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Author: rev2217 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 2881  
Subject: Re: New Learjet 70 and 75 Date: 6/27/2012 7:39 AM
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Jim,

Yes, that's a good point, and one that might be worth digging into to see just how much weight to give to these considerations.

The economics of so-called "fractional jet share" operators should be pretty similar to that of airlines with regard to the number of distinct types of aircraft in their fleets.

Here, you have to remember that, under a "fractional ownership" contract, the operator promises the availability of a particular model of aircraft, with a flight crew, for a specific number of hours per year (or per month). The operator does NOT promise the availability of a specific aircraft and crew. Like a major airline, the operator maintains enough aircraft and crews to meet this contractual obligation, knowing that all of its customers will not need aircraft at the same time. The operator then schedules aircraft and crews as its customers request their availability, keeping track of each customer's actual hours of use. Of course, the operator also must schedule each aircraft for maintenance. Like a commercial airline, each FAA "type" of aircraft in its fleet requires a separate pool of pilots and technicians and a separate inventory of spare parts.

I've always had the impression Bombardier had painted itself into a corner with its fractional jetshares program since it could not offer customers the wide selection Netjets can. As you probably realize, Flexjet offers only Bombardier products.

Historically, I think that Bombardier started the Flexjet operation before NetJets took off. Once you have signed contracts with customers, it's rather difficult to shut down the business. A merger with a competitor, following either a sale or an acquisition, would be the most economical way to do it.

I see some of that demand going to turboprops, and looking further out, to larger turboprops which both Bombardier and ATR say they're planning.

I don't foresee that in North America. If given a choice, most airline passengers will choose a jet over a turboprop every time, so long as there's a choice. This was manifest in the mid-1990's, when Comair's passengers consistently chose flights operated with regional jets over flights on the same routes times operated with turboprops, even when the latter were at more convenient times -- and other regional airlines' passengers started flocking to Comair to fly on regional jets, too.

RJs have two major drawbacks. The primary concern cited for many is fuel-efficiency. With their per passenger seat-mile cost being slightly higher than larger commercial aircraft they're at a distinct disadvantage. Even if the price of fuel drops and remains lower airlines will remain cautious because they don't want to get into a situation where they're operating less fuel-efficient fleets should prices rise again.

Yes, and turboprops have one major drawback. Passengers avoid them whenever there is an alternative, so they will fly nearly empty on routes where there is a competitor with regional jets. They don't generate revenue when they fly nearly empty!

Newer, cleaner, quieter, more fuel-efficient turboprops is another possibile game-changer.

As best I can tell, the "newer, cleaner, quieter, more fuel-efficient turboprops" still operate at slower speed and lower altitude, with more susceptibility to turbulence, and are still not as quiet as regional jets. While the speed and the altitude might not be as significant on routes under two hundred miles or so, the susceptibility to turbulence and the thumping noise are still a very significant factor for passenger comfort.

Norm.
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