Fred Reid has been at the helm of fractional ownership company Flexjet for two years. He tells Flight Evening News how the Bombardier-owned venture has successfully removed the shackles of the recession
How is business aviation faring?
Things have been tough all round. The speed and pace with which the downturn gripped the industry took everyone by surprise. Let's be realistic: Given that most forecasters have pushed the recovery back by up to 24 months, there is little doubt that business jet orders will be low throughout this decade.
Fractional ownership programs have been blunted by the recession. Can the existing business model survive?
Fractional ownership was hit hard, and the model has come under the microscope. But this industry is here to stay and its future looks bright. To start with, the benefits of private aviation are clear: convenience, flexibility, versatility, time and cost savings and access to 5,500 airports in the USA at least. People mistakenly compare private aviation to the Dorchester Hotel and commercial aviation to a cheap motel. But this comparison is a incorrect. Private aviation is about versatility not luxury. You simply cannot fulfil certain missions without a private jet.
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Fractional ownership provides a less-costly alternative to full ownership and charter - depending on the hours flown - and guarantees access to a wide range of aircraft within the fleet at any given time.
Is business improving?
Yes. Despite the recent upheaval over the past two years, business is up and we plan to make an operating profit this year for the first time since 2008. Between 75-80% of our business is brand-new sales. Of course it is growing at a much slower pace than before the recession. We are also starting to see a vast improvement in our extension rate.
With the used aircraft values at their lowest level for years, are customers entering the market to pick up a bargain?
Of course. Used aircraft values are not falling anymore, but they are certainly not increasing. This is a bargain time to come in and pick up a five-year-old aircraft. At any given time we will have about 7-10% of our fleet for sale. The Flexjet fleet totals 83 aircraft today consisting of 19 Bombardier Learjet 40XRs, 13 45XRs, 11 60XRs, 28 Challenger 300s and 12 604/605s. We have more than 1,000 customers in the Flexjet program.
If business is starting to pick up, are you looking to add new aircraft to your fleet?
We will add a super-midsize Challenger 300 to the fleet in December - the first aircraft for 18 months - and a further two Challenger 300s and a superlight Learjet 45XR next year.
What is the secret of Flexjet's success?
We are backed by a major aircraft manufacturer - Bombardier. People have become very discerning. They want an operator that has a stable team backed by a stable owner. We take pride in our flight operations and our customer service. We do not make money out of trading aircraft, unlike some other programs. Our aim is not to be the biggest, but the best.
How has Flexjet survived the recession?
We have evolved. The downturn has taught us to be smart, listen to our customers and react accordingly. We introduced a number of measures such as flat-price contract extensions - to help them to continue flying through the crisis without having to face an immediate asset slump; a walk-away lease program, which removes all the risk associated with fractional ownership. This has proved very popular but there is now a slight shift back to fractional ownership.
Last month we introduced as standard on our fractional fleet, a new in-flight wi-fi service called Gogo Biz. It allows Flexjet customers to use any wi-fi device - ranging from smartphones to laptops - to access the internet, turning our aircraft into high-functioning mobile offices. To extend our global reach we established a partnership in May with Korean Air, which flies between more cities in North America and Asia than any other airline. The alliance gives Korean Air passengers private point-to point travel throughout the USA on a fleet of business jets while Flexjet customers can fly privately from a local airport to catch their Korean Air flight.
To improve our customer service offering, we began offering in June a dedicated representative for Flexjet fractional customer to ensure that every trip is flawlessly executed. The rep handles everything from booking flights and coordinating catering requests to managing ground transportation and checking weather conditions for the passengers the day of the trip.
What are your plans for NBAA?
I will be conducting a presentation on Wednesday 20 October focusing on the future of business jet travel and how the past two years have impacted the fractional ownership industry. It will showcase what best practices are being implemented as a result of this lean "survival of the fittest" period, while understanding how these developments will impact the future of business travel. Topics ranging from the importance of diversifying one's business model and creating strategic alliances to building global travel solutions and offering customization to the highest level will be addressed. This presentation will demonstrate how companies, despite the challenges of the current times, can find the silver lining in any situation and ultimately elevate their businesses.
Source: Flight Daily News
