Fractional Jet Ownership v Private Jet Charter

If private aviation could be summed up in one word it would be this: Options. You have the ability to fly when you want, with whom you want, where you want and on an aircraft that fits those three preferences like a glove. It’s a business tailored to the needs of the consumer every step of the way.

In a series of articles on JetCharter.com, we will go through the ins and outs of private aviation, beginning with fractional jet ownership.

Fractional jet ownership is exactly what it sounds like: You, along with up to 16 other individuals, buy partial ownership of a specific aircraft. Think of it as a timeshare for jets where each owner is guaranteed the right to use the aircraft a specific amount of hours per year. Acquisition cost of a share is the pro-rated cost of the entire aircraft, which is at or at times above market value. The entry level, and most commonly exercised option, is a 1/16 share. So, if the value of the plane is $10 million dollars, the acquisition fee is $625,000. Simply change the aircraft value and or your share to find your cost of acquisition.

As with everything in life there are pros and cons, so let’s start with the benefits of fractional ownership.

To begin with, while you own and may fly on your specific plane, many fractional providers have diverse fleets owners have access to. Larger planes, smaller planes...fractional providers can often provide the perfect aircraft for any trip with little notice.

In addition, if you fly to one destination without a return flight, you will only pay for time in the air. This can be more cost-effective than charter options which would charge for the need to return the plane to its base. This benefit is huge on longer flights, especially those spanning continents.

This the benefit is based on the total hourly rate you are paying by dividing up your total cash outlay in the fractional deal divided by the number of hours you are flying.  This is all based on assumptions because you do not know (a huge risk) how much the plane’s resale value which is your share of the acquisition cost returned will be at the end of the term.

There are, of course, a few cons of fractional jet ownership.

Let’s start with the overhead. The acquisition costs are just the tip of the iceberg. As with any kind of ownership, there are costs that many people overlook. With fractional jet ownership means there is a monthly maintenance fee component that covers everything from the maintenance itself to insurance to pilot salaries. These costs can easily be five figures per month even when you’re not using the plane. There is also an operating hourly component that for the most part includes fuel cost and landing fees.

Another con is that fractional ownership requires owners to sign a contract binding them to the aircraft for 2-5 years, so this is no commitment to take lightly. Even when you can sell, keep in mind you are actually selling a now older aircraft that has probably decreased in value. Selling ownership typically has to be done through the provider and they often do charge remarketing fees. 

Frequent fliers needn’t worry if fractional jet ownership isn’t for them; there is another option in the realm of private aviation and that is private jet charter. Chartering a private jet is similar to fractional jet ownership in that it enables passengers to fly when they want, where they want, with whom they want, and on whatever aircraft they want, but there is no ownership involved – and with no ownership involved that means the cost is greatly reduced.

Passengers booking charters pay only for the trip itself (and any additions like catering onboard if that is not already included in the charter price). These flights are tailored to the needs of the passenger, so if you want a particular service all you have to do is ask for it.

The total cost includes maintenance, insurance, pilots, fuel, and landing feeds so there are never any additional fees to crop up after a trip.

One possible negative with jet charters comes when one-way flights make up the majority of travel. Hourly rates tend to be higher than round trip due to the need for operators to add “repositioning” fees if the plane must return home empty. Charter customers pay for that empty leg of the flight whereas fractional owners simply go about their business. Fractional can still be more expensive though depending on the provider's rates and the specific trip. Sometimes charter might be cheaper even in flying the plane on a return empty trip.

So the choice is yours: fractional jet ownership or private jet charter. Both have their advantages, both have their drawbacks, but either way, they provide an elite form of travel for the world’s busiest people.

If fractional ownership is something you’re considering, check out FlexJet and NetJets. If private jet charters are more your style, consider reviewing your charter operators by entering your itinerary here.