Flexjet A Fast Growing Fractional
Loichinger, who is Flexjet's sales director for Michigan, will only say that those clients who have bought into the fractional ownership program find traveling a lot simpler than business people who fly on commercial aircraft.
Flexjet is a division of Bombardier Inc., a Montreal-based manufacturer of everything from tracked municipal sidewalk plows to systems for defense contractors. Bombardier also is the owner of Learjet Aircraft and Canadair, making it the world's third-largest supplier of civil aviation aircraft and an ideal supplier for Flexjet's fractional ownership program.
Loichinger explained that the way the program works is that a firm buys a share in Flexjet and takes title of a given aircraft, thereby gaining access to a fleet of the same model.
It might be termed a flying timeshare, Loichinger explained: "It's just like any other corporate asset. You depreciate it like you would any other piece of equipment."
He said a firm normally has access to a plane within six to eight hours. "But in an emergency, it could be sooner," he said. "If we have a plane sitting on the ground at Detroit, we'll get it in the air quickly because we want to keep these aircraft flying."
He said all of Flexjet's planes are jet models: the Learjet 40, 31, 45 and 6s, plus the Canadair 300 and 604. The interiors and exteriors of each of the makes are identical, he added.
He said the value of using such aircraft is two-fold.
First, he noted, Flexjet usually can get its passengers closer to their destinations than the terminal of a big urban airport. Being private aircraft, Flexjet jets can fly to about 5,000 airports in the country, as opposed to the 500 to which commercial flights are limited.
Secondly, he said, Flexjet can save a business traveler a great deal of the time that he or she ordinary loses in airport security lines, missed connections, cancellations, security, and travel time to and from massive suburban airports.
"You can drive up to within a few feet of the door of the plane," he said. "There's no security lines or baggage inspections. You climb in and you're soon off the ground." As one boards, he said, a member of the ground staff crew borrows the passenger's keys and parks his car.
"Then, when the plane's 30 minutes out on the return flight, they radio in so that when you arrive, your car is there at the plane. You don't have to lug your bag out to long-term parking or brush the snow off the car."
Flexjet explains there are three components to pricing.
- The purchase price or acquisition of the aircraft share.
- Monthly management fees, covering pilots, pilot training, aircraft hangar time and insurance.
- Rate per occupied hour, covering fuel, maintenance, normal catering and landing fees.
One example would be if a firm bought a sixteenth (50 occupied hours) of a Learjet 31A aircraft, the total monthly after-tax cost would be $ 7,700.
The director of communications for Flexjet doesn't believe that airport congestion or dissatisfaction with commercial air travel is a significant factor that has caused people to seek out Flexjet and fractional ownership.
"The state of the economy and whether people have the means to buy into fractional ownership is a much more important factor," Phillips said.
But while much else in aviation has slowed during the past year, the Aviation Research Group/U.S. said aircraft timesharing is the "most dynamic and fastest-growing niche within the corporate aircraft market." The industry, in fact, is reporting double-digit growth for the second straight year.
And if major air terminal hassles and delays haven't exactly driven business travelers to fractional buying, it certainly doesn't seem to have hurt. Flexjet notes that U.S. Department of Transportation statistics show that the average time from scheduled departure to takeoff during peak periods at LaGuardia, for example, has been running about 80 minutes. That's in addition to rush-hour traffic to and from the air hub that can add another two hours or more to total travel time.
Too, fractional ownership simply is a method of outsourcing. As Loichinger notes, a firm retains the tax savings of equipment ownership but without having to pay salaries and fringes to air and ground crews.
Flexjet says that nationwide there are 3,500 individual fractional owners in almost 630 aircraft. The firm believes such numbers will increase dramatically because fractional programs account for 30 percent of business aircraft OEM backlogs.
The company says it expects the number of aircraft sold and delivered to fractional programs to increase during the current year more than 15 percent over 2001. It predicts that 170 new aircraft will have been delivered by the end of the current year and that the rate of delivery of new aircraft to fractional ownership programs will rise to 220 per year by 2006.
Flexjet itself claims a compounded annual growth rate in excess of 20 percent per year since it was established in 1995. The firm says its owner base has increased 19 percent over fiscal year 2001 and that it expects to reach 626 owners in 2002.
People seeking Loichinger can reach him at (313) 331-5327 or via email@example.com.
Bombardier is traded on the Toronto, Brussels and Frankfurt stock exchanges as BBD, BOM and BBDd.F.