GRAHAM WARWICK / WASHINGTON DC
ShairForce seeks shared ownership success as United Airlines business jet subsidiary closes after three months
The demise of United Airlines' ambitious venture into business jet fractional ownership has not deterred others from seeking to enter the market. Even as United's parent, UAL, announced closure of its Avolar subsidiary barely three months after it began flying customers, a new entity, ShairForce, unveiled plans for a Boeing Business Jet (BBJ) shared ownership scheme.
UAL had been expected to close Avolar after ending its search for outside investment last month. Although the company said it was drawing up a new business plan, observers saw little prospect of the subsidiary being able to finance its $6 billion in aircraft commitments without extra investment beyond the $102 million from United (Flight International, 19-25 March).
Chief executive Jack Creighton says United "explored every possible option that would have enabled UAL to benefit from its original investment but none of them proved financially viable in the current airline operating environment". Shutting down Avolar "is the most prudent move", he says. United's unions had opposed the financially struggling airline's venture into fractional ownership.
United will incur a charge of between $45 million and $55 million for shutting down Avolar and cancelling its $1.9 billion in firm orders for 46 Dassault and 36 Gulfstream business jets, deliveries of which were to begin this month.
Dassault says the decision will not have a negative impact on the company "because the first aircraft to be delivered can be sold to other clients". The French manufacturer will not change its production plans for this year, "which means five clients in 2002 and another five in 2003 will have a shorter wait for their aircraft, those originally planned for delivery to Avolar".
ShairForce, meanwhile, is a far more modest venture than Avolar. The New York-based company is still raising private investment, but plans to begin operations with a single BBJ2 based on the East Coast of the USA. Its ShairForce One scheme differs from others in that share owners are entitled to passenger hours rather than aircraft hours, which the company claims makes it more affordable than traditional fractional programmes. A 1/16th share in the BBJ2 will entitle the owner to 2,400 passenger hours per year.
ShairForce has concluded negotiations for a 36-passenger BBJ2 with the Boeing-General Electric joint venture, but has yet to place an order. The company hopes to have the required financing in place in "a couple of weeks", when it will begin marketing shares, with operations planned to begin within six months.
Additional reporting by Christina Mackenzie
Source: Flight International
