Flexjet Takes on Netjets

PRIVATE JETS Flexjet Takes On NetJets By Mark Huber NetJets have been countering this problem with alleging multiple violations of the huge orders for new aircraft, and by expanding Railway Labor Act, which also Flexjet’s LEXJET, THE SECOND-LARGEST FRAC their leasing—rather than buying—offers. But for governs airline labor relations. large-cabin tional jet program, is taking on indus- those still seeking the tax advantages of a frac- By December, the pilots at both Gulfstream try leader NetJets, nearly four times tional share, Silvestro says, Flexjet is trying hard Flexjet and Flight Options had G450. its size. It’s doing so by aggressively to get the price right at buy-in, while making voted to join the Teamsters. Since Fexpanding its fleet with newer aircraft—180 air- sure the aircraft have the latest equipment and then, Flexjet and the union have been engaged in craft by year’s end, up from 154 in April—and by fresh interiors, and are properly maintained, so increasingly acrimonious litigation. The company adding more large-cabin aircraft with swank in- resale values hold up. He also claims that his Red states it was disappointed by the vote, but looks teriors capable of flying long international hauls. Label crews make Flexjet’s service more person- forward to continuing to work with the pilots Red Label, a new premium service, guarantees al and responsive than the competition’s. “who are so vital to our success.” customers aircraft that are five years old or new- Which is where the industry’s labor problems Flexjet’s next flight mission is to become the er, as well as dedicated crews. come in. In fat years, fractional operations make go-to provider for wealthy international travel- Last year, Flexjet placed a $2.4 billion order modest returns; in a recession, they hemorrhage ers. In the next three to four years, Silvestro for 20 of Aerion’s AS2 supersonic business jets, cash. So every one in the wants to double Flexjet’s fleet of large- cabin which halve trans-Atlantic crossing times. The fractional business has Flexjet is the Gulfstream aircraft, which existing customers first fractional firm to go the supersonic route, cut labor costs, and that can tap via a new Global Access lease program. it quickly distinguished itself from NetJets. In has occasionally affected first fractional Retired Datatel co-founder Tom Davidson leas- total, Flexjet has placed orders for 207 new jets customer service. firm to order es a share in a Flexjet-run Embraer Phenom and options that could ultimately secure the firm Flexjet is part of 300 light jet, but occasionally uses Global Ac- a 445-aircraft fleet for $8 billion. “We want to Cleveland-based Direc- supersonic jets. cess when he needs to intercept his catamaran make sure we are flying the youngest fleet in the tional Aviation Capital, a at its various international ports of call. David- sky,” says CEO Michael Silvestro. private holding company with $1.5 billion in rev- son moved to Flexjet in 2014, partly because he Will its luxury strategy work? The problem enues in 2015. It acquired Flexjet from jet manu- liked the more-personal service that a smaller with fractional-ownership programs: You buy a facturer Bombardier for $195 million in December organization provides. “It’s all about execution. share in a “new” jet and often get an older mod- 2013, but declined to provide Penta with Flexjet’s The staff is tremendously responsive,” he says. el that has been flown triple the average num- recent financial data. Directional has many other Can Directional really run Flexjet as a luxury ber of annual hours of a typically owned private aviation- related businesses, including a lower-end brand? So far, so good, with 20% of Flexjet’s cus- jet. We boarded a fractional Gulfstream a few sister fractional company, Flight Options, and tomers already signed up for the higher-priced years ago, and the ratty interior looked as if it aircraft- maintenance firm Constant Aviation. Red Label program. That’s an impressive result, had been besieged by a pack of hunting dogs. Directional is trying to bring Flight Options’ considering it’s not yet a year old. n Flexjet’s fleet services 2,100 customers; you lower-cost labor structure to Flexjet, and that’s may own a quarter share, but your airplane is not easily done. Early last year, a group of fired MARK HUBER reviews aircraft for Business Jet used by 12.8 other customers. Both Flexjet and Flexjet pilots filed suit against the company, Traveler. Courtesy of Flexjet June 20, 2016 Barron’s PENTA 19.

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