A brief history of NetJets


NetJets can trace its lineage back as far as 1964, when its predecessor Executive Jet Airways Inc was founded.

Back in 1964, business aviation was still in its infancy. Although several prop types were already flying, the jet age was less than a decade old and those aircraft that were flying were either owned by companies or by private individuals.

So, when a group of retired World War II Air Force generals got together they came up with the idea of building the world’s first business-aviation charter and management company. The company was officially incorporated on May 21 1964. On the board was actor James Stewart, himself a keen aviator.

The idea was simple: Build a fleet of aircraft and offer flights on them to anybody who could afford to pay for it.

The company flew a small fleet of 10 LearJet 23s. The LearJet 23 was at the time brand new, having had its first flight in the year before Executive Jet Airways was formed. Capable of transcontinental flight, the LearJet 23 was like the Ferrari of the skies in its day. It was fast, it was sleek and stylish and everybody either wanted to own one or to fly in one.

Over the course of the next 20 years the company built itself up, establishing itself as one of the premier charter and management companies. So much so that it began attracting outside interest.

The company was purchased in 1984 by Richard Santulli‘s RTS Capital Services.

Santulli was looking to introduce a new style of jet ownership, and in EJA, which by then had been renamed Executive Jet Aviation, he saw a company with a trusted and established name that he could use as a platform for his new idea.

Santulli believed that there would be a market for a new style of aircraft ownership, where, rather than buying the whole aircraft, owners could buy a percentage share in an aircraft, with other owners also buying shares in the same aircraft. Depending on how much of a percentage share the owner bought would deliver the number of guaranteed hours that the shareholder would be able to use the aircraft for.

This would give owners the benefits of owning an aircraft, without having the initial huge capital outlay that it normally takes. Owners would still need to pay monthly management fees, which would again depend on how much of a percentage, or fraction, of the aircraft they purchased.

Although Santulli wanted to trade off the EJA name, he also wanted to keep the EJA business as it was. So, rather than changing the company’s direction, he introduced a new company, with a new name, which would remain a part of EJA.

The new company was introduced in 1986, with a small fleet of eight Cessna Citation IIs. The years surrounding the launch saw the internet begin to become widespread, so the name NetJets was chosen with a dual meaning. First it would trade off the internet name, but the Net part also came from the network of jets that Santulli wanted to build around the US and, if successful, in other parts of the world as well.

The market took a while to adopt the new method of aircraft ownership, but eventually, company began to grow, so much so that 10 years later there would be other companies set up offering similar options.

One of the most significant events in the company’s history happened in 1995 when superstar investor Warren Buffet became a customer. Much like Victor Kiam with shaving company Remington, Buffet was so impressed with NetJets that he bought the company in 1998.

The year before NetJets became a Berkshire Hathaway company it had a fleet of 95 aircraft and just over 700 customers. It was also beginning to build up its presence in Europe thanks to the introduction in 1996 of NetJets Europe.

Buffet’s Berkshire Hathaway paid $348 million in cash as well as a further $377 million in class A and class B shares for NetJets and its affiliated companies in 1998. This gave NetJets access to readily available capital to expand.

Earlier in the same year, it placed an order with Dassault for 24 Falcon 2000s. Following the injection of capital from Berkshire Capital, it did not take long for the company to begin placing large orders to replace older aircraft in its fleet, as well as having the funds for expansion.

In 2000 NetJets would place one of those large orders. Having placed an order in the summer of 2002 for 20 Gulfstream G550s, NetJets came home from that year’s NBAA with an order for up to 125 Embraer Phenom 300s.

The firm order portion included 50 aircraft, which the company would use to replace older Citation aircraft in its fleet. Some aircraft would also be used in Europe, again as replacements for older aircraft.

Two years later another large order was placed, this time with Gulfstream for 50 G150s with options on a further 50 aircraft. Also reinstated in 2002 was an order for 50 Gulfstream G200s.

NetJets had originally placed an order for 50 IAI Galaxy aircraft but cancelled it several years later, following issues with Galaxy completions that saw each aircraft taking up to 14 months to finish.

Shortly afterwards, Galaxy Aerospace was bought out by Gulfstream, who would reintroduce the Galaxy business jet as the Gulfstream G200, bringing the completion of the aircraft in-house, which solved many of the Galaxy’s early issues.

In doing this, Gulfstream was able to cut down the time needed to complete the interior of a green aircraft once it had arrived at its facility from the 14 months it had been taking, cutting by several months to the industry average.

Although the 2008 global financial crisis had hurt the company, it bounced back in spectacular fashion in 2011 when it placed an order for up to 125 Bombardier Global family aircraft.

The firm order portion was for 50 aircraft, with a further 70 options placed. At 2011 list prices the order would be worth $6.7 billion. The firm orders were split between 30 Global 5000 / 6000s, with the remaining aircraft to be Global 7000 / 8000s.

To date, NetJets has taken delivery of just over 30 Global 5000s / 6000s, including some aircraft that are operated by NetJets Europe.

But although the company was moving forward with its US and European fleets in 2011, in the same year it decided to dissolve its NetJets Middle East partnership.

The Middle East had always been a tough market for the firm. To enter into the market initially, NetJets joined with Saudi-based NasJet. At one point the NetJets Middle East website said that it was due to take delivery of up to 60 aircraft, but before the NasJet partnership was dissolved it only operated a handful of Gulfstream IVs, Falcon 2000s and Hawker 800s.

The announcement of the closure of NetJets Middle East was made in November 2011. Less than six months later it announced it would be entering into the then-booming Chinese market.

Although its Middle East arrangements were with a local operator, to go into China NetJets wanted to use its own branded aircraft. Rather than offering its usual fractional ownership program to Chinese customers, NetJets choose to offer charter and management.

To get into China it needed investment from a locally based company. This was provided by Hony Jinsi Investment Management, a division of Legend Capital, most known for owning Chinese computer and smartphone manufacturer Lenovo. Further capital was provided by Fung Investments.

Early in 2016 there was a further announcement that Business Aviation Asia (BAA), a subsidiary of China Minsheng Investment Group, was going to be taking a 25% stake in the company. However, although there were discussions and negotiations no deal was ever completed.

NetJets China finally received its Air Operators Certificate (AOC) in 2014 and transferred two Hawker 800 private jets from its European fleet to begin operations.

Having spent so long trying to get its AOC, NetJets China launched at one of the worst times for charter operations in the country. China’s president Xi Jingping had not long before introduced anti-graft measures into the country to cut down on corruption. Charter operators in China, which had long relied on the business of lower-level Chinese officials, found that side of the business almost disappear overnight.

Eventually, the company would put China on hold, citing weak market conditions.

Whilst the company had placed large orders before, in 2012 it would go on to break the record for the largest order ever placed in business aviation history.

In July of 2012 NetJets placed an order for up to 425 business jets which, if all aircraft are delivered, would be worth up to $9.25 billion at 2012 list prices.

The order was split between Bombardier and Cessna, covering the midsize and super-midsize sectors. Firm orders were placed with Bombardier for 75 Challenger 300s and 24 Challenger 605s, and with Cessna for 25 Citation Latitudes.

Options were also placed at the same time with Bombardier for 125 Challenger 300s, 50 Challenger 605s and with Cessna for 125 Citation Latitudes.

At the time, NetJets already had a fleet of 540 aircraft, making it the world’s largest.

Today, having taken delivery of some of the aircraft that it has on order, it has a fleet of more than 700 business jets.