As travelers seek value, their favored business-aviation model is shifting
The business of private aviation has gone through significant changes since the Great Recession. While some providers are reporting returns to pre-downturn sales levels, the business-aviation landscape is different than it was before 2009.
Consolidation has happened across the industry. Leading companies have been acquired by competitors, while others have decided to exit the market. A Florida-based fractional provider declared bankruptcy last year and abruptly wound up its operations, leaving clients stranded. This mass consolidation has forced many business travelers to migrate to other business-aviation options.
In an increasing number of cases, many clients have moved into “disruptive” but more client-focused business models. XOJET is one of several companies offering more cost-efficient ways to fly privately. The 8-year-old firm has created a hybrid business model that combines fleet ownership with on-demand charter. Unlike with fractional aircraft ownership, XOJET clients do not buy an actual share of the aircraft or have to outlay a large acquisition fee.
XOJET Preferred Access™ starts at $200,000, which buys flight time on XOJET’s fleet of super-midsize business jets. XOJET maintains full operational control over its Citation X and Challenger 300 fleet as well as overseeing the safety infrastructure, maintenance, and crew training.
“This level of control separates us from a traditional charter company, where you don’t always know the maintenance history of the aircraft or its pilots,” says Bradley Stewart, XOJET’s CEO. “At the same time, we don’t require clients to invest in the same big acquisition costs or heavy long-term financial commitments required by fractional ownership.”
The XOJET model has been embraced by both private and corporate flyers, with profits expected to be up 15%–20% in 2014. XOJET has a 95% client retention rate. Stewart says that his company’s success is due to its fleet ownership, client-service mind-set, transparent advice, flexible terms on all three of its on-demand charter programs, and institutionalized practices that save clients money.
XOJET’s new tagline, “Take Command,” is more than a slogan. “Everything we do is to let our customers take charge of their flying habits,” says Stewart. “Where people lose money is by chartering a plane that is too big, or paying round-trip when you need a one-way fare. We try to find the most efficient way for our clients to fly.” At least three other start-ups have adopted the new XOJET model, though the others focus on smaller business aircraft for regional travel.
XOJET, 650.676.4700, www.xojet.com