’s Flexjet fractional operation is planning modest growth in its fleet with new Learjets coming online and possible additional Challenger 605s, but plans to celebrate the anchor of its fleet – the Challenger 300 – even as competitive pressures grow within the market with that model.
Flexjet rival NetJets in June announced a firm order for 100 Challengers (75 300s and 25 605s), pitting it directly against Bombardier’s Dallas-based Flexjet. This gave rise to rumors about Bombardier’s long-term plans for the Flexjet operation. But Deanna White, who took over as president of Flexjet in October with the departure of Fred Reid, maintains that Flexjet has a strategic importance to Bombardier – both in terms of sales and operations – and that the Montreal-based airframer is committed to the operation.
As for the NetJets deal, White says it was an important order for her parent company. “We believe the NetJets order is a testament to the airplane,” she says. “It actually levels the playing field.” With NetJets set to become the third major U.S. operator to have a significant number of Challenger 300s, alongside Flexjet and California charter operator Xojet, the companies will be forced to differentiate in other areas, such as levels of service. White believes Flexjet can be a strong competitor in that arena.
Flexjet’s fleet includes more Challenger 300s than any other type, and is planning to highlight its operation with a celebration of the 10th anniversary of the aircraft in its fleet this year.
At the same time, the company is making preparations to add the newaircraft to its fleet. The company will take the first seven Learjet 85s, and is a launch customer of Bombardier’s new Learjet 40/45 successors, the 70/75.
All three aircraft are expected to enter service this year – the 70/75 later this year. The 70/75 is on schedule, but the Learjet 85 has not yet completed its first flight. This would put the aircraft on an aggressive certification schedule for a 2013 delivery.
Flexjet’s Learjet 85 customers are currently offered interim leases using Challenger 300s until the company takes delivery of the new aircraft. The new type will mark a fleet expansion for the company, while the Learjet 70/75 models will be replacements for the existing 40/45s in the fleet.
White says a recent city tour of the mockup generated substantial interest in the new aircraft, and the company has sold the initial four Learjet 85s. Flexjet has plans to take delivery of seven Learjet 85s in each of the next several years, White says. The company has not yet specified the long-term Learjet 70/75 delivery plans.
As it prepares for the new additions, Flexjet is evaluating its fleet composition in light of changing market dynamics. Fractional sales have lagged, White says, but jet card products have experienced a jump in sales.
Jet card buyers tend to lean more toward the larger aircraft, preferring the Challenger 300 and the larger 605. White says the company is going to evaluate the numbers of 605s in the fleet and consider whether a potential expansion is warranted. While trending larger, Flexjet does not plan to add Bombardier’s Global aircraft for now.
White believes customers are trending more toward the jets cards than fractional shares as they continue to put off large capital purchases. “It’s a liquidity issue,” she says, that has been ongoing during uncertain economic times.
Flexjet recently rolled out a new jet-card program tailored for its Challenger 300 – Coastal Connect – that provides a little more aggressive pricing for clients flying from the East and West Coasts. The program runs head on with services of competitor Xojet, which operates a fixed-rate coast-to-coast program using both Challenger 300s and the Citation X.
Flexjet’s new program is designed to compete against operators “skimming off” the more lucrative long-haul U.S. routes, White says. The program, introduced last month, already is beginning to generate interest, she says.
While jet cards are driving the gains at Flexjet, the company is also still seeing interest in its fractional programs. Flexjet picked up some shares after CitationShares last year decided to get out of the fractional ownership market and focus on the jet card business.
Flexjet also recently rolled out a program to provide greater flexibility for shareholders. The FlexShare program enables customers to purchase access to two different aircraft types with a single share.
Beyond these new programs, Flexjet is hoping to further sharpen its competitiveness in the market with a new pricing model that will roll out in the fall.