The 200 Model Daimler Chrysler

Aug. 8, 2000


Charter company sees fractionals as an addition to its business rather than a competitor

By Jordanna Smida, Associate Editor

August 2000

Waterford, MI — Despite the ongoing debate surrounding fractional ownership, DaimlerChrysler Aviation (DCA), which is a partner in Automotive Air Charter, is expanding its management business to include JetOne fractional ownership program.

In the 60's, DCA (then Chrysler Air Services) was created to support Chrysler Corporation's executives. It eventually began offering its services to the public and was renamed Chrysler Pentastar Aviation.

In 1997 when Chrysler Corporation and DaimlerBenz merged forming the fifth largest auto manufacturer in the world, the aviation facility was renamed DCA, with locations in Waterford, MI and Stuttgart, Germany.

Following the merger, DCA and GMAT General Motors company partnered to create Automotive Air Charter, a single charter company offering the two corporation's aircraft for charter, says Steve Taylor, director of DCA's sales and marketing.

With a 200,000-sq. ft. facility housing its full-service maintenance department, which reigns as the only independent authorized Gulfstream warranty repair center in the country, and a full-service FBO with red carpet treatment, DCA is expanding its management business to include fractional ownership.

In June, DCA entered into a mutually exclusive agreement with JetOne, a fractional jet ownership company based in Waterford, MI, in which DCA will provide all aircraft operations, management, and related services for JetOne. Taylor sees the company as a good fit.

"We are concentrating on building our (aircraft) management business right now for a lot of reasons. One is, this is a smart move with the current industry in the way it's going and, from another side, as we build our management customers we take advantage of the 135 opportunities that are created there. The JetOne opportunity gave us exposure to a little different market than we currently have."

JetOne, which was previously operating under contracts with another company, indicates that DCA will help increase its level of service to its customers.

"With JetOne we wanted to provide our customers with an operating platform that was much deeper than we'd already had, that would allow us to grow the company and maintain very high levels of service," says John Scicluna, executive vice president of JetOne.

Level of service
Both Taylor and Scicluna maintain that the JetOne fractional program will uphold the level of standards DCA requires of its charter and maintenance operations, which meet Part 135 criteria.

Explains Taylor, "As a matter of practice at DaimlerChrysler Aviation whether it's a Part 91 trip or not we maintain to Part 135 standards on a consistent basis, which I think was part of the attraction with JetOne."

Currently JetOne's fleet of two Citation IIs operates under Part 91, but according to Scicluna, the company is in the process of certifying its aircraft under Part 135, with one jet already certified.

DCA expects JetOne to meet is its piloting requirements. "Within our operation we don't put our employees on aircraft where the pilot and co-pilot have not both been through simulator training. We take it to a higher level. At a minimum, everything we do is at a Part 135 standard," Taylor states.

In coming aboard with DCA, JetOne had to make a few adjustments to meet DCA's requirements. At the time, some of JetOne's pilots had to be retrained, but Scicluna says that only benefits both companies.

"We can go to the marketplace as a fractional ownership program and know we're offering a first class product with first class services with the highest level of maintenance and training. We can play the game with anybody in the industry right now," he states.

Operating under Part 135 allows for flexibility in the business, Taylor says. "If it's a Part 91 or 135 flight, we book the maintenance, crew, training ... that gives us a lot of flexibility. We don't have to worry about crew scheduling issues. It costs money to do that, but we feel it's worth the investment, and it has certainly paid off in reputation and recognition in the industry."

In the face of the NPRM placed before the FAA regarding the regulation of fractional programs, JetOne has little concern at this time.

"First and foremost, we jumped right out of the shoot and whatever decisions they make, we're okay with because we're already operating at Part 135 standards," Scicluna states.

"By aligning ourselves with good management skills and maintenance through DCA, it is really a big benefit for our clients," he says.

Fractional VS. Charter
Jet One recently relocated to the DCA facility. In July it began flying its fleet of two Citation II aircraft, in which a quarter share sells for $695,000. The company utilizes pre-owned aircraft and refurbishes and outfits the aircraft, Scicluna explains.

Both Taylor and Scicluna expect the JetOne fractional program and the Automotive Air Charter business to complement each other. According to Taylor, JetOne's Citation fleet combined with Automotive Air Charter's fleet (four Gulfstream Vs, two Gulfstream IVs, a Gulfstream III, five Citation Xs, a Citation VII, a Hawker, and a Westwind), "Gives us access to a wider market for our business."

The JetOne fractional program will be managed as any other client, Taylor says. "We look at them(JetOne) as any other management customer except we envision they will grow their particular portion of the fleet faster than a traditional management customer would. That's the only real difference for us."

JetOne also sees the benefit in DCA managing both charter and fractional businesses. "In the event that we need to use a charter backup, there is a select group of audited charter groups that we will use if DCA isn't available," Scicluna states.

With its direct competitors including Flight Options, Bom-bardier's FlexJet, and Raytheon Travel Air, both JetOne and DCA have some strong goals in mind for the growth of the program.

At the end of the year, JetOne expects to increase its fleet to eight aircraft and hopes to double that number next year.

Planning to grow its business in a controlled fashion, Scicluna states, "We're looking at 35 percent growth per year at a minimum. We think that's obtainable.

"Research tells us that the fractional industry is still in a very explosive stage. There's a lot of growth and a lot of potential for us. We think we can meet those numbers," he states.

Neither party is concerned that the charter and fractional businesses will compete with each other. Scicluna envisions the opposite. "Approximately 80 percent of the people that are in fractional ownership are new to the business. As we track new clients through business aviation and as their needs grow and their needs expand, they might in fact decide during their ownership they need to own their own airplane and we would pass the baton over to DCA for full management services for those clients."

Though both Scicluna and Taylor expect some migration between the two businesses, they see it as an opportunity not only to bring new clients into the market, but to also maintain business relationships with them.

Taylor says, "We're at the end of the ramp. Quite honestly you don't just drop in here. You came down here on purpose... We're looking for those folks that keep coming back because they appreciate the level of service they get here. We know these people and they know us and trust us."