CitationShares, formerly the fractional arm of Cessna Aircraft, has rebranded itself as Citationair by Cessna, a retooling the company says will reinvigorate a fractional, jet management and jet card industry besieged by economic hardship.
“We operated for nine years under a traditional fractional aircraft model, copying what everyone else did at first” said Steve O’Neill, Citationair CEO, at a press conference in New York City this morning to launch the new brand, an event held in the same location where the company first launched CitationShares 10 years ago. “We’ve spent the past nine years challenging every decision the fractional industry has made, and we’ve learned an awful lot from our mistakes.”
Since beginning in 2000 with seven Citation Bravos, all purchased as “core” assets used to support excess capacity, CitationShares acquired 111 Cessna Citations, adding jet card, aircraft management and most recently, corporate solutions, in addition to fractional offerings along the way. Fleet size today is 80 aircraft, though only 69 are active as the 11 Citation Bravos have been parked. “We decided on downturn to operate only the most efficient aircraft,” says O’Neill, adding that the fractional industry as a whole is down as much as 30% since the fourth quarter of 2008. “People who needed liquidity sold,” he says.
Citationair is aiming to fix two key problems with traditional fractionals – the need for a large number of core aircraft used for excess capacity, and disconnects between fractionals, jet cards, aircraft management and other offerings included in many business models. O’Neill says there are about 750 aircraft in use at the top four fractionals, and he estimates as many as 300 are owned by the companies to be used as core aircraft, making capital costs “prohibitive”.
Instead, Citationair is working directly Cessna as part of its new jet management offering to build a core fleet owned by Cessna customers who want their aircraft managed and who are paid for flights used to handle excess capacity.
Citationair chief operating officer William Schultz says other fractional providers cannot use customer aircraft as core lift in part because the companies’ jet card and jet management arms are not fully integrated. O’Neill cites 15 sales from Cessna over the past few months as evidence that the idea is working.
He notes that company’s new business model will depend less and less on fractional buyers for revenue. “We’re going to focus less on fractional shares,” he says. “Fractional will be 60% of our business and getting smaller. In our case, that happens to be a very good thing.”