At Flexjet, the Objective of Achieving Sustainable Growth Draws Ever Closer

When U.S. companies released a wave of cost extraction exercises in the wake of the 2008 financial collapse, few executive perks appeared riper for the plucking than the private jet. The charter aircraft and private jet services industries have been trying to return to pre-downturn growth levels ever since, and while growth remains the ultimate goal, just how a firm achieves growth appears to have changed forever. Or so the management of Flexjet tells us.

Back in the mid-1990s, having helped to pioneer the concept of fractional jet ownership (along with its rival and predecessor, Netjets), Flexjet tapped into a new wide tier of jet-setters by promising private jet conveniences at a fraction of the cost. The key to Flexjet’s success was a flagship bottom-step offering — a 1/16 share of a jet, or what computes to 50 hours of annual flight time, which to many was easier to swallow than one share of a jet, which usually is equivalent to 800 hours of flight time per year. This ownership model spurred years of sustainable growth right up until the downturn, according to Flexjet Vice President of Sales and Marketing Bruce Peddle.

Today, the middle-market firm serves 1,100 clients and employs 750 employees, including what is estimated to be the largest nonunionized pilot workforce, numbering 325. Of course, having Bombardier — the largest manufacturer of private aircraft in the world — as a parent company has given Flexjet a significant advantage. Or is it the other way around?

Says Peddle: “We are the largest customer of Bombardier, so all of the flight and operational experience that we accrue as the operator of the Bombardier airplanes has become invaluable information to Bombardier as far as how the product is working in the field goes.”

According to Peddle, while Flexjet’s fleet is made up exclusively of Bombardier planes, the firm operates largely independently, acquiring planes from its Canadian parent through “arms-length transactions” and building a company focused on customer experience, rather than on the manufacturing of aircraft. This focus, Peddle claims, has become only more intense since the downturn.

“How we work with new customers today has really been influenced by how we reacted in 2008,” explains Peddle, who says that back in 2008, the middle-market firm understood that greater flexibility would be a necessity going forward.

“Rather than just say ‘Okay, let’s end the relationship,’ we took a very objective view and instead said ‘Well, if this relationship isn’t working for you, how do we change that?’ And in many cases, we were able to retain the client,” adds Peddle, who says that Flexjet also doubled down on its efforts to better track the travel patterns of individuals to help determine a better fit for its fractional customers.

“Whereas in the past I think we would have written you a 50-hour contract and said, ‘That’s your fractional relationship,’ today we’re saying ‘Let’s understand what your flying patterns are and what works best for you,’ and I think as an industry we’re starting to see the lines blur between the different products: charter flying, fractional flying, whole aircraft ownership, and different elements of each approach being tailored into different solutions,” says Peddle.

Along the way, Flexjet made an interesting discovery concerning its clients. “Our clients don’t tend to delegate certain decisions — they are very resourceful when it comes to exploring our different program options on their own, and we see them researching solutions digitally. In fact, in 2012, about 85 percent of new business was in some way digitally driven,” Peddle notes.

However, the biggest driver of growth for Flexjet remains the economic sentiment of its clients, according to Peddle.

“Over the course of 2012, we saw some quarters of decline in the market as well as some quarters of encouraging growth, so we believe that the market has flattened. But we are now waiting for sustainable growth. If it doesn’t happen in 2013, we believe that it’s just around the corner in 2014 or 2015,” Peddle adds.