Warren Buffett’s NetJets Inc. is buying used jets from customers who want to sell their own plane and join the aircraft-management company’s fractional-ownership plan.
The Aircraft Transition Service was created in August after inquiries from potential clients, said Adam Johnson, global senior vice president of sales for Columbus, Ohio-based NetJets.
“We have almost 10 big prospects that we’re working with right now, so we’re pretty excited about it,” he said in an interview yesterday at the National Business Aviation Association conference in Las Vegas.
The unit of Buffett’s Berkshire Hathaway Inc. (A:US) is wooing aircraft owners by offering an alternative in what Johnson called a “still tough” market for used private jets. Average prices for such planes have fallen in 20 of the past 32 months and are down 43 percent from the peak in November 2008, according to an Oct. 14 JPMorgan Chase & Co. report.
NetJets has made a used-jet transaction under the new program, said Elizabeth Wise, a company spokeswoman. She said she didn’t know the number of used jets bought.
NetJets can use its size and contacts in the industry to help sell used planes, easing the decision to leave behind details such as maintenance, safety, flight plans and permits that come with direct jet ownership, Johnson said.
The company has a fleet of about 700 aircraft, he said. It in 2010 began a 10-year effort to renew its fleet with $17.6 billion of new-plane orders.
“If you own your own airplane, you’re in the business of aviation and there’s a lot of work behind that,” Johnson said. “With our program we handle everything.”
Under NetJets’ fractional-ownership plan, customers buy as little as a 1/16 share in an aircraft.
NetJets competes in the fractional-ownership business with companies such as Directional Aviation Capital, an investment fund that agreed to buy Bombardier Inc. (BBD/B)’s Flexjet unit in September. Directional is poised for another acquisition that would boost its fleet to about 200 aircraft, second only to NetJets, Kenn Ricci, a principal in the firm, said in an interview this month.
NetJets’ used-jet purchases are just a tool to help sell more fractional-ownership shares, and it isn’t getting into the wider business of buying and selling such planes, Johnson said.
“There’s a huge capacity of used aircraft still out there,” he said. “That’s going to take several years to flush through.”
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