If a fractional owner decides that it’s all just too much, he can sell his share back to the company after five years for an amount based on his or her airplane’s fair market value.
There are other, less expensive ways to fly aboard private jets these days. A new company, Social Flights, allows users to book seats on chartered jets for point-to-point service for about the same price as flying a scheduled airline. Still, more than eight of 10 NetJets customers renew their contracts, says a company spokesperson.
Returning clients no doubt get hooked on the attention, especially when compared to the impersonal, cattle-car-like service that most commercial airlines offer. To accommodate owners afraid of turbulence, for example, NetJets pilots will navigate routes that steer clear of projected patches of rough air. For those fearful of flying over water, pilots have been known to follow shorelines for as long as possible, even if the route added hundreds of miles to a transoceanic trip. Good luck getting love like that from Delta or United.
NetJets traces its Ohio roots to 1964, when U.S. Air Force Brigadier General Olbert Fearing Lassiter, who had retired in Columbus, came up with the idea of selling chartered jet transportation to civilians, affording them the same kind of swift, luxurious air service to which Lassiter had become accustomed while a flag officer. He secured financing, acquired some Learjets and Dassault Falcons, hired mostly former Strategic Air Command pilots, and assembled a high-profile corporate board of directors that included, among others, actor Jimmy Stewart, himself a former bomber pilot and one-star Air Force Reserve general. Thus was NetJets’ predecessor, Executive Jet Airways, born.
Within 17 months, according to a June 1966 Time magazine story, EJA (later Executive Jet Aviation) had 87 clients and was earning nearly $3 million a year. IBM and Xerox executives regularly chartered the company’s aircraft. So did Playboy founder Hugh Hefner.
Paul Tibbets, pilot of the Enola Gay, the Boeing B-29 that dropped the atomic bomb on Hiroshima, took over as EJA president in 1976. Before the end of the decade, the company’s client list had nearly tripled.
Wall Street investment banker Richard Santulli saw plenty of room for growth. In 1986, two years after acquiring EJA, Santulli was credited with conceiving what remains today the secret sauce of fractional jet ownership: All owners sign a "master interchange" agreement, allowing each to use any of the others’ jets, and vice versa. No longer wedded to one airplane—which can pose problems when you’ve got a big investor meeting in San Francisco on the same day your co-owner wants to fly his kids to Disney World—the fractional owner under Santulli’s model suddenly had at his disposal an entire harem of airplanes.
"That’s when everything took off like crazy," says NetJets’ president Noe.
By 1998, the list of fractional owners had grown to more than 1,000. One owner, Berkshire Hathaway chairman Warren Buffett, liked the arrangement so much he bought the company. Three years later, Executive Jet changed its name to NetJets, in part, says Noe, to distance itself from negative news reports that used the phrase "executive jet" anytime a private business aircraft was involved in a mishap.
Amid the Great Recession, NetJets and its competitors have struggled. As business travel in general dropped, so did fractional jet ownership. NetJets was forced to cut staff, furlough 495 pilots, and shift its headquarters from New Jersey back to Ohio. Santulli stepped down in 2009 and was replaced by one of Buffett’s top lieutenants, David Sokol, who resigned in March from Berkshire Hathaway and as NetJets’ chief executive officer under suspicion of ethics violations in stock trading. NetJets’ new CEO is Jordan Hansell.