Stuart McCullough would agree. ‘You can always communicate an impression of luxury. Whether your brand has substance, validity and longevity is a different matter. You must truly be a part of the world you want to participate in. That requires authenticity and integrity. Your customers are extremely demanding. If the reality does not match the image, you’re not going to fool them for very long.’
Bentley is confident that it can withstand close scrutiny. Tours of its factory – still located in Crewe – are known as The Bentley Experience. Don’t worry if you are unable to go on one, because the desired impression is evocatively described on the brand’s website (http://www.bentleymotors.com):
Welcome to Pyms Lane, home of Bentley Motors, proud guardians of the Flying ‘B’. You’re struck, first of all, by the quiet. Then the scent of freshly cut leather mingling with hardwoods freshly sawn. So imperceptibly slow is its forward momentum you have to be told that this is the assembly line. Shapes emerge like sculptures partly formed. You make out the gracious lines of a new Arnage, the exciting thrust of a Continental body. Here and there in the cathedral-like spaces small clusters of green-clad engineers pore over the gleaming contours of a new Azure or a Continental GTC.
‘The exciting thrust’, indeed – who can deny that cars are symbols of virility? ‘Gracious lines’, meanwhile, are also the department of Mulliner, a legendary coachbuilder that worked with Bentley and Rolls from their earliest days and was bought by the joint company in 1959. It was responsible for the bodywork of the original Bentley R-type Continental. Now called Bentley Mulliner, it is the bespoke arm of the company, staffed with coachbuilders, coppersmiths, electronics wizards and cabinetmakers. Craftspeople, in other words, who are on hand to personalize your motor and provide the artisanal touches that genuine luxury requires.
‘Some might suggest that the interior fitting of a car is even more important that the exterior,’ says McCullough, ‘particularly for people who don’t want to be too overtly ostentatious about their wealth. They can retain a classic exterior while investing on the inside of the car: marquetry, gold fittings, initials... we can do most things.’
Interestingly, McCullough admits that instantly identifiable luxury automobiles like Bentley don’t always appeal to the world’s richest people, the ‘ultra high net worth consumers’. ‘It’s one of the challenges the luxury car industry faces. Let’s imagine a guy who’s just bought himself a $500 million vineyard in California. He has his Gulfstream sitting at Monterey Jet Center, but the trip from the vineyard to the jet is done in something as anonymous as a black S-Class Mercedes. In fact, at the uppermost end of the market the S-Class is practically the default option.’
The immensely rich and famous prefer to keep a low profile: behind the smoked glass windows of the blandly sleek Mercedes, they could be anybody. But where does that leave the likes of Bentley? ‘It depends on the client, of course, but for some people they are a private indulgence. They are also highly collectible: I’m talking about people with their own car museums, filled with 400 or so vehicles. For example, the American chat show host Jay Leno is well known for his huge collection of cars from every era of motoring history.’
For a classic car overdose, you just have to go along to the Concours d’Elegance at Pebble Beach, California, in August. These are people who are truly passionate about cars – and presumably more attracted by the prospect of driving a Bentley than riding in the back of a limousine.
‘The one does not necessarily cancel out the other,’ observes McCullough. ‘You may have a Bentley at home, but if you’re the head of a corporation, especially right now, you don’t want to be chauffeured to the airport in it. After all, to be on the road is to be in the middle of society. You are cocooned in your automobile, but the cocoon speaks volumes.’
It goes without saying that Bentley lives without mainstream advertising. Its marketing is centred on press coverage, its racing triumphs and, of course, word of mouth. For some customers, the Bentley legend is a driver of desire. And although buying a Bentley is an indulgence, it’s not necessarily a frivolity. ‘People aspire to owning a car like a Bentley. They tend to make the leap when they’ve reached a milestone in their lives, or a certain level of experience. It’s not whether you can afford one – it’s whether you deserve one.’
At this point, I couldn’t resist asking whether Bentley customers had developed a conscience, and were now demanding environmentally friendly vehicles. Would we be seeing a hybrid Bentley? In fact, Bentley was poised to reveal details of a biofuels strategy that would, it hoped, reduce CO2 emissions from its cars by 40 per cent within three years. There was even a hint that the Royal household might acquire Bentleys fuelled by ethanol. ‘The total emissions of all the cars ever built by Bentley amount to a can of Coke in an Olympic swimming pool,’ stresses McCullough, ‘but we want to do our bit.’
He acknowledges that this opens up a debate about the moral integrity of plant-based fuels (does their production, for instance, result in deforestation, soil erosion or the use of land that might be needed for food?), but says that Bentley will stand by them as a means of reducing CO2 emissions.
Many car fanatics no doubt reach for their metaphorical revolvers when they hear the word ‘environment’. But perhaps they need not feel so victimized. After all, it’s not as though they own an aircraft.
6
Fractional high-flyers
* * *
‘Live like a millionaire on a more modest budget.’
An acquaintance of mine, the founder of a large textile company, is the owner of a private jet. I would say ‘proud owner’ – but actually he seems a little embarrassed about it. ‘The fact is,’ he tells me, apologetically, ‘sometimes you need to be at a meeting a long way from your office, very quickly, with a minimum of fuss.’
He stresses that his jet is a small, rather elderly affair that he bought second hand. The more obvious step when you’re in the market for a plane is to go to a company like Gulfstream, which makes the desirable Gulfstream G550: a long-range business jet (it could whisk you from New York to Tokyo in style) that costs around US $48 million.
The Gulfstream brand was created in the late 1950s by Grumman Aircraft Engineering Co, which made military planes. It named its first civil aircraft after the Gulf Stream: ‘the current that flows along the coast of Florida, a favoured vacation spot for Grumman executives’ (www.gulfstream.com). In the 1960s Grumman spun off the civil aviation arm of the company and relocated it in Savannah, Georgia, where it remains to this day. In 1978, an aviation entrepreneur named Allen Paulson acquired the Savannah operation and renamed the business after its planes. Today, Gulfstream is owned by General Dynamics, ‘a giant in the defence industry’, which bought the business at the end of the 1990s.
The current flagship of the Gulfstream fleet is the ‘ultra-long-range’ Gulfstream 650. When it was unveiled in 2008, it was described as the world’s ‘largest, fastest and most expensive private jet’. Capable of flying at 700 mph (‘faster than a Boeing 747’), it seats 18, has a full kitchen and bar, individual entertainment screens, satellite phone service and wireless internet access during the flight. Passengers can sip cocktails at 51,000 feet, its maximum altitude. The plane costs US $58 million. And don’t worry about lack of customers. Aerospace analyst Richard Aboulafia of the Teal Group explained, ‘Gulfstream is staking out the top end. There’s always a part of the market that is willing to pay for the best and the biggest’ (‘What flies 700 mph and costs $58 million?’, USA Today, 24 March 2008).
In the same article, Gulfstream spokesman Robert Baugniet said that 80 per cent of Gulfstream’s clients were companies, 12 per cent were governments and 7 per cent were high net worth individuals.
Tucked away in the section about the history of Gulfstream on the company’s website is a line that points to a new direction for luxury jet ownership – and for the acquisition of other fabulously expensive items, too. It mentions that, in 1994, Gulfstream signed a f
ive-year contract with a company called NetJets. Despite its name, NetJets has little to do with the internet. But it has everything to do with a recent trend in luxury: fractional ownership.
A SLICE OF THE GOOD LIFE
Fractional ownership means exactly that: the chance to own a part of something. The concept is usually sold on its practicality, but in fact it has parallels with mass luxury. If you are wealthy – but not immensely wealthy – you can still afford a villa, a vineyard, a yacht or a plane, as long as you don’t mind sharing it with a bunch of other people. In the property market, such asset sharing makes more sense than the more familiar ‘timeshare’ arrangement, because you have an equity stake in the building – meaning that you could eventually sell your share for a profit.
The fractional ownership of property emerged in the United States in the 1990s before crossing over to Europe. The International Herald Tribune ran an article about the trend in 2008. ‘The hottest segment of the market in Europe, as in the United States, is the so-called private residence club, a fancy term to designate high-end properties that come with luxury amenities and services. The clubs have limited membership and generous use policies, and because they are in premiere locations, they are often viewed as investments that can appreciate’ (‘Fractional property ownership heads to Europe’, 10 August 2008).
Less than US $350,000 buys you membership of a residence club that has properties all over Europe. Obviously you have to negotiate the dates of your stay with the other members, but apart from that small inconvenience you’re effectively getting access to a network of villas in some of the world’s most desirable locations, free of worries about staffing and maintenance.
Soon, the fractional ownership bug had spread to almost every corner of the luxury market. An article in The Independent at the beginning of 2009 confirmed that the trend had caught on with aspiring yacht owners, linking it to the economic downturn. ‘For gilded millionaires struggling to manage declining fortunes and bruised egos, it is the prudent way to keep up appearances,’ the piece began. Martin Gray, the founder of ‘fractional sailing’ company Pure Latitude, commented: ‘Everybody recognizes that boats are extremely expensive and underutilized assets. You need to have a tremendous amount of money to keep a boat all year round, and most people prepared to do so recognize how little time they spend on them. A lot of people who want to try sailing but can’t afford that outlay think fractional ownership is a smart use of money’ (‘Now even the have-nots can have yachts, too’, 12 January 2009).
A website called Fractional Life (www.fractionallife.com) offers shares in just about everything: not only cars, boats, planes and helicopters, but also racehorses, works of art – and even handbags. A chirpy bit of editorial on the site explains the dilemma:
As you are reading this piece, you will no doubt be aware of the opportunities offered by fractional ownership for you to live like a millionaire on a rather more modest budget... One just wouldn’t feel right sporting an uncoordinated high-street bag when stepping out of a £150k sports car at the latest London hotspot. But what if you don’t already own the correct arm jewellery to match your outfit/car/occasion?
What indeed? The solution is simple: you borrow the appropriate bag. The site explains that the basic premise works along the same lines as a DVD rental library. ‘You pay a monthly fee, you borrow a number of items at a time (determined by your membership level) and each time you return an item, you can select another.’ Say goodbye to accessory insecurity, hello unlimited ‘arm jewellery’.
While renting a handbag is an amusing proposition, buying a chunk of jet requires a more hefty commitment. NetJets is one of the best-known brands in the market.
JETS FOR LESS
Although it sounds like a perfectly contemporary concept, the fractional ownership of planes dates as far back as 1986. That year, the man who became the founder of NetJets, Richard Santulli, was thinking of buying a plane. But as the NetJets website (www.netjets.com) explains, ‘while the convenience and flexibility made sense, the finances didn’t.’
Santulli understood fractions. He was a mathematics wizard, whose head for numbers had taken him from the Brooklyn Polytechnic Institute – where he was a maths teacher – to Shell Oil and then to Goldman Sachs. According to a profile in the magazine Wired, Santulli was hired to develop a computer program for Goldman’s leasing department. ‘But because no one but him knew how to crunch the numbers, pretty soon Santulli was running the whole department, selling and closing the big contracts himself – which often involved the financing of airplanes’ (‘Hey, you’re worth it – even now’, June 2001). He later left to set up his own leasing company, specializing in aircraft deals.
In 1984, Santulli came across a struggling but colourful private jet charter service called Executive Jet Aviation. It had been started in the 1960s by a couple of retired air force types (including General Paul Tibbetts, captain of the Enola Gay) and the actor James Stewart. Santulli acquired it as a side business. It was around this point that he began hankering to buy his own aircraft. He told Wired: ‘In terms of the amount of time I fly, it made no sense to own a plane... But when I divided the numbers by four, it started to make sense.’
After juggling the figures – it took a while to come up with the ideal balance of planes and customers that would result in a seamless service – Santulli re-launched Executive Jet as NetJets in 1986. And here Robert Dranitzke, COO of NetJets Europe, takes up the story. ‘When the service was first launched, people thought it was crazy. They’d ask, “So what am I getting for my money?” But in fact it made perfect sense. When you own an aircraft, it sits on the ground for two months of the year for maintenance. And of course you have to pay for a hangar, for a crew and so on. NetJets gives you access to a private jet 365 days a year – and when you’ve finished with it, you can forget about it.’
Investor Warren Buffett certainly recognized a good idea when he saw one. Having come across NetJets in 1995, he bought the company three years later. Buffett’s arrival helped to position the company as exactly what it is: an exclusive club of private jet owners. It also sent out a subtler message to potential customers. If the richest man in the world is a fan of fractional ownership, there must be something to it.
NetJets Europe was established in 1996, with two aircraft and only 10 employees. Arguably, the concept was an even tougher sell in Europe, where private jet travel remained less acceptable than it did in the United States. Today the European arm has more than 160 aircraft and 1,600 ‘owners’. The company can fly them hassle-free to almost 900 airports in Europe – and 5,000 around the world.
For anybody who flies regularly for business, NetJets sounds like a kind of paradise. Not only can you reserve your own jet within 10 hours’ notice, but you can also stock it with your favourite magazines and choose your meals from menus devised by the world’s greatest restaurants: Nobu and Hakkasan in London, L’Arpège and Ladurée in Paris, the Hotel de Principe de Savoia in Milan, La Réserve in Geneva and Sumosan in Russia. Simply consult the menu online and make your choice before your flight. As for the wine, NetJets’ own sommelier has created a list worthy of any of the establishments mentioned above.
All of that, to a certain extent, is the icing on the cake – the ‘going way beyond the basic’ that separates a luxury brand from a workaday one. But it’s the sheer convenience that NetJets customers are really after. Imagine: no more queues at check-in or waiting for luggage. You fly to your own schedule. And you choose who travels with you, so you can squeeze in a business meeting while you’re airborne.
‘Our clients are not, in general, the kind of people who think it’s cool to sip champagne at 40,000 feet,’ says Dranitzke. ‘In fact, they are more likely to regard a plane as a utilitarian tool – something that gets them from A to B. Rather than a lifestyle choice, this is something that enables them to work better, travel more efficiently and be where they need to be, on time, with no unexpected delays. Time is extremely important to these peo
ple.’
And safety is extremely important to NetJets Europe. The company boasts that it is the first dedicated business jet operator to have obtained the internationally recognized IOSA (IATA Operational Safety Audit) certificate from the International Air Transport Association – the highest safety accreditation in the world. Its pilots are highly experienced, frequently evaluated and well rested. In terms of the planes themselves, the company has one of the newest fleets in the sky, serviced by a full team of technicians at its own maintenance facility. In 2004, this became the first facility of its type to receive full approval from the European Aviation Safety Agency (EASA). All this is highly important given what happens when – God forbid – a private aircraft crashes with a well-known personality aboard. ‘Safety,’ stresses Robert Dranitzke, ‘is not a commodity.’
There are several different levels of programme on offer at NetJets Europe. The least you can pay, at the time of writing, is €131,000 for a Private Jet Card, which entitles you to 25 hours of flight time a year – and a jet within 24 hours’ notice. The Owner Programme allows customers to buy a share of an aircraft – as little as 1/16th of a plane, or 50 hours of flying time – in proportion to their anticipated needs. Half a million euros would get you a pretty decent slice.
Luxury World: The Past, Present and Future of Luxury Brands Page 9
