If you only think of NetJets for fractional ownership, think again
(Updated October 2019) NetJets has
5 two aircraft-specific Marquis Jet cards covering the 4 major jet size categories featuring the Citation Excel/XLS and Gulfstream GIV/450 starting at $209,000. There are 20 more variations you can create via its Combo Card. Then, there’s the X-Country Card, and its Elite Card, introduced in 2017. And, the 60-minute minimums for SuperMid and Large Jets work well if you have short trips with large groups of up to 14 passengers. There are also new Elite Cards, including introduced earlier this year the Phenom 300 and Citation Sovereign.
NetJets History and Ownership
NetJets tracks its history in private aviation to 1963 although it wasn’t until Richard Santulli applied the fractional ownership model to private jets in the mid-80s that the company rose to fame, reaching even loftier heights when in 1998 it was acquired by Warren Buffett through Berkshire Hathaway. Berkshire’s market cap as of May 2018 is $487 billion and it ranked 2nd in the 2017 Fortune 500 list.
In 2001 newly formed Marquis Jet Partners struck a deal to buy shares in NetJets’ fleet and then resell them in increments of 25 hours. The minimum commitment for a fractional share is 50 hours of flight time per year and the minimum contract period is three years, so the Marquis Jet Card gave access to NetJets’ fleet without the long-term commitment. Its cards are valid between 18-24 months. In 2010 NetJets acquired Marquis Jet Partners, so it is only in the past decade that NetJets began selling jet cards directly. NetJets, with over 700 private jets (It doesn’t offer turboprops) based between the U.S. and Europe, is by far the largest fleet operator in the world.
Fun Fact: When Uber was pitching its concept the company said its goal was “to be the NetJets of car service,” somewhat ironic since so many app driven private jet charter brokers say their goal is “to be the Uber of private jets.”
Flying jet card owners account for just over 20% of flight hours, according to Patrick Gallagher, executive vice president, sales and marketing, and while that number remains fairly static he says fractional share sales are growing faster than cards, a positive sign for the economy. In terms of cards, Gallagher says the programs serves four purposes:
– It provides new customers a chance to experience NetJets before jumping into fractional shares, which span 50 to 400 hours per year of flying.
– It makes NetJets accessible to consumers who need less than 50 hours or don’t want a long-term commitment.
– It enables fractional owners to buy extra hours in any given year when they need supplemental lift.
– For fractional owners who find they no longer need 50 hours, it enables them to stay with NetJets when their share ends.
The Jet Cards
NetJets sells its programs in blocks of 25 and 50 hours and an eighth. There are
five two aircraft specific Marquis Jet cards covering Light (Citation Excel/XLS), Midsize (Citation Sovereign), SuperMid (Citation X) and Large Jets ( Dassault Falcon 2000/2000EX or Gulfstream IV/450).
The Combo Card allows you to split your hours between any two aircraft so if you need to fly from New York to Florida and Europe, you can split your time between a Large Jet and a Light Jet. Gallagher notes customers split cards for a single destination where in certain cases an aircraft that can make the trip going eastbound with tailwinds would require a stop on the westbound journey. Put a different way, the Combo Card provides 20 different combinations.
Another innovative card is the X-Country Card. For flights over 3.5 hours, you get an 8-seat SuperMid while for shorter flights you are on a 7-seat Citation Excel/XLS. The latest product is the NetJets Elite Card, which is on the Citation Excel/XLS (and new in 2019 Citation Sovereign and Phenom 300), however, unlike other cards, its lead time for booking flights is 24 hours instead of 10 hours. The quoted price includes the 7.5% Federal Excise Tax (FET) and there are no fuel surcharges.
“Quality is remembered long after price is forgotten,” said fashion designer Aldo Gucci in 1938, and to that Gallagher makes the case that safety is expensive. He says, “First and foremost you know whose aircraft you are flying (with NetJets). We have an enviable safety record. We hire the best. We pay the best.”
As an example, he notes, NetJets pilots average 10,500 flight hours and every NetJets pilot is type-rated in the aircraft they fly and he or she flies only that type so they aren’t switching aircraft types. Training includes two times per year in state-of-the-art Flight Safety simulators. Having pilots dedicated to a single aircraft type is not particularly efficient, but the idea is the pilots critically know their aircraft type inside and out. It’s not uncommon that in air crash investigations one or both pilots have limited experience in the aircraft type they were flying at the time of the accident.
NetJets also uses licensed dispatchers, and no aircraft can take off without the OK from both captain and dispatcher. Still on safety, the company is using big data to hone training even further. The entire NetJets fleet has flight data recorders and any variances are noted so the company can identify and areas where more training is needed. In addition to a robust security program led by former FBI agents, Gallagher says is investing large amounts of money in cybersecurity.
NetJets Key Selling Points
– Guaranteed availability, although it varies on Peak Days
– Fixed one-way pricing
– 10 hours call out for Marquis Jet Cards; Elite Cards are 24 hours
– If you want the same cabin configuration and design each time so you literally will think you’re flying on the same aircraft each time (it varies on the charter broker and managed fleet jet cards), you’ll like NetJets.
– We also like that on all its cards the segment minimum is only 60 minutes, even for SuperMid and Large jets. If you need a solution for 8-14 people on 60-120 minute flights, NetJets works well.
– We like the NetJets primary service area (no ferry fees) for Midsize includes the entire Caribbean, Mexico and Central America, the SuperMid gets you to Hawaii, and for Large Jets, you can go transatlantic
– With PSAs in North America and Europe, NetJets is a good program if you fly on both sides of the pond.
– NetJets operations and safety standards are top league, including requirements for its pilots
– Deicing is included
– There’s $300-$400 million liability and risk insurance
– All aircraft have WiFi
– There is no Peak Day surcharge for Marquis Jet Cards; Elite Cards carry a 25%
– If the price is your main driver, chances are you won’t end up on NetJets, although if you are flying to Mexico, the Caribbean and Canada, the fact that NetJets doesn’t have surcharges may be an equalizer
– In the second year, some programs don’t guarantee availability on Peak Days
– We’re not fans of fuel surcharges – they vary monthly – although Gallagher says the Elite Card, which includes fuel surcharges and FET, is racking up strong sales since its 2017 launch.
– There are no roundtrip discounts
– There are no card programs around the Global 5000/6000, so the GIV/450 with a range of up 5,000 miles or just under 10 hours (varying by loads, wind and weather, etc.) is as far as you can go nonstop on a jet card.
– Downgrades are guaranteed; Upgrades aren’t
– The knock-on buying a jet card from a fractional share provider is the perception that they prioritize owners, however, since NetJets wants to use cardholders as an entry point for future fractional owners, one could argue the reverse as well.
Final Thoughts on NetJets
We would like to see NetJets publish more data about its programs, including pricing, rules and fees. We do appreciate their generosity in sharing quite a bit more than what’s on their website with us. We still think there are customers NetJets is losing because some folks want to be able to get a holistic view before putting themselves into the sales funnel.
There’s no escrow program, however, if Berkshire Hathaway runs into problems, chances are we’ll all have other issues to worry about.
The X-Country and Combo Card, both with 60-minute minimums, plus the generous PSAs, will help fliers who feel finding the right solution is like a jigsaw puzzle with missing pieces.
I used to work for a NetJets owner and have visited their Ops Center in Columbus. It’s impressive, sort of like the Control Room at NASA. My boss’s PA loved the service from her owner’s rep, although, yes, there were times they loaded salted instead of unsalted macadamia nuts. Even at 5-star hotels, there are going to be service fails, so it would be wrong to expect perfection. At the end of the day, unless you are looking for a turboprop or need a jet with 10 + hours of nonstop capability, NetJets is going to fit into the consideration set for many jet card buyers who are looking for a premium product.