By Alasdair Whyte, Corporate Jet Investor
Part 1 was an overview and brief history of XOJet touching on its strategic goals and fleet.
Part 2
The six principles of owned charter
The majority of aircraft that are used for charter in the US are owned by individuals or companies that make them available when they do not need them. This means that most charter companies do not worry about ownership costs. XOJET is one of a relatively small number of charter operators that own aircraft.
Despite ownership costs, XOJET CEO Brad Stewart believes that there are benefits from an owned fleet. As a former management consultant, he has identified six principles that an owner-operator needs to be profitable. These are: a closed loop network; a floating fleet; high utilization; direct distribution to customers; dynamic pricing; and scale advantages. Although he highlights that these principles may not work for new aircraft.
XOJET meets all of these tests.
More than 80% of passengers on XOJET aircraft come from its own sales team, including its programs. The company says that it sold more than 950 programs in 2016. This program includes Preferred Access (for a refundable $100,000 deposit); Elite Access (guaranteeing availability at 12 hour notice for $200,000 deposit and $8,500 hourly fee including fees and surcharges); and an Enterprise Access for corporates.
In the last few years, XOJET has also added sales offices in New York and Los Angeles to boost its direct sales. It is also about to open a new office in Palm Beach, Florida. This is on top of its headquarters in San Francisco and an operations centre in Sacramento.
XOJet and its 41-aircraft fleet are included in the Floating Fleets section of FlightList PRO‘s multi-search platform along with all 232 floating fleet aircraft and 14 operators. Free 30-day trials available here.
Most of the 20% of passengers that it does not sell directly come from charter bookings made from broker Sentient Jet (part of Directional Capital) and JetSmarter – both XOJET preferred partners.
XOJET boosts its utilization by not basing aircraft at one airport and having just two types (this also saves on crew and maintenance costs).
He believes any owner-operator needs a minimum of 15 aircraft. XOJET now has a fleet of 41 super midsize aircraft (GMJ has another six). In January 2017 TPG also acquired TMC, which had been XOJET’s preferred travel provider for a number of years. TMC has another 55 aircraft. He does not plan to order any more aircraft for XOJET soon.
He has no plans to launch XOJET outside the US but he is keen to add aircraft management – something the company stopped focusing on in 2006.
“We have clients who are flying a lot and we can help advise them on the pros and cons of owning an aircraft versus program,” says Stewart. “We have a fantastic platform and can offer owners great service. And it fits into our advisory strength.”
He says that the company can launch management itself but is also interested in acquiring significant management companies.
By Alasdair Whyte, Corporate Jet Investor
Part 2 of 3
Source: Alasdair Whyte, Corporate Jet Investor, 6/16/17
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