When talking about the private aviation sector, it’s impossible to speak about it without mentioning NetJets®—often considered as the company that started it all. And for a good reason: with over 50 years of experience in the industry, it’s been the first mover in many of its milestones, from democratizing private aviation to bringing in the concept of shared ownership.
For such an innovative organization, then, one would wonder how it had grown to this point. That said, we take a look into the history, services, and benefits that NetJets has to offer.
Before becoming the NetJets that everyone knows and loves, the company has been through a good number of iterations and acquisitions. To make things easier, here’s a quick timeline of the program’s highlights to help familiarize yourself with it:
- 1964. Executive Jet Aviation (EJA), NetJets’ predecessor, is founded by General Curtis LeMay and General Paul Tibbets of the US Air Force, along with Corpsman Bruce Sundlun of the US Army. It becomes one of the first aircraft management companies in the world.
- Eventually, Air Force Brigadier General Dick Lassiter became the company’s president and chairman, while Arthur Godfrey and James Stewart would serve as the founding partners.
- 1984. EJA is purchased by Richard Santulli, who would eventually turn it into the NetJets program using data collected by the previous heads. With prior experience leasing commercial airplanes and helicopters in both Goldman Sachs and RTS Capital Services, Santulli brings in the concept of fractional ownership with the program in the midst of the charter and full ownership markets.
- 1995. Warren Buffet, Chairman and CEO of Berkshire Hathaway, becomes a member of NetJets. The early 90s see an economic recession, and the idea of fractional ownership begins to gain traction.
- 1998. After suffering near-bankruptcy due to the plummeting private flight market, the company nonetheless still stands, being the largest operator in the industry as per Buffet.
- Buffet, impressed by NetJets’ operation, decided to purchase the company, while Santulli continues as Chairman and CEO until 2009.
- 2009. David Sokol is installed as the new CEO of NetJets after Santulli stepped down, and is tasked with turning around the company after the company loses millions of dollars pretax due to economic conditions.
- Reuters notes that Sokol reduced headcount and sold old planes to cut costs.
- 2010. Marquis Jet Partners, known for providing 25-hour jet cards that sell flight time on NetJets aircraft, is acquired by NetJets.
Indeed, with a string of strategic services, turnarounds, and acquisitions, it’s no wonder that NetJets continues to remain strong despite all the financial difficulties that had plagued it prior. Now, however, the question is this: how good are NetJets’ services?
The NetJets Fractional Ownership Model
To answer the question of the usefulness and efficiency of NetJets’ services, we must first turn to the program that started it all. A revolutionary model back in the day, fractional ownership allows its customers to purchase a “share” of a fleet, which entitles them to the convenience and benefits such ownership offers. The term “fractional ownership” is explanatory in itself—you own a fraction of a fleet.
But with that being said, how does mainly a fraction of a fleet—as opposed to having one’s airplane or taking chartered flights—give you an advantage over other modes of private aviation? We break it down for you below:
- Both private jet ownership and charters have inherent limitations: for private jet ownership, it’s a high initial capital and high fixed costs. For chartered flights, it’s the inability to guarantee flights and quality consistency.
- Fractional ownership, on the other hand, manages to address both of these problems through the following:
- Since you own a fraction of the fleet, that means you share the expense with other fractional owners. The capital cost and fixed cost, then, are effectively lowered.
- Aside from this, you already have a ready fleet of differently sized airplanes at your disposal, which means that you don’t have to go through the expensive endeavor of building a the from scratch.
- Aside from this, owning a fraction of the fleet means that you have more control over what aircraft you’ll be using, your flight schedule, and your flying preferences. Effectively, you’ll get the benefits of private ownership at a lesser cost, all the while steering clear of other costly expenses that a jet owner would otherwise incur, such as maintenance or staff and crew salaries.
- By nature, fractional ownership requires a lot of people onboard, bringing in another bonus—private ownership for all.
- Since you own a fraction of the fleet, that means you share the expense with other fractional owners. The capital cost and fixed cost, then, are effectively lowered.
All this said, how can you apply for NetJets’ fractional ownership program? Here are a few quick steps to get you started:
- Decide on how large a fraction you want to get. Each fraction corresponds to the number of flight hours you’ll be using, with the smallest share—around 1/16 of the fleet—amounting to 50 hours of flight time. The largest percentage equates to 400 flight hours.
- Choose how long you’ll be willing to commit to the program. NetJets offers 2-3 year contracts, often depending on the size of the aircraft. You will get the option to resell your share at the end of the commitment.
- Pay the acquisition fee. Fortunately, you’ll only need to pay this once per contract. The capital price ranges from $550,000.00 to $4.4 million depending on how large the share is. If the upfront price seems too high, NetJets also offers other finance and leasing options, where you can give 20% of the value initially and pay in installments afterward.
The Benefits and Drawbacks of The NetJets Fractional Ownership Model
Indeed, upon reviewing NetJets’ history and services, it’s no wonder why the company continues to be one of the top private aviation companies in the world. However, for the discerning buyer, an overall review might not suffice completely—it’s also important to examine both the advantages and disadvantages of each, and whether they’re up to one’s preferences. That said, let’s retake a look at NetJets’ fractional ownership model and see whether it still holds up:
- Less expensive than common ownership. As mentioned before, because you own only a fraction of the fleet, you’ll be able to instantly access various aircraft to your mission’s liking, without the costly endeavor of building the fleet yourself.
- Not limited to one aircraft type for a mission. Because you already have a section of the fleet at your feet, that means you don’t have to worry about rescheduling or changing aircraft in case any unprecedented events change your mission, whether it’s people backing out or the changing nature of your trip.
- More control of your schedule. With a fleet as sizeable as NetJets’ is, guaranteed availability is not just a possibility, but an absolute. You can bid goodbye to the scheduling gymnastics that comes with charters and full ownership.
- Not as flexible. Despite the many opportunities to customize that NetJets’ fractional ownership program has to offer, the flexibility it provides has its limitations, as you’ll need to tie yourself down for a few years to avail of the program’s benefits and services.
- Low resell value on shares after the contract is finished. As we had mentioned before, at the end of the deal you have the option to resell your stock which can help salvage a bit of the amount you spent on it. However, if you made use of it regularly, you can expect to sell it for less than initially purchased for.
- Will still need to pay extra charges not included in the rate. Another drawback is that despite its uniform prices, the cost of a jet card—particularly with the basic program—excludes certain fees, like fuel, additional service surcharges, and international crew fees.
Indeed, in some aspects, NetJets’ fractional ownership program has the inclusions to back the hefty price. A good part of its appeal stems largely from the convenience and easy customizability it can entail. However, for others—particularly those who don’t travel very often—it may be an expensive endeavor that may do more harm than good.
When NetJets Fractional Aircraft Ownership Makes Sense vs. On-Demand Charter
All this in mind, how does NetJets’ fractional ownership model fares against chartered flights? For the most part, it really depends on your travel style and needs. To break things down to something a little bit easier to understand, we’re going to divide them into the following aspects: travel frequency, flexibility, and price.
- Fractional Ownership: If you’re the type who spends 50-400 hours traveling per year whether for leisure or for work, this is the best mode for you.
- On-Demand Charter: On the other hand, if you don’t travel as much—around 25 hours or less a year—chartered flights might be a better option for you.
- Fractional Ownership: If you’re looking for something more stable and are able to commit to long-term agreements, then fractional ownership’s 2-3 year commitment might be the choice for you. Particularly helpful if you also travel a lot and need guaranteed availability.
- On-Demand Charter: On the other hand, if you’re a sporadic traveler and 2-3 years might be too long to commit to, then you might be better suited to the flexibility of the on-demand charter. Note however that you might have a little more trouble with ensuring the availability of your flights, especially on a last-minute booking.
- Fractional Ownership: Finally, if you’ve got a relatively large budget and high utilization, then fractional ownership might provide the perfect intersection of both aspects for you.
- On-Demand Charter: On the other hand, if you’ve got a tight budget, do not frequently fly out, and desire more flexibility when it comes to your flying arrangements, then on-demand charter might be the option for you.
The NetJets Marquis Jet Card and its Costs
At a glance, NetJets’ fractional ownership seems to be the optimal choice out of the various private aviation options. But while it does have a lot to offer, it nonetheless has its share of limitations. For one, while it is still cheaper than full ownership or chartered flights over time, it nevertheless is still costly, mainly if you either use it too often or not at all. For another, like any other mode of ownership, you might run into some problems with the long-term commitment, such as limited flight flexibility or ability to opt out. We discuss this at length here.
Fortunately, with the acquisition of Marquis Jet in 2010, NetJets had a service that could put those woes to rest: the Marquis Jet Card. (It is important to note that NetJets had kept the Marquis name for the program until recently, with the launch of the NetJets Elite card.)
Indeed, the jet card program had alleviated a good portion of the troubles that plagued the fractional ownership setup, in part thanks to the flexibility that it entails. Instead of consigning yourself to a 3-year contract that may incur penalties when terminated early, or left with a share with a low resell value, you instead are free to have up to 25 hours of flight time, with the additional benefit of purchasing extra hours when needed.
As for the particulars of NetJets’ jet card program, we talked about them at length here. However, here are some salient points:
- Aircraft-dependent. One thing to consider before getting a jet card with NetJets is that its price largely depends on the size of the aircraft. Fortunately, the program offers other options that can make help you utilize your membership further, such as its Combo Card option and the NetJets Elite package.
- Uniform and inclusive pricing. Fortunately, while relatively high, the Marquis Jet Card package nonetheless keeps quite uniform, and at some points is even inclusive of other fees such as ferry charges. Nonetheless, the basic Marquis Jet card pricing is as follows:
- Light jets: up to $172,000.00
- Mid-size jets: up to $210,000.00
- Heavy jets: up to $363,900.00
What Exactly is a Private Jet Card, and when Does It Make Sense to Purchase?
The jet card program then seems like the perfect halfway point between fractional ownership and on-demand charters. But what really is a private jet card, and why purchase one if you could avail of other options? In this segment, we’ll explore this distinction briefly, and talk about when it’d be best to purchase it over different private aviation modes.
In a nutshell, the jet card is a type of shared aviation program that makes use of a debit card with purchased flight hours. However, some jet card providers might opt to price it according to aircraft size (like NetJets does) and translate it into flight hours after.
Often, these jet cards come in 25-hour increments, like the Marquis Jet Card. But depending on your provider and type of card, this can go beyond the 25-hour limit. They can also take on other names and be marketed as the following:
If you’re then interested in these kinds of arrangements, like with the Marquis Jet card, there are a few things you need to consider and look into before boarding the jet card train:
- Are the hours allotted enough for your travel frequency? As mentioned earlier, jet cards usually operate under a certain number of hour increments before you need to renew and pay all over again. That said, consider how much you really travel in a year—does it go over 25 hours, or very well under? If this is the situation that you find yourself in, you might want to reconsider other private aviation options.
- Does the rate-per-hour cost more than if you’d fly charter? Beyond looking into the hour increments, another vital thing to consider is whether the price point. Consider how much you have to pay per flight: is it way above your budget? Would your payments be better utilized if you fly by charter or take up fractional ownership?
- Do you need the asset for tax purposes? Owning a depreciating asset can allow you a tax deduction, which gives you the double benefit of being able to fly at your own pace while reducing expenses. Jet cards, unfortunately, do not have the same advantage as you do not technically own the asset. That said, if the tax deduction is what you’re looking for, then you’d probably be better off looking for other options.
NetJets Alternatives for The Savvy Traveler
Indeed, after taking a closer look into NetJets’ history and services, it isn’t hard to see why it currently stands as one of the most iconic and well-loved of private aviation companies—a legacy it will no doubt continue to keep. However, that doesn’t mean that NetJets is everyone’s cup of tea. Some, for instance, might find it a little too pricey for their taste, particularly the company’s jet card program. Others might find the requirements of certain services a little too tedious for their liking. As discussed, the limitations of NetJets’ offerings are as follows:
- Fractional Ownership: Limited flexibility when it comes to the contract, the price is not entirely inclusive of extra charges, can be expensive at lower rates of utilization, resell price is greatly depreciated at higher rates of utilization
- Marquis Jet Card: Expensive at higher rates of utilization, basic program isn’t as inclusive of extra charges, can be liable to paying above the aircraft type needed at certain missions, not as flexible when it comes to reserving aircraft type
With that said, what would be other alternatives to this for the travel-savvy? In a nutshell, most of the problems with both fractional ownership and NetJets’ jet card program mostly stem from the high price that comes with the following:
- the upfront cost,
- maintaining payments at lower utilization (for fractional ownership),
- going over the allotted hours (for jet cards),
- paying for aircraft either too large or too small for your missions.
If you find yourself in the same situation, you might opt for something that pays on a per-trip basis, which allows you to freely choose your aircraft type. One such option is the on-demand charter, which operates on such tenets and effectively answers to these common limitations:
- Say goodbye to paying a high upfront cost for membership, all you need to do is pay for the hours you’ll be flying—and with a good enough provider, the payments can also include additional costs a typical flight would incur.
- On-demand charters are perfect for those who infrequently fly, as all you need to do is pay per flight. Worry not about going over or under any designated flight hours as it is primarily up to you.
- And with chartered flights, you don’t have to worry about being restricted to a particular aircraft type—choosing the type of aircraft you’ll be boarding comes along with booking a flight.
Is NetJets the Best Option for You?
With all this said, the question that remains now is this: is NetJets really the best option for you? And it can be if the options and price are right. We’ve discussed above both its fractional ownership and Marquis Jet Card offerings, each of which has their own sets of pros and cons. However, in the end, it really boils down to how much you’re willing to spend.
In a previous article, we had talked about the cost differences between fractional ownership arrangements and charters using a Gulfstream G450 as a comparison point. As on-demand charters lack the need for capital, fixed cost, and residual cost, it beats out fractional ownership price-wise, despite the latter being cheaper in variable cost ($6,500.00/hour for fractional, $7,000.00/hour for charter).
And if we were to compare the Marquis Jet Card program price-wise to a standard charter—particularly in the heavy jet category, as we made use of the G450 in the previous example—operational expense would equate to a whopping $14,556.00 per hour, as opposed to a charter’s $7,000.00/hour. And while this may include necessary fuel charges, there are still some additional fees you’ll have to pay on top of this, such as FET and fuel surcharge.
That being said, if you’re willing to cough up the money for the expenses needed for both fractional and Marquis, you might find yourself rewarded with the benefits NetJets has to offer. However, on a more practical note, on-demand charters are your best bet. And as mentioned earlier, with the right operator, you might even find yourself with a quality experience that can rival that of private ownership.
For the most part, quality often begets a price becoming of it, as each dollar covers every effort made to ensure that you have a world-class product or service. But in a time where economic fortunes are ever-changing, it’s becoming increasingly important to find more affordable options that do not compromise quality. While NetJets and its offerings may have the services and the price to boot, it can be harder to afford for the everyday middleman, which might be a disadvantage in a world where aviation has quickly become a need. But fortunately, on-demand charters are there to fill in that need, such as Jettly.
If you have any questions or need help making an informed decision for your individual needs, don’t hesitate to reach out to the team of flight success managers at Jettly.com. You can call us directly 24 hours a day 365 days a year at 1-866-448-2358, or you can submit a flight request online.
Disclaimer: Jettly is in no way affiliated with NetJets. NetJets is a registered trademark of NetJets and Berkshire Hathaway.