Europe has been a tough nut to crack for fractional ownership providers. Traditional operating practices, such as leasing and block charter, have been a mainstay of the business aircraft industry and the concept of shared ownership has long been regarded with scepticism.

Only NetJets and Flexjet have offered their fractional brands to a cynical European audience. But two years after it began, Flexjet withdrew its programme because of hefty financial losses, and was convinced Europe was not ready to embrace the concept. Although Flexjet has remained in Europe offering upscale block charter programmes through the Flexjet and Skyjets brands to a widening customer base, it is sure it was right to pull out of fractional.

NetJets, on the other hand, has held its resolve despite a very slow start. Eight years into its venture, it now boasts an expanding fleet of 52 aircraft and more than 300 shareholders, but the process has been very costly. Warren Buffett, chairman of NetJets' parent company Berkshire Hathaway, said last year: "The European loss is painful. But any company that forsakes Europe, as all of our competitors have done, is destined for second-tier status." For the years from 2001 to 2003, NetJets Europe recorded gains of 88%, 61% and 77% in European management-and-operating revenues. "We have not, however, yet succeeded in stemming the flow of red ink," says Buffett.

Rob Dranitzke, NetJets Europe business development manager, is bullish about prospects in Europe and says the programme could break even next year, when significant orders for the European programme are expected. "With so many more people entering fractional ownership here, we should be the fastest-growing programme in the world in two years in terms of net aircraft growth."

As in the USA, the jet membership card has been a blessing to NetJets Europe, prompting its acquisition of Marquis's three-year-old European subsidiary. And the investment seems to be paying off. The now-renamed Private/Corporate Jet Card has nearly 200 members and a 90% renewal rate, says Dranitzke. In May alone, NetJets sold more cards than Marquis Europe did throughout 2003. "At some point the card customers will surpass the fractional owners," he adds.

Source: Flight International