Charter operator JetFlite International has found that growing competition has made doing business in traditional strongholds in the U.S. much more difficult, and thus the company has expanded its services to tap new sources of revenue. This includes serving new markets in Russia and other countries and the October 2011 opening of JetFlite’s FAA-approved Part 145 repair station at the company’s Long Beach, Calif. headquarters.
One of the greatest challenges JetFlite faces, said CEO Bill Cripe, “is that more and more [competitors] are giving more and more stuff away.” Aircraft owners want guarantees that their costs will be covered, he said, “and for us it doesn’t make a lot of sense.” JetFlite is competing against companies that, for example, lease a Gulfstream IV from an owner and cover crew and insurance and a portion of maintenance costs then turn around and try to generate as much revenue as possible, in many cases going after market share rather than profits. “A lot of these trips are being sold for below cost because [the company is] just trying to recoup as much as possible,” he explained. “Having the airplane sit and losing $50,000 is a lot worse than flying the heck out of it and losing $20,000. So for the traditional charter companies like us, it’s a struggle. What we’re trying to do is expand our services so we have more to offer for the customers who want all these services.”
The move to Russia, where JetFlite opened a new JFI Russia office last October in partnership with Moscow-based Best-Jets, is an effort to capture business that isn’t available to the low-cost competitors. Having infrastructure in Moscow gives JetFlite a key advantage, Cripe said, not just for the Russian market but many other countries as well. JetFlite also opened an office in Farmingdale, N.Y., in 2010 and a sales and business development office in New York City last year.
Through last October, JetFlite’s charter business grew 10 percent, but then it dropped markedly during the last quarter of last year. The January numbers jumped, and that month was JetFlite’s best in several years and included a combination of U.S. and international flights. Last year JetFlite provided trips to more than 35 countries.
Expanding to Russia has not been without challenges, according to Cripe, including illegal charter providers that compete with legitimate charter companies. Customers are becoming more knowledgeable, he added, and JetFlite markets its long history and FAA certification to explain the benefits of doing business with the company. “We’re trying to help educate them,” he said. “It’s not as bad as it was a couple of years ago; the customers are starting to avoid brokers and go directly to the operators and request operators that are certified. Hopefully that will continue, and we’ll be one of the first [operators] that has a solid hold in Russia.”
There are also growing opportunities to manage aircraft for Russia-based customers, Cripe said. One customer owns a Gulfstream G200 based in Moscow, and another has a G650 on order that JetFlite will manage.
JetFlite’s repair station in Long Beach is an advantage because that kind of maintenance is not readily available in Russia, he said. JetFlite’s location near Gulfstream’s Long Beach facility is also helpful because the factory service center is available to help fix major problems that require engineering assistance. “If we find something significant on [a customer’s Gulfstream],” he said, “we have engineering and all of the parts next door.” o