Assignment 2: Secondary data searching
Title: Fractional Jet Services
Product Definition: Fractional jet services can be defined as a service that customers can purchase or lease share of a plane instead of purchasing the entire plane. The core product of this industry is to sell a fraction of the plane but owners can choose sizes of share, cabin volume, and types of aircraft that best match their needs. Most shares are sold at 1/16th or 1/8th of fraction share, which will be converted to number of flight hours per year (Exhibit 1). The minimum of share rental is 1/16th, or 50 hours per year with two to five-year agreement. Owners are guaranteed availability. They can use the service for either personal or business purposes at any time with just 2-48 hours notice. At the end of the contract, owners can choose between renewing their share or selling it back to the company at market rate. (NetJets, 2012), (Flight Option, 2012).
Market Size: In 2006, the top four fractional jet providers generated a revenue exceeding $4 billion dollars per year. There are over 1,000 aircrafts available in this industry and more than 8,000 owners in United States, Europe and Middle East. (Fuchs, 2006). Figure A
According to the pie chart (Figure A) from (BBA Aviation, 2010), it shows that segmentation of US fractional fleet by operator, 2009. NetJets is the largest by 69% of total fractional aircraft among all US operators. The growth rate: After emerging of the fractional jet business in 1986, it experienced significant growth. With a 32 percent compounded annual growth rate from December 1998 to December 2003. The graph below (Figure B) shows that the total US fractional fleet has increased dramatically from 1998 to 2008 and there is a slight decline in 2009. (BBA Aviation, 2010) With the general economy in 2010, a business of fractional jet services was getting better. Industry leader tried...