Flight Options, LLC
Flight Options, LLC
Sales: $700 million (2005 est.)
NAIC: 481211 Nonscheduled Chartered Passenger Air Transportation; 532411 Commercial Air, Rail, and Water Transportation Equipment Rental and Leasing; 488190 Other Support Activities for Air Transportation
Flight Options, LLC is a leading U.S. provider of fractional ownership of business aircraft. It has a fleet of approximately 200 planes. The company, formed through the merger of an Ohio charter operation's fractional business and that of Raytheon Company, has done much to lower 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 alternative to commercial air travel. In addition to offering freedom from 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 aircraft is their enormous cost, for the multimillion-dollar plane itself, plus thousands of dollars per hour for maintenance, fuel, and crew. Owning an aircraft in partnership with others allows most of the freedom at a fraction of the cost.
As the fractional aircraft ownership market developed in the 1980s and 1990s, it seemed natural for manufacturers to enter the business. Raytheon Aircraft Company, a subsidiary of conglomerate Raytheon Company, launched its fractional ownership unit, Raytheon Travel Air, in August 1997. Raytheon owned Beech and Hawker and the start-up fleet included three types of planes for a variety of budgets: three Beech King Air B200 turboprops, three Beechjet 400A jets, and three Hawker 800XP jets.
Raytheon Travel Air was based in Wichita, Kansas, and led by Gary Hart, hired from rival Bombardier's FlexJet program. Fourteen FBOs (fixed-base operators) from another Raytheon unit were available to support the fleet across the United States. The King Airs, which had a shorter range than the jets, were based in five hubs: Atlanta, Chicago, Dallas, New York, and Van Nuys. As the least expensive business aircraft available for fractional purchase among the major suppliers, the turboprops widened the circle of those who could now afford to fly private planes. Travel Air kept a portion of its fleet in reserve (initially 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 professional golfer Fred Couples. It took little more than one year for the company to reach 100 fractional shares sold. By this time, Travel 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. This 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 preparing to be the first to offer fractional ownership of previously owned jets. Flight Options, Inc. of Cleveland, a unit of charter and maintenance company Corporate Wings, Inc., began selling shares in October 1998. Flight Options, Inc. was led by Darnell Martens, former vice-president of finance at Executive Jet.
The company's 11 jets ranged from three to five years in age. The company charged $625,000 for a one-fourth share in a seven-seat Cessna Citation II jet, plus $12,900 a month for maintenance and $1,200 per hour for actually riding in it. This represented a 60 percent 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 planes and the company had secured new capital enabling it to order another two dozen. Flight Options announced its 150th customer at its first anniversary. The operation had hangars in Ohio, Indiana, and New York. 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 was coming not just from business executives but from affluent baby boomers 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 flights and calculating trip costs.
A Year of Change in 2001
At the beginning of 2001, Raytheon Travel Air, with 93 planes and more than 700 owners, was the third largest fractional ownership program in the United States. Flight Options, which was preparing to open operations 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 been 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 American 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 ordeal.
A year of major change ended with a new beginning for Raytheon Travel Air and Flight Options, Inc., which announced they were joining forces in a new company called Flight Options, LLC. Flight Options Inc. owned 50.1 percent of the new venture with Raytheon holding the remainder. Part of the deal included a $900 million order for 115 new planes from Raytheon over five years, although it was not an exclusive arrangement. Flight Options, Inc. had just ordered 25 new Envoy 7 aircraft 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 company and the only competitor of comparable size to Executive Jet's NetJets program. Sales were reportedly between $700 million and $1 billion in 2002 and 2003. Flight Options employed more than 1,500 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 importance of dispatch reliability, or keeping as many planes in the fleet available as possible.
Raytheon-Controlled in 2003
John Nahill, formerly vice-president of corporate strategy at Raytheon Company, replaced Kenn Ricci as CEO in February 2003. (Ricci returned to Corporate Wings while remaining an advisor to Flight Options.) Raytheon Co. was acquiring majority control of Flight Options, LLC, raising 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. Nahill reduced the number of suppliers as one way to trim costs, he told Crain's Cleveland Business.
Focus on Safety, Service, and Consistency. Luxurious, state-of-the-art aircraft aren't the only highlight of flying with Flight Options; in addition, our flight crews are trained to the highest industry standards. 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 time. Add to this exceptional customer service, and you can see why Flight Options has emerged as a leader in the fractional jet industry.
- Raytheon Aircraft launches its fractional ownership unit, Raytheon Travel Air.
- Flight Options, Inc. is formed to market fractional shares in previously owned business jets.
- Raytheon Travel Air and Flight Options combine their fractional businesses in Flight Options, LLC.
- Raytheon Co. acquires majority control of Flight Options, LLC.
- Raytheon Co. raises ownership interest to 95 percent.
The company also was increasing its product offerings to raise its top line. Following an industry trend, in the summer of 2004, it began offering jet card memberships in 25-hour blocks beginning at about $100,000 (plus tax). This made jets affordable to many more people, some of whom later converted to fractional ownership. Another program allowed both fractional owners and members access to aircraft in Europe and Asia. It also introduced a program allowing customers to split their shares 75-25 between two different aircraft. At least one incentive 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 Flight Options, LLC was cutting its aircraft types from 11 to four (the Beechjet 400A, Hawker 800XP, Citation X, and Legacy). This lowered expenses in maintenance and training while producing a reliable, efficient 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 and NYC; Northwest; South Central; Southeast; Southwest.
Bombardier Flexjet; CitationShares; NetJets Inc.
Carey, Susan, "Raytheon-Owned Firm Offers Rental Time on Corporate Jets," Wall Street Journal, July 27, 2004, p. D2.
Charlton, Brian, "Time-Share Jets Taking Off; Local Company Second-Largest in New Industry," Plain Dealer (Cleveland), June 22, 2005, p. C1.
Clarke, Susan Strother, "Private, Charter Airline Companies See Business Increase Dramatically," Orlando Sentinel, September 30, 2001.
Collogan, David, "Flight Options Transitioning Fleet, Service Offerings," Weekly of Business Aviation, August 22, 2005, p. 79.
―――――, "Poised for Continued Growth, Flight Options Launches New Pricing, Support Strategies," Weekly of Business Aviation, April 15, 2002, p. 175.
Gerdel, Thomas W., "Flight Options: Offering Time Shares in the Sky," Plain Dealer (Cleveland), December 31, 1999, p. 1C.
Grant, Alison, "Pilots at Merged Company Agree on Seniority System," Plain Dealer (Cleveland), October 9, 2002, p. C3.
Krouse, Peter, "Flight Options Shareholders Withdraw Opposition to Deal," Plain Dealer (Cleveland), August 13, 2005, p. C1.
"Larger Cabins Prompt Travel Air Challenger Buy," Flight International, February 6, 2001, p. 24.
Lopez, Ramon, "Raytheon Travel Air Boosts Fleet and Eyes Overseas Markets," Flight International, August 18, 1999, p. 23.
McMillin, Molly, "Wichita, Kan., Aircraft Company Buys Used Jets to Add to Fleet," Knight Ridder Business News, January 27, 2001.
Mortland, Shannon, "Flight Options Adds New Choices for Jet Customers," Crain's Cleveland Business, September 20, 2004, p. 18.
"Nahill Abruptly Departs Flight Options," Weekly of Business Aviation, November 8, 2004, p. 207.
Paradis, Tim, "Flight Options, Raytheon Unit Combine in Aircraft Venture," Dow Jones News Service, December 20, 2001.
"Raytheon, Flight Options Finalize Joint Business Plans," Weekly of Business Aviation, March 25, 2002, p. 141.
"Raytheon Fractional Scheme Exceeds Initial Targets," Flight International, October 1, 1997, p. 40.
Rimmer, David, "Ricci: Fractionals a Two-Horse Race; Flight Options Looking to Expand Through Acquisition," Business & Commercial Aviation, May 1, 2002, p. 46.
Sarsfield, Kate, "Flight Options Slashes Ageing Fleet As It Seeks Economies of Scale," Flight International, March 8, 2005.
Seidenman, Paul, "Raytheon Travel Air: Up-Front About Downtime," Overhaul & Maintenance, October 1, 2000, p. 38.
Serres, Christopher, "Companies Can Take Flight with Fractional Shares in Used Jets," Crain's Cleveland Business, October 5, 1998, p. 6.
―――――, "Flight Options Jetting Ahead: Fresh Cash Lets Corporate Wings Unit Pursue Expansion," Crain's Cleveland Business, January 4, 1999, p. 2.
Stacklin, Jeff, "Changes in Wings for Flight Options," Crain's Cleveland Business, January 6, 2003, p. 1.
―――――, "Flight Options Lands in West: Company Opens Sacramento, Denver Sites," Crain's Cleveland Business, August 13, 2001, p. 23.
―――――, "Flight Options Looking to Soar: Fractional Jet Biz Plans to Be Top in the Field," Crain's Cleveland Business, June 10, 2002, p. 4.
―――――, "Raytheon to Pilot Flight Options," Crain's Cleveland Business, April 7, 2003, p. 3.
Summers, Graham, "Raytheon Travel Air Orders 22 Premier I Entry Level Jets," Airclaims, October 16, 1998.
Suttell, Scott, "Prepare for Takeoff: Flight Options Ready to Fly High After Securing $20M," Crain's Cleveland Business, August 23, 1999, p. 1.
Thomas, Paulette, "Case Study: Flight Company Owner Knows Trust Is Mutual," Wall Street Journal, July 30, 2002, p. B5.
Vanac, Mary, "Brantley Gets Delay in Investment Case," Plain Dealer (Cleveland), July 14, 2005, p. C3.
―――――, "Jet Company to Decide on Restructuring," Plain Dealer (Cleveland), July 9, 2005, p. C1.
Warwick, Graham, "Raytheon Launches Fractional Ownership," Flight International, June 11, 1997, p. 8.
Zesiger, Sue, "The Fractional Jet Set," Fortune Magazine, April 27, 1998, pp. 489+.
"Flight Options, LLC." International Directory of Company Histories. . Encyclopedia.com. (August 16, 2018). http://www.encyclopedia.com/books/politics-and-business-magazines/flight-options-llc
"Flight Options, LLC." International Directory of Company Histories. . Retrieved August 16, 2018 from Encyclopedia.com: http://www.encyclopedia.com/books/politics-and-business-magazines/flight-options-llc
Encyclopedia.com gives you the ability to cite reference entries and articles according to common styles from the Modern Language Association (MLA), The Chicago Manual of Style, and the American Psychological Association (APA).
Within the “Cite this article” tool, pick a style to see how all available information looks when formatted according to that style. Then, copy and paste the text into your bibliography or works cited list.
Because each style has its own formatting nuances that evolve over time and not all information is available for every reference entry or article, Encyclopedia.com cannot guarantee each citation it generates. Therefore, it’s best to use Encyclopedia.com citations as a starting point before checking the style against your school or publication’s requirements and the most-recent information available at these sites:
Modern Language Association
The Chicago Manual of Style
American Psychological Association
- Most online reference entries and articles do not have page numbers. Therefore, that information is unavailable for most Encyclopedia.com content. However, the date of retrieval is often important. Refer to each style’s convention regarding the best way to format page numbers and retrieval dates.
- In addition to the MLA, Chicago, and APA styles, your school, university, publication, or institution may have its own requirements for citations. Therefore, be sure to refer to those guidelines when editing your bibliography or works cited list.