NetJets, a subsidiary of Berkshire Hathaway, offers fractional ownership and rental of private jets, emphasizing high safety and reliability standards. Founded in 1964, the company has seen significant milestones, including the launch of its fractional ownership program and expansions into Europe and the Middle East. Recent financial challenges have led to workforce reductions and the cancellation of aircraft orders, prompting recommendations for downsizing and diversification into chartering options.

1. MSA 602 – Air Transportation Systems Final PresentationNetJets AviationInc.Can Bayrak# 1479227 bayrakc@my.erau.edu

2. Overview Introduction

3. Foundation

4. Milestones

5. Recent Activities

6. Fleet

7. Fast Facts

8. Advertisements

9. Conclusion

10. Recommendations

11. References2

12. IntroductionWhat is NetJets ?A subsidiary aviation company of Berkshire Hathaway that offers factional ownership and rental of private business jets.NetJets operate under FAR Part 135 Air Carrier Certificates.Philosophy:“We lead the industry because we scrupulously tend to every aspect of our business and hold ourselves to a higher standard. And we do it all for one reason - to provide owners with the ultimate in safety, security and reliability”.3

13. Foundation1964 – Executive Jet Aviation Era

14. Founded by Brigadier General O. F. Dick Lassiter.

15. Incorporated as the civilian version of the Air Force’s Special Air Mission Squadron.

16. The original board includes General Curtis LeMay, M.J. Rathbone, and actors Jimmy Stewart Arthur Godfrey.

17. Purchased the first 10 produced Lear Jet 23s.4

18. Milestones1984

19. Executive Jet, Inc. is purchased by Richard Santulli, a former Goldman Sachs principal.

20. 1986

21. At the National Business Aviation Association’s annual conference, a Fractional Ownership Program named ‘NetJets’ was introduced.

22. 1987

23. Executive Jet, Inc. launched its NetJets fractional ownership program after purchasing 8 new Citation S/IIs.5

24. Milestones1990

25. Executive Jet Aviation launches its Computerized Aviation Management System, a state-of-the-art, proprietary system which manages every facet of aircraft operations, including flight, pilot and maintenance scheduling.

26. 1995

27. Executive Jet Aviation International, Inc. (now NJI, Inc.), formed as a wholly owned subsidiary of Executive Jet, Inc., sells its first wide body Gulfstream aircraft in the Gulfstream Shares program.

28. 1996

29. The NetJets Europe program is launched.

30. 1997

31. The NetJets Middle East program is launched.6

32. Milestones1998

33. Executive Jet, Inc., is been purchased by Berkshire Hathaway (for $ 725 M) after three and a half years of Warren Buffet’s first NetJets share purchase.

34. Mr. Santulli and Mr. Buffet attended NBAA’s annual convention and announced the purchase of 161 new business jets – an order that was valued over $ 3 Billion and included Boeing Business Jets, Gulfstream Vs & IV-SPs, and Citation Sovereigns. 7

35. Milestones2000

36. Executive Jet Aviation inaugurates the world’s most advanced aviation complex, a 200,000-square-foot operational headquarters at Port Columbus International Airport.

37. 2001

38. Marquis Jet Partners, the first premium private jet card program provider, agreed NetJets on 25-hr block flight option sales.

39. 2002

40. Executive Jet Aviation, Inc. changed its name to NetJets Inc. due to companies primary focus, fractional ownership program.8

41. Recent ActivitiesNetJets agreed with Gulfstream on purchase of 40 more jets. Four G450s and four G500s each year from 2012 to 2016. [August ‘08]

42. The FAA and NetJets signed an agreement on NextGen. NetJets plans to run test programs in various parts in the U.S. by equipping some of the G550s and G600s with the required avionics. [January ‘09]

43. Egelsbach Airport, a general aviation field just south of Frankfurt International, was bought by NetJets. The field is considered key to improving access to German Bank Capital. [February ‘09]9

44. Recent ActivitiesNetJets Europe shed the equivalent of 300 flight crew positions, approximately %30 of its pilot workforce. [July ‘09]

45. NetJets guru Richard Santulli resigns. David Sokol, former head of a Berkshire Hathaway subsidiary MidAmerican Energy Holdings, assigned by Warren Buffet. [ August ‘09]

46. Headquarters moved to Columbus, OH from Woodbridge, NJ. [August ‘09]

47. NetJetsEurope continued to slash its workforce with ending another 100 employee’s contract, approximately %6 of its workforce [September ‘09] 10

48. Recent ActivitiesNetJets US cut %5 of its workforce by ending contracts of 300 employees. [October ‘09]

49. NetJets has cancelled the Hawker Beechcraftcontract of $712 Million for 2009. [February ‘10]

50. NetJets has cancelled 65 Dassault Falcon jet orders that it placed for delivery beyond 2014. [March ‘10]11

51. FleetCessna

52. Citation Bravo [18]

53. Citation V Ultra / Encore [70]

54. Citation XLS / EXCEL [145]

55. Citation Sovereign [44]

56. Citation X [70]

57. Hawker Beechcraft

58. 400 XP [59]

59. 750 [12]

60. 800 XP [79]

61. 900 XP [10]

62. 400012

63. FleetDassault Falcon

64. 2000 EX [55]

65. 7 X [2]

66. Gulfstream

67. G 200 [38]

68. G 450 / 400 [49]

69. G 550 / V [22]

70. Boeing Business Jet [2]13

71. Fast FactsWhat is Fractional Ownership ?

72. Purchasing a share, not the whole aircraft.

73. Shares start from 1/16 interest, the equivalent of 50hr of annual flight time.

74. If need less, Marquis Jet Card program sells 25hr blocks.

75. Availability of entire fleet.

76. What are the Costs ?

77. Acquisition Cost: One-time purchase of the asset

78. Monthly Management Fee: In-direct Operation Costs (Pilot wage, hangar costs, insurance, etc.)

79. Occupied Hourly Fee: Direct Operation Costs (Fuel, airport taxes, catering, etc.)14

80. Fast FactsNetJets Difference

81. Most Experienced: 285,000 Flights annually.

82. Market Leader: More companies and individuals use NetJets than all others combined.

83. Financial Strength: Berkshire Hathaway backing.

84. Largest Fleet: 840 Aircraft among 14 types.

85. Global Accessibility: more than 170 Countries.

86. Safety

87. Including pilots who have flown Air-Force-One.

88. Average 7500 hours of flight experience.15

89. Advertisements16

90. ConclusionNetJets enables the owner to select the desired time and destination of arrival and departure, requiring only an 8hr notice.

91. Amenities and services in-flight are selected regarding to owners interest.

92. NetJets is the biggest, the most luxurious, and the most experienced aviation company offering private jet service.

93. NetJets has a fleet size as big as the second biggest airline in the world. However, the crisis in 2009 had a major effect in NetJets’ financials. The company decided to downsize in fleet, cancelling the orders from various manufacturers.17

94. Recommendations Downsizing and reducing the aircraft type variety would be a good idea to minimize the costs, especially maintenance.

95. The biggest companies are often choosing the chartering option instead of fractional ownership. NetJets might make a radical move and offer chartering options next to fractional ownership. Therefore, instead of just focusing on individuals, NetJets might draw the companies’ attention as well.

96. Special offers for specific aircraft types, such as offering a lease option for a type of aircraft in the fleet would be beneficial. XOJet’s Citation X Lease option is an example to that.18

97. ReferencesAnselmo, J.. (2010, February). Hawker Posts $712 Million Loss As NetJets Orders Evaporate. Aviation Daily, 379(27), 3. Retrieved April 8, 2010, from ABI/INFORM Trade & Industry. (Document ID: 1969881961).Flottau, J.. (2009, February). NetJets Buys GA Airport Near Frankfurt, Germany. Aviation Daily, 375(21), 1. Retrieved April 8, 2010, from ABI/INFORM Trade & Industry. (Document ID: 1645326111).Garvey, W.. (March 15, 2010). Buffet: “I Failed You” with Netjets. Aviation Week & Space Technology. 45. Retrieved April 8, 2010, from ABI/INFORM Trade & Industry.Hughes, D. (2008, December 15). NetJets and NextGen. Aviation Week & Space Technology, , 38. NetJets Inc. (2010). NetJets fast facts. Columbus, OH: Author. Richard Newman. (15 August). NetJets headquarters moved out of New Jersey. McClatchy - Tribune Business News. Retrieved April 8, 2010, from ProQuest Newsstand. (Document ID: 1831274531).Sarsfield, K., (2009, July). Netjets Europe to Get Rid of Equivalent of 300 Pilot Jobs. Flight International. Retrieved April 8, 2010, from ABI/INFORM Trade & Industry.Sarsfield, K.. (2009, October). NetJets slashes jobs as chief resigns. Flight International, 176(5210), 24. Retrieved April 8, 2010, from ABI/INFORM Trade & Industry. (Document ID: 1904808311).Starry, C., & Bernstein, G., 2008. The Economics of Private Business Jet Travel. Business Economics, 43(4), 36-44. Retrieved April 8, 2010, from ABI/INFORM Global. (Document ID: 1632635051).Swickard, J. E.. (2008, August). NetJets Buys 40 More Gulfstream in $1.9 Billion Deal. Business & Commercial Aviation. 22. Retrieved April 8, 2010, from ABI/INFORM Trade & Industry.Swickard, J. E.. (2009, September). NetJets Founder Santulli Resigns. Business & Commercial Aviation. 13. Retrieved April 8, 2010, from ABI/INFORM Trade & Industry.Swickard, J. E.. (2010, April). NetJets Posts ‘Staggering Loss,’ but Buffet Predicts Profitability. Business & Commercial Aviation. 13. Retrieved April 8, 2010, from ABI/INFORM Trade & Industry.Wall, R.. (2010, March). Dassault Also Hit by NetJets Cancellation. Business Aviation, 8. Retrieved April 8, 2010, from ABI/INFORM Trade & Industry.19