What Santulli accomplished
By Jeff Burger - October 1, 2009
Richard T. Santulli, who resigned in August after nearly a quarter century as chairman of NetJets, had never been in an airplane–had in fact never been outside
the New York/New Jersey/Connecticut metropolitan area– until he turned 21 and spent his honeymoon in Puerto Rico. Santulli, who was born in Brooklyn, N.Y., in 1944, has said that his goal while growing up was to someday
earn $25,000 a year.
It’s safe to say he beat that target some time ago.
After receiving a master’s degree from New York’s Polytechnic University and teaching math for a few years, Santulli joined Shell Oil and then, in 1969, Goldman Sachs, where he became involved with aircraft financing. He spent 11 years there and rose to the position of vice president of investment banking, but it wasn’t until after he left Goldman that he really started to make his mark.
That’s when Santulli pondered buying an airplane but concluded that doing so wouldn’t make financial sense, given his 150-hours-a-year usage. So he got three friends to agree to go in with him on a purchase, which made it more feasible.
“That was the good news,” he recalled in an interview on the TV show Beyond the Boardroom with Jonathan Tisch. “The bad news was…the first fellow said, ‘Well, I want to fly Tuesdays and Thursdays.’ So the other guy said, ‘Well, then I’ll use it on Wednesdays and Fridays.’ I raised my hand and said, ‘Then we have no deal.’ The only reason to have a private jet was to use it when you needed to use it. So I actually left that meeting saying, “If there were a way to keep the economics of that–kind of like time sharing–but guarantee availability, I’d have something. Because there were a lot of people that were a lot more successful than I was, that had a lot more money than I did, that I’d be able to sell this to.”
Santulli bought a company called Executive Jet Aviation and began selling fractional jet shares in 1986. The business struggled in its early days, but it had become so successful by 1998 that Warren Buffett–who’d then been a customer for three years–decided to buy the firm for $725 million. “Rich Santulli is a great salesman,” he reportedly said, “and I like what he sells.”
Lots of other people apparently agreed. Today, the company (which was renamed NetJets in 2002) operates more than 800 aircraft in 140 countries and dispatches more than 300,000 flights per year.
What Santulli did was to completely rewrite the rules of the game for business jet travelers. Until NetJets came along, you basically had two choices for getting involved in private aviation. You could buy an aircraft, which meant spending a whole lot of money and then making sure a flight department or management company would maintain the airplane, hire pilots and crew, make repairs and so on. Or you could charter, which relieved you of these responsibilities and required you to pay only for your flights but didn’t offer the advantages of ownership, including tax benefits and quick, easy access to a particular aircraft model.
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