With just under three months on the job, Fred Reid, the CEO of private aviation provider Flexjet, is tackling marketing private jet ownership in an increasingly tough economy. Reid, who joined Flexjet after stints as head of Virgin America and Delta Air Lines, talks with Halogen Guides about the current demand for fractional jet shares, how private fliers are adjusting their travel purchases and how Flexjet is fine-tuning its programs.

How is the economy impacting your business?

Reid: There is no question that the percentage of fractional owners renewing ownership is declining somewhat. The majority still renew, and we are still selling new shares today, but we are seeing a lot of movement. We have some people who own multiple shares who trade down a bit to a lesser share. We have some trading up to whole ownership. We have seen some reduce shares to go with a jet card. But I’m also anticipating that a number of corporations that have their own fleet of aircraft will give us a serious look. I’m not pretending that we are not in a dreadful economy and there will be other forms of stress on us, including reduced consumer spending. But having said that, there are sectors that remain healthy, and we’re not excessively exposed to financial services as an owner base.

Are there any price cuts in store?

Reid: We are not price cutting now, but we are trying to do everything we can to meet our customers’ requirements. On the Flexjet 25 card, we announced a split payment option a few weeks ago. For those that buy a card before the New Year, they can pay the card price in two installments—one by December 31 and one six months later. We also have a combo jet card that lets fliers use different aircraft models. We’re also allowing fractional owners to put hours up for sale. Owners can carry over a quarter of their hours to the next year, or they can put unused hours up for sale. Say you need 20 more hours in the next six months. You buy a card or buy hours as you need them from this pool.

What is your focus for the next six months?

Reid: I’m looking for new product offerings. We are looking at how to be more creative on contract extensions. We are also looking at geographical expansion. Canada and Mexico are natural extensions. It was misreported that we were reopening Europe, but we’ve made no such decision. We will continue to retire older aircraft to keep our fleet the youngest in the industry, but the number of aircraft exiting the fleet will be higher than the number entering the fleet.

How’s demand looking for the holidays?

Reid: Most of our demand emerges just 10 to 24 hours ahead, so it’s hard to say. Like everyone else, our so-called live hours are down a bit in the last 60 days. One barometer for the business is budgeted hours—a measure of how much owners are flying. If 10 owners have 50 hours a year each, they tend to burn through 500 hours in a year. Now, we are seeing them burn through those hours slower.

The price of oil just hit a 20-month low. Are private fliers seeing savings yet?

Reid: They are enjoying much cheaper fuel. There is some administration cost—we have to source the fuel and pump the fuel—but that is standard across the industry. The cost of fuel is 100% passed on to the flier. It’s not like the airlines that institute a fuel surcharge, but when the price of fuel falls, the surcharge remains.