Business Jet operator profits...or lack thereof
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Business Jet operator profits...or lack thereof
I'm sure others are puzzled too, but when we talking about boom years, high utilizations, and a time where the internet and technology are really helping with deadheads, how are we still seeing the same meager operator profits?
How do these guys survive and stay in business for all this time?
Are they just masked in depreciation or is the fact that most aircraft under charter are not owned by the operators mean that hourly rates are set by people who aren't out there to make a profit, just get a tax break and offset their acquisition cost?
What do you guys think?
How do these guys survive and stay in business for all this time?
Are they just masked in depreciation or is the fact that most aircraft under charter are not owned by the operators mean that hourly rates are set by people who aren't out there to make a profit, just get a tax break and offset their acquisition cost?
What do you guys think?
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Look, this is an emotion industry not a business:
I have seen your questions before about loadfactors etc... this is not a business and no there is no money to be made... The only companies around that have been there for a number of years are management companies... Forget it
- Guy with too much money from, let's say real estate, starts flying private
- Guy likes flying private buys own jet
- Guy listens to his pilot and rents out the plane as the rates on the market are "great" according to his pilot
- Guy starts an AOC company first or buys one to be able to lease out his aircraft and hey lets buy another aircraft!
- Two years later: no profits but a lot of hassle: sells company
I have seen your questions before about loadfactors etc... this is not a business and no there is no money to be made... The only companies around that have been there for a number of years are management companies... Forget it
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Netjets, as the biggest example,does not make it's money selling shares, but reselling airplanes.
They buy them by the hundred and pay half price. The owner buying a share is being charged based on the full price. After a few years when this owner wants to get rid of his share, Netjets pays him a part of the "marketprice". (so the owner payed for the depreciation)Then they sell the airplane with a big profit.
E.g. jet x new: 7 million, (bought for 3,5 million), after a few years sold to third party for 4,5 million, profit 1 million dollar and the share owner payed all the other cost.....
If more owners knew about it, I am not so sure if would accept that "fake " new price of an airplane they bought a share from.........
They buy them by the hundred and pay half price. The owner buying a share is being charged based on the full price. After a few years when this owner wants to get rid of his share, Netjets pays him a part of the "marketprice". (so the owner payed for the depreciation)Then they sell the airplane with a big profit.
E.g. jet x new: 7 million, (bought for 3,5 million), after a few years sold to third party for 4,5 million, profit 1 million dollar and the share owner payed all the other cost.....
If more owners knew about it, I am not so sure if would accept that "fake " new price of an airplane they bought a share from.........
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I agree with HP on the netjets theory but I guess the immediate question that comes next is why are they still to make a profit in Europe after 10 years? and is the much promised 'next year' when they make money actually going to be this year??
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Well, one thing is for sure, JAROPS wiped out a lot of small companies that were just making enough to survive.
Next sure thing (apart from a cessna...) that NetJets is lobbying at EASA/EU very hard to put more restrictions on non-AOC (company) operations. Make it more difficult and restrictive and we will ahve more business at NJE.
Another thing that I´m sure of is that a most operators are just to stupid to see the signs on the wall: if they keep on on their own, fighting th next small operator instead of unite, they will be driven out of the market. The big ones will win.
"Guy listens to his pilot and rents out the plane as the rates on the market are "great" according to his pilot"
Yeah, those damn pilots...what do they know... http://www.pprune.org/forums/images/.../eusa_wall.gif
Next sure thing (apart from a cessna...) that NetJets is lobbying at EASA/EU very hard to put more restrictions on non-AOC (company) operations. Make it more difficult and restrictive and we will ahve more business at NJE.
Another thing that I´m sure of is that a most operators are just to stupid to see the signs on the wall: if they keep on on their own, fighting th next small operator instead of unite, they will be driven out of the market. The big ones will win.
"Guy listens to his pilot and rents out the plane as the rates on the market are "great" according to his pilot"
Yeah, those damn pilots...what do they know... http://www.pprune.org/forums/images/.../eusa_wall.gif
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As so astutely observed by all, this is not a "business" but an extremely expensive club. I believe that personal transportation improves in a direct relationship to your wealth from foot to bike to bus to taxi to car to train to plane to yacht to private jet.
The desire to amortise those costs by renting out your aircraft probably means you weren't quite wealthy enough to buy it in the first place. Most people who amass the sort of money needed to even consider buying and operating a jet did not achieve that status by being stupid. Even the most cursory audit would reveal that this was the easiest way to become a millionaire provided you started as a billionaire!
There are, amazingly, still folk who think they can come up with some new "formula" for making money out of corporate aviation...exempt Mr. Santulli, no one has cracked the code yet of ownership+profit.
The desire to amortise those costs by renting out your aircraft probably means you weren't quite wealthy enough to buy it in the first place. Most people who amass the sort of money needed to even consider buying and operating a jet did not achieve that status by being stupid. Even the most cursory audit would reveal that this was the easiest way to become a millionaire provided you started as a billionaire!
There are, amazingly, still folk who think they can come up with some new "formula" for making money out of corporate aviation...exempt Mr. Santulli, no one has cracked the code yet of ownership+profit.
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Slightly on a tangent but can anyone give me an idea of the netjets turnover in europe? would be a great help for a piece of work currently on the go.
have tried searches etc here and search engines etc but cannot turn up firm data.
Thanks
have tried searches etc here and search engines etc but cannot turn up firm data.
Thanks
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Do you really think that those numbers are readily available ? Come on ! This market is a marketing market, you are selling a product, a package, the alchemy of the formula is highly unstable and difficult to process. the solution is only stable for a set amount of time then you have to twick it a little to make it work, no vision, no future.
50 % discount do not exist, this is UNREALISTIC numbers, but I can tell you that you are FAR from it!!
We all wished a 50 % discount....
50 % discount do not exist, this is UNREALISTIC numbers, but I can tell you that you are FAR from it!!
We all wished a 50 % discount....
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Netjets, as the biggest example,does not make it's money selling shares, but reselling airplanes.
They buy them by the hundred and pay half price. The owner buying a share is being charged based on the full price. After a few years when this owner wants to get rid of his share, Netjets pays him a part of the "marketprice". (so the owner payed for the depreciation)Then they sell the airplane with a big profit.
E.g. jet x new: 7 million, (bought for 3,5 million), after a few years sold to third party for 4,5 million, profit 1 million dollar and the share owner payed all the other cost.....
If more owners knew about it, I am not so sure if would accept that "fake " new price of an airplane they bought a share from.........
Reply
They buy them by the hundred and pay half price. The owner buying a share is being charged based on the full price. After a few years when this owner wants to get rid of his share, Netjets pays him a part of the "marketprice". (so the owner payed for the depreciation)Then they sell the airplane with a big profit.
E.g. jet x new: 7 million, (bought for 3,5 million), after a few years sold to third party for 4,5 million, profit 1 million dollar and the share owner payed all the other cost.....
If more owners knew about it, I am not so sure if would accept that "fake " new price of an airplane they bought a share from.........
Reply
- Prospects are told NJ makes money on the initial sale, buy them cheap sell them at market rate
- There is a percentage in the contract that is charged on the sales price as it is with FlexJet/Flight Options/Citation Shares etc.
- The sales price is the actual market price based on third party information and regardless of the fact if they can off load it or not.
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Very interesting discussion and as I’m running a small aviation business here my view.
Mixing it all together everybody is right and everybody is writing b**s**t in the next sentence.
Look, this is an emotion industryRIGHT as we all love to fly
not a business: WRONG lots of people make a living with it
Guy with too much money from, let's say real estate, starts flying private
Envious ? RIGHT that this guy is flying
I have seen your questions before (not my questions) about loadfactors etc... this is not a business and no there is no money to be made...
WRONG ; again we have proof that lots of people make a living with it and from it
The only companies around that have been there for a number of years are management companies... maybe RIGHT than he should start a management company
Forget it WHYbecause you fly for NJE or the airline
--------
Not joining the pro and cons and how or if fractionals make money. not my business They have a big market share and pushed the industry for new jets, and got a lot of first timers into business Jet. Thanks for that.
--------
Well, one thing is for sure, JAROPS wiped out a lot of small companies that were just making enough to survive.
RIGHT just to much overhead to run a small business
Next sure thing (apart from a cessna...) that NetJets is lobbying at EASA/EU very hard to put more restrictions on non-AOC (company) operations. Make it more difficult and restrictive and we will ahve more business at NJE.
WRONG NJE does not need to do this, the rules are tailored to the airlines and the GA gets caught in the requirements that do not fit.
Another thing that I´m sure of is that a most operators are just to stupid to see the signs on the wall: if they keep on on their own, fighting the next small operator instead of unite, they will be driven out of the market.
WRONG not to stupid, they are all individualists otherwise they would not have started in the first place.
an extremely expensive club. I believe that personal transportation improves in a direct relationship to your wealth from foot to bike to bus to taxi to car to train to plane to yacht to private jet.
RIGHT and the top is the private jet
The desire to amortise those costs by renting out your aircraft probably means you weren't quite wealthy enough to buy it in the first place.
WRONG most business people think business even for a hobby, and I’m sure many would rent out their car if it were practical and buy a second one and ....
Wasn’t this how Mr. Avis started J
Most people who amass the sort of money needed to even consider buying and operating a jet did not achieve that status by being stupid. Even the most cursory audit would reveal that this was the easiest way to become a millionaire provided you started as a billionaire!
WRONG they are billionaires and stay that way, some exception to the rule maybe.
There are, amazingly, still folk who think they can come up with some new "formula" for making money out of corporate aviation...exempt Mr. Santulli, no one has cracked the code yet of ownership+profit.
RIGHT ownership breaks your neck if the AOC company has to carry the full investment cost of a new jet. But Mr. Santulli idea is actually managing aircraft not owning them.
--------
my conclusion:
BizAv charter companies are making profit but to become rich one should invest somewhere else. A lot of investors buy an aircraft and run it as a (side) business, often it is a hobby, for status, for their private transport who cares, in the end better than giving it all to the tax poeple where we all know it is wasted.
And most important it give me a great and interesting job, otherwise I would have to fly the bus the whole day long.
Last; we own one jet and the others are managed and more are coming.
Mixing it all together everybody is right and everybody is writing b**s**t in the next sentence.
Look, this is an emotion industryRIGHT as we all love to fly
not a business: WRONG lots of people make a living with it
Guy with too much money from, let's say real estate, starts flying private
Envious ? RIGHT that this guy is flying
- Guy likes flying private buys own jet
- Guy listens to his pilot and rents out the plane as the rates on the market are "great" according to his pilot
- Guy starts an AOC company first or buys one to be able to lease out his aircraft and hey lets buy another aircraft!
I have seen your questions before (not my questions) about loadfactors etc... this is not a business and no there is no money to be made...
WRONG ; again we have proof that lots of people make a living with it and from it
The only companies around that have been there for a number of years are management companies... maybe RIGHT than he should start a management company
Forget it WHYbecause you fly for NJE or the airline
--------
Not joining the pro and cons and how or if fractionals make money. not my business They have a big market share and pushed the industry for new jets, and got a lot of first timers into business Jet. Thanks for that.
--------
Well, one thing is for sure, JAROPS wiped out a lot of small companies that were just making enough to survive.
RIGHT just to much overhead to run a small business
Next sure thing (apart from a cessna...) that NetJets is lobbying at EASA/EU very hard to put more restrictions on non-AOC (company) operations. Make it more difficult and restrictive and we will ahve more business at NJE.
WRONG NJE does not need to do this, the rules are tailored to the airlines and the GA gets caught in the requirements that do not fit.
Another thing that I´m sure of is that a most operators are just to stupid to see the signs on the wall: if they keep on on their own, fighting the next small operator instead of unite, they will be driven out of the market.
WRONG not to stupid, they are all individualists otherwise they would not have started in the first place.
an extremely expensive club. I believe that personal transportation improves in a direct relationship to your wealth from foot to bike to bus to taxi to car to train to plane to yacht to private jet.
RIGHT and the top is the private jet
The desire to amortise those costs by renting out your aircraft probably means you weren't quite wealthy enough to buy it in the first place.
WRONG most business people think business even for a hobby, and I’m sure many would rent out their car if it were practical and buy a second one and ....
Wasn’t this how Mr. Avis started J
Most people who amass the sort of money needed to even consider buying and operating a jet did not achieve that status by being stupid. Even the most cursory audit would reveal that this was the easiest way to become a millionaire provided you started as a billionaire!
WRONG they are billionaires and stay that way, some exception to the rule maybe.
There are, amazingly, still folk who think they can come up with some new "formula" for making money out of corporate aviation...exempt Mr. Santulli, no one has cracked the code yet of ownership+profit.
RIGHT ownership breaks your neck if the AOC company has to carry the full investment cost of a new jet. But Mr. Santulli idea is actually managing aircraft not owning them.
--------
my conclusion:
BizAv charter companies are making profit but to become rich one should invest somewhere else. A lot of investors buy an aircraft and run it as a (side) business, often it is a hobby, for status, for their private transport who cares, in the end better than giving it all to the tax poeple where we all know it is wasted.
And most important it give me a great and interesting job, otherwise I would have to fly the bus the whole day long.
Last; we own one jet and the others are managed and more are coming.
