September 2014 Newsletter

Fractional Programs: Why Buy or Lease a Fractional Share

If you fly privately there are many options to choose from, ranging from ones with little commitment (meaning relatively low cost and no long term contract) to ones with greater commitment (meaning higher cost and long term contract or ownership).

Charter is great for the occasional flyer but are you paying only for the time you are on the aircraft. In most cases the answer is no unless you get on the aircraft at its home base to fly to your destination and return in a relatively short time, usually 24 hours. If your trip starts anyplace other than the aircraft home base your charge will include positioning the aircraft to pick you up, flying you to your destination and then repositioning the aircraft back to its base. Another thing about charter is the supply of aircraft is mostly random, you make your request by asking for a class of aircraft (light, medium, super medium or large) not by the type of aircraft (such as a Cessna Citation Excel). Snacks stocked on the aircraft are normally included but not catering if you want more or the length of trip dictates it.

If you are a frequent flyer (200 plus hours a year) then you might consider the purchase of a whole aircraft. With whole aircraft operations, the more you fly reduces your per flight hour cost. Whole aircraft ownership guarantees consistency of the aircraft you fly but will it be right for each trip you want to take (too much or too little but it is all you have). Also if you are flying your own aircraft or it is parked in the hanger you incur costs like insurance, maintenance (maintenance is required if you fly it or not), hanger fees, crew salaries, crew training, depreciation, stocking and catering.  While charter has no commitment ownership does and depending on the aircraft market it may be hard to dispose of your aircraft (at least for the price you want).

Fractional aircraft ownership programs fall somewhere in between charter and whole aircraft ownership. There are several programs to choose from and range from turbo prop light models to large long range aircraft

. However, today there are only two major fractional aircraft providers. While it is no secret that fractional programs are expensive (if you fly out and back trips on charter, fractional programs cannot match the charter cost) they do offer many attributes that program participates enjoy over charter and whole aircraft ownership.  The cost might be high but they are fixed and thus predictable. The larger fractional programs offer the ability to interchange to smaller or larger aircraft (normally on an as available basis) to match the seating capacity and range that is best for your trip but are priced at a premium. Catering that is reasonable for length of trip and passenger load is included as well as aircraft stocking. Maintenance, crew training, crew salaries, hanger fees are covered by your monthly or hourly fees. Should you elect to leave the fractional program after a contractual minimum term of ownership the fractional program guarantees to repurchase your fractional share in as little as 90 days. One other attribute most fractional users appreciate is the consistency in the type aircraft supplied and services provided (you know exactly where that bag of salted nuts or candy bars are).

Aircraft on the Market

New Asking Price – 1996 Learjet 31A

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Immaculate – 2011 Quest Kodiak 100

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