Constantly flying for business leads to the question about whether fractional ownership is right for your private jet travel needs. Fractional ownership remains one of the high-value alternatives to owning an aircraft.
We took a look at the upside to the question in our last blog post.This post will take a look at the downside. With fractional ownership you can enjoy all the advantages of whole aircraft ownership, but without the management responsibilities. However, there are other details that need considering.
A History of Jet Sharing
Let’s take a look at the history of fractional ownership one more time. It started in the 1980s. It came about as more businessmen agreed to share the cost of aircraft ownership. Then, it was called jet sharing, which evolved into the official name of fractional ownership.
Fractional ownership is designed for the traveler who flies more than 50 hours per year. You can start with a share sizes start at 50 annual flight hours. Then, it can be increased in 25-hour increments. The type of aircraft is totally up to you. Various contracts offer minimum commitment starting at two years. A fractional plane’s time share is typically based on 800 hours a year. The smallest fraction is typically 1/16th equivalent to 50 flying hours per year. The initial costs range depending on the type of aircraft requested for the fractional ownership agreement.
Here are a few fractional ownership facts to consider if you are asking yourself this question: “Is fractional ownership for me?”
Consider these downsides to fractional ownership:
Large Upfront Costs. Sometimes, the total cost of aircraft ownership and operations, on a per-hour basis, may exceed the costs of other forms of ownership. In some situations, look out for increased management and infrastructure costs.
Heavier Depreciation Costs. Consider that remarketing fees may be charged on selling back the fraction
conflict of schedules possible. For example, there may be increased market value depreciation due to high utilization of the aircraft. A contract may permit as much as 1-700 hours of annual utilization when compared to typical fleet utilization of 400-500 hours for the year.
Aircraft Interior Choice. With fractional ownership, you cannot personalize aircraft interior. If that matters to you, fractional ownership is not your best choice.
Inflexibility on Aircraft Choices. There may be inflexibility on aircraft size or type to fit the needs of a trip.
More Taxes. Some businesses need to take a look at the possibility of increased federal taxes on operations.
Another option when thinking about fractional ownership is a jet card. Sometimes, jet card programs can balance out any unused flight hours towards the price of the fractional share.
Be sure to check our last blog post on the upside of fractional ownership. In the end, understanding what your needs are in combination with your flight patterns are will help you decide if fractional ownership is right for you.