NetJets 2009 danger ahead ?

[navoff]

I think you will hear very differently very soon. I have not flown for nearly a month and a half!!

[SpainFly]

Bravo ? H400 ?

[On standby]

On the last 2 tours I have flown First flights for new NJE customers, who have left other programmes to come to NJE.

[FormerFlake]

Card or Share?

[On standby]

I'm not sure but I think 1 was a new share.

[SpainFly]

If you think about a time like 5-6 Years ago. There was a very little market. And there were much less People flying Biz-Jets.

Maybe NetJets just started something like a straw-fire in business aviation. They attracted people to fly on a business Plane or buy a card/share which were not used to travel like this.

I mean, what did all these Customers do before NetJets ? I think they did not travel in BizJets.

Don't you think there was something like a "Gold-Rush" in business aviation ? A boosted demand started by a lot of advertisement, that was never for real ?

What makes you guys so sure that demand will come up again (after recession/depression) ?

[CargoOne]

SpainFly

At least this wasn't any kind of dotcom or real estate bubble. Bizjet growth was paid by customers and customers were never promised they will become rich because of that.

There were several factors which made bizjet market to grow:
- more and more rich people, try to google how many new millioneers and billioneers were appearing each year;
- stupid security things at airports
- overcrowded terminals
- dramatic fall in service level on intra-european flights
- smoking ban

Currently we have a problem only with the first factor, while other are still there. So if wouldn't take too long to get back to normal level... 1-2 years.

[Holyman]

cargoone,

the rich people seem to be having 50% less money after the financial crises, the times of million dollar bonuses seem far away. many governments have stepped in, and they will not allow tax payers money to be used to give the happy few big bonuses at the end of the year.

in short, making easy money is over. the coming period will show the real entrepeneurs, the make something people would like to buy. these makers are by nature more cautious, because the are not used to fast money like the bankmanagers.

also, netjets did a nice job, but now clients walk away cause we are expensive, and there are or coming some good competitors on the market. (taxi vlj company's, jet republic, tag, jet aviation etc)

so the big mogul netjets is having multiple problems me thinks....how to turn the ship ? it seems a marketing stunt from the republic but they are offering nespresso and data link for blackberry......if someone takes this and combines it with a "cheap" aircraft like the phenom 100 or 300 they will turn out to be winners......

netjets is to far down the road to change quickly.....

[chrispler]

Quo vadis? Buisness Aviation - what will come & what is necessary

I fully agree with you CargoOne and SpainFly. I think the revolution started already mid 2007.

Our industry must wake up, as it will never occur exactly like in the past.
CargoOne you are right, the fundamentals changed and I am completely in line with your arguments you provided so far:

There were several factors which made bizjet market to grow:
- more and more rich people, try to google how many new millioneers and billioneers were appearing each year;
- stupid security things at airports
- overcrowded terminals
- dramatic fall in service level on intra-european flights
- smoking ban

additonal facts /thoughts from myside:

* 9/11, SARS, Bird Flew, Oilcrisis, etc. favoured BizAv growth
* Increasing speed of globalisation favoured BizAv, that speed is turned into zero speed. Eco development cooled off, and this is in line with the latest traffic figures for BizAv (compare FAA, Eurocontrol)
* Even Premium Airliner travel dropped significantly (compare IATA)
* Buisiness Traveller completely changed their travel behaviour and pattern
* millioneers and billioneers which gained ground by leveraged high risk BizModels are heavily impacted by the ongoing “Deleveraging” of the industry and capital market -à major cause, why traffic deteriorated in the last since mid 2008

We must wake up and prepare

* We must forget sounds from EBACE 08 irritating, that the BizAv industry will not be impacted by the eco crisis.
* OEMs backlog will not ride the recession, all will be heavily impacted- some more, some less (already proven by Textron, HBC)
* Demand will come back, but different as we all experienced in the past

What will come – what is necessary

* I think the speed of industry consolidation will increase (Yes! Agree nothing new, but who will have the power? Lean towards big players? Yes, but screen for innovative companies with a solid BM)
* The time of “Nice Weather Captains” is definitely over, leadership with profile is necessary
* Innovative concepts for operations, marketing, and strategy are needed more than ever
* Look for and recruit innovative staff and combine their thoughts with your industry knowledge
* Nothing said to get rid off experienced staff, but change managment is needed, honestly change managment
* The demand will come back – that`s sure; but for sure in a different structure and we all need to be prepared for it. Everybody (!!!!!!) must recognize this.
* The politic associations like EBAA must react, but they need to be restructured and prepared for the future more effective
* There are tendencies, which I really recommend to all of you think about – it`s worth reading and thinking (some good perspectives)


Quote :
The various players in Business Aviation, be it Charter Operators, Airports, FBOs, Route Planners or Service Providers should now consider finding ways of cooperating.
Working together means a joint effort to get a significant share of the pie.Collaboration can mean different things to different minds. If there is still such a thing as a hatchet in business, it better be buried fast. Fast changing business environments and markets movements need smart concepts, not hatchets.

How Small Can Beat Big?
Never Underestimate Small Companies in Big Groups

By banding small companies and their services together, the synergy will enable them to develop and provide a range of better complementing products and services for their respective clients. Unification can increase the potential for more market share and higher profits. By working together, rather than competing against one another, small united companies can acquire the clout of a big company without losing their individuality. By placing cooperation ahead of competition, smaller companies are then able to take on larger projects that they couldn't have undertaken on their own.
Banding together means forming a “virtual company.” It does not mean merging or take-over; however it does not exclude such steps in the future. Time and experience will prove whether a joint venture or remaining separate will have the best advantages. The virtual company, the way I see it, will be the emerging "coop-company" with the best potential for future success in our field of business.

None Of Us Are Us Good As All Of Us
The virtual company may be a temporary network of independent companies who join forces quickly to exploit fast-changing opportunities and, linked by information technology, share skills, costs, and access to one another's “markets”. Together, they could accomplish what they couldn’t have done alone. It may mean restructuring the way the companies work to improving monetary results and increasing efficiency. It may mean reorganizing ways to conduct research and development together. It may mean jointly exploring for tax advantages. The virtual company does not need a central visible office in a high traffic area, nor does it need a hierarchy. An organizational chart will show how emphasized tasks are handled from different locations.

Strength Of Going Virtual - Uniqueness Of Each Individual
The intention is not to wipe out all differences, but to unite with all differences intact. Member companies need to look for a central focal point that would give them the strength of a big company. Yet it leaves each member-company’s dedicated management and individual skills in place. There will be more flexibility, added skills, and availability. It will be much easier to pull together a crew or task force to handle larger and more complicated projects or tough deadlines. Unlike major companies that have large, vertical teams all under one roof, the operating teams of the virtual company will be kept small and flexible.

Since small companies mainly consist of dedicated senior professionals or highly talented and skilled pioneers, they can work faster and more efficiently on their own without supervisors, secretaries and clerical workers.
1 + 1 = 3; All Are Greater Than The Sum Of Its Parts
The virtual company has significant advantages and joint resources for its members:

1. Enhance product-features, lines and services.
2. Access to each others expertise, information and advice.
3. New available creativity, resources, talents, skills and innovation.
4. Avoid isolation, collaboration in new developments
5. Precisely selecting and pulling the right resources together on the spur of the moment.
6. Sharing joint project workloads
7. Assigning specific types of work to specialized members.
8. More opportunities for new ideas, where before time and funding were not available to the individual member.
9. Joint implementation of more complex projects.
10. Cooperation accomplished more than working alone.
11. Overhead can be kept significantly lower.
12. Working faster and more cost-effectively.
13. More powerful and influential image.
14. Enhance individual reputation.
15. Opportunities to acquire investments or find more financial support.
16. Acquiring support services for mutual benefit, which individually none could afford.
17. Extend projects in more geographical areas or adjust to local or regional needs.

New Culture In A Changing Environment

The virtual company will not change the world nor anyone's own little world It will adjust to a changing environment in the most practical way.
Who understands that synergy, not domination, will lead to sustainable progress and success, will fit in the virtual company culture. Any candidates joining the virtual company are obligated to incorporate this new culture; otherwise they cannot be accepted. A prospective member who is looking for anything easy in the virtual company is not an appropriate party! There is no easy way to get in the market, no easy way up the ladder of success, no easy way to get out of a problem.

Food For Investors
The growth of a company may be explosive; a downfall may also come with a bang. Either way makes investors nervous. A company with little exposure has a slim chance to receive funding from major investors. On the other hand, the virtual company can be instrumental in acquiring funding and let its members benefit from it while the investors will enjoy:

1. the spread and thus lowered risk
2. the joint potential for success

Being independent entities, the individual members of the virtual company can still have own funding, while others may opt for investment. One member of the virtual company could also become an investor in the other. After the initial cooperation experience of learning to know, appreciate, and trust each other there will be a base for deepening relationships.

Joining Forces Means Becoming A Major Force
The virtual company relationship will open doors to success and growth. Standing strong united has the potential to sell as much service as possible in the shortest possible time. Looking at the global marketplace, competing companies are finding ways to join forces and be successful individually. If there is a desire and a will to work together, all else is just a matter of logistics to be worked out.

Source:http://www.newslett.co.uk/bluesky/articles/teaming_up.htm

I know very bad news and progonis: But we all need to wake about and recognize, that it is time for change – NOW! I love the BizAv and my heart beats for it. Looking back, we can be proud of for what we have achieved in the last three years.


Comments are more than welcome of all of you

With my best regards

Chrispler

[CargoOne]

Holyman

the rich people seem to be having 50% less money after the financial crises

Don't worry. If someone needs to switch from steaks to carrots because of 50% lower pay it is quite different from situation where someone now have only 1 billon instead of 2 (and anyway 90%+ of that money are virtual, not hard cash).

[gordon field]

Chrispler, a great and very comprehensive reply.

I entirely agree with you on most points particularly on OEMs and EBACE, they live in a fantasy world! The OEMs are just order takers and the salesmen get 50% of their commission when they have 'sold' an aircraft. The management count the aircraft as 'sold' when in fact they have received an 'order' for an aircraft but never really qualify the buyer at the outset and on a regular basis as to whether or not they have the ability to purchase the aircraft. Now they are stuck with inventory.

There are many Dealers, brokers and individuals that have placed forward orders for jets and turboprops and when asked to complete payment a large number will 'walk away' from the deal, lose their deposits and just disappear.

If you have cash now you can get a substantial discount and very early delivery on most light jets. If you want one with a few hours then there are yards of them laid up and not flying. All prices are 'make offer.'

As for the the charter companies co-operating I hope that there will be some rationisation among the more mature members but historically many leave it until too late. The others will probably default on fuel, airport charges, rent or finance payment and cease trading.

There is going to be a 'Big Chill' with lack of customers and lack of funding as many of the finance deals are no longer available due to lack of profits to prime the pump.

The growth with new users of the light biz jet were typically either ex owners who flew less than 100 hr pa (not cost effective) or often spent upwards of €50,000+ on annual travel. After 9/11 with the delays on scheduled flights many were tempted by personal jet travel.

It made sense whilst their companies were making 'profit' as most travel could be offset against company profits. A no brainer, rather than give 40% to the taxman why not fly to your villa in Spain or visit some 'clients' in an exotic location. Now the 'profits' have disappeared and a large number of the users will not renew their agreements.

Watch this space, the 'good guys' that have not overtraded or have already started to downsize will probably survive, we shall see.

[chrispler]

Netjets deferred Cessna deliveries for 2009

By the third quarter, Citation orders dropped significantly, Pelton said. Cancellations and deferrals seriously affected plans for 2009 production growth.
Fractional ownership company NetJets, a major Cessna customer, deferred a "significant number" of planes scheduled for delivery this year, Pelton said.
Cessna could lay off more than 1,000 | Aviation | Kansas.com

[SpainFly]

Heard some rumours that NetJets Europe started to talk about laying of pilots ?

Can anyone confirm ?

[Kelly Hopper]

Spainfly
I know NJE are very good at fecking their pilots but I think you meant laying off pilots???

[Edgar Kilkenny]

No confirmed word to date of definite lay offs, but as with all companies at the moment, there is a limit as to how much a company can take before it has to take drastic action.

Thankfully, we are not at that stage yet.

However, it is disappointing that crew bonuses have been cancelled, but this was the correct decision for two reasons:

there was no clear and safe way to measure individual's performances

we are in difficult times and a bonus is probably not financially prudent

There has been no mention of managers or directors having their bonuses cancelled.

[navoff]

Dear Edgar

I sincerely hope I was wrong with my earlier posts, the news does seem little more positive! However, I still will not have flown for 3 months!! Off to Farnborough for me next.

[Damianik]

Who said they cancelled the bonuses? the CEO said that 2008 was positive so they were giving bonuses to those eligible...

maybe bad english?

D

[south coast]

I think it is reference to PIB, not CPS (which is not a bonus, it is profit sharing) with a statement like:

'there was no clear and safe way to measure individual's performances'