NetJets
The world's largest private jet aircraft fractional ownership company, owned by Berkshire Hathaway since 1998, offering shared ownership of private aircraft.
NetJets
Founded: 1964 (as Executive Jet Airways) Acquired by Berkshire: 1998 CEO: Shum Will Status: Berkshire Hathaway subsidiary
Overview
NetJets is the world's largest private jet aviation company, operating a fractional ownership program that allows individuals and corporations to purchase shares in private aircraft. Owners have access to NetJets' fleet of hundreds of jets worldwide.
History
Early History
- Founded in 1964 as Executive Jet Airways
- Pioneered the concept of fractional aircraft ownership
- Initially struggled with regulatory and operational challenges
Berkshire Era
Buffett acquired NetJets in 1998 and has maintained it as a Berkshire subsidiary despite it being a notoriously difficult business:
"If you'd like to see how a business can go wrong, look at NetJets."
Business Model
Fractional Ownership
Customers purchase a share of a specific aircraft type:
- Typically 1/8 to 1/2 ownership fractions
- Pay monthly management fees
- Pay hourly usage fees
Fleet
NetJets maintains a massive fleet:
- Gulfstream aircraft
- Bombardier Challengers and Globals
- Dassault Falcons
- Airbus aircraft
Challenges
Capital Intensive
- Requires constant fleet investment
- Aircraft values fluctuate
- Maintenance costs are substantial
Competitive Pressures
- Competitors like Flexjet and Directional
- Used aircraft market competition
- Economic sensitivity
Buffett's View
Despite calling NetJets a "terrible business" at times, Buffett has kept it in the Berkshire family:
"NetJets provides an invaluable service to Berkshire executives and has become the preferred way for many wealthy individuals to travel privately."
Related
- warren-buffett — Who acquired NetJets
- berkshire-hathaway — Parent company
- private-aviation — The industry NetJets operates in
Source
Berkshire Hathaway Annual Meetings