NetJets Is Soaring After Fixing Warren Buffet’s ‘Biggest Mistake’

‘Biggest Mistake’

For the two decades plus that NetJets has held its first place position in terms of fleet size and flight hours, it hasn’t always been profitable. It’s hardly alone in first-hand experience that the glamorous world of airlines – public or private, can be brutal on a balance sheet. Buffett has, over the years, said that airplanes attract investors, even if the companies that operate them have a long trail of bankruptcies and failures. His love-hate relationship with investing in airlines once led him to quip, “If capitalists had been present at Kitty Hawk when the Wright brothers’ plane first took off, they should have shot it down.”

Back in 2010, Johnson was attending the annual Berkshire shareholder meeting in a far different position and situation. He was an up-and-coming executive as NetJets was being tossed around by the turbulence of the Great Recession. As Johnson tells it, he was sitting “up in the rafters” along with the 20,000 attendees who flock to what’s been dubbed “The Woodstock of Capitalists.” NetJets had posted a $711 million loss in 2009. Buffett told shareholders it was worse than they had known. His private jet airline had lost $157 million since buying the company in 1998. Debt had ballooned from $102 million to $1.9 billion. He said the company was a “major problem.” He called NetJets that year’s “biggest mistake.” Without Berkshire Hathaway’s deep pockets, the industry’s biggest player would have failed.

On the dais at this year’s Berkshire meeting, Johnson recalled a conversation with Abel after he took the reins back in 2015. Johnson said, “I remember my first board meeting prep, and I was excited, and we were starting to move. I was talking about growth. We’re gonna get this right. We’re gonna grow. And Greg pulled me aside in a very kind way. He said, ‘Why don’t you pay $1 back to Warren and work on getting your debt down?'”

As Johnson puts it, “That was a teaching lesson. I took that to heart. I heard it clearly, and I actually already knew that. And so, we just started really putting our blinders on, and we said, ‘Safety and service, safety, and service.'”

Johnson continues, “Warren bought NetJets after becoming a customer in 1995…He did a video for us that we still use. And he said, ‘I want safety, and I want service.’ And we’ve been really focused on making sure everybody stays in that alleyway. That, in large part, plus a lot of hard work, is why we’re able to pay off the debt. We’re able to pay cash back to Berkshire Hathaway.”

The Big Show

The Berkshire annual meeting is on a Saturday. It is broadcast live by CNBC. On Friday, Squawk Box co-anchor Becky Quick spoke with Abel and Johnson on the floor of the expansive convention center that hosts the meeting. There was no breaking news, but if you weren’t familiar with NetJets, the numbers were impressive.

Johnson told Quick there were 1,104 airplanes (including over 200 with Executive Jet Management, its aircraft management arm). For comparison, United Airlines has 1,082 mainline airplanes. A NetJets airplane lands somewhere every 57 seconds. It flies to over 3,100 airports. American Airlines, currently the world’s largest scheduled airline, serves 368 airports. Johnson told Quick NetJets flies to around 150 countries in any given year. Turkish Airlines, which flies to more countries than any other scheduled airline, serves 122 countries, according to Routes360.

What wasn’t discussed is what drives the numbers. In terms of its fleet, NetJets makes money from the airplanes it buys, reselling fractional shares to owners. Of course, it has to ensure it sells the shares, not necessarily an easy task. It also has to invest in what’s called a core fleet, aircraft it owns, so that when an owner calls, it has an aircraft available.

Unlike airlines, which typically tweak routes and schedules twice a year, the number of destinations NetJets serves varies daily. It’s not based on route planners who analyze demand and set schedules six months in advance so other departments can plan menus, arrange international permits, and book hotel rooms for pilots in blocks months before their flights.

At NetJets, its customers determine the routes, set the schedules, and make up the menus. In some cases, this happens as few as six hours before departure. While they pay a lot of money, buying their share, and then monthly management fees, NetJets guarantees they will get an airplane in the fleet type they purchased or better. They are also guaranteed the hourly rate to fly, which is locked in for the five-year contract, although fuel prices are updated monthly. If the airplane scheduled to fly breaks down or a pilot gets sick, NetJets gets a replacement aircraft without additional charges. Flying NetJets is easy. All you have to do is show up.

Think about it this way.

You wake up at home in Charlottesville, Virginia. You have a message that you need to be in Yakima, Washington, for a critical dinner. Instead of furiously figuring out which hubs and airlines might get you there as you hurriedly throw a few pieces of clothing in your rollerboard and scramble to the airport, you call NetJets.

After that, you go down to your home gym for your morning workout, shower, pack, have your coffee while catching up on emails, and head to the office. Your flight isn’t until 2 pm, and you only need to be there 10 minutes before departure. If you are late, the airplane will wait for at least an hour. It’s an interesting concept to those of us who race to the gate only to find the boarding door closed 19 minutes before the departure time, our airplane sitting at the end of the jetway, and an empty podium.

You arrive in Yakima using private aviation door-to-door about five or six hours faster than if you flew with the airlines. For any trip, you have more than 10 times as many choices of airports to fly to. Private jet companies can use over 5,000 airports in the U.S., compared to fewer than 500 served by scheduled airlines. Flying from airports near where you are leaving and arriving can shave another hour or three from your door-to-door travel time.

Patrick Gallagher, the president of NetJets Aviation, says getting customers where they want to go, when they want to go, on such short notice, probably looks easier than it is. He cites “weather patterns, air traffic control delays, and the (ongoing) demand surge, the TSA craziness (earlier this year, causing customers to switch from airlines to private flights), the conflict in Iran (impacting international routings), et cetera, et cetera.”

It’s not an easy model to make work for operators. Think of flight scheduling like putting together a jigsaw puzzle where the edges of the pieces keep changing. For users – companies, high-net-worth individuals, and their families, the fractional ownership and leases NetJets sells offer the benefits of owning an airplane without the hassle. In fact, over 30% of full aircraft owners also hold fractional shares, according to research by Private Jet Card Comparisons. They use those shares when their existing aircraft is down for maintenance, out of position, not suitable for the mission, being used by someone else, or the pilots aren’t available.

Secret Sauce

For anyone trying to figure out the ingredients in NetJets’ secret sauce, it’s not necessarily apparent. Some aspects seem counterintuitive.

Major airlines often aim to reduce the number of fleet types to improve efficiency. Adding the Ascend, the Embraer Phenom 500, a long-range midsize jet with a stand-up cabin, and the Bombardier Global 8000, the new flagship, means 15 different aircraft types.

Explaining fleet strategy, Gallagher says, “Our goal is to ensure owners have the flexibility to match their jet to their journey. Having a diverse fleet allows for that, and the Ascend is a great example of how we address market needs, fitting between the Phenom 300 and Latitude fleets.”

It also provides more opportunities for new customers to enter the fractional ecosystem. That includes existing jet card customers who buy flights in 25- and 50-hour increments.

Gallagher says, from an internal perspective, “NetJets’ fleet has 10 different aircraft types and five jet classes, from agile light jets to expansive long-range aircraft.”

In some cases, there are synergies with common crewing and type ratings for pilots. The Global 7500 and 8000 are one crew type. It’s the same for the Global 5000, 5500, and 6000 fleets.

Its current fleet strategy provides insulation with supply chain issues that impact OEM’s. “Our perspective on scale has also evolved in recent years as we can now scale a fleet much faster than we did several years ago, due to our pace of sales and growth. This allows us to use variety as a competitive advantage because we can reach critical fleet mass and target utility rates faster,” Gallagher says.

He notes, “Ten or so years ago we had nearly double the number of crew types and aircraft types we have today,” continuing, “We feel the current mix is optimal to meet the needs of our (fractional) owners,” before adding, “Perhaps the biggest factor is that with delivery delays and supply chain issues, we have to diversify to ensure availability if a part is in short supply or a single OEM can’t supply enough aircraft to meet demand in a certain category.”

Out With The Old

Another difference is how airplanes are being retired from the fleet. The current fleet of nearly 50 XLSs will leave by the end of 2027. NetJets currently flies over half of the Citation Latitude and Longitude aircraft produced.

How the major private jet operators move legacy fleets can impact both the charter market and the value of pre-owned aircraft. Last decade, after NetJets sold around two dozen Falcon 2000s to Dumont Aviation, the buyer turned around and created jet card and fractional programs that competed with NetJets.

Last year, Vista Global sold its Citation X fleet to Jet Excellence, a charter operator focused on the wholesale market, and Flexjet sold its Challenger 300s to Baker Aviation, which sells only through brokers. While not competing directly with the companies they bought the airplanes from, the charter brokers who are clients of Jet Excellence and Baker do so through their ad hoc charters and jet card programs. Often, the pitch is a lower price.

Some in the industry worry about the mass of private jets that will exit the NetJets fleet in the coming years, and the impact on the rest of the ecosystem. Gallagher says, “Our fleet disposition strategy has changed a lot since (the Dumont sale)…just thinking about the way that we maintain aircraft for the long term, when aircraft hit certain milestones around major engine overhaul, major inspection dates, you reach certain points where their useful life within a program like ours has been exhausted,” adding, “We’re very carefully managing that to where aircraft are dispositioned versus, selling them or trading them in as we’ve done in the past.”

Gallagher says even after the exits, incremental growth will be “well over” half of the new deliveries.

Earlier this year, NetJets accepted the first of its new flagship, the Global 8000. “We’ve now got the fastest civilian aircraft since the Concorde,” Gallagher noted. Still, fractional owners of its 19 Global 7500s won’t feel left behind. Their jets are being converted to Global 8000s through software upgrades that increase speed and range. NetJets is absorbing the expense. The upgrades retails for around $3 million per aircraft. It’s the same with WiFi upgrades across the fleet. The upgrades also add to the residual value of each customer’s share, which NetJets buys back at the end of the contract.

Expanding The Market

McKinsey estimates the U.S. addressable market for private aviation is about 1.5 million individuals. Even after the Covid surge, only about 15% are users of private aviation. While some companies are focusing more on larger jets, Gallagher says to gain converts, “[E]ntry-level category (the Phenom 300 and Ascend) is still very important to us because most new entrants to the (private aviation), oftentimes, they’re looking for the shorter hop.”

Remember our Charlottesville flyer. When she has to go to Cleveland, Pittsburgh, or Louisville, a nonstop flight on a private jet taking one hour replaces a four to six-hour connecting flight through a hub. If time is money and you have the money to spend, private aviation can be a wise investment. You get extra time with the family, a few more runs down the ski slope, and more opportunities to grow your business and make even more money.

In terms of how customers matriculate through NetJets’ product segments, Gallagher says its 25-hour jet cards and leases currently account for about 15% of its flying. That’s changed a bit. Before the Covid surge, officials typically pegged that number at 20%. Back then, jet cards had fewer peak days and no blackouts.

NetJets was the first large operator to halt sales of its jet card program when demand began outstripping the availability back in the summer of 2021. It also stopped renewing existing customers after they used up their flight hours. The decision worked out well. Wheels Up, which went full steam ahead, couldn’t keep up with demand and saw its service levels plummet.

As the surge waned and more new aircraft arrived, NetJets launched 25-hour leases in March 2022, with more restrictions that its previous leases starting at 50 hours. It brought back its jet cards. However, the current jet cards carry more restrictions, making them impractical for some.

At one point, about 50% of fractional customers started with a jet card. So what’s next? Gallagher says, “We feel like we’re in a really good place from an operating model with (current 25-hour products), and so I don’t foresee any new restrictions or fewer restrictions to the jet card program.” Gallagher says more new customers are entering its core fractional product directly, perhaps deciding to bypass the restrictions of its current 25-hour programs.

Looking Ahead

Looking ahead, there is no apparent let-up. “Both new customer demand and existing customer retention rates remain as high as we’ve ever seen them,” Gallagher says. In terms of interest, Gallagher says, “Certainly 2025 and 2024 looked very similar from an inbound lead standpoint, and so far, this year it’s no different.”

What’s not apparent to those who don’t use private aviation is that around 90% of private flyers also use airlines. Gallagher says the delays and inconsistencies have driven last-minute bookings to record highs, making that Charlottesville-to-Yakima trip a more regular occurrence.

While private jet companies typically convert only a small number of leads, Gallagher says it’s not just about the quantity of prospects. He says, “The comforting part which allows us to remain so bullish is that it’s not just the volume (of inbound leads), it’s the quality as well.” adding. On the backend, “retention rates have been as high as we’ve ever seen them.”

If You Build It

With flying continuing to set new records (up 8.1% in North America in 2025, following 9.2% growth in 2024) and a robust pipeline, ensuring it has the on-the-ground infrastructure to support its fleet growth and larger customer base is an important part of the story.

Customers see part of this investment in the form of private terminals reserved for NetJets flyers, helping them avoid the increasingly crowded FBOs used by all operators. NetJets already has its own terminals at high-traffic airports. That includes Palm Beach, Teterboro (which serves New York City), and Van Nuys in Los Angeles. Palm Beach and Teterboro together account for 10% of the company’s flights. Additional terminals in Augusta, Austin, Boston, Bozeman, Dallas, Denver, Las Vegas, Scottsdale, and Vail/Eagle have either recently opened or are in development.

In Augusta, the 432,000 square feet of ramp space was completed in advance of this year’s Masters golf tournament, which handled over 750 landings and takeoffs for its customers. The facility will serve as a reliever to stage flights for customers departing from Charlotte or Atlanta’s already crowded private aviation airports, where overnight parking is limited. Gallagher says, “In a perfect world, we would have all the space that we need (at congested airports), but in the absence of being able to get as much real estate as we need to support this fleet, then we look where we can get it nearby.”

Johnson told CNBC, “Infrastructure is big in my space and airport availability; they’re not building new airports, so we’re laying down some infrastructure to make sure there is parking space, FBO space.”

The expanded hangar and ramp space enable NetJets to cut ramp delays and more efficiently service its fleet, providing the consistent delivery Gallagher says keeps customers coming back.

Other investments include ensuring customers can stay in touch while they are in the air. An agreement last December with Starlink will see the service installed in 600 of NetJets’ over 800 aircraft by the end of next year. Gogo’s Avance platform, including 5G and its global LEO broadband satellite service, is upgrading its other aircraft under a 2024 deal.

Craig Ross of Aviation Portfolio, a consultancy that supports fractional and whole aircraft owners, says he is not surprised by NetJets’ turnaround. A former NetJets executive, after it acquired Marquis Jet Partners, Ross worked with many of the current senior team members. He says, “I’ve known Adam, Pat, and Jim (Bostick, the head of sales) for more than 20 years. They’ve put in the time and cut their teeth in the trenches. Their success is not surprising. You have continuity at the top, a ‘do your job’ focus, and then the strength of Berkshire Hathaway. They’ve invested in technology, they’ve invested in people, they’ve invested in training, and it has paid off.”

Slap Shot

NetJets faces plenty of competition in a long-tail industry. Including flight hours from owned, charter, and fractional aircraft, NetJets’ market share in the U.S., which accounts for nearly 70% of global activity, was 13.3% in 2025. The top 30 charter and fractional operators flew 32% of the industry’s flight hours, according to Argus. Just under 44% of hours were on aircraft exclusively used by their owners. Over 1,000 charter operators, some with just two or three airplanes, accounted for the remaing 24% of the industry’s flight hours.

What’s more, signing up a fractional customer doesn’t mean they are monogamous to NetJets. A significant portion of flyers have more than one solution. Forty percent of fractional owners also have jet cards, and 32% use ad hoc charter flights, according to the Private Jet Card Comparisons research.

It’s a brawl for each customer. Think of the physical intensity of hockey players battling for a puck stuck in the corner. Those 1.5 million prospects, according to McKinsey, are less than one-half of a percent of the U.S. population. Competitors fight NetJets for every customer.

Flexjet, Inc., the second-largest player, which attracted an $800 million investment last year from LVMH-affiliated L Catterton, segments the market. It uses its flagship Flexjet brand to go against NetJets on the fractional front with design-led cabin interiors, Sentient Jet competes on the jet card front with more flexible terms and lower prices, and its charter broker FXAir caters to consumers buying on-demand charter flights.

Vista targets a more global swath of flyers who mainly use larger jets. In February, it agreed with Bombardier for a firm order of 40 Challenger 3500s and options for 120 more. It is upgrading all 19 of its Global 7500s to 8000s by the end of the year. In addition to North American and Europe, its programs serve clients based in Africa, the Indian subcontinent, Asia, and the Middle East, including flights within the region. While NetJets flies everywhere, it focuses on flyers based in North America and Europe. Vista attacks the broader charter market with its XO brand, a brokerage with a technology-led online platform that enables users to book flights instantly rather than just gathering requests.

There are a host of others, too. Delta Air Lines-backed Wheels is increasing its share of the business travel market through the airline’s corporate sales force, which has contracts with 40,000 companies. They are pitching Wheels Up as a premium add-on. It’s a market where NetJets counts 40 Fortune 100 companies among its customers.

flyExclusive benefits from vertical integration. It has built in-house capabilities to refurbish and paint pre-owned preowned aircraft it acquires. After giving them a new-airplane feel, it then uses them to compete in the fractional and jet card segments at lower pricing. In the fractional model, you are accessing your provider’s fleet type, so you may never fly on the airplane you actually own.

PlaneSense, which until recent years exclusively operated the Pilatus PC-12 turboprop, attracts fractional jet owners who also need short-hop and short-runway solutions. It now also competes for those entry-level flyers NetJets targets with the Phenom 300 and Ascend. It offers the PC-24, a well-regarded Swiss-made light jet with space for large sporting equipment and baggage.

After operating regionally in the Midwest for two decades, Airshare has expanded nationally. It offers fractional ownership and jet cards, selling days of access instead of hours. It has gained visibility through sponsorship of the Ryder Cup and its partnership with the PGA. Its model can be attractive to flyers who take multiple flights in a single day or have longer flights. For example, with the Challenger 3500, its 1/16th share provides 20 days of access. If your typical flight is four hours, you get 80 hours of flying compared to 50 hours in a traditional 1/16 share.

Bond, a new fractional start-up focused on larger private jets, is trying to use NetJets massiveness against it. Bond executives contend its offering will be akin to Aman versus Ritz-Carlton, or Maybach compared Mercedes-Benz. Bond has said it will sell only 10 shares per aircraft, instead of the typical 16. It has 50 firm orders with Bombardier and options for 70 more, including the Global 8000.

And then there are hundreds of charter operators, some with only two or three charter jets, but ready to quote your next trip. Add thousands of brokers. While some have significant volume, to get started, an individual only needs a website, a WiFi connection, a subscription to a sourcing platform, and the tolerance to make hundreds of cold calls.

For the merits of the other pitches, NetJets consistently comes away with the puck more than anyone else. It has over 13,000 customers across its products.

Fasten Your Seatbelts

Can anyone or anything slow NetJets down? The biggest obstacle to continued dominance may be its own pilots’ union, not unusal for an industry where labor warfare and discontent in not uncommon.

In 2023 and 2024, as airlines saw post-Covid travel picking up, they turned to private aviation as fertile grounds for recruiting. As airlines increased pilot pay, NJASAP sought a mid-contract increases for its members. During those talks, it launched ads in the Wall Street Journal, trashing Buffett and questioning his safety. Picketers with similar messages were outside the gates of events like the Masters, visible to customers, prospects, and the media. The brawl ended with an extension giving pilots a 52.5% increase in compensation. NetJets then sued, alleging the union engaged in a coordinated campaign of disparagement, including publishing false statements about maintenance, pilot training, and safety standards. It was resolved in March 2025, with the union posting a “disregard release” message on its website regarding the offending materials.

Good relations with pilots is maybe more important on private airlines. On private jets, there are no flight attendants on all but the largest airplanes. Pilots meet customers in the FBO. They make sure their luggage is loaded. They help owners and their families get situated in the cabin and show them where catering items are stored. They make small talk and smile at your kids. For now, it seems everything is hunky dory. Over 95% of respondents to the Private Jet Card Comparisons annual survey who fly with NetJets rated their overall satisfaction level as excellent or very good, its highest mark ever.

Still, NJASAP may have received a subtle warning from the new boss. Berkshire Hathaway rarely sells companies. But in Abel’s first annual meeting as CEO, one shareholder asked if he could envision divesting businesses. Abel called it “a good question” and went on to list a few examples where “we might not be the best owner of the business.” One was “labor issues that we cannot resolve.” The extension with pilots, which was ratified in 2024, runs through 2029.

Munger once described owning airlines as “a very unpleasant experience.” That didn’t stop Berkshire from subsequently investing in American Airlines, Delta Air Lines, and United Airlines, and, again, recently $2.6 billion in Delta. For now, Berkshire and Buffett, with nearly $400 billion in cash and equivalents, can enjoy NetJets’ smooth and profitable ride at the top of the league standings.