Can Private Jets Truly Make Money From Operations

[flyingpotato]

From inception they were intended for corporate fleet departments, not airline style operations. The recent effort to squeeze profits from operations when traditionally private/charter companies made the bulk of their profits from management and sales, has some downsides. The big company that shall remain unnamed that's embarked on squeezing profits from operations, when it previously hadn't, has found itself in acrimonious labour disputes, overworked staff, and high attrition rates. Not exactly what the Oracle would want to be known of. Yet when one looks at BNSF, and how the rail business now runs, it's not entirely unforeseeable that it may penetrate the once cozy corner of biz jet operations. Add to this 135 operating certificates combined with large scale operations, but without 121 level scrutiny or compliance. This seems like a perfect example of regulatory arbitrage. Who shall jump first? Regulatory agencies concerned with safety, or companies policing themselves more strictly than they're legally required to preserve profits? And can this attempt to profit from operations truly succeed?

 

[Boris Badenov]

Perhaps a link to explain what you're on about?

 

[Pilot Fighter]

Perhaps a link to explain what you're on about?

I got this.

 

[Boris Badenov]

I got this.

View attachment 78075

Not currently undergoing Panfar? Your reason and expectations of coherence are lies. His is the superior Intellect! Provided anyone can figure out what's going on here. I feel sure.

 

[Skåning]

The big company that shall remain unnamed

No please, name names

 

[BobDDuck]

No please, name names

No idea what he's talking about, but NetJets has been screwing with their union recently.

 

[BEEF SUPREME]

I mentioned that operators like Wheels Up, XOJET, Netjets etc. are basically big pyramid schemes once. The uncontrollable hysteria and madness from pilots that resulted just from me mentioning this wasn’t worth it. So I just stopped working at places like that.

No these places aren’t sustainable. Once the investors backing the operation realize that the only way to make a small fortune in aviation is to start with a large one, the house of cards implodes.

So you’re not wrong but to the OP: You cracked the code bro. Don’t talk about it and get a job at an airline where the name on the paycheck matches the one on the side of the airplane ASAP.

 

[flyingpotato]

I mentioned that operators like Wheels Up, XOJET, Netjets etc. are basically big pyramid schemes once. The uncontrollable hysteria and madness from pilots that resulted just from me mentioning this wasn’t worth it. So I just stopped working at places like that.

No these places aren’t sustainable. Once the investors backing the operation realize that the only way to make a small fortune in aviation is to start with a large one, the house of cards implodes.

So you’re not wrong but to the OP: You cracked the code bro. Don’t talk about it and get a job at an airline where the name on the paycheck matches the one on the side of the airplane ASAP.

Those three are very different. The big one is mostly an aircraft dealer now attempting to squeeze margins from operations.

 

[flyingpotato]

Those three are very different. The big one is mostly an aircraft dealer now attempting to squeeze margins from operations.

Vista's debt fuelled structure is opaque: it sells and buys aircraft from itself through entities controlled by Mr. Flohr. WU is probably the most reliant on operational margin. Yet the pyramid scheme isn't a good explanation. They essentially guarantee future returns in the form of hours in return of an upfront investment, then deliberately run a multi year waitlist to fund current operations. They're sustainable so long as there's a backlog of confirmed purchases. Airlines do this with future ticket sales.

Private jet disrupter: the debt-fuelled ascent of Thomas Flohr’s VistaJet

Lossmaking airline’s founder has become an aviation superstar as his company amassed a fleet of luxury aircraft

www.ft.com

 

[jrh]

From inception they were intended for corporate fleet departments, not airline style operations. The recent effort to squeeze profits from operations when traditionally private/charter companies made the bulk of their profits from management and sales, has some downsides. The big company that shall remain unnamed that's embarked on squeezing profits from operations, when it previously hadn't, has found itself in acrimonious labour disputes, overworked staff, and high attrition rates. Not exactly what the Oracle would want to be known of. Yet when one looks at BNSF, and how the rail business now runs, it's not entirely unforeseeable that it may penetrate the once cozy corner of biz jet operations. Add to this 135 operating certificates combined with large scale operations, but without 121 level scrutiny or compliance. This seems like a perfect example of regulatory arbitrage. Who shall jump first? Regulatory agencies concerned with safety, or companies policing themselves more strictly than they're legally required to preserve profits? And can this attempt to profit from operations truly succeed?

I don't have any idea what your post is trying to say. It would help if you wrote thoughts less vaguely and more directly.

With regard to the last line: yes. All kinds of businesses can succeed. It's only a matter of figuring out a way for profits to exceed losses. New businesses and business models are created every day. That's truth for the Oracle of Omaha. Bet on the innovation and resourcefulness of Americans to keep building businesses.

 

[mightynimbus]

From inception they were intended for corporate fleet departments, not airline style operations. The recent effort to squeeze profits from operations when traditionally private/charter companies made the bulk of their profits from management and sales, has some downsides. The big company that shall remain unnamed that's embarked on squeezing profits from operations, when it previously hadn't, has found itself in acrimonious labour disputes, overworked staff, and high attrition rates. Not exactly what the Oracle would want to be known of. Yet when one looks at BNSF, and how the rail business now runs, it's not entirely unforeseeable that it may penetrate the once cozy corner of biz jet operations. Add to this 135 operating certificates combined with large scale operations, but without 121 level scrutiny or compliance. This seems like a perfect example of regulatory arbitrage. Who shall jump first? Regulatory agencies concerned with safety, or companies policing themselves more strictly than they're legally required to preserve profits? And can this attempt to profit from operations truly succeed?

Remind me not to do mushrooms when you are around

 

[CFI A&P]

Vista's debt fuelled structure is opaque: it sells and buys aircraft from itself through entities controlled by Mr. Flohr. WU is probably the most reliant on operational margin. Yet the pyramid scheme isn't a good explanation. They essentially guarantee future returns in the form of hours in return of an upfront investment, then deliberately run a multi year waitlist to fund current operations. They're sustainable so long as there's a backlog of confirmed purchases. Airlines do this with future ticket sales.

Private jet disrupter: the debt-fuelled ascent of Thomas Flohr’s VistaJet

Lossmaking airline’s founder has become an aviation superstar as his company amassed a fleet of luxury aircraft

www.ft.com

There it is, are you a current or former VJ?

 

[flyingpotato]

There it is, are you a current or former VJ?

No. Watched too many empty 7500s squatting on ramps, and figured I'd rather avoid.

 

[CFI A&P]

No. Watched too many empty 7500s squatting on ramps, and figured I'd rather avoid.

It kind of sounds like you have a specific operator in mind, and if it isn’t VJ, which one?

 

[mikecweb]

Cool.

 

[Richman]

Is this like the new subscription free internet camera that’s disrupting the industry? Or the mosquito catcher? Magnetic belt? Free solar panels and a Tesla wall?

With all these people disrupting all these industries, I can’t keep them straight.

 

[CoffeeIcePapers]

Is this like the new subscription free internet camera that’s disrupting the industry? Or the mosquito catcher? Magnetic belt? Free solar panels and a Tesla wall?

With all these people disrupting all these industries, I can’t keep them straight.

Subscription air filters for your AC! The industry is ripe for disruption. Can’t let those fat cats at boomer Home Depot or Walmart continue to get rich.

 

[BEEF SUPREME]

Those three are very different. The big one is mostly an aircraft dealer now attempting to squeeze margins from operations.

Is it just me, or is it weird you asked how the 91K or 135 industry makes money with private jets. When you already know the answer??

 

[flyingpotato]

Is it just me, or is it weird you asked how the 91K or 135 industry makes money with private jets. When you already know the answer?

The question is if the shift to large scale operations for profit rather than traditional aircraft sales and management necessitates a higher level of scrutiny given some of these companies are approaching 1000 aircraft fleets, with the same or more flights a day. Is that company an outlier therefore it can be regulated through company specific op-specs, or should there be a fundamental enhancement of operating certificates at the federal level for operators above a certain threshold of flights and fleets? And does squeezing margins from operations rather than relying on sales and management actually work? The conflict is clear here when reliance on operational efficiency for profits incentivises following the bare minimum of regulations which may not be enough when conducting large scale, airline style operations.

 

[pwttogfk]

The nice thing here is that doing lots of flying and having a healthy SMS program (which if the large operator’s name rhymes with “PetJets” it does) gives tons of data. Is there the usual acrimony between management and union? Yup. Is there a lower level of safety than at 121 carriers? I’m not privy to the data, but I’d guess it’s somewhere between the level of airlines that do and don’t sell their own tickets. Is it higher than your friendly local 135? Again, I don’t have data but I’ll stick my neck out and say yes.

TL;dr this is a weird axe to grind.