Story ID: 
ExecuJet targets NetJets owners
By: Charles Alcock
Caption: ExecuJet Aviation has launched a new lease-based alternative to fractional ownership, block charter and traditional aircraft management.
Word Count: 788
ExecuJet Aviation has launched a new lease-based alternative to fractional ownership, block charter and traditional aircraft management. Simply Fly will see the Swiss group acquiring business jets, making them available to individual clients and operating them on a fully turnkey basis, covering crew, insurance, maintenance and handling. Customers will have exclusive use of an aircraft and a dedicated crew.The aircraft will be operated under one of the following eight air operating certificates (AOCs) that ExecuJet holds around the world: Switzerland, Germany, Denmark, the UK, South Africa, Australia, Mexico and the United Arab Emirates. The group already operates more than 100 aircraft.As a Bombardier distributor in 35 countries, ExecuJet is now negotiating with the Canadian manufacturer to buy an initial batch of Global Expresses and Challengers. It plans to begin Simply Fly operations by September with a pair of used Challenger 604s.ExecuJet launched Simply Fly in London on March 18. It plans to publish rates for monthly fees and fixed flight hour costs early this month, with the first contracts to be signed soon after. At press time, the precise rates and conditions of the program were still being refined in the course of initial sales negotiations.Customers will have the choice of an operating lease or lease finance terms that would result in their buying the asset at the end of the standard 60-month term. In either case they can offset their costs by allowing ExecuJet to make their aircraft available for third-party charter.ExecuJet chief executive Niall Olver said that Simply Fly is aimed at the upper end of the business jet market, specifically NetJets customers who are approaching the end of their fractional ownership agreements. The company believes that this part of the market is less vulnerable to the current financial downtown than the entry-level very light jet sector.ExecuJet believes that at least 10 percent of existing NetJets share owners could opt to have direct control of a full aircraft, particularly when their annual flying requirements exceed 200 hours. The finance for the aircraft and the lease terms are being offered in conjunction with Dublin, Ireland-based finance company QED Equity. Both companies are majority owned by Irish entrepreneur Dermot Desmond.A Stable InvestmentAccording to Brian Foley, managing director of QED’s new corporate aviation arm, Simply Fly will be attractive to individuals and companies who want to keep aircraft off their balance sheets. He told AIN that this is a greater concern during difficult trading conditions like those being faced in the current banking crisis and credit squeeze.The former Guinness Peat Aviation airline leasing executive argued that wealthy customers would do better to put less of their own equity into aircraft and invest this money where they can expect higher returns. In his view this makes better financial sense, even allowing for the relatively higher management costs associated with Simply Fly’s lease terms. He said that the program’s lease payments will be tax deductible in most fiscal jurisdictions.Simply Fly clients will pay an initial deposit that will probably amount to six monthly management fees. In addition to flight hour charges, they will also be liable for fuel surcharges, special catering requests and additional fees for airports with high landing fees. “There will still be some variable costs, but no surprises,” explained Olver.In calculating fixed costs for the new program, ExecuJet will assume that each aircraft will be flown up to 600 hours per year. Clients will be free to fly more hours up to a ceiling of around 800 hours but will face surcharges for additional hours due to the increased costs associated with the need for more crew and faster depreciation of the aircraft. Each client will have an account manager responsible for handling operations of its aircraft anywhere in the world and will be assured around-the-clock concierge services. The home base of the aircraft will be established by mutual consent, as is already the case with ExecuJet’s managed aircraft fleet.The lease terms will include access to 100 flight hours of “alternative lift” while a client’s aircraft is grounded due to maintenance. ExecuJet will either provide these additional aircraft from its own charter fleet or possibly from Bombardier’s Skyjet block charter program. Simply Fly clients will be able to upgrade to larger aircraft for some flights by paying increased hourly charges.Commenting on the mounting difficulties in world stock markets and in the banking sector, Olver suggested that business aviation is now less dependent on the fortunes of Wall Street due to the increasing international profile of the marketplace. He added that softening in demand for new aircraft could work in ExecuJet’s favor in that some new aircraft delivery positions might be more readily available for Simply Fly clients.