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.
So why the gloom that appears to be spreading over the fractional-ownership industry in the early months of this year? It may be reaction to an announcement earlier this year by the head of NetJets’ parent company, Berkshire Hathaway, that last year the fractional provider lost money for the second year in a row, despite record revenues. Berkshire Hathaway CEO Warren Buffett further pronounced that “overall, the fractional-ownership industry lost significant sums last year, and that is almost certain to be the outcome in 2003 as well.”
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