As fleet expands, NetJets Europe takes steps to sustain growth

 - May 17, 2008, 4:19 AM

Fractional ownership provider NetJets Europe (NJE) this year is planning to increase its 140-aircraft fleet by around 20 percent. The ab initio flight crew training program it set up last year to boost its pilot workforce is now operational to meet this additional demand.

Meanwhile, on the environmental frontline, NJE (Booth No. 109) is striving to reduce its carbon footprint with a new mandatory carbon offset program for its owners, and the Berkshire Hathaway company also has provisional plans to expand into in India.
In early 2007, NJE acknowledged that finding and retaining flight crews for its burgeoning operation has proved somewhat challenging–especially since it prides itself on employing pilots who are among the most experienced in the business. In 2006, NJE had experienced a flight crew turnover rate of 8 percent, with many pilots being lured to positions with Europe’s fast-growing low-cost airlines which have been offering attractive pay packages and more predictable work schedules.

The company believes the part-sponsored training program is a way to tackle this challenge. Thirty-nine cadets currently are undergoing ab initio ATPL training at Oxford Aviation Academy in the UK and another 32 are to join the program this year. Plans call for a future average annual intake of 48 cadets.

The large number of applicants means that only around 5 percent of those applying will make it through the selection process and be offered a place. Successful cadets will comprise 20 percent of NJE’s first officers. In theory, cadets can fail the course; however, according to director of marketing Robert Dranitzke, the thorough selection process makes this highly unlikely. After a cadet graduates, he or she will fly 30 to 40 legs as a copilot, without passengers, before being released onto the line.

The course, which lasts approximately 17 months, includes two weeks of modules covering specific NetJets training requirements, such as unusual attitude recovery and VFR/IFR integrated procedures. It also comprises other specific NetJets ground modules such as standard operating procedures, customer service training and company operations manuals. The first session began in May 2007, thus none of the first cadets has completed it yet.

The cost of the course is roughly £75,000 ($150,000). Upon joining NetJets, cadet crewmembers will be paid the same as direct-entry pilots. However, if they have borrowed money from the company to pay for training expenses, deductions will be taken from each month’s salary to repay those loans. NJE estimates these paybacks will continue for five or six years.

Most NJE pilots work 6/5 rosters (six days on, five days off), but the schedule for long-range pilots is 7/6. They can choose from among 43 European “gateway cities” for their base and are required to live within a one-hour commute of that location.
The pilots are covered by contracts that had been a source of contention. “All pilot job contracts are back onshore now,” Dranitzke said. In late 2006, some European operators challenged NetJets’ use of offshore contracts and some pilots also demanded onshore contracts. The main difference between offshore and onshore contracts is the much higher level of social contributions for onshore contracts (covering benefits such as unemployment and disability insurance). “Our crewmembers wanted that and we agreed with them,” Dranitzke explained.

NJE’s fleet consists of approximately 140 business jets (see table). “We fly intercontinental a lot; 20 percent of our fleet is large cabin, long range,” Dranitzke said. For example, he said, the average leg for a Gulfstream is six hours. He indicated that Dassault hopes to deliver first Falcon 7X–maybe even the first two–by year-end, when NetJets expects to have a 170-plus strong fleet.

NJE jets visited 136 countries last year, he said, explaining that “seventy percent of our usage is for business purposes.” The company lists more than 1,600 customers–the slight majority being block charter card holders rather than share owners. However, the latter account for the vast majority of the flight time, at 77 percent. Plans call for another 150 owners to sign up this year.

Tracking finances involved in making those trips across Europe can become a maze when it comes to invoicing. Domestic flights are subject to VAT sales tax, but international legs are not. “We work with all local tax authorities,” said Dranitzke.
So does NetJets have hopes for a more straightforward tax plan as Europe becomes more integrated? “We support EBAA and all organizations that try to accelerate the process,” Dranitzke answered.

NJE maintains a number of bases throughout the Continent. In addition to Lisbon, Portugal, where AOC holder NetJets Transportes Aereos has its headquarters, it operates a maintenance facility at London’s Northolt Airport and maintains a sales headquarters in that city center. Recently, it opened sales offices in Paris and Munich, and its customer contract office is located in Rotkreuz, Switzerland.

Carbon Offset Initiative
Befitting its global footprint, last year NJE launched a compulsory carbon offset program. Part of the initiative is funding a research program for a new aviation fuel with near-zero greenhouse gas emissions. With NJE’s support, Dr. Fred Dryer and his team at Princeton University in New Jersey are studying the synthesis of jet fuels from a combination of coal and biomass. The subject is full of complex considerations.
On the one hand, coal has a high-energy density and is readily available. But the carbon footprint of a coal-based fuel is as bad as that of an oil-based fuel. On the other hand, the carbon footprint of biofuels is close to zero–carbon dioxide emitted during combustion will be absorbed by the next generation of plants. But if biofuels are to be made from purpose-grown plants, they require huge land surfaces.

Dryer is working on a new jet fuel that would take advantage of both energy sources. The carbon dioxide emitted during the coal-to-liquid conversion could be captured and sequestered. An offshore gas platform in the North Sea uses such a process but it still has to be developed and generalized.

Looking beyond European shores, in March NJE announced it had appointed Ashida Chordia, CEO of luxury goods firm Shreyans, to market its services in India. “We are dipping a toe into the market,” Dranitzke said. Chordia and NJE are looking at various options to bring fractional ownership to the fast-growing Indian economy, including bringing in more partners. He insisted there is no firm plan to set up an Indian base.