One of the biggest revolutions ever to hit the air-transport industry came when airlines realised that, to run a profitable business, you no longer had to own your own aircraft, but merely to own the access to aircraft. Leasing was the key: let somebody else own the aircraft; even let that other person make a profit out of leasing it to you, while you made a profit out of operating it.
Now, a similar revolution is transforming the corporate-aircraft market. Just as leasing made it possible for a few people to become rich (and a lot of people poor) out of introducing a whole new generation of passenger to air travel, so fractional ownership looks like making a lot of money for some of those who are turning business-jet travel from an elite pursuit into almost a mass market.
Scarcely a week now passes without the announcement of yet another record breaking order for business jets from one of the fractional-ownership operators. Through these orders, unprecedented numbers of aircraft which were once the preserve of a tiny fraction of the world's businesses will go into service. They will be used by unprecedented numbers of businesses, the vast majority of which have never before been significant users of business aircraft. Is it all too good to be true? Perhaps.
One of the factors which brought about the crisis in the airliner-leasing business five years ago was its circularity. One of the immutable rules of commerce is that somebody, somewhere, must take the risk. If the ultimate customer is not taking the risk, then the supplier must. It was thus in airliner leasing, where the manufacturers ended up taking the risk, either directly through their own leasing subsidiaries, or indirectly through building aircraft at uneconomically sustainable rates to satisfy the lessors' demands. It is now so in fractional ownership, where the manufacturers are, increasingly, their own customers, taking major stakes in the programmes which buy their products.
Anything which helps to spread the message that more businesses could benefit from using the business jet as an effective, affordable business tool should be good for the industry. The business-aircraft manufacturers must be wary, however, of assuming that they are automatically the right customer for their products.
Source: Flight International
