Business models to pull the trigger on growth

opinion

by Fayaz Hussain

December 22, 2025

“If a far-sighted capitalist had been present at Kitty Hawk in the early 1900s he should have shot Orville Wright. He would have saved his progeny money,” wrote Warren Buffett in his 2007 letter to shareholders. “But seriously, the airline business has been extraordinary. It has eaten up capital over the past century like almost no other business because people seem to keep coming back to it and putting fresh money in.”

Buffett, whose company owns NetJets and Flight Safety International, was making a joke. But as an industry, airlines have on average struggled to deliver a positive return on capital since the start of commercial flight. But that is just the average. Some state-owned airlines would struggle to make a profit selling free diamonds. A few airlines, however, stand out with great returns.

A new report by charter broker and consultant ACC digs into the financial status of some of the largest business jet markets. ACC analysed public accounts for Vista, NetJets, Flexjet, Wheels Up, flyExclusive, AirX and Jet Linx.

“When we started studying the private aviation space, our initial goal was to understand the financing needs in the industry,” Naishal Chag, manager, Consultancy at ACC Aviation tells CJI. “What was surprising to me is that not everyone has as much debt, so some operators, of course, need more financing than others and the difference is huge. Understanding the different business models was key.”

Chag says that business jet operator debt – typically non-investment grade at around B+ – is similar to airlines. “Assessing credit quality and financial resilience in this context necessities a focus on cash-flow adequacy, particularly the operator’s ability to cover debt service from core operations,” says Chag. “Vista and Flexjet, for example, maintain adequate ratios, signalling the ability to service operations.”

“Everybody wants to access cheap financing,” Chag says. “To reduce the cost of capital, you are going to need scale and credibility in the market. For example, Vista has been able to reduce their cost of capital because they are credible, they had the financials to show for it and they have been in the industry for so many years.”

Chag says it is hard to compare companies that have different strategies – like fractional, aircraft managers and owned fleet operators. He recommends using revenue per market value of aircraft (RPM) as a way of comparing operators with very different fleets.

“Operator-owned models will definitely have higher RPMs because they need to utilise the aircraft as it’s on the balance sheet,” Chag explains.

As the industry evolves, the success of players will depend on matching business models to market realities, he says. Regulatory changes, shifting tax incentives and consolidation pressures will continue reshaping the competitive landscape.

Buffett never speculated on what a communist should have done if they had been in North Carolina 122 years ago this week. They would probably have celebrated. Karl Marx was a big fan of capital destruction. But then again, anyone who has had to fly on Aeroflot would agree with Buffett.