NETJETS

NetJets created the blue ocean of fractional jet ownership. Today, NetJets is a multibillion-dollar business with the largest private jet fleet in the world – over seven hundred aircraft, flying over one hundred seventy countries

NetJets observed that business travelers, the most lucrative mass of customers in the airline industry, had two principal choices: They could fly business class or first class on a commercial airline or the company could purchase its own aircraft to serve its corporate travel needs.

Commercial travel avoids the high up-front, fixed-cost investment of a multimillion-dollar jet aircraft. Also, a company purchases only the number of corporate airline tickets needed per year, lowering variable costs and reducing the possibility of unused aviation travel time that often accompanies the ownership of corporate jets. On the other hand, corporations buy private jets to dramatically cut total travel time, to reduce the hassle of congested airports, to allow for point-to-point travel, and to gain the benefit of having more productive and energized executives who can hit the ground running upon arrival.

To create a blue ocean NetJets built on these distinctive strengths. The result was the new market space of fractional jet ownership. Here customers don’t buy a jet outright. They only buy a small fraction of it. The result is that buyers get the convenience of a private jet at the price of commercial airline travel. NetJets’ smaller airplanes, the use of smaller regional airports, and limited staff keep costs to a minimum. With point-to-point service and an exponential increase in the number of airports to land in, there are no flight transfers; trips that would otherwise require overnight stays can be completed in a single day. The time from your car to takeoff is measured in minutes instead of hours. Perhaps most appealing, your jet is always available with only four hours’ notice. If a jet is not available, NetJets will charter one for you. Last but not least, NetJets dramatically reduces issues related to security threats and offers client’s customized in-flight service.

By offering the best of commercial travel and private jets and eliminating and reducing everything else, NetJets opened up a multibillion-dollar blue ocean wherein customers get the convenience and speed of a private jet with a low fixed cost and the lower variable cost of first- and business-class commercial airline travel. Now, nearly thirty years later, NetJets share of the blue ocean it unlocked still stands a staggering five times greater than that of its nearest competitor.

As the NetJets case study illustrates, insight into new market space can be gained by shifting an organization’s focus from competing within to looking across defined industry boundaries.

THE BLUE OCEAN STRATEGY PRACTITIONER PROGRAM