CitationShares, the new fraction ownership venture between Cessna Aircraft and TAG Aviation, has placed a firm order for 50 Cessna Citation business jets.

The order comprises a 50-50 split between two entry-level Citation variants, the upgraded CJ1 CitationJet and the Citation Bravo-an evolution of the Citation II.

Customer demand will determine the actual mix. Included in the $300 million deal is the order for 12 new Bravos announced at the CitationShares launch in New York last month.

Cessna CEO Gary Hay said the purchase is an action independent of the two principals, an "arms length deal" involving cash deposits that will add to Cessna's backlog.

"We didn't move money from one pocket to another," Hay said, his sentiments echoed by Steve O'Neill, CitationShares' CEO: "They (Cessna) beat us up on price to prove it."

CitationShares is based on Cessna's acquisition of a 50% stake in TAG StarShares, the Beech King Air-oriented fractional business Wayfarer Aviation started before TAG bought the New York-based operator from the Rockefeller family last year.

The creation of the joint venture represents a combined $20 million investment by the two partner companies, and marks Cessna's entry into the hotly competitive fractional ownership market.

O'Neill (formerly StarShares CEO) said CitationShares has signed its first customer, and three others are near to signing. "One King Air 200 owner wants a quarter share of a Bravo, and two King Air 90 owners looking at shares of a CJ1," he said.

Cessna's Hay said there are no plans to expand CitationShares to Europe for now, but Luxembourg-based TAG's involvement with the program provides a "natural beachhead" for expansion.

"Going forward, we know we'll have to devise a strategy for Europe that gives us an advantage the competition does not have," Hay said.

Looking beyond the fractional fray, Hay said Cessna relies heavily on Europe for Citation sales, with 370 on European registers to date.

"The last two or three years have seen dramatic growth in Europe, compensating for some softness we experienced in the Latin American market."

By Paul Richfield