NetJets Business Plan

111 Wilson Street, Greensboro, NC 27401

(201) 674-4755

27 August 2021

Jason Daniels • Adam Johnson · Alan Bobo · Bradley Ferrell · Bram Van Der Ploeg · Doug Henneberry · Patrick Gallagher · Pete Richards.

This document is confidential.

Table of Contents. 2

Executive Summary. 3

Vision/Mission Statement and Goals. 5

A. Vision Statement 5

B. Goals and Objectives. 5

C. Keys to Success. 5

Company Summary. 6

A. Company Background. 6

B. Resources, Facilities and Equipment 6

C. Marketing Methods. 7

D. Management and Organization. 7

E. Ownership Structure. 8

F. Social Responsibility………………………………………………………………...6

G. Internal Analysis. 9

Products and/or Services. 10

Market Assessment 10

A. External Analysis. 10

B. Customers. 11

C. Industry Analysis…………………………………………………………………….8

D. Strategic Alternatives. 11

Strategic Implementation. 12

A. Production…………………………………………………………………………...9

B. Resource Needs……………………………………………………………………...9

C. Sourcing/Procurement Strategy……………………………………………………...9

D. Marketing Strategy…………………………………………………………………..9

E. Performance Standards……………………………………………………………..10

Financial Plan. 14

A. Financial Projections. 14

B. Contingency Plan. 15

Executive Summary

Vision/Mission Statement

“NetJets mission is to provide our owners and jet card members with a superior air transportation experience through an environment that fosters continuous improvement, teamwork, and growth.”

Company Summary

NetJets offers anyone the opportunity to travel like they own their own jet through a variety of programs and the ability to personalize all our products and services. NetJets offers three different ways to travel, NetJets Share™, NetJets Lease™, or NetJets Marquis Card™.

We pride ourselves on the excellence and genuine relationships that we build with our owners, their families, and/or their businesses. It is our unparalleled commitment to safety and personal service that encourages our Owners to stay with us year after year, and generation after generation.

NetJets™ has a fleet inventory of over 750 aircraft. There are 4 different makes, and 11 different models ranging from “Light” Private Jets, “Midsize” and “Super-Midsize” Private Jets, “Large” Private Jets, and “Long-Range” Private Jets. The fleet can accommodate 7-14 passengers and 4-16 hours of range one-way. One of the many unique perks of being a part of the NetJets family instead of owning a jet of your own is that you do not have just one jet. Our fleet is your fleet. You can request and choose any plane depending on your travel needs on any specific day or occasion.

Our Services

Each owner or member has their own unique travel needs whether it is for personal travel or business. One of our 3 different programs will accommodate whatever those needs may be.

Our 3 different programs include:

v NetJets Share™ (Fractional Ownership)

v NetJets Lease™

v NetJets Marquis Jet-Card™

Our share program is our signature program and is the most cost-effective for those who fly more than 50 hours per year. The lease program offers all the same benefits but is a monthly payment structure for those who do not want an initial capital outlay. Finally, the jet-card program is simply for those who want the benefits of our company but fly less than 50 hours per year.

Market Assessment

Over the last year and for the foreseeable future, private air travel is a stable and growing industry. We owe much of that to the current pandemic. With that being said, private jet travel was growing even before that due to a rise in disposable income around the country. With neither of these factors changing, private jet fractional ownership and charters are only going to continue to grow over the next several years.

The industries players all have very similar services and programs. Those are fractional ownership; lease to own fractional ownership, and card members. The competition is in the details. It’s all about how you make those who come to you for this service feel. Whomever can do this the best will sit atop the industry.

A significant trend that we are seeing during these times is that many more who were financially able to fly privately who still chose to fly commercial, are now flying privately to avoid the danger and hassle of Covid-19. The pandemic has driven all kinds of changes in people’s lives and our industry is fortunate to benefit from it in that respect.

Strategic Implementation

The NetJets experience is not something you can manufacture or replicate over and over. What we provide to every individual owner or member is original and organic. We do this the best we can by hiring the best people for the job. Our focus is what sets us apart from the rest, and our focus is what makes the owner/member feel like they are why we are there.

When it comes to how we manifest the service we strive to provide, it is done by supporting and taking care of our teams in the same way they take care of our patrons. We provide them with the best of the best when it comes to anything they need whether it is a state of the art fully loaded luxury long-range jet, or the budget needed to go out and by the kind of blanket that got left behind at home or in the hotel room so they have it one the plane when they return. We also send them to the best certifications, trainings, and conferences their trades have to offer. We develop a better service by developing better staff.

Expected Outcomes

NetJets has been the leader in worldwide private aviation for decades already. Our intentions are to continue that legacy by providing the best of the best when it comes to each owner’s personal needs. While we grow in how we can provide better services, we will continue to grow in many other ways.

NetJets is focused on improving acquisition rates, increased revenue, reduced costs, process improvements or efficiencies, culture change, increased profitability, increased word of mouth, increased conversion, and more upsell and cross-sell opportunities. We take every opportunity to learn, improve, and put that into action.

Not only do we plan on staying the best in the industry, but we plan on staying the best employer to our employees by investing in them as much as we invest in our patrons. The success of NetJets will directly depend on each individual employee’s genuine passion to do their part in making the company the best in private luxury air travel.

Lastly, we are extremely proud to be the first private aviation company to buy a stake in the production of sustainable aviation fuel (SAF), which is a natural and significant next step in our plans to lower our carbon footprint. At NetJets, we prioritize safety then service above all else. This includes our efforts to operate sustainably and our commitment to what matters most to our Owners, their guests, and our employees. Fly confidently, knowing NetJets will continue focusing every effort possible to be at the forefront of sustainable private aviation.

Vision/Mission Statement and Goals

A. Vision Statement

NetJets mission is to provide our Owners with a superior air transportation experience through an environment that fosters continuous improvement, teamwork, and growth.

B. Goals and Objectives

1. Increase Market Share

2. Maintain Profits

3. Grow Shareholder Value

4. Decrease Debt

5. Increase Sales with the Newest Innovations in the Industry

6. Develop the Best Customer Service

7. Invest in Quality Employees

8. Team Building & Diversity Training

It is our prediction to be profitable by the end of the fourth quarter, and we will continue to build the team around the growth of the company during that first year and beyond. It is also our goal to continue to grow in all the objectives above each quarter.

C. Keys to Success

The success of NetJets will directly depend on each individual employee’s genuine passion to do their part in making the company the best in private luxury air travel. Determining each applicant’s willingness and desire to uphold our standards is one of the main focuses during the initial interview in our 5-step application process. During that interview, we introduce a situation or circumstance pertaining to the role they will be playing within the company to see how they would handle it.

In addition to the genuine passion the NetJets employees possess and exude, the NetJets fleet will set it apart from all other private jet charters with the largest, newest, and most diverse luxury class fleet of jets in the world. The outfitting of each aircraft will have the best of the best from its finishing’s to the technology available to both the crew and the passengers. It is all about the small things.

Company Summary

A. Company Background

Richard Santulli founded Executive Jet Aviation (now NetJets) in 1964. Over twenty years later is in 1986 Santulli launches the fractional ownership model offering clients a share of an aircraft. 10 years later NetJets Europe introduces its model to the European aviation market.

In 1998 Warren Buffet’s Berkshire Hathaway Inc. acquires NetJets Inc. In 2009 Santulli resigns as CEO and is replaced by David Sokol. 2010 marked the Marquis Jet acquisition that launched the Jet Card program. In 2012 NetJets™ announces the largest single aircraft order in history estimated at 17.6 billion. 2016 Launches QS Partners, a subsidiary providing whole aircraft sales and acquisitions.

NetJets Share™ is our fractional jet ownership (or shared ownership) that provides the immediacy and luxury of whole aircraft ownership without the operational complexities and hidden overhead. Owners purchase a portion, or share, of a specific aircraft, and that share equals a specific number of hours to fly on that aircraft type—with the ability to upgrade or downgrade to any other jet in the fleet. Owners typically purchase shares in 25-hour increments with a minimum of 50 hours.

NetJets Lease™ offers similar benefits to a NetJets Share^TM with a different payment structure for those who do not want an initial capital outlay.

NetJets Marquis Card™ is the optimal solution for those who fly fewer than 50 hours per year and prefer short-term commitment. With multiple private jet card options available, your ownership is personalized, making it the ideal travel solution for your unique needs. Simply pay a fixed, upfront fee that includes the total charge for all your flight hours.¹ Then enjoy the exceptional service and ultimate convenience of NetJets.

B. Resources, Facilities and Equipment

NetJets™ has access to over 5000 airports in 202 countries. Its airplanes are stored and maintained all over the world. The regions and cities that are traveled to more frequently have more airplanes (Hot Spares) stored in or near those cities.

Over 7000 employees work for the company all over the world. Over 2500 of those employees are the pilots who fly NetJets™ customers wherever they want to go.

The NetJets™ Flight Center is home to many of the other employees who help keep the ball rolling logistically. It has several departments including an Owner Services Team, Owner Experience Team, Meteorology Department, an Airports and Runways Team, Crew Support, Dispatchers, Safety, and Operations.

Commercial Airlines are frequently used to commute pilots to their assignments and those airlines are compensated in the same manner by allowing their pilots to “deadhead” with a NetJets flight when the flight plans can accommodate it.

C. Marketing Methods

We have our own marketing team that keeps the NetJets name in the forefront of the industry and educates the public in the most current and innovative ways technology has to offer. They use all the social media platforms, search engines, algorithms, web ads, magazines, and television.

Over 130 million was spent on its marketing strategies last year at the 7%-8% of revenue standard, with a 5:1 ROI. 2020 annual sales were 1.7 billion with 336,252 flight hours and total costs being 47.8% of our total revenue.

All our divisions work with our suppliers, contractors, and partners to make sure that both parties are mutually and equally benefitting from the relationship. This keeps costs low for NetJets, with substantial and predictable sales for the supplier.

D. Management and Organization

Our current board of directors elected upper-level management team consists of:

CEO & CFO: Adam Johnson

COO: Jason Daniels

Marketing: Alan Bobo

Flight Center Management: Bradley Ferrell

Hospitality: Bram Van Der Ploeg

Pilot and Crew Management: Dour Heneberry

Fleet Management: Patrick Gallagher

Human Resources: Pete Richards

The upper-level management team’s strengths and backgrounds revolve around their expertise in hospitality, finance, aviation operations, and marketing. They have over 150 years of management experience combined in their respected fields, and each individual manager on the team is working hard to educate themselves more on the everyday operations of every division and department including their own. Our organization does not only hire workers to do their jobs, but our employees are also family, and we invest in their aspirations and futures.

We are very proud of the ones that run our business from the top, but the heart of our company and the key people and personnel that make the business run are hands down our lower-level management and employees. They are the ones who make it all happen and are in direct contact with the ones who keep us in business, the owners. These team members are who the owners and members are most in contact with and who they go to when they need anything at all.

NetJets Organizational Structure

E. Ownership Structure

NetJets was incorporated very shortly after its conception. Our companies’ stakeholders consist mostly of our owners and card members, shareholders (publicly traded), and employee pension holders. Upper-level management are voted on and hired by a board of directors that is also nominated and voted on. That board is up for re-elections every year.

NetJets uses the chain of command and unity of command when it comes to how it addresses company and work-related issues. We also encourage all our employees to have a mentor and to be a mentor. Through the mentor/mentee relationship program all employees and management are striving to learn what each division and department does from the bottom up.

For NetJets to stay compliant with the requirements to operate legally in the US and the rest of the world it must have and maintain a 14 CFR FAR Part 135 License. In addition, some charters will require landing permits in foreign countries. Also, all planes need to be maintained and kept up to date on inspections which is one of the jobs of our fleet maintenance division.

F. Social Responsibility

With NetJets being such a large multifaceted operation, it handles and disposes of chemicals and hazardous materials on a large scale in multiple countries all with different laws, policies, and procedures on how to keep people and the environment safe.

Each one of these chemicals has its own handling and disposal requirements that are followed by the NetJets and its employees no matter where they are in the world. In addition, NetJets has their own handling and disposal procedures that are adhered to and documented by trained professionals or any of the other companies contracted to do so.

All employees who are applying for a position that requires a certification will not be considered for employment until they have all the certificates required by law, and from that governing organization. Once hired, any job training specific to NetJets will be done in a classroom setting and then on the job before being cleared and placed into their positions.

Each airport has its own noise ordinances that are adhered to and those routes are navigated by its ATC.

G. Internal Analysis

NetJets strengths mostly revolve around the owner experience from the moment we pick up the phone when the owner calls about where and when they need to go, until the moment they get dropped back off at their front door when they return. It is our goal to help them feel like they own their own jet, and that it is an extension of their family that flies and takes care of them when they travel.

Some of our core competencies include how we hire and train our employees; collecting, storing, and using the data we compile on all our owners and members to make sure we anticipate their needs so they never need to ask again; companywide appreciation events like cookouts, awards galas, Christmas parties where bonuses are given out every year; and all our events have things like raffles, auctions, and games for employees and their families to have fun and win great prizes like all paid vacations or a new boat for the lake.

NetJets uses every flight experience to build on its already existing relationships with its owners and contractors. Experiences, whether they are good or bad are always a chance to learn and grow, and NetJets is always looking for ways to improve. One of the ways we are currently focusing on is for the upper and lower-level management knowing more about the day-to-day business of all the positions in each division of the company.

We are always researching lower costs opportunities without compromising quality.

Our guest experience division has shown the most promise and has directly affected our service the most. There are no current plans to discontinue any divisions or their enterprises at this time. We are open to all recommendations from our management or employees when it comes to how we can improve any aspect of how we bring the best service to our owners and card members.

Products and/or Services

NetJets is a luxury jet airplane ownership program that has been offering all the perks of personal jet ownership for a fraction of the price for over 40 years. Our business model provides their services to the owner without the responsibility of personally having to service, maintain, supply, stock, or staff the airplane themselves. Our service also provides the option to use other jet depending on the distance they want to travel, the number of people that will be flying, or if they just simply prefer it. It is like owning a jet in every class there is from “light” to “long range” private jets and everything in between.

Fractional ownership is not a market that is flooded with competitors, but there are few others out there that offer similar programs and services. What sets us apart from other fractional ownership programs and jet charters is our family centered mindset when it comes to the relationships we cultivate with our owners and members. We aim for them to feel like we are their extended family with whom they travel with from the moment they pick up the phone to tell us it’s time to load up and head out, to the moment we drop them back off at home.

In comparison to the competitors out there, and without discrediting them, there may be some out there that can “match” the quality of our company in certain areas, but when it comes to the full package, and especially our “genuine hospitality” (said by many of our owners who have flown with other companies), we far exceed the competition.

Our pricing is determined by extensive cost-volume profit analysis and is still as competitive as it gets in the industry. Part of this analysis is to account for and allow us to have planes all over the world. Hot spares (back-up planes) are kept in the areas that have more travel volume so that we can be ready at all times. Planes can be wheels-up ready in as little as a half-our, or 4 hours at the most.

Market Assessment

A. Examining the General Market

NetJets has a very specific consumer population. Our family consists of owners, jet card members, or charters that either travel so frequently and spontaneously that they require their own jet, or they have the means and they choose to travel privately. Our three programs offer substantial flexibility for different needs amongst those two groups.

The different ownership programs offer the most value for the traveler who’s travel needs are frequent, on short notice, and fly more than 50 hours per year. Our leasing program caters to the same travel needs, but with a different payment structure for those who do not want an initial capital outlay. Finally, our NetJets Card Program™ is ideal for those who want the benefits of NetJets but may have to wait up to 10 hours until wheels up and fly fewer than 50 hours per year.

We use “Porter’s Five Force’s Model” to help us determine different opportunities and threats we may face within our industry as a whole and with our competitors. Our niche industry is not a largely competitive sector. There are not many opportunities to get a leg up on each other when it comes to offering different services or programs. Our competition is determined by the level of quality each company can provide in comparison to ours as we all offer the same services.

We fly all over the world so we have many different laws and regulations we must abide by and they are not only our own governments laws and regulations, but they are also the laws and regulations of other governments. Laws and regulations like covid testing and quarantine; where and how long we can park and store our airplanes and how they are inspected; how we dispose of waste; and if or when we can fly into a country or province.

B. Customer Analysis

Our company sells luxury, hospitality, and convenience. We take customer service to the next level. It all starts with the sense of the perfect balance of professionalism and hospitality that is exuded from the first time a new owner or client contacts us about interest, to the last flight they take with us. We do not take our patrons business and loyalty for granted. It is our goal to keep them for life, and for their families to continue to let us serve them as well.

When things come up, our hospitality team is as proactive as they can be and head it off before it even becomes a problem for our patrons. When it comes to the point of having to address issues that one of our owners or members have an issue, our staff recognizes it, apologizes for it, handles it immediately. We always compensate in addition to handling the issue. We know our guests well enough to know exactly how to do that, whether it be a gift waiting for them on the airplane or sending them a car to and from the airport.

C. Industry Analysis

D. Strategic Alternatives

Goal setting is a strategy that NetJets uses to achieve chosen objectives. Those goals start small and lead to larger ones. Some are time-based goals, some are financial, and some of customer related as well. What really matters is that we are striving for a better environment or experience for both the owner/member and/or our team.

NetJets also has a “secret flyer” implemented to survey the industry from the outside in. We have contracted a company to have an anonymous potential client go through the entire process of vetting NetJets, signing with us, and then flying with us. We then grade ourselves. We also vet and fly with competitors to see what the competition is like. These two methods have proven to be the most effective way to see how we chalk up to the competition.

Strategic Implementation

A. Production

The NetJets experience is not something you can manufacture or replicate over and over. What we provide to each and every individual owner or member is original and organic. We do this the best we can is by hiring the best people for the job. Our focus is what sets us apart from the rest, and our focus is what makes the owner/member feel like they are why we are there.

NetJets potential to grow will be most obtainable through market penetration. A business has many different opportunities and strategies to use when it wants to grow and even though we are such a niche industry, there are some options to talk about when it comes to growth using all types of NetJets development and growth. Some examples would be diversification and acquisition.

As we grow, we will do more of what works, and revisit and revise what does not work as well as we would like and we believe could work better. It is a constant learning process and if it one thing we know about our industry and serving people, it is that things change and you must be ready to change with them.

B. Resource Needs

a) Human

NetJets hires it’s upper-level management from candidates voted for by its board members. Its board members are nominated and elected by upper-level management, mid-level management, and team supervisors. NetJets uses a 5-step hiring process to choose who will join the team. The team includes its pilots; crew (cabin and ground); flight center technicians; meteorologists; hospitality; finance; and management.

b) Financial

NetJets primary financial resources are its owners and members. That is the foundation of the fractional ownership business model. Our finance team manages those resources to optimize them.

c) Physical

NetJets physical resources are airplanes, hangers store those planes, buildings for flight center and offices. These resources will be needed all over the country and world at different airports.

C. Sourcing/Procurement Strategy

Our finance teams monthly cost volume analysis is what will primarily decide what, where, and how much money we will spend. Decisions are then further considered based on the input of the entire team. After all considerations, we feel the best decisions can be made with the least amount of damage when both of those criteria are covered. This process minimizes financial and implemental setbacks.

Like most everything nowadays, partners; suppliers; and contracts are sought out through various avenues. There is nothing like networking and doing business face to face. Attending conferences, and hosting events are how we build our best relationships with those we do business with. We are not ignorant of the fact that there is a way to reach everyone in a very strategic and beneficial way though other avenues like, the internet, cold calling, and working with local partners.

D. Marketing Strategy

NetJets is fortunate to have such a diverse background on our marketing team so that we can approach the market with so many different perspectives taken into consideration. The most important factor our team focus on is the demographics of the industries clientele. Knowing your customer is the biggest tool you can use when determining where and how you will find them, get their attention, and sell them.

Once we have someone’s attention either from our magazine, internet, television, or social media ads, and they are serious about our services, they are instructed to contact us directly preferably over the phone and we will schedule a time to meet face to face or at the very least, over a video chat. The personal experience you get from NetJets happens from the very start.

NetJets pricing is based on which program the customer choses, the type of aircraft that is requested, how often they travel, and with how many passengers. We help the potential customer make this decision as we get to know them during that first face to face meeting.

a) Hedging, forward pricing, options

Our finance team has a strong knowledge of how to protect investments and capitalize on our equity. They also work with upper and middle management to unsure that we are using our financial resources in the best way possible either through bulk ordering or forward pricing contracts.

b) Contracting

All NetJets business will be contracted for specification of terms like price, time periods, services, and quality standards. Contracts protect both sides doing business together.

c) Insurance

NetJets will carry all insurance coverage that is recommended by its lawyers. Most fall under the liability category. Aircraft liability, premises liability, indemnity, and workers compensation insurance.

E. Performance Standards

The standard of service that a company has in this industry is what sets it above or below the rest. The NetJets standard of service is the best in the industry because our entire team does not settle for less than providing the best service possible. We all have the same goal and we hold each other accountable when it comes to achieving it.

In addition to the team effort of working together and holding each other accountable, our team leaders support their teams however they can and need to in order to help them achieve the best service possible. Those same team leaders do this without micromanaging and are there only to help their team help their owners and members feel like they could not be taken care of any better than they are. We do this best by exceeding their expectations, and with do it with a genuine desire of getting to know them.

How NetJets successfully monitors and upholds its standards we touched on before. The front line is holding each other accountable as a team. If we see something, say something. For example, before each flight, two sets of eyes pass through the cabin to make sure everything is just so. As our crews get to know their owners even better, every person on that crew will be aware of how certain things need to be to be just so. We help each other be better and do better.

We also have a “secret flyer” program that takes a person through the entire process of becoming a new owner or member, and then booking and flying. As they move through each process, they have certain things that are graded and commented on. It is very similar to the more popular “secret shopper” in a store, or a “secret diner” in a restaurant.

Financial Plan

A. Financial Projections

NetJets has never borrowed or asked for any kind of equity capital from outside the company. We started with one jet already privately owned, operated, and chartered. The business originally grew as a standard chartered business from profit. With NetJets now being a fractional ownership business model, the business’s growth is entirely funded by the owners and other programs

NetJets debt to equity position is 1.0 at the end of each quarter. Our capital debt funds are provided by the owners, members, and shareholders. It is NetJets policy to not borrow, lease, or pay any interest unless it is voted and agreed upon by the C-Suite and the board.

NetJets financial risk management team manages any financial risks by first prioritizing risks, limiting liabilities, purchasing the necessary and proper insurance policies, limit any high-risk potential owners or members, not growing faster than the business plan allows, and by the implementation of a quality control team and program. The risk management team worked with all the team managers to ensure that all operating procedures within the department were a good fit for the entire company, and for the department itself. This includes all the financial and managerial accounting, and budgeting.

NetJets used income and expense projections, projected sales volumes, and projected administration expenses as some of the assumptions for financial forecasting. The finance department monitors all financial aspects of the business (equity, assets, ROA, ROE, ratios, leverage, and more) to ensure that we know all we can to make the best decisions possible and to help limit any unknowns.

NetJets has an abbreviated financial analysis at the end of each day, a slightly more extensive one at the end of each month and quarter, then the most thorough financial statement analysis at the end of the fiscal year.

NetJets goal is for it to grow by 2.5%-5% each year, maintain a 1.0 debt to equity position, and to not have to borrow from any other outside investors/lenders.

NetJets is constantly changing and adapting to be the most efficient it can in all of its operating procedures to help give the company the best shot at hitting our numbers, while still remaining the most luxurious private travel company in the world.

B. Contingency Plan

The NetJets contingency plan has always been in its already present operating procedures. We do not grow unless the company is performing to the standards stated in the business plan. An emergency or tragedy is prepared for by insurance policy contracts that were put into place by our lawyers. All of our middle and upper management teams are trained and can work in other departments as they have learned all aspects of what makes NetJets the best in the world at what it does. If something ever happened to any of them, we have what we need to keep running on all cylinders until that team member is replaced.

Works Cited

The NetJets website. Netjets.com/en/us/. Accessed 24 Aug. 2021