Fractional ownership of private aircraft seems to be a struggling business model in North America and Europe but it’s alive and well in this part of the world, according to NetJets Middle East (NJME). The company, which is owned by Saudi Arabia’s National Air Service and is affiliated to U.S.-based NetJets Inc. through a licensing agreement, says that it has not been hit by the marked dip in demand that is afflicting fractional ownership operators in the West.
Here at the Dubai Airshow, NJME (Chalet B8) is launching an ownership program for the new Dassault Falcon 2000LX jet and is also relaunching its card program for its Hawker Beechcraft aircraft. The company will take delivery of its first 2000LX in a few weeks time.
“We don’t appear to be affected in the same way as in the States and in Europe,” said Graeme Deary, NJME’s new executive director for business development. “We’re still very buoyant and still bringing new customers on board. A number of clients have reduced their flying, but very few people have actually left the program.” He said the company achieved positive growth in customers this year.
In the U.S., however, NetJets Inc. has seen Richard Santulli, its chairman, CEO and founder, resign following a dismal second-quarter financial report, and has reported third-quarter losses of $471 million (with losses for the first nine months totally $1.2 billion). The company also has announced that it will furlough up to 495 pilots from its North American fractional operations. Most furloughs, which will take effect on January 15, will come from NetJets Aviation, but a “small number” will also come from NetJets International, the division that flies Gulfstreams. Said current NetJets chairman and CEO David Sokol, “This difficult decision resulted from a comprehensive analysis of current and projected flight demand.” Further downsizing of NetJets aircraft in the U.S. in the fourth quarter is expected.
Deary was involved in the launch of NetJets Europe back in 1996 before launching rival fractional ownership provider European Business Jets, which went into administration last October. He credits NJME’s operational diversity as an important factor in its weathering of the financial storm. “We are adapting to what the customer requires,” he said. “We offer our JetCard in 25-hour increments, can lease fractional shares for one to five years–depending on what the customer requires, and provide aircraft management, charter management and on-demand charter. There is a significant minority [of successful individuals in the region] who will need an aircraft for shorter periods.”
Here in Dubai, NJME, which celebrates 10 years in service this year, is signing two agreements with Aviation Link of Jeddah, Saudi Arabia, Deary said. The first is a memorandum of understanding for NJME to manage a Gulfstream G550, which Aviation Link expects to take delivery of in January; and the second is for Aviation Link’s purchase of a one-sixteenth share in one of NJME’s Hawker jets.
The NJME fleet comprises 17 fractional aircraft: a mix of Hawker 750s/800XPs,
Falcon 2000s/2000EXs and Gulfstream GIV-SPs/G450s. The company also has three business jets under management agreements, which are operated under a separate part of the organization called Aircraft Management Services. These managed aircraft are chartered to both NJME and outside customers. NJME’s affiliation with NetJets, for which it pays a licensing fee, entitles its customers to interchange opportunities with the U.S. and European NetJets fleets.