CitationShares Becomes CitationAir

Cessna adds a twist to the former Citation Shares fractional jet biz.

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Warren Buffett is fond of saying that you don't know who is swimming naked until the tide goes out. Well, the tide has gone way out on the fractional jet ownership business, and everyone involved is swimming naked, or at least is down to the skimpiest of Speedos. And that's why CitationShares has remade its business model to become CitationAir by Cessna.

In the conventional fractional business, which included CitationShares, the operator buys an airplane from a manufacturer and then sells that airplane in shares of as small as one-sixteenth to owners. The operator has large capital sums tied up in the airplane until all shares are sold, or worse yet, when it is forced to buy back shares from owners as has happened often in the economic downturn.

The new CitationAir concept is along the lines of a lease-back arrangement that has been used to supply piston airplanes to flight schools and rental fleets for many years. Under the CitationAir plan, the Cessna sales staff will sell an entire jet to an owner and CitationAir will operate it for that owner. CitationAir customers will fly on the airplane when the owner is not using it, so the owner's costs are greatly reduced and people have access to an airplane without buying a share.

Bottom line, CitationAir becomes an extension of the Cessna sales force, which makes sense since Cessna owns CitationAir. By offering to crew, maintain, dispatch and in all other respects operate the Citation for a buyer, CitationAir simplifies the jet ownership experience. The option to make the airplane available to others when the owner is not using it adds a great deal of flexibility and cost control. And the actual owner can also use other airplanes in the CitationAir fleet when his airplane is in for maintenance, so he gains more true availability than if he operated the airplane himself.

CitationAir goes to great lengths to describe its new business model, but it won't look that different from the outside. It will offer jet cards on which you prepay flying hours, and it will offer access to its entire fleet for those who want an experience akin to charter but with a consistent and familiar company providing the service.

The real difference is that owners will buy the entire airplane and then CitationAir will use that airplane to optimize the owner's investment by making the airplane available for other customers to use under a variety of programs. And CitationAir will guarantee the residual value of airplanes that people buy. For more information, visit citationair.com.