Whole aircraft on offer from Euro frax firm
European fractional ownership provider Jet Republic is now trying to sell whole midsize business aircraft. Under its new Free to Fly program announced at the end of June, the company is offering Bombardier Learjet 60XRs for $13.5 million, at what it claims is a discount of more than $1 million off the full list price of $14.6 million.
In a June 2008 contract signed with Bombardier, Jet Republic agreed to pay $1.5 billion for 110 Learjet 60XRs, valuing each aircraft at just over $13.6 million. However, according to new market data from U.S. consultants Conklin & de Decker, in today’s depressed market conditions, the actual price for a new example of the aircraft is around $12.9 million.
According to Jet Republic, the Learjet 60XRs that it has on order will be delivered with more than $1.1 million worth of additional equipment and features that will not be on standard aircraft ordered directly from Bombardier. The company had its own designer develop the cabin interior for its fleet. The cabins will feature fully reclining seats, Internet access, iPod connections, espresso coffee machines and a galley equipped to serve gourmet food. All Jet Republic flights will be made with a flight attendant, and passengers will enjoy the support of a worldwide concierge service.
With Free to Fly, whole-aircraft owners can fly the Learjet 60XRs for up to 200 hours per year without paying any flight-hour fees to Jet Republic, which will operate the aircraft as part of its fractional fleet. After the five-year agreement, Jet Republic agrees to buy back the aircraft for at least 50 percent of the price paid, or allow the client to extend the agreement. The company claims that its whole-aircraft clients will save $2.1 million per year in operating costs compared with the expense incurred if they operated the aircraft themselves.
Jet Republic sells shares in the Learjet 60XRs in one-sixteenth units starting at $843,750 and flight-hour fees of E4,900 ($6,800). Another option is Share Partnership through which clients can buy a minimum of 50 flight hours per year at an hourly rate of E6,500 ($9,000). Aircraft availability is guaranteed with 24 hours’ notice.
The company is also marketing block charter cards for flights in a variety of light, midsize, large and “global” aircraft flown by selected operators. Rates start at E115,000 for 25 hours.
A spokesman for Jet Republic insisted that selling whole aircraft is not at odds with its existing marketing pitch that share ownership and block charter are more cost effective than owning aircraft directly. “Our core rationale is to redefine the private jet market,” the company told AIN. “Free to Fly is an innovative option within our exclusive ownership program and offers clients a cost-effective and hassle-free way to own a state-of- the-art Jet Republic Learjet 60XR,” he said.
Jet Republic argues that Free to Fly clients can own an aircraft without the expense of management fees that would otherwise have to be offset by making the aircraft available for charter. It added that, for some clients, the new option gives the possibility of tax-favorable asset-depreciation terms.
The first Learjet 60XR is due to be delivered to Jet Republic in October, and three more should join the fleet by year-end. Fourteen aircraft are scheduled for delivery next year, with that number rising to a rate of one aircraft every two weeks for the following three years.