Fractional Jet Ownership

Fractional Jet Ownership

When it comes to having a private jet, there are plenty of options; outright ownership, leasing, jet cards, charters, and fractional jet ownership to name just a few.

Of course, it can be difficult to decide which one is the best one for you.

In this guide, we’ll outline everything you need to know about fractional jet ownership – the pros and the cons!

What is Fractional Jet Ownership?

As the name suggests, with fractional jet ownership, you own a percentage of an aircraft with a group of other people. It can be compared to a time-share whereby your share dedicates how many hours you can use a plan for during the year. Depending on a number of factors your shares can range anywhere from 50 hours to 400 hours of flight per year. Generally speaking, you can buy the following share sizes:

Share Size Hours Per Year
1/16th 50 hours
1/8th 100 hours
1/4th 200 hours
1/2 400 hours

How Much Does Fractional Jet Ownership Cost?

The cost of fractional jet ownership depends on the jet and the share size that you choose to go for. At the lower end of the spectrum, you’re looking at around $275,000, and this can go all the way up into the millions. You also have to remember that there are monthly and fuel costs, and in some cases yearly costs too.

Of course, you do have to remember that for this price you will also own part of the plane, which depending on the market can appreciate or depreciate during your ownership. At the end of the term (usually 5 years), you also have the option to sell it back to the operator at market value.

How Does it Work?

When you buy a fractional jet share, you become part-owner of a jet. In return for your money, you’ll be allocated a number of hours in the aircraft as indicated by the table above. The larger the share the more time you have.

With most flight share companies, they operate multiple aircraft. Therefore, when you fly, you might not actually be using your own jet. Instead, you’ll be allocated seats on another plane. Depending on the company, these other jets might also be bigger, or in some cases smaller than the one you’ve bought shares in.

When you purchase your share you will have to sign the following documents:

  • Purchase Agreement
  • Management Agreement
  • Binder/Deposit Agreement
  • Master Dry Lease Exchange Agreement

Whenever you enter a flight share agreement, it’s recommended that you hire a lawyer experienced in such deals as it’s both a long term and expensive agreement.

Purchase Agreement

This is the document through which you purchase your fractional share from the provider. We make sure that this document includes iron-clad representations and warranties from the fractional company regarding title to, and the condition of, the aircraft. Just as important, the Purchase Agreement provides the terms under which the provider will repurchase your share at the end of your contract term.

Management Agreement

This is probably the most important document for fractional owners. It outlines everything that ownership provides for you. For example your management fees, requirements, flight agreements, additional cost structures, contract length, etc. In short, this document is the what and what you can’t do with your share and flight hours. With most companies, the terms of these are negotiable, so if you have some additional or unusual requirements, then make sure you bring this up with your provider.

Binder/ Deposit Agreement

If your provider is awaiting the delivery of your aircraft, it may want you to put up a deposit to hold your share. This document should identify the specific aircraft in which you’re buying the share, guarantee that the pricing won’t change, and include a firm delivery date. Most importantly, make sure you understand how and when your deposit becomes non-refundable.

Master Dry Lease Exchange Agreement

This document governs the relationship among all fractional owners in the program. Essentially, each owner agrees to share his plane with every other owner, thus enabling the provider to utilize the entire fleet to service all the owners. This arrangement is a common feature of all fractional programs; so much so that you may rarely, if ever, actually fly on the aircraft in which you own a share.

Primary Service Area

Each company has an area that they are dedicated to, as you can see in the table below. Unfortunately, not all companies operate worldwide. Though they might provide global flights, this could potentially cost you extra as it’s outside their normal service area. Unfortunately, most companies only operate in North America, with some even limiting themselves to mid-, and easter-US. If you’re looking at global options then NetJets will be your only choice. This lack of choice could be a huge put off for some people as NetJets might not meet all of your needs or requirements.

Travel Needs

The most important factor to consider, when deciding to go down the fractional ownership route is your travel needs. While we’re used to A to B flights, travel needs can be more complex:

  • How quickly do you want to be in the air
  • From where, and where to would you like to fly
  • How many hours are you planning to fly per year
  • What are conditions like at the airports that you’re touching
  • and more

What is the Best Fractional Jet Ownership Program?

There are multiple companies offering a fractional jet ownership program. Unfortunately, without testing them or a large base of client reviews, it’s impossible to determine which one is best. Therefore, if you think that fractional jet ownership is something that you’d be interested in, we’d recommend contacting each of these companies and choosing the right one for you.

Fractional Company Aircraft Type Locations
Net Jets Light, Mid, Super-Mid, Heavy Global
FlightOptions Light, Mid, Heavy North America
Flexjet Light, Mid, Super-Mid, Heavy North America
Nicholas Air Light, Mid North America
AirShare Light Mid US
PlaneSense Light Eastern US
The Company Jet Light Mid US

Fractional Ownership vs Full Ownership

When it comes to full ownership, the most prominent difference is the price. When you’re the owner of a jet the costs increase significantly. You have to pay for pilots, downtime, maintenance, fuel surcharges, all by yourself. Not to mention you also have to organize this yourself or hire someone to do it for you. In short, with whole aircraft ownership, the costs really start to stack up.

Also when you share a private jet, it becomes harder to track you. With private ownership, anyone can track your plane using its tail number. This might be great if you’re Iron Maiden on a world tour, but less so if you’re a private business person.

Fractional Ownership vs JetCards

A Jet Card allows you to purchase flight hours up-front, and are often offered by shared ownership operators. In essence, a Jet card lies between chartered flights and fractional ownership so the differences are less substantial. With JetCards you’re not tied into a long term deal but of course, it is likely to be more expensive per flight.

Fractional Ownership vs Private Charter

Private charters are perfect for casual and non-frequent flights. If you’re planning on flying a lot of hours, then Jet Cards or even fractional ownership is probably a better option. While private charters are more expensive, you do get to choose the aircraft so if you can get a larger or smaller plane as required. Furthermore, with a private jet charter, you have a lot of added flexibility and can choose options more freely.

Fractional Ownership vs Leasing

Fractional Ownership can be frowned upon by shareholders due to the large upfront investment that it requires. Of course, you might recoup this at the end of your term but investors mainly care about the current situation. For private use, the two are very similar and the decision should be personal and depending on which option you’re happier with financially.

Conclusion

When it comes to fractional jet ownership, it really comes down to two things. Which one is the most cost-effective, and also meets all of your needs and requirements.


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