NetJets Inc., a Berkshire Hathaway company, is the worldwide leader in private aviation with the largest and most diverse private jet fleet in the world. In 1986, the company pioneered the concept of fractional aircraft ownership – offering individuals and businesses all of the benefits of whole aircraft ownership and more, at a fraction of the cost. Today, NetJets offers a full range of private aviation solutions through its businesses in North America and Europe, as well as in China – once regulatory approvals are finalised. Marine Eugene, Head of Sales for NetJets in Europe, explains why the company is spending 17.6 billion USD on expanding and rejuvenating its already extensive fleet. “As our main markets in Western Europe are recovering from the recession, our new NetJets aircraft meet European demand, particularly for luxury light jets.”
NetJets was founded as Executive Jet Aviation, the first private business jet charter and aircraft management company in the world, in 1964. In 1984, the company was acquired by former Goldman Sachs executive Richard Santulli and he became Chairman and CEO of the corporation. Santulli is also credited with launching the NetJets fractional aircraft ownership programme, in 1986. Under fractionalownership plans, customers buy as little as a 1/16 share of an aircraft, depending on how often they want to use it, and have guaranteed access to flights anywhere in the world at 10 hours’ notice.
In 1998, after being a NetJets customer for three years, billionaire Warren Buffett, Chairman and CEO of the Berkshire Hathaway company, acquired the company. This ownership change allowed the firm to soar to new heights, providing further investment into their fleet of jets, safety and services. Now with a large and diverse fleet, NetJets has flown more hours than all other fractional aircraft companies combined. The NetJets fleet currently includes over 700 private jets. “Every eight minutes, a NetJets flight takes off somewhere in the world,” Ms. Eugene adds.
She goes on to explain that NetJets first established a physical presence in Europe in 1996. NetJets Europe has meanwhile branched out into two new business areas: finance and aircraft management. The latter uses the company’s resources to provide aircraft owners with services such as crew recruitment and training, flight planning, hangarage and maintenance. Owners also have the option to rent their aircraft to NetJets Europe to provide additional capacity when they’re not using their plane. NetJets’ European fleet is registered in Portugal while its commercial headquarters is based in London.
Ms. Eugene says the company has enjoyed tremendous growth in Europe, overall, despite several ups and downs. “We are in a highly cyclical industry. Many of our customers are top executives at publicly traded companies. When the stock exchange is in a downwards spiral, that impacts us virtually immediately.” She emphasises, however, that the backing of parent company Berkshire Hathaway gives them an exceptionally sound financial basis. “In the midst of the recent financial crisis we continued to invest in order to achieve our ambition of building the largest, most advanced and best maintained fleet in the world.” On that note she emphasises that raising capital is one of the biggest challenges to overcome for competitors who want to enter the fractional ownership market. “NetJets covers every aspect of fractional ownership. In the air and on the ground, from maintenance through to staff training, it’s all done by our own people to ensure the safety, quality and consistency of our operations. Customers can reach us 24/7, wherever they are in the world. Whether they want a plane in Amsterdam or just want to get home from Chicago because a meeting finished early, we’re there. This is something you can only do with hundreds of aircraft, thousands of pilots and the financial backing of Berkshire Hathaway.”
In May 2013, NetJets was unveiled as the launch partner for Bombardier’s new Challenger 350 business jet. The NetJets Signature Series Challenger 350 joins NetJets’ global fleet in 2014 and is part of NetJets’ wider 10-year plan to add up to 670 new aircraft with a total value of $17.6 billion. This year, the company is flying a demonstration model of the allnew aircraft to more than 20 cities in the US, with the aim of showing the model to current and prospective customers. Ms. Eugene says they’re considering a similar campaign to introduce the Challenger 350 to European-based customers. NetJets will take actual delivery of the first jet in the US this summer.
Similar to all other new jets in the NetJets fleet, the Challenger 350s are part of their Signature Series of aircraft, which are custom designed and built exclusively for NetJets. Other jets in the Signature Series include the Embraer Phenom 300, the Cessna Citation Latitude, and the Bombardier Global 6000 amongst other models. The redesigned Challenger 350, specifically, includes state-of-the-art avionics and greater cabin comfort with larger windows and advanced HD and wireless entertainment. With seating for up to 10 passengers, Wi-Fi availability, a fully customised galley designed by NetJets, and the latest technologies for optimal pilot situational awareness and safety, the Challenger 350 is said to provide the ultimate in luxury and travel for NetJets Owners and their guests. It has a range of 3,780 sm (6,083km), which in effect means that it can fly as far as from New York to Los Angeles and San Francisco to Maui. “Previously we offered a choice of jets with a limited range and a passenger capacity of up to seven people on the one hand, and jets with a long range and a passenger capacity of around 10 people on the other hand,” Ms. Eugene points out. “The price difference between those is quite considerable. We believe that the Challenger 350, which sits exactly in between the two choices, gives our customers an attractive additional option. It has ample baggage capacity, and offers more comfort and a longer range than our entry level jets.
This makes it ideal for business people who extend their business trip with a leisure break, and who need to store their golf bag somewhere, for example.” Ms. Eugene emphasises that when NetJets announced it would invest 17.6 billion in expanding its fleet, back in 2010, they were not speculating on the investment winning them an x number of new customers. “When we made the decision to invest, the world still was in a deep financial crisis, and we still don’t want to take anything for granted. The decision was mostly based on a thorough, multi-year analysis of what our customers want and need from us.” Pre-sales of the new NetJets aircraft are going very well indeed, she adds; the first Embraer Phenom 300 are already sold out, notably. The Phenoms form part of an order signed in 2010 for up to 125 of the seven-seat business jets.
The jets will form the backbone of the fractional ownership company’s light cabin offering – previously represented by the Hawker 400XP and Cessna Citation Bravo. “The Phenom 300 ticks all the boxes,” says Ms. Eugene. “It has ramp appeal, a long range, a large comfortable cabin – equipped with a lavatory – and the NetJets Signature Series bespoke interior.” While the Eastern European market and Russia do form part of NetJets Europe’s general development plan, Western Europe still is their core market. The company focuses on Britain, Germany and France, where demand is picking up as Europe emerges from recession, as Ms. Eugene confirms. As Western European markets are very light-jet oriented, the new aircraft in the NetJets fleet will likely appeal.
This company profile appeared in an edition of Zillion International, a business-to-business publication by Zillion media. The business review is a bi-monthly business magazine that features company reports on international companies and organisations.
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