a dozen other owners or more. In JetLimited, when an owner’s airplane is unavailable, Rifton offers an upgrade to one of its other airplanes at no extra cost, or a downgrade, in which case the owner’s occupied flight time is reduced by the interchange ratio (see chart). As a last resort, acceptable airplanes will be provided to JetLimited customers by PrivatAir.
It’s evident that JetLimited is not intended to be a large, national frax operator with hundreds of airplanes and owners. The company is marketing shares to individuals and companies just in the Northeast, several of whom are current charter customers. “Expanding market share is an alien concept to us,” said Rifton. “It is only by remaining limited in size that we can maintain the unlimited service our clients demand.” Rifton doesn’t see JetLimited expanding beyond four more aircraft over the next five years.
Limited but Personalized
Rifton believes that as a direct outgrowth of this “limited size,” service will be “highly personalized.” According to Rifton, its customers will talk to dispatchers they know personally and get to know their crew personally. Special considerations will be available, the company promised. For example, clients will be able to select their own set of china or linens for their exclusive use whenever they occupy the aircraft. The company said that final negotiations with several potential buyers were under way.
In addition to the charter income provided to customers for unused allotted hours, the acquisition cost, monthly management fee and hourly occupied rate of JetLimited aircraft are less than those of other fractional providers, such as NetJets, Flight Options and CitationShares. A flight attendant is a standard member of the crew in the GIV and Falcon 2000, and available as a cost option in the Excel. Simultaneous use of aircraft in the JetLimited fleet is available to shareholders that own at least a half share.
As with other frax providers, JetLimited provides interchange ratios among its aircraft, but Rifton’s program also includes time on three different helicopters–an S-76B, a TwinStar and an AStar. The helicopters are part of the JetLimited program but owned and operated by other companies, including SikorskyShares. Each five-year airplane share-ownership contract comes with four complimentary helicopter flights in the New York metro area.
Higher Residual Values
JetLimited share contracts are five-year agreements, with various financing packages available from the operation’s underwriter, Fleet Capital’s corporate aircraft finance unit. Owners may sell their share at the end of the contract period for “fair market value.” Fewer owners mean fewer total airframe hours, so Rifton expects JetLimited airplanes to have a residual value higher than that based on the much higher average utilization of a particular model in a large fractional fleet. “After the first two years, the company will guarantee a buy back of the share based on fair market value.”
JetLimited is Rifton’s latest expansion to the Avitat FBO and charter/management operation it established in 1997 in the former W.R. Grace corporate aircraft facilities at Stewart. In addition to providing line services and maintenance to tenant and transient business aircraft customers, Rifton also provides ground support services and fueling for Stewart’s airline operations and cargo flights. The company recently built a 120,000-sq-ft hangar designed to attract bizliners such as the Boeing Business Jet and Airbus Corporate Jetliner. Rifton’s tenant capacity is about 60 percent occupied by some 15 operators with 20 aircraft.
The company is also in the formative stages of expanding its personal and security concierge services. Rifton plans to establish “strategic partnerships” with experts that provide enhanced concierge services to be able to respond to charter and frax customer requests, including last-minute needs, for specific amenities (such as theater tickets and restaurant reservations) and security requirements (such as 24-hr guard dogs for parked aircraft).