2012 Fractional & Charter Market Special Report - Part One

Companies interviewed for this year’s fractional and charter market special report indicate that business is decent, although nowhere near the pre-recession pace of 2005 and 2006. The fractional-share business, at one time assumed by many to be dying or at least permanently flat, is growing, but still at a slow rate. The fact that Cessna’s CitationAir has transitioned to a charter/management business model has helped some fractional providers generate new business. Most of the providers continue to see a steady flow of customers; the leader here is obviously NetJets, with its huge fleet and commensurate multibillion-dollar orders for hundreds of new jets. But NetJets isn’t the only game in town, and other fractional providers are adding new aircraft, too, slowly but steadily renewing fleets with more modern aircraft.

On the charter side of the market, demand in the U.S. and Europe remains somewhat stagnant, but operators tell AIN that they are learning to survive and even thrive under existing conditions. One of the ways they have adapted is to pursue overseas opportunities, and this past year saw a number of charter operators partnering with companies in Asia to build charter/management capability where little or none existed. Another way to adapt is by launching creative new programs, and this is something that both fractional and charter operators have done.

In this first part of our special report, AIN examines the overall state of the fractional and charter markets. In the November issue, the focus will be on issues affecting the charter industry, including the disturbing prospect of excise taxes on management fees; per-seat and empty-leg availability; social media; and other key charter/management industry issues.