Flight Options Opts for Used Aircraft That Cost Less and Are Available Now

Flight Options is a new Cleveland-based fractional ownership company slated to begin operations this month. The firm is starting with a fleet of eight used aircraft: three Citation IIs, three Beechjet 400As, and two Hawker 800s in nationwide service.

Flight Options is focusing on used aircraft because they offer a less-expensive buy-in for customers, and because manufacturing backlogs are extensive--making it difficult to assemble a fleet of new aircraft.

"We're simply trying to lower the cost of business transportation for a larger group of people," said company president Darnell Martens. Martens helped put together the business plan for Flight Options, a unit of Cleveland-based Corporate Wings (Booth 5973). The management team also includes Richard Heckman, who helped forge Raytheon's Travel Air fractional program. Heckman takes charge of Flight Options marketing.

Martens has cast the new company as a niche player in the small, medium and large aircraft segments, and said the key advantage Flight Options offers is a lower initial acquisition cost. "It's not about affordability, its about justification," he said. "If you bring the price down, that justification takes place at an earlier point."

The company plans to add about one aircraft every two weeks, with the next model to come on line the Gulfstream III, with Dallas Airmotive Stage 3 hush kits. Flight Options has not ruled out buying new aircraft, and has thus far held discussions with three manufacturers, Martens said.

Flight Options' parent company Corporate Wings, with its recent acquisition of Miller Aviation in Binghamton, N.Y., has a total of 500 employees and $100 million in annual sales. Flight Options is backed by an investment banking firm and has initial capitalization of $60 million, according to Martens.

Typical pricing for shares is about one third less than pricing of similar aircraft offered by the three major national fractional companies: NetJets, Raytheon's Travel Air and Bombardier's FlexJet. Other than that, the provisions of Flight Options are similar to other programs. Shares are sold in one-eighth increments, with each entitling the owner to 100 hours of occupied time in the aircraft.

The program includes a monthly management fee and a per-hour charge, but there is no charge for unoccupied time in the aircraft. Guaranteed availability is as short as four hours with a quarter share. There also are provisions for simultaneous aircraft use and for using aircraft models other than the one in which a share is owned. Flights will be operated under FAR Part 91, but the aircraft will all be placed on a Part 135 charter certificate.

"We're definitely, without question, going to have to prove ourselves in the marketplace," Martens said. Acquisition price is one way the company plans to do that. Service is the other. Flight Options plans to maintain a 50 percent core fleet-to-owned aircraft ratio to limit the amount of flying that is sold off to outside charter operators to about five percent, Martens said. The cabin is another area of emphasis. Aircraft are completely repainted and refurbished to a standard configuration that will include cabin electronics in all the aircraft. The basic suite includes dual video and audio systems, and LCD screens and switches at each seat.

The company also believes that used aircraft represent a better value to customers because residual value is relatively higher than with new airplanes, Heckman said. New aircraft tend to depreciate initially, before pricing levels out and then begins to appreciate.

"Fractional ownership isn't about a love of airplanes. It's about transportation," Heckman said. The airplanes have to be on time, in good condition, and they have to be a sound investment, he said.

By Perry Bradley