Bizav Fractionals Facing a Matured Industry

 - September 1, 2009, 12:18 PM

The fractional jet industry is undergoing a “major transformation,” according to business aviation consultant Brian Foley Associates. “Regrettably there’ll be more turmoil in the charter, air taxi and fractional arenas before year-end,” said company president Brian Foley. As proof, he cites the recent $1.5 billion cancellation of Bombardier Learjet 60XR orders and options by Portugal-based Jet Republic, which he said should have come as no surprise. Meanwhile, fractional fleet sizes are flattening, likely indicating that the industry has matured and that demand is not limitless, he noted. “The problem is that the existing business model is geared to rapid growth,” Foley explained. “So long as fleets expanded, providers could profit by buying new aircraft at discounts and selling them at list price to customers. But now, with fleet size nearly constant, the emphasis must be on making the operational side profitable, or changing the business model altogether.” However, Foley is optimistic about the fractional aircraft industry’s future, especially as companies look to get business jets off their books. He is also predicting double-digit percentage gains in year-over-year fractional flight activity later this year.