Please patronize our sponsors. Ads with links are clickable.

bar_eleg.gif (11170 bytes)

The Sunday Record, October 29, 2000 -- Business & Money Section

Time shares for high-fliers
More executives are buying into a program that provides immediate access to a fleet of corporate jets

By Don Stancavish, Staff Writer

Teterboro -- Pilot Devain Knight gestured at the plane behind him, a sleek Cessna Citation X with gold and black stripes gleaming under the hanger lights.

"Except for the Concorde," he said, "there’s no faster [commercial] plane in the world."

Fast indeed. The Citation X courses through the sky at speeds of more than 600 miles per hour. It’s capable of transporting passengers from Teterboro Airport to Seattle in a little more than four hours. A large commercial plane, by contrast, makes the trip in roughly 51/2 hours.

Speed is a key selling point if you’re Executive Jet Inc., a Woodbridge-based company that sells what it calls time shares in a fleet of more than 300 aircraft through its NetJets program.

"People love the speed, they love the convenience," said Kevin Russell, an Executive Jet senior vice president. "The idea that they can save 30 or 40 minutes [compared with flying on a large commercial airline] has tremendous appeal."

Executive Jet, a subsidiary of Warren Buffett’s Berkshire Hathaway Inc., commands 70 percent of the world’s "fractional jet ownership" market. The setup works this way: Clients pay for a share of a plane and, in exchange, they can ask to be flown to one of the nation’s 400 commercial airports or 5,000 smaller general aviation airports – even on short notice. NetJets is quick to point out that its fractional share owners don’t have to deal with the complexity and expense of owning their own plane outright.

Among the affluent and the time-pressured, fractional ownership has become an increasingly popular way of zooming around the country. "It’s not a question of, ‘When can I get a flight to San Francisco?’ It’s a question of, ‘The plane’s ready to go, when can you get here?’ " said David Stempler, president of the Air Travelers Association. "The plane leaves three minutes after you step on board. There are no cancellations or delays."

This week at Teterboro Airport, Executive Jet staged a ground display of the airplanes in which it sells shares. Potential customers streamed in, asking about everything from cabin measurements to cruising altitude to coffee selection. The display is one of about 20 the company sponsors around the country each year, hoping to attract new customers.

The sales pitch has worked. Since it introduced the concept of fractional ownership in 1986, NetJets has assembled a list of corporate and individual clients that includes General Electric Co., the Seagram Co., Texaco Inc., and sports stars Tiger Woods and Andre Agassi.

"I view these folks as an extension of my own staff, as sort of my own aviation consultants," said Charlie Lynch, a NetJets customer who owns investing and venture capital firms in Morris County.

"When I take [a] group of investors with me, it’s always productive," he said. "You don’t have to worry about who’s sitting next to you, or if anyone’s listening. It’s also quiet. I have a ton of reading to do in my job. I can get a lot of that done.

"You’re spending a significant amount, but you’re getting a lot for your dollar."

Owning a share in the NetJets program isn’t cheap. For a five-year, one-sixteenth share (which amounts to 50 hours of flying time a year), clients pay from $400,000 to $2 million, depending on the size of the plane, plus annual fees ranging from $125,000 to $300,000. Before sticker shock settles in, Russell said customers are paying for two intangibles: convenience and safety.

Executive Jet acknowledges that in many cases flying business class is far cheaper than owning a share in one of its jets. Even paying a hefty $5,500 for a round-trip business-class ticket to London is less expensive than one NetJets flight.

"It’s a quality-of-life decision, not an economic one," Russell said. "It’s a business productivity and personal productivity issue. The question is, how valuable is the time of the CEO or chairman or managing director?"

NetJets pushes the convenience angle, which comes into sharp focus when considering the restrictions on regular commercial airline travel and the major carriers’ increasingly poor on-time records.

"Try and get to Little Rock, Arkansas" through one of the commercial airlines, Russell said. "Try and get to Lexington, Kentucky. Try and get to Effinghman, Illinois."

NetJets, aware that some fliers may be nervous at the prospect of jetting around in a smell plane, is trumpeting its intensive training program. Executive Jet pilots receive 22 hours of training a year. "There’s a great focus here on safety," Russell said.

Executive Jet, founded in 1964, has grown dramatically since its 56-year-old chairman and CEO, Richard T. Santulli, pioneered the idea of time-share corporate jets. In 1993, the company, then based in Montvale, had about 100 customers and a fleet of 17 planes. Today, Executive Jet has a fleet of more than 300 planes that shuttle 2,000 customers around the globe.

And it adds 65 to 70 planes a year. This month the company ordered 20 new Gulfstream V-SPs and three additional Dassault Falcon 2000s, and it is focusing on growth prospects in Europe, the Middle East, Asia, and Latin America. Executive Jet has a fleet of planes worth $2 billion, but has back orders for $4.2 billion in aircraft. It buys planes from manufacturers such as Boeing, Cessna, and Raytheon.

On the back of a healthy economy, growth prospects are bright, and with the boom times of recent years the company has seen an increase in the number of competitors in the fractional flier market.

Though Executive Jet is still the dominant player, companies such as Bombardier Aerospace’s Flexjet and Raytheon’s Travel Air have entered the fray.

What has all this new competition done to the large commercial airlines? Not much, said Catherine Stengle, a spokeswoman for Continental Airlines. "The commercial business is so large and growing so fast that we have not observed a real impact," she said.

Stempler added: "The big draw of the large airlines is the pricing and the frequent flier miles. If you don’t have the need for a whole crew or a whole plane to yourself, I don’t know how much sense it makes to fly on corporate jets."

During a tour of several planes at Teterboro, Russell sat in the cabin of a Falcon 2000, holding a digital phone in his hand. "I can make calls from here," he said. "I can plug in my laptop and work on a presentation. This becomes my office in the sky."

The jet’s crew focuses on making travelers feel at home. In some of the larger planes, chairs fold out into beds. You have the option of preparing something to eat in a small kitchen or making coffee or having a drink. The DVD and CD selection is constantly updated. A wood-paneled storage compartment in a Falcon 2000, one of the larger planes in the NetJets fleet, was stocked with CDs from Faith Hill, among others. Among the DVD selection: "The Beach" with Leonardo DiCaprio and "Erin Brockovich" with Julia Roberts.

Or: "You could bring your own DVD or CDs," Russell said. "A lot of our clients do that."

Other selling points: comfortable leather chairs, spacious bathrooms, and ample storage for things such as golf clubs and skis. NetJets customers frequently use their planes for leisure – the company’s busiest day of the year is the Sunday after Thanksgiving.

NetJets tailors its flights to individual clients. When Seagram executives fly, the plane is stocked with Seagram’s products. And you won’t find a Pepsi product on the plane when Coca-Cola Co. executives fly.

Among Berkshire Hathaway’s diverse portfolio of businesses, Executive Jet is a rising star.

Revenue from Berkshire’s flight-services business, which includes Executive Jet and Flight Safety International, a pilot training business, rose to $1.9 billion last year from $858 million in 1998, with most of the increase attributable to Executive Jet. That increase made Executive Jet the fastest-growing of Berkshire’s many businesses, which also include Geico Insurance and Dexter Shoes.

Last week, The Wall Street Journal reported that Santulli is one of three Berkshire Hathaway executives Buffett has chosen to succeed him as CEO of the diversified company after his death.

Buffett, who for years was an Executive Jet customer, purchased the company in 1998 for $725 million in cash and stock. He had been a NetJets customer since 1995, owning a quarter-share in a Hawker 1000.

"Warren was so impressed with our business that he wound up buying it," Russell said.


NetJets at a glance

"Fractional shares" in NetJets planes range from $400,000 to nearly $3 million, depending on the size of the share and the plane you choose.

After you sign up, the plane is at your disposal for as many hours as you’ve signed up for. For instance, a one-sixteenth share amounts to 50 hours of flying time a year. A one-eighth share gives you 100 hours of flying time annually.

NetJets planes fly to 400 large airports and 5,000 smaller general aviation airports. The planes are on call 24 hours, every day of the year.

The company has about 1,400 pilots and a fleet of more than 300 aircraft.


Please patronize our sponsors. Ads with links are clickable.

bar_eleg.gif (11170 bytes)

  Photo Features 
George Washington Bridge
Paterson Great Falls [General Photos][Background info][Hydroelectric plant]
Secaucus Junction
Grand Opening  [Index]
Mail Factory Migrates To Teterboro [ Sneak preview][Ribbon cutting]
"The Wright Stuff"100 Years of Aviation [Index]

Please patronize our sponsors. Ads with links are clickable.

bar_eleg.gif (11170 bytes)

regional news, information and features
  LOGO.GIF (7473 bytes)
[Advertising Information]  [Policy Statement]      MAIL.GIF (4196 bytes)   [E-mail: Webmaster]      
   Please report broken links.  Submissions welcome.  Site established 1998.   1998-2018.  All Rights Reserved
Permission required for any commercial reproduction of photographs used herein.
Site developed and maintained by [The Iron Horse Advertising & Marketing Co. Inc.]