NetJets Europe Cuts Nearly A Third of its Flight Crew

NetJets Europe announced that it is to reduce its workforce by the equivalent of 300 full-time pilots as a response to the hard hit the economic crisis took on the corporate and private jet travel market. According to the industry journal Flightglobal, NetJets Europe has 60,000 excess duty days that they need to reduce. The company already cut its planned business jets delivery by 60% for 2009. Founded in 1986, the company offers its customers fractional shares of a jet, starting at a 1/16th interest for USD 425k, the equivalent of 50 hours annual flying. It later broadened its` services with on-demand charter, offering 25 hours of flight time for at starting price of USD 130k a year.

Net Jets Europe’s workforce reduction ends its rapid expansion for now, after hiring 341 pilots in 2007 and another 200 in 2008. The situation of the parent company NetJets Inc., the worldwide leader in fractional aircraft ownership, is not much better. According to the quarterly report of its owner, Warren Buffets Berkshire Hathaway, it lost USD 96 million in the first quarter of 2009.

The harsh slow-down of NetJets´ growth reflects the overall crisis of the private jet industry, where all major jet manufacturers announced heavy job cuts as well. As the General Aviation Manufacturers Associations reports, the delivery of business jets dropped by more than a third during the first quarter of 2009 and is not expected to pick-up anytime soon. Given the huge costs for flying on private jets the expenses for the purchase of new jets, fractional shares or charter were cut heavily as the crisis hits the corporate world. Which in the case of NetJets make up for 75% of the customers. Public Relations disasters such as when the three CEOs of close to bankrupt automakers flew in their corporate jets to Washington to beg for cash did hurt the private jet industry further.

While the public perception will most likely ease inline with overall recovery of the economy, it can be expected that it will take some time for the industry to get back pre-crisis levels. The market is awash with used aircrafts and companies are likely to fly their current fleet a few years longer rather than spending tens of millions for a new jet. However, the pain of flying commercial airlines, spending time in overcrowded airports and airplanes, and the inconvenience of stiffening safety regulation will only get worse. In the long-term the private jet business will benefit from these unsolved problems of the public air service. New business models based on the development of the low-cost “Very Light Jets” are likely to broaden the markets further, allowing cost-effective air-taxi services. This could justify private jet travel not only for the CEOs, but also for the middle management.