Waltham, Mass.-based Raytheon, during its third-quarter earnings conference this morning, announced its decision to sell Flight Options, its Cleveland-based business aircraft fractional share division. On October 15 the company entered into a definitive agreement to sell the fractional provider to HIG Capital, a Miami-based global private investment firm.
FAR Part 91 Subpart K, which will regulate fractional-ownership operations, has finally moved out of Transportation Department final review and on to the White House Office of Management and Budget (OMB) for final scrutiny.
When Richard Santulli sold three fractional shares in a business aircraft in 1986, people snickered. Ten years later, NetJets had sold 1,551 shares and Santulli was the one left laughing. Today, NetJets has company in the fractional-ownership industry, an industry that now represents 5,827 fractional shares. Even with the current economic slump, last year’s new share sales were up by 17 percent over the tally for 2001.
Sentient, launched four years ago as a business aviation charter broker, is now second only to fractional-ownership giant NetJets in the number of business jet flights flown annually, according to president and CEO Mark Stone.
If anyone went to the General Aviation Manufacturers Association’s annual review and outlook hoping to see light at the end of the economic tunnel, they had to be disappointed. “This may not be the deepest trough in modern times,” said GAMA chairman Bill Boisture, “but it is certainly one of the longest.”
According to the National Air Transportation Association (NATA), a law recently approved by the California State Assembly would assess all fractional ownership flights in the state with personal property taxes.
And you thought the dot.com bubble-burst was bad.
What began as a concept that met with outright skepticism and indeed some hostility by the established aviation industry has blossomed into a viable branch of business and personal transportation that continues to fuel manufacturers’ production lines, gobbles up flight crews and, at least for now, staves off recessionary pressures by keeping order books fat.
In the first few days after the new FAR on fractional ownership hit the street last month, the aviation community was reacting with tempered optimism. While many praised the cooperative effort between the FAA and the Fractional Ownership Aviation Rulemaking Committee (FOARC) in creating the long-awaited final rule, they also reserved substantive comment until they had further time to analyze the result.
When Steven Santo announced the creation of a fractional ownership program with an aircraft fleet consisting solely of Italian-built Avanti turboprop twins, some reacted to the news with skepticism. The economy was entering a recession, they said, and the airplane itself had never sold well.
Now the skeptics are silent, and Santo typically shows up for work with the smile of a man well satisfied with his lot in life.