Fractional demand remains at a feverish pace with no signs of slowing for the foreseeable future, executives in the market segment agreed. However, political and trade uncertainties had a ripple effect on the sector’s operations in the first quarter, and continue to create a small dip in trips to the U.S. from Canadian operator AirSprint, fractional executives told the recent JetNet iQ Summit in Washington, D.C.
AirSprint CEO James Elian, PlaneSense president and CEO George Antoniadis, and Airshare CEO John Owen participated on a panel at the JetNet annual event discussing their growing businesses and how they are keeping up with demand.
Asked if they saw any signs of a cooling off, Antoniadis’ message was simple: “We are seeing no signs of a slowdown.” In fact, reports from JetNet company WingX showed that by 2024, departures in the segment had jumped 61% from 2019, and Argus International data finds that year-over-year growth continues.
However, Owen noted that there was a drop-off at the beginning of the year. “We saw a huge slowdown in Q1. I think that was all centered around political and economic uncertainty. We all sat around [asking] ‘What's going on?’” he said.
That changed by the second quarter, Owen added. “In April, it's like the switch flipped again and everything was back to normal. It was a scary first quarter, but since then it's back to normal, if not better.”
As for Calgary-based AirSprint, Elian noted, “I live in Canada, and there’s a trade issue between our two countries. I’ll say that we’ve seen a little bit of a slowdown.”
He stressed that AirSprint is still seeing substantial demand. “But we’re seeing a lot of hesitancy in the market,” Elian continued. “It has dropped about 5% from what we would have expected, and growth is a little bit slower than what we would have expected because people are sitting on their hands and they don’t know what to do.”
AirSprint’s Fractional Ops
AirSprint, which introduced fractional ownership to Canada 25 years ago, is the only domestic provider in the segment in the northern country. It began with the PC-12, and now counts among its fleet 40 jets: eight Embraer Praetor 500/600, eight Embraer Legacy 450/500, 18 Cessna Citation CJ3+, and six Cessna Citation CJ2+ aircraft. The fleet has an average age of about six years, Elian said, adding that with a luxury tax on new airplanes, AirSprint will look at the preowned market.
Established in Alberta, Canada, AirSprint faced skepticism given the geography of the country and regulatory requirements. "The key was to ensure that the operation minimized empty legs and to remain profitable," Elian said. “We never had any outside money behind us, and you had to be profitable from day one. We’ve been profitable every year of our existence, because we had to be.”
The company began with the PC-12 flying in Western Canada. Over time, its operations expanded into the U.S., and that business accounted for 70% of its flights, Elian said. But he added that in light of the trade issues, those operations may now be down to 65%.
Airshare Evolves
Airshare began operations 25 years ago with two turboprops and now has a managed fleet spanning nearly 140 aircraft and another 25 to 30 fractional aircraft. It has streamlined its fleet in recent years down to the Embraer Phenom 300 and Bombardier Challenger 350/3500. But, at the same time, the fractional provider has spread from what had long been a Midwest company to more nationwide operations. And it has substantially grown its managed fleet, giving it a balance that is not dependent on one product.
“We have gone through a lot of fleet iterations,” Owen said. Airshare began with the Beechcraft King Air, and when he joined the company, it had a handful of types among its fleet of 30 aircraft. “That many fleet types is not the easiest operation to run nor the most efficient,” he said, noting the company went through a simplification project based around the Phenoms with the Challengers added to open up national service.
Airshare has evolved over the years with the help of large investors who have maintained continuity at the company. It brought a Midwestern focus but has methodically expanded as data has pointed them in that direction.
PlaneSense’s Big Bet
PlaneSense took a bet on the single-engine turboprop in the mid-1990s, Antoniadis said, but faced naysayers over the model. “We saw the airplane that was being built in Switzerland, and my feeling at the time was that we weren’t going to compete with Citations against everybody else’s Citations, and we were not going to compete with King Airs against everybody else’s King Airs,” he said. “I had people say to me in the beginning: ‘PlaneSense? No. PlaneNonsense.’”
However, pointing out that it was cost-efficient as well as environmentally efficient, Antoniadis added, “It turned out that the PC-12 was a very successful corporate aircraft with one engine.” The company has grown the fleet to 74 and added the PC-24 jet. Included in the fleet are 46 PC-12s and 18 PC-24s. However, PlaneSense keeps a steady flow of orders because the company retires its aircraft relatively quickly, he explained. “Our average age in our fleet is in the mid-four-year range.”
More recently, PlaneSense eliminated fees to break down regional differences. While it has tremendous demand for the PC-12 in the Northeast U.S., it has also been successful in other parts of the country and now has a coast-to-coast program. The company has looked internationally but has opted to extend its reach through a partnership with Luxembourg-based JetFly, where its clients can book through each other for seamless travel. “Without having to start our own operation in Europe, we’ve created a partnership and vice versa…so expanding in intelligent ways that we can provide even more value to our clients,” he said.
Antoniadis credited the success of the model with the ability to enjoy the benefits of full ownership without having to own a whole airplane. “It’s the most cost-effective manner to have the flexibility, the guaranteed availability, the known quality, the known entity without owning your own airplane,” he said. “That I think is the fundamental platform that has made fractional ownership such a successful player in this space.”
Fractional not only simplifies ownership, but costs, he maintained. “I believe that the fractional ownership is the lowest-cost way to benefit equally as if you own that aircraft.”
For AirSprint, the segment helps connect a large country that only has about a handful of large markets for private aviation. “Unlike in the U.S., there are only a few tier-one airports that have tier-one charter service,” Elian said. “What fractional does with its guaranteed access and no positioning costs is it allows all the secondary- and third-tier airports to have a tier-one level of service at all those really small locations. It really makes a difference when all of a sudden you don’t have to pay for a charter flight to come one hour away, two hours away, and you have guaranteed access. You don’t have to worry about it.”
Covid created a push toward fractional operations because there was substantial demand but not enough charter supply, he said. “As soon as people could get a fraction, get that guaranteed access, they did.”
Owen agreed with Antoniadis that not everybody needs a whole aircraft, nor do they all want to buy charter. “This offers a perfect blend of both.”
He noted that while the panelists’ operations are similar in size, each has a unique position in the market. Airshare, he said, offers what he called a “database fractional program.”
Looking at the data, the company realized a notable percentage of flights headed to Florida, so it decided to sell there. The next hotspot moved the operation into the Northeast, later the mid-Atlantic to connect the Northeast with Florida, and ultimately the West.
“We thought we’d probably never be West with the size of the fleet that we had, and then through that same data, we realized that 8.2% of our flights were touching Scottsdale [Arizona] and Southern California and Las Vegas,” Owen said.
Managing the Growth
As far as managing the growing business in the heated market, Antoniadis conceded, “It can be a nightmare. Unlike an airline where one can plan the hotel rooms for their crews a year in advance, we have maybe half a day’s notice, so operational efficiency is king in our business.”
He stressed the importance of operational systems that work and perform, but he believes PlaneSense also manages through “absolute vertical integration.” The operation has brought in-house many of the key functions, including training, a large portion of maintenance, and fleet strategy.
“We do what we can control, and at least that’s an island of control within the insanity of the eight-hour notice,” Antoniadis said.
Elian agreed the business could be “complete chaos sometimes,” particularly around the holidays and high peak times. “The key to success around that is really planning for all your assets.” This includes planning how much backup capacity and how many pilots the company has, along with the placement of the pilots.
“There’s so much to it, even where are your clients located and what percentage of your clients are primarily using it for business and what percentage are primarily using it for pleasure,” he said, adding that this matters because different types of customers fly on different days.
“And not only that, but businesspeople are typically set on their schedule, but personal flyers sometimes have some flexibility. If you can use some of that flexibility to create a win-win, then you can manage your fleet really well. It’s tricky, and it took us a long time to figure it out.”
Owen added, “We all know…all it takes is one AOG to blow up the entire system, and so what we’ve done a lot of over the last several years is really invest in technology. We have dashboards all over the office. We have dashboards online, whether it’s deadhead percentage, on-time percentage, or aircraft availability. We monitor data like crazy.”
Airshare has fully integrated its entire technology system. Before, the flight management software stood separately from an optimizer and a customer app. This required a lot of manual communications and management. “The last several years, we’ve developed an entire ecosystem of technology that talks to each other, and it provides us with real-time data,” he said.
To ensure PlaneSense stays on top of the ebbs and flows, Antoniadis said the key is to observe the behavior and demands of the clients. “If we don't fully understand and predict what our clients want, then there's no space for us,” he said.
This includes tracking behavior and geographic patterns. "During Covid," he said, “we all had the same experience. There was a precipitous drop for about a month, and then it showed up. What happened for a couple of years is clients were buying shares like crazy because they thought they would never be able to find any [capacity].” After that, PlaneSense saw a retreat from people who hoarded unnecessary capacity.
Things have since stabilized to “a very healthy demand is going on today.”
For AirSprint, Canada shut down for about 18 months, making running a fractional program challenging, Elian said. “And then overnight, the restrictions went away. And that was the worst 3 to 5 months of my 24 years at AirSprint,” he said. “Most of the charter couldn’t meet the capacity. There was all this revenge flying. There was so much demand.”
Since AirSprint was the only operator with guaranteed access, it found that 50% of its flights didn’t have the actual fractional owners on board. “It was their family, their friends, their coworkers, anybody who needed to go somewhere, call up their buddy and say, ‘You have a fraction of AirSprint? We need to go.’”
At the time, the operator had a fleet of 20 and was grappling with the same supply-chain issues as everyone else. “In November of 2021, on average, I had six of my 20 airplanes down waiting for parts. And my demand was 31 airplanes worth. So, the challenge associated with that was frankly crazy,” he said.
The company ended up buying four more aircraft, one of which was “just a parts machine until we could get parts.”
Today, Elian continued, the Canadian private jet environment is 45% bigger than in 2019. AirSprint has 6% of the fleet in Canada but absorbed 50% of the growth, he said.
Owen said that because Airshare ran its entire business off data, it has managed to have an off-fleet charter percentage of less than 2%. He noted that he was in continual communication with Elian, and they shared a lot of information.
The company also hired an executive with a background at Ritz-Carlton to focus on customer experience, noting that, as a service provider, this is what matters in the end.
As for the Covid experience, he stressed, “I think we all did the right thing—we just stopped selling. We realized we weren’t all of a sudden very good at fulfilling demand that was coming in at a rapid pace, and decided we’re done. Let’s take care of customers, and once that subsides, which took about a year, let’s start building back up.”