Cessna, Tag Launch Fractional

Cessna Aircraft and charter operator TAG Aviation have launched a $20 million joint venture company that targets the low end of the business jet fractional ownership market.

Called CitationShares, the new fractional business will offer shares of Cessna's entry-level jets-the Citation CJ1 and the Citation SII Bravo-primarily to U.S. customers seeking lift east of the Mississippi River.

"We always knew we'd enter the fractional business when the time was right," said Gary Hay, Cessna's CEO. "We have studied this market and believe that the ideal opportunity has presented itself as we join forces with another outstanding company."

The deal is based on Cessna's acquisition of a 50% stake in TAG StarShares Holding, a fractional ownership business Wayfarer Aviation founded before TAG's U.S. unit bought the former Rockefeller family flight department last year.

Wayfarer StarShares sought to create a fractional market for the Beech King Air series of turboprops, catering mainly to weekend/leisure traffic using Westchester County Airport (HPN), the business aviation hub just north of New York City.

Steve O'Neill, StarShares CEO, said he expects most of the King Air share owners to migrate into the Citation program, as "experience is showing us that people would rather pay more to fly in a jet."

O'Neill will stay on as CitationShares' CEO, but the joint venture's seven-member board will have equal representation from both TAG and Cessna. The seventh member is Neil Armstrong, the first man to walk on the Moon.

CitationShares will be based at HPN, and six used Citation Bravos sold against delivery positions on new aircraft will form the core of the CitationShares fleet. Cessna plans to add 12 new aircraft to the program before the end of 2001, and Hay said larger Citations could be offered for fractional sale, "if the demand is there."

Hay said CitationShares' major selling point is its lower entry, monthly and hourly costs than new-aircraft fractional competitors Bombardier Flexjet, Raytheon Travel Air and Executive Jet Aviation (EJA), each of which offer shares in larger aircraft.
EJA also happens to be Cessna's largest customer, with hundreds of Citations on order. Hay said EJA chief Richard Santulli was consulted prior to the CitationShares launch.

"Richard was positive, and he sees CitationShares as a means of expanding the fractional ownership base," Hay said. "Richard believes there is plenty of work for everyone."

By Paul Richfield