Through an exclusive alliance with fractional aircraft ownership pioneer and industry leader NetJets®, Marquis JetSM gives individuals and businesses the benefits of flying privately with NetJets. Customers purchase 25 flight hours at a time, in the form of a prepaid card with pricing ranging from $126,900 to $349,900, depending on the aircraft type selected.
The company was founded in 2001 by entrepreneurs Kenny Dichter and Jesse Itzler, who after selling their sports marketing firm became convinced that the private aviation space was missing a special niche market, a prepaid 25 hour jet card. They specifically sought after NetJets, being the market leader in private aviation, as the company to support their business model and pitched their ideas to NetJets founder and CEO, Richard Santulli, in early fall 2000. Since selling the first Marquis Jet Card in 2001, the business has grown to more than 3,500 Card Owners with sales in excess of $700 million in 2007.
The NetJets partnership is crucial to the Marquis Jet business model. NetJets introduced its fractional ownership concept in the mid-1980s, giving customers the benefits of aircraft ownership without all the hassles or cost. Today, NetJets is the recognized industry leader, managing the world’s largest and most diverse fleet of private aircraft with operations in the United States, Europe and the Middle East, including more than 750 aircraft and 15 different aircraft types.
- Challenge
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It took Marquis Jet executives several meetings and some creative presentations to convince Mr. Santulli that they had a good idea and that they were the right guys to execute it. After all, NetJets was already the industry powerhouse and the idea of entrusting the brand to a couple of unknown upstarts seemed risky. But ultimately Santulli agreed that the Marquis Jet Card concept was a smart way to attract new clients that NetJets, with its fractional share model, might otherwise miss. In fact, Santulli saw the potential in Marquis Jet for something very special.
Marquis Jet began with a little over $5 million in startup capital and two dedicated aircraft shares leased directly from NetJets. After an initial slow start, the company sold 27 cards, or less than one whole aircraft, in its first five months of existence. It soon became apparent that the Marquis Jet Card program met the needs of a large and not fully tapped market, among them the swelling number of hard working and successful wealthy Americans, the “millionaires next door”, plus business people, Hollywood celebrities and sports figures.
The company grew at an average rate of 55 percent annually over its first four years. By 2005, Marquis Jet had 2,000 customers and annual sales of more than $300 million. By then, itsaircraft lease commitments directly with NetJets had grown to 67 aircraft, making Marquis Jet NetJets’ largest, single customer.
In the fourth quarter of 2005, NetJets and Marquis Jet agreed that as part of Marquis Jet’s larger overall growth plan, it made sense for Marquis Jet to begin purchasing and owning aircraft rather than leasing them to meet its and their clients’ growing needs. While NetJets would continue to manage and operate the aircraft for Marquis Jet, it became clear that significant third party financing would be necessary to satisfy Marquis Jet’s growing thirst for additional aircraft.
Superior Card Owner experience was and remains the key for Marquis Jet. But as a relatively young company with no meaningful hard assets on its balance sheet, management would have challenges convincing conventional lenders to finance several hundred million dollars worth of airplanes for them, despite the connections and relationship it had with NetJets. The company needed a financial services partner as strong, reliable and industry-wise in aviation and fractional financing as NetJets is in private aviation.
- Solution
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By this time, the CIT and NetJets relationship had reached new heights, leading Richard Santulli to introduce the Marquis Jet management team to representatives from CIT’s Aerospace Business Aviation Unit. Based on more than a decade of personal experience, Santulli was well acquainted with CIT’s resources, knowledge and commitment to the aviation industry, and more specifically to NetJets. Through a special vendor arrangement, as of early 2005, CIT had financed more than $600 million in NetJets share purchases for hundreds of NetJets Owners. In early 2007, this figure passed $1 billion. In fact, given CIT’s closeness to the NetJets business, Marquis Jet was a known entity and all agreed that it was only a matter of time before the NetJets/Marquis Jet/CIT partnering would become a reality and expand the overall relationship once again, this time in a new direction.
CIT focused first on understanding the Marquis Jet business model, market position and financial situation. Because of its extensive experience in business aviation and its long-term relationship with NetJets, CIT was able to look
beyond the balance sheet and recognize Marquis Jet’s massive potential for long-term revenue and income growth, along with its likelihood to contribute to NetJets’ long-term success.
The business aviation financing experts at CIT proposed a customized financing solution for Marquis Jet that reflected its expertise in the NetJets world and its understanding of Marquis Jet’s place in the overall combined business plans of both companies. With support from CIT Business Aviation, Marquis Jet would be able to acquire the aircraft it needed to meet client demand and support its growth objectives, while also meeting cash-flow goals.
- Results
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Since Marquis Jet chose CIT Aerospace as a partner in Q4 2005, CIT has provided more than $300 million in financing to support the company’s acquisition of more than 25 aircraft, accommodating its needs for both whole and fractional share aircraft purchases. The company’s growth prospects continue to be excellent, given a consistently upward trend in demand for private aircraft, its ever deepening relationship with NetJets and its established position as the leading force in prepaid jet cards.
Marquis Jet’s 48 aircraft combined with its 65 leased aircraft, all operated by NetJets, support its 3,500 current Card Owners. The Company continues to add about 100 new Card Owners to its client base each month and Marquis Jet revenues are projected to reach $900 million in 2008. To support this growth, the Company will require financing for a minimum of 20 additional aircraft in 2008. CIT is and will continue to play a major role in financing the company’s aircraft growth. Relationship Capital at its best.
