Wasatch Phantom

With the price of oil north of $130.00 a barrel I'm curious as to how the fractional jet ownership segment is doing.

I know very little about that whole industry, but as I understand it, a client pays a hefty initial fee and then an hourly fee when they actually fly. I also think that, depending on the price of jet fuel, there is a surcharge to the hourly fee.

For the "Really Wealthy" it's probably an annoyance, but won't change their travel plans. However, I think there is a fairly significant number of clients who were "stretching things" financially when they bought in. That is, they liked the status of "owning a private jet", and the lifestyle that goes along with it, but realistically couldn't afford it.

With the economy in recession, the credit markets tight, and oil more expensive than ever, these folks must be curtailing their travel plans big time. Or, perhaps they aren't using "their jet" and are flying commercially with what Leona Helmsley called "the little people".

Globaldriver53

As a matter of fact Corporate Aviation is doing better than ever. Many types of corporate jets are selling so well that there is a 3 years backlog on certain large models. Training slots for initial and type ratings are very difficult to obtain. Our flying has picked up a lot in the past year. The very wealthy are not feeling the pain it seems.

Flyby1206

I think most fractional timeshares require the owners to sign a 5-year contract, which means they cant really end it because they decide the economy is slowing. I also think that most of the fractional owners are very wealthy and the word 'recession' is a foreign concept. Those who might not be very wealthy and still fractional owners have analyzed the cost of the fractional share, and for their business/personal usage it makes more financial sense to do that fractional route.

cs757200

most those people are making money on $130/ barrel oil

captainkudzu

I think that you might see new sales drop off a little for a while until people see what the economy is going to do. I don't see many people choosing to fly the airlines over fractional unless there is a powerful financial incentive to do so.

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BoardPilot

I would guess a lot of these people are able to write off their travels as business expense, since they can (at least in theory) be much more productive flying with a fractional as opposed to the airlines. Thus the increased surcharges and what ever don't affect them so much.

dzlpwr

As far as the very large fractional, it's a club. It's one step above owning their own jet.

For these people, airlining is disgusting (well for me too, but I have no choice).

With the reduction of airline service per day, connections will get longer and it will take longer to go almost anywhere a connection is required. Fraction sales will be strong. Time vs money. If you have the money you can buy the time.

If your buying a $350,000 car, do you think you'll talk them down because of $5/gal gas?

HalinTexas

Those businesses, not individuals, that are using the fractionals for travel, that find their business losing money because of a depressed or flat economy could try and dump or fail to renew their contracts. BK courts could help many of these people out of contracts.

Secondly, the backorder for aircraft includes growth prospects for the future. The frac. companies might have to revise their own growth plans at that point. However, it still remains a pretty good business model.

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Chris99

In addition to all that's been posted, the owners actually are saving money on gas due to the deals the fractionals get with FBOs by buying in bulk. If the owner had their own plane, they would still have to fuel it at full cost...

GlasssPilot

I don't know of any Frac that passes that savings on to the owner. Why would they? The owner is not entitled to a fuel savings the company gets by bringing hundreds of planes to a particular FBO. The owner ownes a share of 1 plane.

Besides, the difference is how fracs help pay for the gas on the dead legs.