Wealth Effect Fuels 55% Surge in New NetJets Owners
As the U.S. economy recovers, Berkshire Hathaway-owned NetJets has seen a surge in new customers taking part in its fractional ownership options and current owners flying more hours, NetJets CEO Jordan Hansell and Warren Buffett told CNBC on Monday.
"We've got people who have been in the program flying more and we're up year-over-year 55 percent in terms of new owners who have just come to the program for the first time," Hansell said, sitting next to his boss, Berkshire chief Buffett, who described the comeback since the financial crisis.
"When 2008 came along, in the fall, people already owned the planes. They were paying the monthly management fee," Buffett added during a three hour, special appearance on "Squawk Box" from Omaha, Neb., following this weekend's Berkshire shareholders meeting. "[But] the flying fell off dramatically. Very, very rich people cut back in a significant way. It was like someone blew a whistle, and it's been coming back from that."
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NetJets started to take delivery of new, customized jets that it helped designed at the end of 2012. The company placed orders two years ago for 50 global business jets with options for an additional 70 aircraft from Bombardier for $2.8 billion dollars.
"Both of these aircraft, the Phenom and the Global 6000, were completed with heavy the input from folks at NetJets," Hansell explained, referring to the two jets behind them. The interview was conducted in an Omaha, Neb., aircraft hangar where NetJets operates.
NetJets is the leader in the fractional ownership business with over 60 percent market share in the U.S., Buffett said, adding that he's confident that NetJets will remain at the top.
"It's not like the airline business," he said. "There will be nobody [to] come in, in my view, that goes into the fractional ownership [jet]."