Fractional ownership of a private jet is a popular option for those who want the freedom that comes with full aircraft ownership but without as many headaches.
Overview of Fractional Ownership
Fractional ownership is when you (or your entity e.g. company) purchase a share of a private jet.
The shares that can be purchased range from 1/16 to 1/2 ownership of a private jet. The purchasing is done through a third party – i.e. a fractional share provider.
One of the most popular companies that provide fractional ownership is NetJets.
The amount of time per year that you can use the jet is in direct proportion to the ownership that you have of the aircraft. Most fractional ownership programs expect the aircraft to be flown for 800 hours per year. Therefore, your ownership stake is a proportion of the total 800 hours.
As a result, if you own 1/16 of an aircraft you would expect to be able to fly for 50 hours per year. 1/2 ownership would result in having 400 hours at your disposal.
Importantly, despite purchasing a share of an aircraft it is unlikely that you will always be flying on “your” jet. Companies that offer these fractional ownership programs – like NetJets – have large fleets of aircraft. Therefore, it makes more sense for these companies to use the aircraft that is closest to you.
At the end of your ownership term – usually five years – the operator will typically buy back the aircraft at a fair market value. However, fractional owned aircraft are typically flown more than aircraft own by just one individual or entity. Therefore, the market value will likely be lower than an equivalent aircraft that has sole ownership.
Fractional Ownership Advantages
- Lower up-front capital outlay compared with full ownership
- Guaranteed aircraft availability
- Depreciation benefits
- Choice of plane size
- Planes are professionally managed and maintained
- No charges (generally) for dead heading or repositioning costs
- Possibility of guaranteed plane buyback
Fractional Ownership Disadvantages
- Can be relatively expensive to use per hour as planes are used more heavily
- There are limits on peak flying dates
- Liability could be high, depending on whether the owner or operator is in operational control
Costs
Depending on the share of the aircraft and the size of the aircraft, the initial upfront fee is likely to be the most significant. This is the amount that you pay for your share of the aircraft.
This can be roughly calculated based off the initial value of the aircraft and the proportion that you wish to own. You can find the price of all new aircraft currently for sale here.
If you were to buy a 1/16 share of a typical light jet you would be looking at a minimum initial upfront fee of $350,000.
After the initial acquisition fee expect a monthly maintenance fee. This value will include costs such as pilot’s salary, insurance, maintenance and the cost of keeping the plane in a hangar.
Additionally expect to pay an occupied hourly fee This fee covers fuel, maintenance and in-flight catering whilst you’re onboard the jet. They may also be additional miscellaneous fees, such as a fuel surcharge.
Alternatives
There are many ways to fly by private jet. Therefore, you are likely to be able to find a way to fly that fits your needs. Other options to fly by private jet include:
- On-Demand Charter
- Jet Cards
- Private Jet Leasing (no upfront acquisition fees)
- Full Ownership
