In January 11, fractional provider NetJets, Inc., based in Columbus, OH, named Jim Christiansen president of NetJets Aviation, the company's fractional ownership division. Christiansen is no newcomer to corporate aviation or to NetJets for that matter, having joined the company in 1990 as president of Executive Jet Aviation, which is today NetJets Aviation. As he walks in the door for another tour of duty, Christiansen says he sees a company that is well-positioned to remain an industry leader. What he terms "cyclical labor issues" are behind them. "The market has been strong for us," he says. "We had a very solid 2006; the productivity in the company — which we measure by the utility of the assets, the fleet — is the best that it's ever been. The company is really running very well."
Christiansen's resume reads like a ‘Who's Who' of corporate aviation. It includes serving as chair of the National Air Transportation Association; president of K-C Aviation Transportation Services and of Wayfarer Ketch; COO of Tag Aviation; serving on the board of Citation Shares and, more recently, working on special projects for the chairman of NetJets. He was viewed as a key cog in the process that saw the creation of FAR Part 91, Subpart K, which in essence wrote the book on how fractional ownership programs would be regulated.
Having worked alongside the father of fractionals, NetJets founder Richard Santulli, at the beginning tied Christiansen to the concept of fractional ownership of business aircraft early. He says he remains bullish on the industry sector.
"To get it into perspective," he relates, "worldwide we have about 7,500 employees at NetJets, and we fly well over 600 aircraft. If you think about the number of jobs created by NetJets and our competitors, it's had a huge influence on our industry. NetJets flew over 350,000 flights last year; close to 3,000 airports.
"NetJets is in the best position that it's ever been. Our results have been very strong; we're perfecting the model all the time. Some have said the model is broken; it's far from broken. It's doing very, very well."
The company has evolved into a family of companies under NetJets Inc., which is a Berkshire Hathaway company.:
- NetJets Aviation, Inc., operates most of the fractional ownership program, except the largest aircraft;
- NetJets International, which oversees the Gulfstream large cabin fleet and is based in Hilton Head, SC;
- NetJets Europe and NetJets Middle East;
- Executive Jet Management for on-demand charter and aircraft management programs; and
- NetJets Large Aircraft Company, operator of the BBJ program.
Following a 2005 Ddownturn, a 2006 Rebound
Christiansen acknowledges that the past two years have not been as robust, particularly 2005, as some earlier years. He says, however, that he is confident the company will experience renewed growth now that its labor negotiations are completed and the company can turn full-time to operations and opportunities.
"NetJets has reached agreement with our three organized labor groups," he explains, "the pilots, the flight attendants, and the mechanics. We're now through that cyclical time period when those negotiations go on. We have a three- or four-year window before we start into that cycle again.
"NetJets is positioned to really achieve its full potential, in my opinion."
Christiansen says that the company has a significant backlog of resumes for pilots who want to hire on with NetJets. The ongoing challenge for the company may be the competitive arena in which it operates, and Christiansen is confident NetJets will maintain its leadership position.
"I believe our market share shows that we're on the right track," he says. "We have something north of 50 percent of the market, looking at the four major fractionals — us; FlexJet; CitationShares; and Flight Options. If you look at dollar sales, NetJets has in excess of 75 percent of the market.
"The interesting thing to look at is that the competitors almost invariably have chosen to compete on price. NetJets continues to compete on quality. We think that this discipline is extremely important. We've proven it because we're the only program, to the best of my knowledge, that has ever made money. Some of the others say they've made money recently, but if you peel back the onion a little bit, you might be able to see that there are some factors in there that make it appear they made money when perhaps that's not the actual case."
Christiansen relates that he was put off by the press coverage of NetJets at the most recent National Business Aviation Association convention in Orlando. The ‘buzz' on the show floor was that Berkshire-Hathaway CEO Warren Buffett was unhappy with the company's financial performance.
Says Christiansen, "The article that appeared in one of the publications at NBAA was disturbing because the information in that article was almost a year old. There is no basis in fact that Mr. Buffett is upset with NetJets. We had had a bad year the year before in terms of financial performance; we stepped up to that and 2006 was a very strong year. When Mr. Buffett releases the earnings statements everyone will see that we're on very solid footing."
