Helium Report spoke with Flight Options CEO Michael Scheeringa last week by phone. Due to the length of the interview, we’ve divided the story into three parts, which we’ll publish on subsequent days.

Flight Options is a wholly owned subsidiary of Raytheon (NYSE:RTN), which sold its aircraft business to Goldman Sachs and Onex last week for $3.3 billion. Scheeringa explained the sale does not affect Flight Options since his firm “has never been limited to [Raytheon] products,” citing the Cessna Citation X as an example of an aircraft in their fleet manufactured by another company.

Scheeringa (photo, right) joined Flight Options in 2004, formerly serving in a variety of executive-level positions at US Airways. With nearly 20 years of experience in the aviation industry, Scheeringa is passionate about the private jet business and bullish about Flight Options’ growth potential.

We’ll start with his views on fractional jet programs (part 1), discuss his thoughts on private jet safety (part 2), and wrap up with Scheeringa’s overview of Flight Options’ key differentiators (part 3).

Fractional Jet Programs vs. On-Demand Charter

Flight Options currently offers two private jet programs: fractional ownership and a fractional membership program. (See Part 3 for more detail on Fractional First and JetPass Ultimate Travel.) Scheeringa maintains the key reason consumers choose fractional over charter jet services is safety. He emphasized fractional jet providers have never had a loss of life and said consumers are willing to pay a premium to fly fractional.

Scheeringa estimates fractional programs cost 35% more than jet charters, on average. “In some cases, the rates are the same; sometimes it’s twice the price,” he noted.

He provided two examples to illustrate his point. According to Scheeringa, a round-trip from San Francisco to Van Nuys costs about $5,000 for charter and the same trip is $10,000-$12,000 on Flight Options – a 100% differential. Conversely, a trip from the Bay Area to Sun Valley, Idaho could cost $12,000 for a fractional flight, but even more for chartered flights due to deadheads each way.

Economics Always Prevails

Noting “economics always prevails,” Scheeringa explained consumers are becoming savvier to the alternatives. For the first trip, if they’re comfortable with charter, then they’d chose the lower cost option.

In addition to jet safety, Scheeringa listed three other reasons as to why consumers choose fractional over chartered jet flights:

• Guaranteed access (typically 8 hours or less)
• One-stop shopping
• Consistency of product (majority of planes owned by fractional fleet)

Indeed, Scheeringa highlighted the fragmented nature of the charter jet industry, claiming more than 2,000 charter companies fly over 4,000 airplanes.

In Part 2 of this series, Michael Scheeringa provides his views on why fractional jet programs are safer than chartered flights.

And in Part 3, Scheeringa explains how Flight Options has repositioned itself over the past two years, changing their product mix in an effort to better suit the needs of private jet consumers.

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