The recession has dealt an enormous blow to the fractional share industry. Rapidly declining used-aircraft prices and fewer flying hours have affected the industry to the point that most fractional operators have shrunk during the past year, deferred new aircraft deliveries, cut staffing and explored new ways to keep flying. Business has been so bad at the fractionals that some pundits are questioning whether the business model is broken.
According to the management of Jet Republic, the overriding reason that the company suddenly ceased trading on August 20 was because “the aviation asset finance market has completely dried up, making it much more difficult for potential clients to take out and obtain financing for fractional ownership of jets.”
Shortly before the departure of NetJets chairman and founder Richard Santulli, NetJets Europe achieved its goal of reducing flight crew capacity by 60,000 pilot duty days per year in response to declining demand for its fractional ownership and block charter services.
Lawyers acting for European private jet club start-up Jet Republic are seeking to lift a legal injunction secured by rival fractional ownership provider NetJets Europe that has prevented it from hiring NetJets employees. A Portuguese court granted the injunction in July last year, three months before Jet Republic was officially launched.
In a seismic event for the business aviation industry, NetJets founder, chairman and CEO Richard Santulli yesterday resigned his position at the company, effective immediately. Santulli, credited as the “father of the fractional aircraft industry,” said he will remain with NetJets–a Berkshire Hathaway company–as a consultant for at least a year.
NetJets Europe has achieved its goal of reducing flight crew capacity by 60,000 pilot duty days per year in response to declining demand for its fractional ownership and block charter services.
With certification of Embraer’s Phenom 300 expected before year-end, Flight Options released more details about its fractional ownership program for the aircraft in June.
European fractional ownership provider Jet Republic is now trying to sell whole midsize business aircraft. Under its new Free to Fly program announced at the end of June, the company is offering Bombardier Learjet 60XRs for $13.5 million, at what it claims is a discount of more than $1 million off the full list price of $14.6 million.
Even as other well-established and larger fractional ownership operations are quietly laying off employees and reducing aircraft delivery rates in response to the economic crisis, Avantair is hiring and adding to its fleet of 53 Avanti twin turboprops as quickly as Italian manufacturer Piaggio can deliver them.
As the larger fractional ownership operations lay off employees and/or reduce aircraft delivery rates, Clearwater, Fla.-based Avantair is watching its fleet of 53 Avantis and Avanti IIs grow as quickly as Italian manufacturer Piaggio can deliver them, with six more due before year-end.