The Jet Set
CEOs and Entrepreneurs Queue Up To Buy the Ultimate in Private UltraLong- Distance Jet Travel
From the Print Edition:
Ernest Hemingway, Jul/Aug 99
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For Boeing and Airbus, the most obvious attribute of their models is their size. A cabin that might seem cramped for the approximately 120 passengers those aircraft were originally designed to carry is downright spacious for the handful of people likely to fly on the corporate/VIP versions of the aircraft.
The A319CJ has the larger cabin of the two, with a length of 78 feet, width of 12 feet, 2 inches, height of 7 feet, 3.1 inches, and volume of 7,000 cubic feet. The BBJ is 14 inches longer, but has about two inches less head room and it is about six inches narrower.
Airbus's Leahy offers one benefit that his competitors can't match. Because the company's corporate jet is based on a certified commercial aircraft--the A319--it can be easily configured for airline use should the operator want to sell or lease the aircraft. The Boeing Business Jet can't, because its design incorporates features from two different models of the 737. The other two jets are not airliners.
That flexibility gives the A319CJ a "higher residual value," allowing operators to ride out the "boom and bust in the corporate jet market," according to Leahy. The aircraft's cockpit is identical to the ones used in the full line of Airbus jetliners.
While the enormous cabin of each manufacturer's aircraft is its main selling point, it also causes Boeskov's aforementioned "perception problem." Having one of these four ultralong-range--and pricey--jets in the company holdings doesn't always go over well with stockholders.
That's one of the reasons for the popularity in recent years of fractional ownership plans. These plans typically offer customers one-eighth, one-quarter and one-half shares in business aircraft. The fractional ownership company maintains the jets, having them on-call when needed.
Executive Jet International developed the fractional ownership market in 1986, and it is the market leader today with a customer base of about 1,200. The Woodbridge, New Jersey-based company was recently purchased by Warren Buffett's Berkshire Hathaway Inc. for $725 million. Executive Jet has purchased GVs and BBJs for its portfolio, and Boeing has said that nine of the initial aircraft to roll off its assembly line in Washington state will go to Executive Jet.
"We think the Boeing is a perfect fractional airplane," says Executive Jet chairman and CEO Richard Santulli. "There are governments and rich people that are going to want to buy a Boeing. But most people don't travel long range and with a lot of people."
For those people, as well as Fortune 200 companies that need an aircraft for fewer than 200 hours per year, it makes economic sense to buy a share in a business jet rather than the entire aircraft. At Executive Jet, a one-quarter share in a BBJ costs about $11 million. For that, the customer gets on-demand usage of the aircraft--request the jet, and it's ready within six hours--for 200 hours a year.
The success of the NetJets program--the name of Executive Jet's fractional ownership plan--has prompted others to get into the business.
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