NetJets Europe: cautiously optimistic

posted on 12th June 2018

There is plenty going on at NetJets Europe. There is a new management team, a 10 year planning exercise and the new shape of the future operation to conjure with. In addition, there are the knock-on effects of the bold moves being made by the US operation to consider; that is the acquisition of up to 125 new Embraer Phenom 300 aircraft. Emily Williams, Sales Director, NetJets Europe, explains to Jo Murray

NetJets Europe is not a homogenous operation like the US operation. It tackles eight diverse markets, each with its own flavour. From the UK & Ireland, to France, Switzerland, Germany, Italy and Spain to Russia as well as Central Europe & the Balkans – NetJets Europe engages with numerous cultures which consistently demand high levels of service from their private jet providers – be they fractional share or flight hour suppliers. The markets have not changed as a result of recession; it is simply the case that a better organised, better honed and more finely tuned NetJets Europe approaches each market as a niche rather than a generalised region.

“We use an acquisition/retention sales structure,” explains Williams. “Our acquisition focussed sales team are focused either on the Jet Card or the fractional ownership programme. Our retention team looks after our existing customers to make sure we are serving them well and to monitor their accounts to make sure they are in the right programmes and have enough hours to meet their requirements.” On top of all this there are support and research teams.

The approach to markets may have been reengineered somewhat but there is no getting away from the fact that the last two years have been crippling for fractional companies. “It has undoubtedly been a tough couple of years for anyone in any business and aviation is certainly no exception,” concedes Williams. “But NetJets Europe is feeling cautiously optimistic about the outlook. We have taken a long hard look at our business, we have very strong foundations and, most importantly, the value to our customers hasn’t changed at all.”

She continues: “In September 2010 we had the best new-business sales month – more new customers and a larger number of hours – that we have had since July 2007. And anecdotally we hear from our customers that it is still OK for them to fly and they are starting to fly more and more. Businesses are in an acquisitive mode. They want to get out on the road and do the right deals at the right time.”

In fact the trend has been upwards throughout the year. In the first half of the year, flying at NetJets Europe was up 5% across all products, a figure that was depressed by the ash cloud and could otherwise have risen as high as a 12%. “We are definitely seeing positive signs in the market,” she adds.

Of course the big news – and this has come from NetJets Inc (NetJets Europe’s sister company) – is that up to 125 Phenom 300s will join the fleet (that is a firm order for 50 aircraft with an option for a further 75).

Flying may be up and optimism may be rising, but NetJets’ prime area of business is the sale of fractional shares and with the banks reticent to lend on whole aircraft let alone fractionals, what can NetJets Europe do to facilitate the placing of its products in the market?

Williams responds: “NetJets is a very consultative business with both our prospects and our customers. We offer lots of different options to meet both financial and flying needs.” She refers to the plethora of aircraft types, the multitude of programmes (right down to 15 hours on a Jet Card programme) and the new 1/32nd share – which equates to 25 flying hours a year with only a three year commitment. It is not so much the case the NetJets can facilitate lending but that the company tailors its products to what its market can afford; and that means making fractional shares smaller.

“We offer a lease product as well,” she adds. “This is an operating lease so that we hold the asset and the user pays a rental. It comprises a five year commitment from NetJets to the customer and the customer commits to us for three years with an option to exit with only 90 days’ notice.”

Other financial mechanisms offered to customers are often tailored to specific markets. “For our Russian customers we have launched a 30 hour product. They told us they needed a mix of mid-size aircraft and large cabin aircraft so we put that product out on the market.”

Just as a fractional provider might have benefited from the shift down from whole aircraft ownership to fractional, it stands to reason that fractional owners have also shifted down to the flexibility of Jet Cards and ad hoc charter. Has Williams seen that scenario evolve at NetJets? “We actually had the same number of customers at the end of 2009 as we did at the beginning but we were down in terms of the number of flying hours. We worked with every individual customer to make sure they had what they wanted. While we saw customers reduce their shareholding with NetJets, we did not see customers walking away,” she says, reminding us that the bulk of customers are fractional owners.

“We saw a few of them move down into the card products in consultation with us but we did not see that many people go to ad hoc charter,” she comments, pointing to NetJets’ high levels of safety and service as customer retention mechanisms.

At present, NetJets has completed its 10 year planning process across the European and US operations. Looking forward, in terms of fleet, Williams says: “We will always put our customers at the centre of what type of aircraft we have on board. We will always have a light jet category. The mid-size category is an important category for us. We’ll look to answer a need for perhaps a super mid-size along the way and, obviously, the large cabin and the long range will always be part of the NetJets Europe fleet.”

With the corporate market regaining momentum – 70% of NetJets Europe’s customer base is of the corporate variety – and NetJets still making bold moves in an otherwise conservative market for aircraft orders, cautious optimism from Williams and her team sounds about right.