A analysis highlights someofwhatwe learned. en masse, are retired from their fleets. This fleet owned market when these fleet aircraft, in­ data, kers andporedover andconsultants, transaction talked totheseproviders aswell asaircraft bro- in discussingbothplansandstrategies. We also ries totheircustomers),butotherswere candid to provide answers (alltheOEMsreferred inqui- plans. ishment anddelivery A numberdeclined viders andthemajorOEMsabouttheirreplen- to beflexible.” ing what’s selling andwhat’s thetrend. They need majorblockstaking of airplanes, without know not surethatyear-to-year they arecommitted to “Even iffleetoperatorswanted totellyou, I’m aboutwellissues, talking publicized fleet orders. Solutions, aspecialistinfractionalownership aviation attorney James Butler, CEO of Shaircraft always turn intodeliveries.” noting, “The big order announcements don’t Associates, Rolland Vincent of Rolland Vincent ofthosedeals,”details said­ deliveries isn’t clear. planes, buthow many ofsuch ordersturn into years for more than $20 billion worth of air announced firm orders and options in recent fractional providers ( and NetJets) have tified with the same precision. The two major Their fleetreplenishmentplanscan’t beiden (Part 135/380) have 212 jets and 66 turboprops. while owned andoperated(O&O)charter fleets jets and78turboprops, accordingtoJetNet, of fleetrefreshmentsonthepreowned market. viders, their replenishment plans, and the impacts announce theorders,butwe don’t know the “We allknow thosearejustnumbers,” added Nonetheless, we asked mostofthesepro “Everyone rushes tothemicrophone The fractional fleets (Part 734 91K) contain trying toassesswhathappens inthepre- trying and owned andoperatedcharter pro major fractionalownership programs sis surveys thefleetsof world’s IN’sBusiness Aviation Fleet Analy Fleet Analysis Fleet BusinessAIN Aviation impact on the preowned market Fleet composition, replenishment plans and the aviation consultant aviation consultant singly or ­singly or ------percent the first half of this year over of percent thefirsthalf hours,under 200,000 flight was up0.5 shuttered providers. tionShare, andother grams have grown toreplace Cita $23 billion,asotherfractional pro and optionsfor new jetsvalued at ­NetJets alone have orders placed firm before theshare pricescollapsed.” why people came back. They got out saw shares returned at ahigher rate, and share,” saidApplegate. “That’s why you who had to comeandbuy their aircraft a houseorart,but there was abuyer quick cash. the only placeshareowners couldget but because repurchase provisions were wasn’t aneedtodownsize, borneof the program exits seen at that time NetJets, maintainsthat thesprintfor former associate general counselat Aerlex, and Amanda Applegate of not cometopass. Aviation attorney 2008 financial collapse, clearly have ownership, the madeinthewake of fractional theendof Predictions of Fleets Fractional The FLEXJET GLOBAL EXPRESS Fractional activity in the U.S., at just In theyears since, Flexjet and “At that point they couldn’t sell - -

many program members. large inthepurchase decisions of ownership also loom tax benefits of service. The safety and consistency of for many seekingthehighestlevel of tional ownership remains thechoice many owners exiting programs, frac- have created reverse sticker shockfor Argus International. the sameperiodin2015,according to fleet. “Theycostlesstooperate,fleet. they warranty preowned—aircraft for its chases new—and occasionally under- aircraft accessperyear.days of mum one-sixteenthshare providing 20 days, rather thanhours, withthemini- King Air350is. Shares are sold in access 100s and300s, Citation CJ2+s, and Phenom aircraft composed primarily of 35 operates aMidwest-based of fleet Executive Airshare, founded in 2002, Herethe fleets? are someanswers. owners’ aircraft whenues of theyleave theresidualfresh, val andmaximize - doing to keep relevant their fleets and While cratering residual values The Lenexa, Kan. company pur What are thefractional programs

2016 Executive Airshare

-

© 2016 AIN Publications. All Rights Reserved. For Reprints go to www.ainonline.com hours (seven toeightyears old).“That’s our operated untilaccumulating 4,000to5,000 approach” refreshment. to fleet Aircraft are ful invest innew equipment.” crew. There are reasons why most success- more maintenance personnel and more but itjustdidn’t make sense. We’d need we looked at operating apreowned fleet, and CEO. “Before we ordered , the aircraft,” saidKeith Plumb, president more reliable, sowe cangetmore outof have fewer maintenance events and are EXECUTIVE AIRSHARE PHENOM100 AND 300 AIN BusinessAIN Aviation Analysis Fleet NETJETS GLOBAL Executive Airshare takes “asystematic aircraft asthematurity date nears. owners withamarket summaryfor their values, andExecutive AirShares provides Shareowners “are keyed in” toresidual share ispreparing tosell“ahandful.” brokerage firms” toselltheaircraft. dow. That gives usleadtimetowork with maturing withinthesamesix-monthwin agreements soalltheowners have contracts six owners inonePhenom100,we setupthe sweet spot,” we have saidPlumb. “If five or is a2009model,andExecutive Air The oldestPhenom100inthefleet - - the delivery schedule.” that willbebasedon tunities, andpartof game. We’re looking at expansion oppor before year-end. “We want tobeaheadof options, acquisition plans andwillfinalize has two Phenomsonorder and“about five” announced plans to tap new markets. EA Group took majority ownership in EA, and the leisure buyer.” itsolderPhenom300s“at thepricefor of group, the company mightrepurpose one destinations.” Butfor that cost-conscious business owners flying tohard-to-get-to but we’re seeingourgrowth primarily in are lookingfor thelowest acquisitioncost, closely,” hesaid.“Someleisure customers the firstyear. “We willmonitorthat dynamic thecostin depreciation” half andwriteoff and theywant totake bonus advantage of is businesses flying for business purposes, “At our customer base least 65 percent of Share haspurchased only new aircraft. 15 to20years.” happiness for Phenom 100 brings a lot of few hundred hoursperyear, a4,000-hour an individual or company that only flies a useful economiclife,” Plumbsaid.“For them onthemarket; theystillhave along and cabinetry repaired. “We don’t dump pet andseat leather replaced as necessary an “extensive cosmetic checklist,” with car In Septemberinvestment Curran firm Over thepast18monthsExecutive Air Before sale, retiring aircraft must pass - - -

© 2016 AIN Publications.© 2016 AIN All Publications. Rights Reserved. All Rights For ReprintsReserved. go For to www.ainonline.com Reprints go to www.ainonline.com craft, andwillbeavailable toFlexjet owners joining FlairJet’s seven managed air of fleet will baseeight Nextant 400XTisinEurope, expanding its footprint in Europe. Flexjet aircraft management company FlairJet, G450s andthree Learjet75s. Flexjet now has eight Challenger 350s, two these,G650s), valued at upto$1billion.Of up to50Gulfstreams (G450s, G500sand announced. Flexjet also has an order for program, noalternative orders have been Since Bombardier cancelledtheLearjet85 Challenger 605s) and options for 160 more. Learjet 85s;20Challenger350s;and10 orders for 85aircraft (25Learjet75s;30 worth asmuch as$5.2billion,withfirm ordered upto245Bombardier business jets bardier Aerospace. program, purchased Flexjet from Bom theFlightOptionsfractional pany of less thantwo years. is thefleet theremainder of mostof of nine years oldonaverage. Average age Another 11are Learjet40XR/45XRs, 300s, withanaverage 8.9years. age of (29)are thefleet Challenger Almost half 300, Challenger300and605. G650. Flexjet alsooperates thePhenom Global Express andtheG450,G500 75, Challenger350,Legacy450/500, LXi Cabin Collectionoffers the Learjet resenting 11mostly models. midsize Its 66aircraftFlexjet’s rep - consistsof fleet BusinessAIN Aviation Analysis Fleet Aviation Capital (DAC), parent com WHEELS UPCITATION XLS AND KING AIR 350i In August Flexjet acquired UK-based itsFlexjet purchase, DACAt thetimeof In 2013,Cleveland’s Directional

Flexjet - - -

to theMiddle EastorAfrica. for point-to-pointtravel withinEurope and and Global 5000s, and 20Global7000s (30 Global Expresswith 50 firm XRSs space, for up to 120 Bombardier Globals, its firstorder withBombardier Aero at retail prices. In 2011 NetJets placed 10 years valued at upto$17.6billion totaling upto670jetdeliveries over orders 75 more, thefirstinaseriesof “Platinum Edition” jetsandoptionsfor order withEmbraer for 50Phenom 300 22 initsU.S. fleet. modelsitoperates butnumber stillhas of the industry. model amongcustomersandwithin dence inboththeprogram andtheaccess That backingcontinues toinspire confi boughtNetJets. the following decadeWarren Buffett’s he purchased thecompany in1984,and launched thefractional conceptafter and 2,700shareholders. Richard Santulli more than 500 jets European of fleet industry’s dominant force, its U.S. and Fractional pioneer NetJets remains the dispositionhavefleet beenannounced. the Flexjet Nootherplansfor fleet. the its 18Phenom300s, willbetransferred to aging FO’s 16years. aircraft, Someof like 17 years old, and five Beechjet 400As aver Citationdozen Xs that are an average of shareowners and58aircraft, includinga Flight Options(FO),which stillhas344 In 2010NetJets placeda$1billion In recent years NetJets hasreduced the Meanwhile, DAC iswindingdown

NetJets - - -

6000s; andfive Citation Latitudes. lenger 650s;nineGlobal5000s;16 Phenom 300s;30Challenger350s;12Chal lighting andstorage features. quieter cabins seating andcustomized and entertainmentsystems,include in-flight NetJets’ Signature Series interiors, which and CL650s, respectively.) orders were later upgraded toCL350s for 125more. (TheCL300andCL605 Citation Latitudes, andoptions another order for50; andafirm 25 Challenger 605s, withoptionsfor orderoptions on125more; for afirm 25 order forfirm 75Challenger300sand Cessna jets($2.3billion),includinga 275 Bombardier ($7.3billion)and150 with all70optionsexercised. and 8000s),apurchase worth $6.7billion close future delivery plansbeyond“more.” for thisyear.dis Antoniadis declinedto PC-12s. 56 One more is scheduled of ery N.H. -basedPlane-Sensehas taken deliv- Antoniadis. said PlaneSensepresident andCEOGeorge its fractional program for thePC-24shortly, next year. The companyof will announce first production model,inthe second half SN101,the is scheduledtotake delivery of the largest order for thenew twinjets—and PlaneSense hasordered sixPilatus PC-24s— ordered toreplace retiring Hawker 400XPs. five Nextant 400XTismallcabin jets ithas two of andhastaken itsfleet, delivery of of Pilatus PC-12/-12NG­ PlaneSense operates somethree dozen Citation Latitude. more efficiently by theChallenger350or service, andtheirmissioncanbeperformed tion Sovereigns average almost10years in shares owning about 10 aircraft. Its 44 Cita years oldonaverage, withtotalownership aircraft. Ithas30Falcon 2000smore than15 lective shares outstandingown fewer than10 almost 14 years old on average, and the col- for retirement. The37Citation Excels are ishment plans, but somemodelsseemripe Gulfstreams taken intrade by Bombardier. its 34Hawker 400XPs, anditsG200s, the Phenom order, andretired allbut oneof tion Ultras, presumed tobeintrade for the ECC Leasing purchased 25 NetJets Cita During thisperiodEmbraer subsidiary Thus farNetJets 57 hastaken delivery of All thenew jetswillbeoutfittedwith In 2012 NetJets ordered up to another Since launchingin1996,Portsmouth, NetJets declined toreplen discuss fleet

PlaneSense turboprops, thecore - - - - -

© 2016© 2016 ©AIN 2016 AIN Publications. AINPublications. Publications. All RightsAll Rights All Reserved.Rights Reserved. Reserved. For For Reprints ReprintsFor Reprints go togo www.ainonline.com to go www.ainonline.com to www.ainonline.com harder andlongerthanfractional operators. wise object,O&Ostendtorun theiraircraft individual owners who mightother lack of charterbookings.to getmore hours” of Jets). “We’re at timestolower better off yield The Travel Management Company (TMC afford that,” saidScottWise, president of haveter fleets tomatch. tinue tosetthecharterrates managed char in theirneedtogenerate revenue theycon- in theprocess. Yet O&Oshave survived, and ditional charter pricing, rattling the industry inclusive point-to-pointrates well below tra especially afterXOJet introduced in2009all- wasfleet anunsustainable business model, debuted lastdecade, that owning acharter fessionals have said,sincethefirstO&Os for theirairplanes. no monthly management fees and have to pay pete with,O&Osmust fly tosurvive; theyget charter management companiestheycom planes. Unlike fractional operators, andthe major globalO&Ospossesssome279air Dwarfed by themanaged Part 135fleets, the fractional fleets. and supplementalneedsof the adhocchartermarket, jetcard programs Owned andoperated provide fleets liftfor Operated Fleets Owned and craft replace theoldestinfleet. closer to4.5years onaverage,” asnew air be justover five 2019, years, by theendof next year we expect theaverageof age to down. ourfleet Bythemiddle the age of market driven.” ourown; we useathird party,of andit’s some dark room withanarbitrary formula late [shareowner] exit valuation, it’s notin nal value.” origi retained alittleover 50percent of 10-year-old aircraft exiting have ourfleet any business aircraft.value “We of see that dispatch theaircraft.” reliability of with the maintainability comfortable and and we went tothat [age] afterwe became aircraft at the10-year mark, to dispose of “Ourcurrent strategyretirements, for is As BusinessAIN Aviation Analysis Fleet it costsus$3,000to$5,000,andwe can’t Given thefinancialimperatives andthe “Every day jet sits, a light or midsize That’s why somecharter industry pro In addition,“We are constantly driving As for residual value, “When we calcu PC-12s currently enjoy thehighestresale

------Source: JetNet Global Citation Challenger Citation Citation King Air Falcon Citation Falcon Hawker Citation Citation Embraer Global Citation Embraer Challenger Hawker Challenger Aircraft JETSUITE EMBRAER E135 JETSUITE EMBRAERE135 Top 20 Aircraft Operated by Frax and O&Oby Percentage Legacy 500 5000 Encore 300 Excel Sovereign 350i 2000 Latitude 2000EX Easy 750 X Encore+ Phenom 300 6000 XLS Legacy 450 350 800XPI 650 Model in Fleets Total 19 15 45 43 44 38 30 15 58 13 72 44 89 58 24 12 3 5 8 2 in Service Total 212 164 454 369 348 296 230 104 309 349 200 328 137 34 37 48 65 51 24 6 Percentage in Fleets 11.65% 12.64% 12.84% 13.04% 13.51% 14.42% 16.67% 18.77% 20.00% 20.63% 22.00% 27.13% 33.33% 42.34% 47.06% 50.00% 8.82% 8.96% 9.15% 9.91%

© 2016 ©AIN 2016 Publications. AIN© Publications. 2016 All AIN Rights Publications. All Reserved.Rights Reserved. All For Rights Reprints For Reserved. Reprints go to www.ainonline.comFor go Reprintsto www.ainonline.com go to www.ainonline.com AIN BusinessAIN Aviation Analysis Fleet Source: JetNet Global 6000 Global 5000 Global Express GV GIII Jet Zetta Citation X Challenger 300 X King Air350i Falcon 2000 Citation XLS Citation Excel aka Gama Aviation Global 6000 Global ExpressXRS Global 5000 Challenger 350 Challenger 605 Challenger 850 VistaJet Hawker 850XP Hawker 800XPi Hawker 400XP Hawker 800XP Challenger 604 Beechjet 400 TMC Pilatus PC-12NG Pilatus PC-12/45 Hawker 800XP SurfAir Gulfstream G650ER Global 6000 Global ExpressXRS Global 5000 Challenger 605 Challenger 604 Qatar Executive Citation Mustang GlobeAir Embraer ERJ-135 Embraer Phenom100 Citation CJ3 JetSuite Aircraft OJ et Charter Fleet Composition No. Aircraft 14 24 17 52 26 15 10 36 24 12 14 3 1 1 1 1 1 9 6 1 6 5 2 1 2 1 2 1 2 1 1 4 3 1 8 8 Average Age (Years) 10.38 6.333 6.785 13.5 2.75 1.25 17.5 14 14 36 14 15 10 15 28 12 13 14 16 11 8 1 1 8 2 3 6 2 8 9 8 1 1 2 7 4 and we have to fly a certainamountto pay the moneyisthere. We own theairplanes, which isakey toprofitability, O&Ossay. down, there’s room tobargain onprice, their own recently madejets, andtheirsales Moreover, withOEMs competing against nance credits andreliability guarantees.” the deal and provide training and mainte- and lock in costs, and Embraer can sweeten edged “buying new, you getthewarranty represent a significant value, he acknowl the next year.” Wilcox said,andwillbuy “at leasttenin old, withprobably fewer than1,000hours,” 300s,” either new or “three or four years “currently looking at acquiring Phenom Coast markets. scheduled servicelinkingseveral majorWest E135s, for JetSuiteX, its Part 380 per-seat year: luxuryconfigured, 30-seat Embraer Phenoms’ interiors. signed andcommencedrefurbishment onthe land-based Constant Aviation this year rede maintenance andinteriorrefreshment. Cleve time early.” Intheinterim,JetSuite invests in We sendingtheminany have nointentionof not us. We’re operating more like anairline. inthree,you four, getridof five years; that’s Alex Wilcox. “Market disposable airplanes planes that last 10 years or longer,” said CEO aircraft sinceits2006launch.“We like air eight Citation CJ3s, andhasyet toretire an JetSuite operates Phenom100sand adozen themdoit. of its inalow-margin business. Here’s how some ary; they’re concerned about generating prof values, for mostO&Os, that’s beyond second an owner isconsidered high.Asfor residual charter peryear for generating 200hoursof aircraft. Atchartermanagement companies, more than1,060revenuerate hoursper of utilization, was flying at apro-rated annual and XOJet, which leadsthePart 135packin ter revenue each;JetSuite’s some750hours; char to generate anaverage 662hoursof of were allO&Os:TMCJets’ isontrack fleet rates through Q2thisyear—and in2015— the three withthehighestaircraft utilization Among the25largest U.S. charter operators, “At therightpriceandutilization, Though low-time preowned aircraft can Eying significantexpansion, JetSuite is JetSuite added anew this modeltoitsfleet

JetSuite ------XOJet, boughtTMCJets; while negotiations TPGGrowth, ment firm parent company of airplanes,” saidWise. ThisSeptemberinvest fectly happy operating five- to15-year-old switched toapreowned “We’re fleet. per operating new aircraft uneconomical,and ufactured Beechjet400s—but soonfound vice with24new Nextant 400XTs—reman- Elkhart, Ind.-based TMC Jets launched ser purchased preowned. AmongthefirstO&Os, 400XPs (36)andHawker 800XPs(24),all TMC Jets operates 60jets, primarily Hawker years andIdon’t expect that tochange.” JetSuite has been profitable for thepast five many more hours. Theeconomicswork. we’re theaircraft over amortizingthecostof E135s, 100hoursonthePhenom100s, and the note. We fly 200hoursamonthonthe so much more efficient,” Wise said.“Ina Icouldown sixmore,604s. itwould “If be hard” at proceeding withtheremanufacture. to Nextant 400XTis, andisnow “looking we needtobeinmidsize,” Wise said. the count“down to20airplanes, about where 800s,” over thenext few months, winnowing “We’ll probably [sell]sixto eight Hawker ondemandforsqueeze thesmallerairframes. jets, midsize puttinga to match thepricesof theiroperatorsfleet; sometimesdrop rates super-midsize aircraft inthecharter glut of a has toomany jets, midsize theresult of itself.”“Fuel hastaken care of best dealwithallthevendors,” saidWise. to serviceisswift, andwe’re negotiating the right thingsinmaintenance, andthereturn craft. “We make sure we’re doingallthe and “ithashelpedtremendously.” employs, adjustingrates tomarket demand, has adopted the dynamic pricing XOJet Now, besidesregaining itsfocus, TMC rates accordingly, affecting itsbottomline. as fuelpricesdropped,” failingtolower The company also“fellbehindonpricing we justsat still,”year-and-a-half saidWise. stantly buying airplanes, andfor thepast ishment activity went onhold. were underway, TMC’s replen typicalfleet - Nextant toconvert itsHawker 400XPs The company alsohastwo Challenger TMC Jets hasanorder onholdwith Looking ahead,Wise saidthecompany TMC buys five- to seven-year-old air “We’re thosecompaniescon oneof

TMC Jets - - - - -

© 2016 ©AIN 2016 Publications. ©AIN 2016 Publications. AIN All Publications. Rights All Reserved.Rights All Reserved.Rights For ReprintsReserved. For Reprints go For to www.ainonline.comReprints go to www.ainonline.com go to www.ainonline.com tinue toinvest in them,” Stewart said.XOJet year. “Ourfleet’s ingoodshape. We con cash-flow generation.” the airplaneisworth; of we thinkinterms he said.“We don’t thinkalotabout what buy andleaseairplanestooperate them,” into thefleet.” some olderaircraft exit, andsomenew come “Over athree- tofive-year timeline, we’ll see craft seven to 17 years old,” said Stewart. “Our business modelisbuilt around air time charter network partner, TMCJets. Hawkers to now sister company, and long - Challenger 605s,ple” of and sold its fleet of to thelessor. XOJet previously had“acou- Citation Xsonleasewent back a coupleof retired sinceservicelaunchin2006,though XOJet’senough.” Noneof aircraft hasbeen Stewart, president andCEO. “Forty-one is super-mid inthefuture,” fleet saidBradley and “We donotanticipate expanding the Challenger 300s (17) and Citation Xs (24), XOJet owns andoperates 41super-midsize sure,” hesaid. continue toinvest for inthelightjetfleet, those.”invest inafew of Meanwhile, “we’ll year, that heavy if market isgood,we might BusinessAIN Aviation Analysis Fleet any aircraft withinthenext inthefleet total economicsofyourtransaction,” saidKioussis,adding,“Noneofthisislinear. —J.W. the cheapestairplane,orbuyingat the peakofitsmaintenancestatus,butwhereyoucanoptimize tenance andfleetsales,aswellguiding purchasing inthepreownedmarket.“Thekeyisnotbuying is restored.Amongotherapplications,thisdataallowsfleetoperators tofinetunedecisionsonmain- somemaintenanceequity flies, creatinga“maintenanceexposure”;whenmaintenanceisperformed, ty isatitshighestpointthedayaircraft comesofftheassemblyline,andisexpendedasanaircraft ident Tony Kioussis. aircraft comingoutofthefractionalfleets,andeffecttheyhaveonaircraft aroundthem,”saidAIpres- vice fromappraisalfirmAssetInsight(AI).“We routinelyruninternalanalyticsthatexaminevaluesfor and trends,arenowrequiredreadingformarketparticipants.Manyofthese playerssubscribetodataser er, orthepeoplethey’re buyingfromaregettingsmarter.” customers,” saidDavidWyndham,presidentofConklin&deDecker. “Eithercustomersaregettingsmart- ators, financinginstitutionsandconsultants.“We’re beingaskedtogetintocostsdeeperandby The company hasnoplanstoreplace Residual values aren’t a concern. “We

XOJet Adapt, anewAIproduct,tracksandquantifies“maintenanceequity”of enrolledaircraft. Thisequi- Publications likethequarterlyBusiness Jet UpdatefromUBS, which parsespreownedmarketvalues With thedollarsatstake,trackingoperatingexpensesandfleetvalueshasbecomeafocusforoper Using DataforFleetPlanning - - tions of thecompany’stions of failure. the chartermarket anddrawing predic range, bringingpoint-to-pointpricingto its Citation Xs, priced in the low $20,000 one-way transcontinental fares aboard to beallWi-Fi equipped. and thecompany’s was fleet amongthefirst been outfittedwithQuietCabin upgrades, gram ontheCitation Xs, theCL300shave completed aninteriorrefurbishment pro XOJET CHALLENGER300 “Most peopleinourindustrydon’t truly In 2009XOJet introduced all-inclusive - - - - of two PC-12NGs, withfive-bladeof props, list prices. This year SurfAir took possession tional 50,adealworth upto$312millionat for 15PC-12NGsandoptionsfor anaddi- same year thecompany order placedafirm a preowned refurbished fleet, in2014,the Bay areas. Surf-Airstartedoperations with between theLosAngelesandSanFrancisco 14 Pilatus PC-12/-12NGs primarily flying ter service. Thecompany operates of afleet itsPart 380scheduled char 2013 launchof you canfly” members’ modelwiththe California-based SurfAir introduced the“all through large-cabin partners, Stewart said. 16 percent thisyear, allthegrowth coming expanding itscharterbrokerage, which isup to bewholesale orretail distribution.” long and hard about whether you’re going believe in dynamic pricing; and sixth, think utilization;to maximize fifth,you’ve gotto can’t extend beyond that; fourth, you have to operate theairplaneinaclosedloop, you have a scaled operation…Third, you need percent depreciated; second,you needto cannot benew—it’s gottobemore than50 practice.” Hecitedsixrules:“The airplane understand intimately andneedtoputinto Stewart. “There are principlesyou needto money in the owner-operated business,” said understand the economics of how tomake understand theeconomicsof Though its fleet remainsThough itsfleet static, XOJet is

SurfAir -

© 2016 ©AIN 2016 Publications. AIN Publications.© 2016 All Rights AIN All Publications. Reserved.Rights Reserved. For All ReprintsRights For ReprintsReserved. go to www.ainonline.com go For to www.ainonline.comReprints go to www.ainonline.com said. VistaJet bespoke emphasizes customer But theywillpay for aqualityproduct, he commercial officer.said Ian Moore, chief can’t afford orjustifyowning anaircraft,’” and Shanghai. in L.A.,andenhanceditspresence inBeijing quarters in New York, established a foothold year thecompany expanded itsU.S. head- CL850 basedinHongKong. Over thepast the U.S. and Malta, save for one B-registered Challenger 350s, 605sand850s, registered in 5000s; and one Express XRS), the remainder are Globals (26 Global 6000s; sixGlobal super-midsize jets. the fleet Just under half five large-cabin dozen and bardier of fleet Malta-based VistaJet operates anall-Bom $1,950 monthly feefor basicservice. Air memberspay a$1,000sign-upfee, anda itslegacyaircraft. Surf- replacing thelastof BusinessAIN Aviation Analysis Fleet trates additional challenges. The X Elite upgrade trates additional challenges. The X Elite upgrade Citation Xsretiring from theNetJetsfleet,illus- created torecycle 10-year-old, 10,000-plus hour with alotofhours.” Asset Insight.“Peopleshyawayfrom aircraft industry,” saidTony Kioussisofaircraft appraiser “There’s anaversiontooldairplanesinour despite impeccablemaintenancehistories. retired fleetaircraft faceaftermarketbias, of PlaneSense,amongotheroperators. 400XP. Nextant400XT/XTisare now in thefleets poraneous Hawker’s Beechjetderivative,the and wasoffered athalfthepriceofcontem- outfitted withmodernizedinteriorandavionics, The Beechjet’s airframeisstripped,re-engined, more valueoutofitsagingBeechjet400Afleet. ter companyFlightOptions’efforts tosqueeze 2007 by Nextant Aerospace, resulted from sis- aircraft. The Nextant 400XT/XTi, introduced in residual, andenhanceresale, valuesofretiring fleet operators—andOEMs—taketoprotect “The decisioneverybody’s makingis, ‘I

VistaJet Textron Aviation’s CitationXEliteprogram, Not allprograms are sosuccessful,and Aftermarket upgradeprograms are onepath -

N-registered, all-Bombardier Global Singapore-based ZettaJet operates an its aircraft average three years oryounger. single XRSissixyears old,andtherest of have onaverage service, its eightyears of are nearretirement; thefive Challenger850s itsaircraft ther plansfor Noneof thefleet. 7000, Moore said,decliningtodiscussfur ery positionsfor thein-development Global in thesameperiod. percent andpassengercountup20percent tomers upto120.Flightactivity was up23 contractualhourssoldtonew flight cus- of best quarterever, withtheaverage number reported that thesecondquarterwas its hours,ers buy and the company blocks of brands featured onboard. VistaJet custom- taurants and partnerships with luxury service, catering menus from renowned res- “Buyers gettobefussy.” dham, president ofConklin&deDecker. 5,000-hour [Citation]Xs,”saidDavidWyn- hour airplane,youhaveapickof4,000-and though there’s a business case for a 12,000- petition from youngerCitationXs.“Even but sales have been weak. One reason: com - 2013 andtheprogram waslaunchedin2014, airplane,” hesaid. aboard an X Elite. “I thought it was a brand-new for a factory-new X+. Kioussis recalls stumbling panels. Price:$6.5million,versus$23.5million Honeywell’s Primus Elite flight deck with LCD Cockpit upgradesincludeBFGoodrichseatsand net accessviaGogoBusinessAviation Wi-Fi. touchscreen cabincontrols, USBportsandInter tures custominteriorandnewseats,CMS, optional winglets.Therefurbished cabinfea- enhancing theflightcontrol systemsandadding through themandatory15,000-hourinterval, all maintenanceandinspectionrequirements includes strippingtheairframe,completing AFTERMARKET REFURBISHMENT VistaJet owner ThomasFlohrhasdeliv-

Said DennisRousseau,founder andpres­ The firstXEliteupgradewascompletedin Zetta Jet - -

- by year-end. conversion andisexpectedto enterservice completed 400XPRiscurrently undergoing petitor toNextant’s 400XTi.Thefirstfactory Beechjet 400A/Hawker400XP, adirect com- remanufactured, re-engined offering forthe FAA approval forthe400XPRprogram, a tember subsidiaryBeechcraftreceived final for CitationExcels.More dramatically, inSep- owners andhasdevelopedasimilarprogram refurb market.Itoffers XEliteforindividual almost twiceasmanymodelsoutthere.” choices has gone up 75 percent; there are In the last 15 years, the number of aircraft much theairplane;it’s thechoicesofairplanes. a trough floor.” speed, versusafive-footeight-inchcabinwith program, withasix-footcabinandnicecruise 300 with6,000or7,000hoursonanengine ing onthemarket.NowIcanbuyaChallenger “They didnotfactorincompetingaircraft com- ident ofthevaluationserviceAircraftPost, XLSs. GamaAviation operates theWheels 50 King Air 350isand15 Citation Excel/ grams providing accesstoagrowing of fleet Wheels Up offers two membership pro unique interior, Cassidy said. competitors, every ZettaGlobalhasa of sidy said.Unlike the“cookiecutter” fleets bardier about Global7000purchases, Cas- next year, andisindiscussionwithBom numbering seven, tohave 16by theendof aging director. Zettaexpects now itsfleet, said Geoffery Cassidy, co-founder andman many between flights theU.S. andAsia, enables ittooffer theshortestroute for ability—that is, thepolarregions—which magnetic unreli throughflight areas of market. ZettaJet hasFAA approval for floating tailored fleet, tothetrans-Pacific Up-owned aircraft. Textron isn’t steppingawayfrom the Added Kioussis,“Theproblem isnotso This year Wheels Upintroduced shuttle

Wheels Up n - - - -

© 2016 ©AIN 2016 Publications. AIN Publications. All© 2016 Rights AllAIN Reserved.Rights Publications. Reserved. For Reprints All ForRights Reprints go Reserved. to www.ainonline.com go to Forwww.ainonline.com Reprints go to www.ainonline.com Source: JetNet AIN BusinessAIN Aviation Analysis Fleet Total uniqueshareholders Total PC-12/47 PC-12/45 PC-12 NG Nextant 400XT Hawker 400XP Total uniqueshareholders Total Phenom 300 Hawker 800XPi Hawker 800XP Hawker 750 Hawker 400XP Global 6000 G550 Falcon 7X Falcon 2000EXEASy Falcon 2000 Citation XLS Challenger 350 Total uniqueshareholders Total Phenom 300 Hawker 900XP Hawker 800XPi Hawker 800XP Global 6000 Global 5000 GV GIV-SP G550 G450 G400 Falcon 2000EXEASy Falcon 2000 Citation XLS Citation X Citation Sovereign Citation Latitude Citation Excel Citation Encore+ Citation Encore Challenger 650 Challenger 350 Total uniqueshareholders Total Phenom 300 Legacy 500 Legacy 450 Learjet 75 Learjet 45XR Learjet 40XR G450 Challenger 605 Challenger 604 Challenger 350 Challenger 300 Total uniqueshareholders Total Phenom 300 Phenom 100 Learjet 45XR King Air350i King Air350 Citation CJ2+ Beechjet 400A Aircraft i No. Aircraft Fractional Fleet Composition 419 38 15 19 87 10 15 10 22 47 13 10 10 14 29 58 40 44 37 13 15 12 30 66 29 35 10 13 1 2 1 1 8 1 6 8 1 1 4 9 9 9 3 6 1 5 5 5 3 2 3 6 5 2 2 1 8 1 1 3 2 4 1 Executive AirShare NetJets Europe Average Age(Years) PlaneSense NetJets Flexjet 11.0 18.0 11.0 11.0 10.0 10.1 16.0 10.4 12.5 15.3 15.7 10.0 12.0 10.8 15.0 10.3 14.0 13.7 12.8 14.0 15.0 13.0 7.9 3.3 9.6 4.0 1.0 8.4 2.3 0.2 1.8 1.0 1.0 1.3 9.0 9.2 2.0 6.5 1.4 6.0 7.0 2.7 7.0 7.3 9.7 3.8 7.6 1.3 9.7 9.1 9.1 2.3 2.9 9.9 9.6 9.0 0.9 1.1 6.3 8.9 5.9 3.4 6.2 No. Shareholders 2,264 2,667 329 439 542 164 340 120 220 514 108 194 466 117 408 152 415 112 256 614 252 169 38 32 26 75 27 73 39 35 66 78 23 15 98 27 46 75 65 92 60 42 13 31 47 37 14 24 10 84 54 76 25 0 0 0 0 3 8 0 3 1 8 4 1 6 1 2 No. AircraftinUse 247.00 28.44 11.06 17.38 38.13 12.13 41.63 10.22 38.25 15.47 35.28 26.88 48.09 19.84 17.72 0.00 0.00 0.00 0.00 7.81 0.25 2.47 0.44 4.16 2.53 0.00 6.31 0.16 1.88 6.19 3.38 3.09 9.00 8.38 0.06 2.34 1.66 8.69 0.75 3.16 4.00 9.78 5.59 3.94 9.28 4.69 2.94 1.00 2.47 3.59 2.72 0.84 1.63 0.59 7.78 5.84 7.34 0.75 0.06 0.50 0.09 2.13 1.00 utive’s aircraft isunderfour years. lenger 604,theaverage Qatar Exec - age of delivered. Other thana14-year-old Chal G650/650ERs. Two G650ERshave been G500,G600,and 30 Gulfstreams—a mixof has placed orders for up to Globals andfour 600-seriesChallengers. adozen aircraft adozen includeshalf of Qatar-based airline, Qatar Airways. Its fleet Doha, Qatar Executive of isthecharterarm Dichter said. we think we canget there in24months,” business—a $100 million-plusbusiness—and operators. “We believe itwill be ninefigure members, vetted usingliftfrom anetwork of Deck, an in-house charter brokerage for annual $200millionby revenue year-end. of company expects tohave 3,000membersand Wheels Upmemberships are ontarget, andthe private aviation.” cited about usingandexperiencing bring inyoung people, andtogetthemex- CEO Kenny Dichtercalls“achannelto ship program, “8760,” which founder and Also new, anintroductory level member “emptyleg” flights.with daily postingsof nations, andaHotFlightsfeature onitsapp, toandfromflights popularevents anddesti XOJET CHALLENGER300 Meanwhile, the company launched Flight Dichter saidgrowth plansfor itsfull-price

Qatar Executive - - -

© 2016 ©AIN 2016 Publications. AIN Publications. All Rights All Reserved.Rights Reserved. For Reprints For Reprints go to www.ainonline.com go to www.ainonline.com to JetNet. Annually, that works outto about the transactions) for the period, according 21,000 totalsales(roughly 2.5percent of O&O charterfleets, compared tosome aircraft were sold from the fractional and an even comparative lower activity. level of owned market transactions, salesshow fleet bizav Andcompared fleet. tooverall pre thesemodelsinthe thetotalnumber of of 8.11 percent and 3.72 percent, respectively, ate, according toJetNet, accountfor just ness jetandfive turboprop typestheyoper models currently inoperation. The44busi- represent these arelatively small portionof the preowned market? What retirements impactdofleet have on Preowned Market Impact Aftermarket Fleet Sales: “last mile” service. to offer eachother’s transatlantic customers beAir andJetSuite announcedpartnering to $25.66millioninrevenue). InMay, Glo 24 percent thisyear over 2015(from $20.75 tangs, andanticipates seeingrevenue climb 14Citation Mus of with itsO&Ofleet tria’s GlobeAirhasfound success inEurope thebusiness,On thesmallcabin Aus sideof - BusinessAIN Aviation Analysis Fleet VISTAJET BOMBARDIERGLOBAL From 2005 through 2015, a total of 542 From 542 2005through 2015,atotalof Aircraft inthefractional andO&Ofleets

Globe Air

- - - - ue gyrations similartotheG200s:“There ing afew modelslikely toencounterval- valuation specialistAircraftPost,of not- Dennis Rousseau, founder and president discount from ‘mainstream’ aircraft,” said al aircraft are selling at about a35-percent creating agreater differential.”instead of The higher-time pullsthelower-time down, play out in difficult and supply-rich markets. ued against thehighertimedoesn’t always lower-time airplanes willbepositively val sales, “Unfortunately, theideathat the MesingerJet Sales, whichof handlesfleet order.fleet a replaced by Challenger350s, aspartof ny’s 25Gulfstream G200s, which were being Bombardier’s takingthefractional compa - 50Phenom300s, and itspurchase of part of sidiary, 20 Citation Ultras from NetJets as Embraer’s accepting,through itsEECsub- suchdeals include sale.fleet Examples of have a taken aircraft intrade aspartof That hasbeenmostapparent when OEMs impact onresidual values canbedramatic. product lineto make way for anew model, all markets. newer model.That volume can’t sway over as they age and are replaced by a new or actions. Theseare usually soldoneat atime some2,100retail trans- salesoutof 54 fleet “We canmake astatement that fraction- Said Jay Mesinger, president andCEO anentire But when operators disposeof - - ble” inacceptingalowball price. About20 quickly. Butno one wants tobeirresponsi how longittakes tosell;otherswant tosell sellers care more about the dollars than Durham based brokerage Jetcraft. “Some Raleigh- said ChadAnderson,president of more commonly theywork through brokers. handlethesales themselves,Some fleets but trade-ins aren’t cut betterdealsif included. ever sinking values, operators and fleet can given today’s sluggish aftermarket and facturers are reluctant toactassalesagents trade-ins favor; have fallenoutof manu to cometheaftermarket viaOEMs, as nificant depreciation of theaircraft.”nificant depreciation of models, that lost value can add to “a sig When it’s timetosurrender ashare insuch Conklin & de Decker.ham, president of life” inretaining value, saidDavid Wynd- in someprograms “don’t have alongshelf and cabin systems that boost share prices premium-priced brandedinteriors nize fleet tional shareowners themselves needtorecog shareowners to whom they answer. But frac are O&Os, which don’t have individual more concernedabout residual values than meet changingdemandsorbusiness strategy. reducing or eliminating an aircraft model to icy, othersmay bereshaping and theirfleets at relatively pol- young ages asamatter of aircraft run out.Someoperators disposeof said. Butmany aircraft fleet are farfrom theaircraft,”owner-operator of Anderson inventory, “we mightbesellingtothelast works andwhat doesn’t.” through theexchange andlearnedwhat exchangers,” saidAnderson.“They’ve been operators,enced fleet but experienced fleet over time. “Now you have notonly experi- latory issuesare addressed.” from amechanical perspective, andallregu- right andmake sure theaircraft are attractive tant,” Anderson said. Sellers need to “price you positionaircraft inthemarket isimpor resent fleet-owned aircraft. “How which totaled $1.7billion lastyear, rep Jetcraft’sto 25percent of transactions, that dototheGlobal6000market?” over every itsfleet five years. What does hours,” Rousseau said.“VistaJet turns Falcon 2000swith10-to12,000 are alotof “Everybody wants value,” tomaximize Today, aircraft though,fleet are lesslikely As agroup, fractional operators are some fleet Given the age and vintage of The disposalprocess hasgottensmoother o ------

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