“Time is our most precious commodity, and there are conveniences that wealth brings to essentially get you more time. —retired Microsoft CEO Steve Ballmer, explaining why he commutes via private jet from his Seattle home to watch games of the Los Angeles Clippers, the basketball team he bought last year for $2 billion. ”
European firm to offer fractional shares and jet cards
Against a backdrop of tumbling stock markets and a huge banking crisis, Jet Republic has launched what it hopes will become a successful fractional and
jet card operation in Europe. The company has plans to buy up to 110 Bombardier Learjet 60XR aircraft. The first 25 of these midsize jets are under firm orders, with deliveries due to begin in October 2009.
In addition to selling shares in the Learjet 60XRs, Jet Republic plans to offer a card program for which an approved group of undisclosed operators will provide flights. Card packages will start at 25 hours and will be available for aircraft categories ranging from light jets such as the Cessna Citation Bravo to "global cabin" models including the Dassault Falcon 7X.
According to Jet Republic, fractional shares in the Learjet 60XR will start at one sixteenth, providing 50 flight hours per year. Share prices will be calculated on the basis of a $14.6 million price tag for a whole aircraft. Jet Republic's 110-aircraft deal is valued at $1.5 billion, which would give each jet a purchase price of just over $13.6 million. On top of the share price, owners will pay monthly management
fees of €2,000 ($2,940) and hourly occupied rates of €3,500 ($5,145). Leases will also be available at €2,000 per month, plus monthly management and hourly occupied charges. At the end of the five-year fractional contract, Jet Republic will offer to buy back an owner's share at a "fair market value" price to be set by independent experts. Clients will be allowed to leave the program after three years under the same terms.
If successful, Jet Republic could become the most direct challenge yet to NetJets' dominance of the European fractional ownership market. Asked what his company will offer that NetJets Europe doesn't provide, Jet Republic CEO Jonathan Breeze, who formerly worked in sales for NetJets Europe and Air Partner, pointed to his company's planned 24-hour global concierge support, BlackBerry connectivity, multilingual flight attendants, hot food, fresh espresso and iPod video systems. Jet Republic airplanes will be available with 24 hours' notice from share owners and charter customers. By comparison, NetJets Europe guarantees availability with just 12 hours' notice, but Breeze argued that having less than a 24-hour cut-off damages customer service and encourages customers to deliberately book flights late in the hope of getting an upgrade to larger aircraft.
Breeze claimed that Jet Republic's jet card would be better than Air Partners' JetCard in that it has no fuel or airport surcharges and because prices are fixed for the life of the contract and clients can leave the program at any stage, with all remaining credit being refundable. According to Air Partner, however, these benefits are all already available through its JetCard.
The block-charter card offered by Jet Republic-for which flights will be available ahead of the company receiving its own aircraft-will allow customers to carry forward flight hours not used within the period for which they were purchased. The company has also offered to refund payments for unused hours but has not specified under what terms this would be permitted.
Jet Republic claims to have debt-free financial backing from the European American Investment Bank AG (Euram Bank), a private investment bank in Austria, and a consortium of its clients. According to Breeze, Jet Republic's founders were turning away prospective investors when its launch capital was being finalized during the summer-apparently indicating that, despite the worsening squeeze on credit, some still view business aviation as an attractive investment opportunity.