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Private Jet Insider
Welcome to the eighteenth edition of Private Jet Insider.
There’s a verse in the Bible that says, “What has been is what will be, and what has been done is what will be done, and there is nothing new under the sun.” - Ecclesiastes 1:9.
Whatever worldview or religion you subscribe to, I think we can all agree there’s wisdom in that verse. It’s the inspiration for this newsletter, which I’m calling The Great Fleet Convergence. It’s based on my observations from the past 24 to 36 months in fleet planning by major operators.
Something in the forecasting and costing models caused a lot of executives to reach similar conclusions. Data intelligence plays a critical role in business decisions, which is where today’s newsletter sponsor can help.
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A touch of housekeeping...
This newsletter currently has 1,620 subscribers. Many of whom fly private or are getting ready to fly private. It would mean so much to me if you would forward it to a fellow private flier and help them get the inside scoop.
Disclaimer: This newsletter is far more of a blog than it is hard news and analysis. I write it as observation from the inside. Read it through that filter, as is based solely on opinion. That's why I like writing it. Now that I've CYA'd for whenindustry folk roll their eyes, let us begin.
I recently had a conversation with a Bombardier Global 7500 owner where they explained why they chose the Global over the Gulfstream G700. As a taller person, they found the Gulfstream’s windows too short, and it bothered them. The taller windows on the Global were a key factor in their decision.
Large fleet operators, however, don't make these types of decisions solely based on window height.
Large fleets have to keep their aircraft flying. Recovery events (when an aircraft breaks and another one is dispatched to pick up the customer) cost money. Flight logistics cost money. Lost revenue costs money too.
All of this leads to one of the most important performance indicators for a charter operation: up-time, or as it's more formally called, dispatch reliability.
Every manufacturer will highlight their aircraft's dispatch reliability in marketing materials and talk up how dependable the plane is. But the real-world experience can be very different.
For example, the running joke about the Citation X is that it’s the fastest business jet between service centers. Not exactly what you want to hear if a down aircraft is costing you $31,000 a day.
The Number Two Metric: Spreads
Another key factor in fleet composition is the operating margin spread.
Generally, fleet operators prefer aircraft that command a strong hourly rate while keeping operating costs low. This equation matters less to high-net-worth individuals, who may prioritize speed or features like taller windows.
When you look at the historical fleet decisions of large operators, patterns start to emerge.
For instance, The Excel/XLS platform is known for being cost-efficient while offering a spacious cabin that commands a premium. NetJets operated Citation Excels before transitioning into the Citation XLS. FlyExclusive still flies some Excels today.
Nothing is new under the sun... and the Citation Ascend is simply the next iteration of the Excel/XLS lineage (NetJets being the pilot customer for this aircraft).
Homogeneous Fleet Optimization
The convergence of these two factors takes us to the current landscape of fleet composition. I went and pulled fleet data from the top operators (shoutout to Private Jet Card Comparisons for making it super easy) and highlighted in unique colors where there was fleet overlap.
For years, Wheels Up promoted the fuel-efficient, cost-effective King Air as the key to “democratizing private aviation” and expanding the total addressable market. Yet here they were, acquiring a fleet of jets that placed them directly in line with other operators. Adding the Challenger 300 market only reinforced the idea that, truly, there’s nothing new under the sun.
Airshare originally started with the Phenom 100's, then quickly realized that the aircraft wasn't built for scale, with reliability at the forefront. They moved into Phenom 300's. They also operate Challenger 350's in their fleet. I'm seeing a pattern.
Before JetIt went under, they tried to make a hard pivot to the Phenom 300 platform as well.
Literally every company in the above chart operates the Challenger 300 series aircraft. Every single one.
Now, charter is incredibly fragmented. And yes, I can already hear the objections...plenty of operators aren’t flying Phenom 300s or Challenger 300s and are still building solid, profitable businesses. That’s not the point.
The point is that very smart people at the companies mentioned above came to a similar conclusion in the light jet and super-midsize categories.
The natural conclusion would be that the Phenom 300 and the Challenger 300 series likely have incredibly high dispatch reliability while giving a strong spread on the costs willing to be paid by customers minus the cost of operation. It is almost ubiquitous across the top operators, and add in the vertical integration of in-house maintenance and pilot training and it becomes even more attractive as a large fleet operator.
My Take On It
Those owners who buy into the categories in which major operators have concentrated their fleets can likely expect a strong residual value because of the demand for the aircraft. If they choose to charter the aircraft, they might expect to have stronger success by following the large operators.
The risk is in concentration, because when the fleet operator moves on from a model (which is inevitable), the market will be flooded with their same make/model. This has been seen in the Citation X market recently, which has driven values down (among other things) as Vista and WheelsUP decided to start liquidating their fleet.
Staying ahead of the curve is something that a savvy owner is aware of. A good broker team will help you stay ahead of this curve.
That's all for this week. I hope you enjoyed it. I'm sure I'll be getting some hot opinions on this one in the coming days...
Until next week,
Preston Holland
P.s. Send this to a friend who owns one of the aircraft mentioned in the chart! I'm sure they'll appreciate the thought experiment. Then, ask them when the next time you're going on a golf trip in their jet!
