AIN_Dec10_Fractional Market.pdf
Not long ago, the idea of sel
AIN_Dec10_Fractional Market.pdf
Not long ago, the idea of selling fractional shares in business jets looked like a winner. Industry pioneer NetJets–which Warren Buffett had acquired for Berkshire Hathaway in 1998–appeared prosperous, and so did the several other companies that had formed to take advantage of the business model. Flexjet started in 1995, PlaneSense launched a year later, Flight Options debuted in 1998 and CitationAir by Cessna (then called CitationShares) opened its doors in 2000. Avantair–which, like PlaneSense, focuses on turboprops–came along in 2003. There was, it seemed, business enough for all of them.
Today, though, the news about the fractional-share industry doesn’t concern the startup of companies–at least not national ones with ambitious plans. With the Great Recession having taken a toll on business jet travel and residual aircraft values, the news these days at the major U.S. fractional providers largely concerns red ink and efforts to stop its flow. NetJets, for example, had accumulated a staggering $1.9 billion in debt as of April 2009 and has since cut staff, moved its headquarters from New Jersey to Ohio and replaced its CEO, industry founder Richard Santulli. Avantair and PlaneSense appear to be doing at least relatively well on a much smaller scale, but CitationAir, Flexjet and Flight Options have all struggled to varying degrees. We’ve seen furloughs, layoffs, reorganizations and downsizings.
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