26180 Curtiss Wright Parkway
Focus on Safety, Service, and Consistency. Luxurious, state-of-the-ar t aircraft aren't the only highlight of flying with Flight Options; i n addition, our flight crews are trained to the highest industry stan dards. Each aircraft is operated by dual-captain certified pilots who each have received annual simulator training and biannual practical training in their aircraft--in addition to their extensive flight tim e. Add to this exceptional customer service, and you can see why Flig ht Options has emerged as a leader in the fractional jet industry.
Flight Options, LLC is a leading U.S. provider of fractional ownershi p of business aircraft. It has a fleet of approximately 200 planes. T he company, formed through the merger of an Ohio charter operation's fractional business and that of Raytheon Company, has done much to lo wer the cost of business aviation and widen the market.
Formation of Raytheon Travel Air in 1997
For those with the means, owning a plane presents a very appealing al ternative to commercial air travel. In addition to offering freedom f rom a slew of airline industry hassles, including lost luggage, time- consuming check-ins, and inflexible timetables, private aircraft can fly to more than twice as many U.S. airports than the 4,950 served by the scheduled carriers. The main drawback to owning business aircraf t is their enormous cost, for the multimillion-dollar plane itself, p lus thousands of dollars per hour for maintenance, fuel, and crew. Ow ning an aircraft in partnership with others allows most of the freedo m at a fraction of the cost.
As the fractional aircraft ownership market developed in the 1980s an d 1990s, it seemed natural for manufacturers to enter the business. R aytheon Aircraft Company, a subsidiary of conglomerate Raytheon Compa ny, launched its fractional ownership unit, Raytheon Travel Air, in A ugust 1997. Raytheon owned Beech and Hawker and the start-up fleet in cluded three types of planes for a variety of budgets: three Beech Ki ng Air B200 turboprops, three Beechjet 400A jets, and three Hawker 80 0XP jets.
Raytheon Travel Air was based in Wichita, Kansas, and led by Gary Har t, hired from rival Bombardier's FlexJet program. Fourteen FBOs (fixe d-base operators) from another Raytheon unit were available to suppor t the fleet across the United States. The King Airs, which had a shor ter range than the jets, were based in five hubs: Atlanta, Chicago, D allas, New York, and Van Nuys. As the least expensive business aircra ft available for fractional purchase among the major suppliers, the t urboprops widened the circle of those who could now afford to fly pri vate planes. Travel Air kept a portion of its fleet in reserve (initi ally 40 percent, later much less) to resolve scheduling conflicts.
At the time of its August 1997 launch, noted Flight International, the company had sold a one-eighth share in a Beechjet 400A, to p rofessional golfer Fred Couples. It took little more than one year fo r the company to reach 100 fractional shares sold. By this time, Trav el Air had 180 employees, more than 110 of them pilots.
In October 1998, the company made a $90 million order for 22 new Premier I entry-level business jets for delivery beginning in 2001. T his order was doubled within a year, and the company also ordered 27 Horizon mid-size jets worth $425 million.
Launch of Flight Options, Inc. in 1998
As Travel Air was wrapping up its first year, another company was pre paring to be the first to offer fractional ownership of previously ow ned jets. Flight Options, Inc. of Cleveland, a unit of charter and ma intenance company Corporate Wings, Inc., began selling shares in Octo ber 1998. Flight Options, Inc. was led by Darnell Martens, former vic e-president of finance at Executive Jet.
The company's 11 jets ranged from three to five years in age. The com pany charged $625,000 for a one-fourth share in a seven-seat Cess na Citation II jet, plus $12,900 a month for maintenance and $ ;1,200 per hour for actually riding in it. This represented a 60 perc ent savings over buying a share in a new jet, Martens told Crain's Cleveland Business.
Flight Options grew quickly. By the end of 1998, its fleet had 21 pla nes and the company had secured new capital enabling it to order anot her two dozen. Flight Options announced its 150th customer at its fir st anniversary. The operation had hangars in Ohio, Indiana, and New Y ork. In October 1999 it began an expansion of its 100,000-square-foot Operations Control Center.
Kenneth Ricci, a pilot who had bought Flight Options' parent company Corporate Wings in 1981, told the Plain Dealer that business w as coming not just from business executives but from affluent baby bo omers looking to make the most of their leisure and family time.
Flight Options was providing a web site for owners by the time of its second anniversary. The site included scheduling tools for booking f lights and calculating trip costs.
A Year of Change in 2001
At the beginning of 2001, Raytheon Travel Air, with 93 planes and mor e than 700 owners, was the third largest fractional ownership program in the United States. Flight Options, which was preparing to open op erations centers in Denver and Sacramento, was a close fourth.
In 2001, Raytheon Travel Air took a page out of Flight Options' book and began buying used Challenger 601 jets. This aircraft, which had b een out of production since 1995, had a larger cabin and longer range than Travel Air's other planes.
The September 11, 2001 terrorist attacks on the United States had Ame rican executives fleeing commercial airlines in droves. Security made private aircraft more attractive than ever. New, lengthy screenings at airport check-ins made scheduled transportation even more of an or deal.
A year of major change ended with a new beginning for Raytheon Travel Air and Flight Options, Inc., which announced they were joining forc es in a new company called Flight Options, LLC. Flight Options Inc. o wned 50.1 percent of the new venture with Raytheon holding the remain der. Part of the deal included a $900 million order for 115 new p lanes from Raytheon over five years, although it was not an exclusive arrangement. Flight Options, Inc. had just ordered 25 new Envoy 7 ai rcraft worth $775 million from Fairchild Corp.
The combined business had more than 200 aircraft and 1,600 customers, making it the world's second largest fractional aircraft ownership c ompany and the only competitor of comparable size to Executive Jet's NetJets program. Sales were reportedly between $700 million and & #36;1 billion in 2002 and 2003. Flight Options employed more than 1,5 00 people, including 900 pilots and 200 mechanics. Flight Options Inc . head Kenn Ricci would also be chairman and CEO of the new venture, which was based in Cleveland.
Ricci told the Weekly of Business Aviation that his outfit was superior to NetJets in several key ways. He emphasized the importanc e of dispatch reliability, or keeping as many planes in the fleet ava ilable as possible.
Raytheon-Controlled in 2003
John Nahill, formerly vice-president of corporate strategy at Raytheo n Company, replaced Kenn Ricci as CEO in February 2003. (Ricci return ed to Corporate Wings while remaining an advisor to Flight Options.) Raytheon Co. was acquiring majority control of Flight Options, LLC, r aising its holding from 49.9 percent to 65 percent.
The main challenge for Flight Options was becoming profitable as the once-booming fractional market lost momentum in a slowing economy. Na hill reduced the number of suppliers as one way to trim costs, he tol d Crain's Cleveland Business.
The company also was increasing its product offerings to raise its to p line. Following an industry trend, in the summer of 2004, it began offering jet card memberships in 25-hour blocks beginning at about &# 36;100,000 (plus tax). This made jets affordable to many more people, some of whom later converted to fractional ownership. Another progra m allowed both fractional owners and members access to aircraft in Eu rope and Asia. It also introduced a program allowing customers to spl it their shares 75-25 between two different aircraft. At least one in centive was aimed at keeping aircraft available during peak periods. Owners of 1/16th shares could save money by agreeing to fly off-peak only.
Another area of cost savings was standardizing the fleet. In 2005 Fli ght Options, LLC was cutting its aircraft types from 11 to four (the Beechjet 400A, Hawker 800XP, Citation X, and Legacy). This lowered ex penses in maintenance and training while producing a reliable, effici ent fleet of aircraft.
Raytheon increased its stake in Flight Options again in the summer of 2005. It invested $50 million to raise its holding to 95 percent .
Principal Operating Units: Mid-Atlantic; Midwest; Northeast an d NYC; Northwest; South Central; Southeast; Southwest.
Principal Competitors: Bombardier Flexjet; CitationShares; Net Jets Inc.