I think the jet card model is going to gain share over the fractional jet model, regardless of the state of the economy. Ownership of jets is becoming less and less “sexy,” as the appeal of owning a jet (“this is my jet, I can use it when I want”) has decreased given the number of new options in private jet travel. The jet card provides flexibility. You can fly 50 hours a year or you can fly 0 hours per year, and the costs are completely variable. Over time, jet travelers will trend toward this model to capture this flexibility. The major players such as NetJets will succeed by continually investing (they are backed by Berkshire) in their fleet to ensure they meet this demand.
Thanks for the comment. I agree these regional competitors are great for individuals that have a limited set of destinations. For the consumer, they are, without a doubt, cheaper than both NetJets and Marquis Jet. However, I think they both cater to different consumer groups. Beacon and SurfAir cater more to customers that would normally purchase a first class plane ticket, and that frequently fly to only a handful of destinations. NetJets and MarquisJet cater more to ultra high network individuals and corporations who spend a considerable amount of their weeks traveling. The price sensitivity of the latter consumer group is must lower, as they care more about the fleet quality, availability of jets, and overall number of destinations.
Agreed. First-class commercial travel pales in comparison to private jet travel in terms of convenience, reliability, comfort, and service. The concept of fractional jet ownership, which closed the gap between first-class travel and private ownership, has actually been around for decades, long before NetJets. However, the issue of jet availability always was a deterrence on the reliability front (several owners needing jet at the same time was a key challenge). NetJets addressed this challenge by building out a fleet of nearly 700 jets, providing its owners assurance that either their jet, or comparable jet owned by other owners or NetJets itself, would be available at few hours’ notice, creating the utmost reliable travel experience.
Thanks for sharing, Max. I have used Priceline in the past, but I have actually heard of a trend of using Priceline and other OTA’s to find the best prices, and then calling the hotel, airline or rental car agency directly to honor the price. I started doing this after I had to change a reservation through Priceline and it ended up being a disaster. The Priceline operators were not helpful, and when I tried to instead work directly wit the hotel, I was told that they could not help me, since the reservation was booked through Priceline. Given this experience, I started doing this for all flights, hotels and rental cars, and always appreciate working directly with the vendor when problems or scheduling changes arise. Do you think this is something other consumers will catch on to? If so, it could be damaging to their volumes and sales.
John – thanks for writing this article. I enjoyed learning more about the MED’s business model and roll-up strategy. Obviously, the acquisition of new optometrists is key to its competitive advantage. The benefits of joining MED to near-retirement optometrists is clear. However, I would imagine that being clustered with several other optometrists under one roof, and as part of a retail chain, would be less appealing to younger optometrists that still have a strong entrepreneurial spirit. Do you feel the benefits of outsourced back office functions (and thus freedom to focus solely on eye care) outweigh the loss of operational control? Also, the strategy appears to be working flawlessly in the DC area and surrounding states. That said, are you aware of expansion into other areas of the US? I know population growth in the south (Texas) and southwest (California, Arizona, New Mexico) is well above the national averages. I would think the expansion into these regions would be trickier given the much more diverse populations (and thus more diverse income, wealth, insurance coverage, etc.).
Incredibly informative article, Matt. Thank you for sharing. What stuck out to me the most was how much H-D’s employees embrace the culture of quality, innovation and American manufacturing excellence. From the videos, it is evident that designers, engineers and assembly workers alike strive to reflect these principles to the utmost degree in every bike produced. This pride and integrity of work in its work force is what has contributed to building (and growing) H-D’s brand equity over the years. That said, I would be interested to learn more about H-D’s (1) new talent assessment (2) hiring process, (3) review process, and (4) means of driving the culture. After reading the article, I would imagine that H-D’s hiring process is somewhat similar to that of Facebook, which we learned from reading the case that they focus on hiring incredibly smart people, without knowing in which functional they will work or if there is even a need for their skill set, and find the best place for them in the company once they are on board. Are you aware of a similar practice at H-D, where they prioritize hiring candidates that will, above all else, embody both the culture and core operating principles to the fullest, despite perhaps needing a specific skill set?