XOJet expands charter ops as market slowly rebounds

 - September 29, 2010, 11:16 AM

Riding the wave of recent increased charter activity, private jet operator XOJet is continuing its expansion plans following the two strongest quarters in the company’s history. While statistics from aviation specialized services firm Argus show a 5.89-percent increase in domestic charter flights through the first half of the year, compared with the same period last year, San Carlos, Calif.-based XOJet saw the year begin with a 31-percent increase in flight hours over the previous January, and on a year-over-year basis it showed a 24-percent increase in departures for the first half, greater gains than any fractional provider has achieved, according to the company.

The company credits its upturn to a fundamental change in the fractional industry. “I think the market is shifting from long-term ownership contracts to more flexible contracts, so as people stop buying airplanes, they are looking for alternatives and we fit there,” said XOJet CEO Blair LaCorte. “I wish we could say we had predicted there would be a cyclical downturn right at the time we were ready to expand, but I’ll take it.” As part of that expansion, the company is opening new business offices in New York City and Los Angeles, and is continuing to accept aircraft deliveries.
With the addition of four new Challenger 300s so far this year, XOJet’s fleet currently consists of 26 super-midsize jets (19 Cessna Citation Xs and seven Bombardier Challenger 300s). The company also plans to take delivery of its first large-cabin jet, a Challenger 605, in December.

“The [Citation] ten is a Ferrari, and there’s no replacement for that,” said LaCorte. “I think the 300 is a great airplane and the 605 is as well. For certain missions [the 605 is] a nice airplane to have in your stable so you can put 12 people on it and [take them] the extra distance.” As a result of its fleet expansion, the company has increased its pilot roster by more than 20 percent, to more than 100 pilots, since the end of last year.

International Expansion
As well as hiring pilots in the U.S., XOJet is adding pilots in the Middle East, where it has plans to develop its international presence. “That’s one of the reasons we are hiring pilots in the Middle East and we expect that in the next couple of months we’ll probably be announcing the formality of it,” LaCorte told AIN. “We’re making a lot of flights there today under different structures from XOJet.” The company has several aircraft operating in the region under lease/management arrangements and it is using those to gain local experience.

Domestically, XOJet has seen success with its fixed-price charter program between certain city pairs. The fixed-price packages–rolled out last summer–include ground transportation in both the departure and arrival cities, standard catering and unlimited in-flight worldwide calls as well as Wi-Fi connectivity.

With the transparent pricing, the company says clients do not pay any additional fees, repositioning costs or fuel surcharges. “If you look at the number-one source of a new lead coming into charter, it has come through the fixed-cost program, so it has driven a lot of new people to get to know us,” said LaCorte. The strategy appears to be working. According to the firm, half the customers who have tried the fixed-price program have become repeat clients, allowing XOJet to move them to other usage plans quickly. “After three to five flights, it becomes an easy sell to move into ‘on account,’ which we consider to be a membership relationship because of how we interact with them,” said LaCorte.

While XOJet’s fleet currently consists solely of super-midsize aircraft, well suited for coast-to-coast flights, the company–through its retail charter department–can source any aircraft a customer might need, using Argus platinum-rated vendors. “It has become a significant piece of the direct charter business that we do,” said LaCorte, who noted that he regularly sees clients who wish to downsize from their own aircraft for a certain flight to save money. Because this is a service to XOJet’s customers rather than its core business, “we don’t try to get the cheapest airplane and charge the highest price; we actually have a fairly fixed margin that we add on, and it’s well below the industry average because, to us, this is a way of building a relationship with someone,” La Corte said.