Is Fractional Aircraft Ownership Right for You?

Fractional aircraft ownership has become a popular choice for individuals and businesses seeking the benefits of private aviation without the full financial commitment of owning an entire aircraft.

However, determining if fractional ownership meets your specific needs involves numerous considerations, the first and most important being: is fractional ownership the right product for me?

Fractional ownership involves purchasing a share of an aircraft, which entitles you to a set number of flying hours each year, typically ranging from 50 to 400 hours, depending on the size of your share and the specific aircraft type.

It’s an excellent option if you fly privately for at least 50 hours per year. You can buy a share of a Turboprop, a Light Jet or an Ultra-Long-Range Jet (or anything in between). It is important to know that you may never fly in “your own” plane. You’re essentially buying access to a type of aircraft – for example a Light Jet. If the operator has 10 of them, you may fly in all 10 at some point.

Fractional ownership allows you to enjoy the benefits of flying privately while leaving the management of the plane, including crew sourcing, scheduling, maintenance, positioning, and much more, to the fleet operator.

Owners typically have guaranteed access to fleets of uniform late model aircraft, so you will always be flying on newer planes. An aircraft can be ready with just a few hours’ notice, providing more consistency and availability than chartering.

If you’ve never flown privately before, then fractional ownership is not usually the place to start, because it’s a large, long-term commitment. It’s far better to try out private aviation through some initial one-off charters, where you can try different providers and different aircraft on various missions.

Having said that, if you think fractional ownership might be good for your travel plans, you must analyze your flight data and your projected uses to determine if this option will meet your needs.

Analyze Your Flight Data

Historical Data: Review your travel history over the past few years. Key metrics include the number of flights, average trip duration, destinations (including any key city pairs or routes), frequency, number of passengers, and amount of luggage.

This data helps identify your total flying time, travel patterns, and peak travel periods as well as other key needs.

Future Needs: Estimate your future flying requirements based on business growth, personal commitments, and/or lifestyle changes. Consider upcoming events, potential new travel destinations, and increased travel frequency.

Remember, with fractional ownership you will typically be entering into a five-year agreement, so estimating your future plans is a key component.

What are Your Projected Flight Hours?

Using your data from the above assessments, you should calculate your expected annual flight hours. If you’re below 50 hours annually, will owning a share encourage you to fly more because of the convenience and service levels? If you know you won’t be flying more than 50 hours per year, then one of the other alternatives mentioned below will make better financial sense.

A caveat is that fractional programs offer guaranteed availability, even on peak days. If you do a lot of flying around peak periods, then a fractional share could be a financially sensible option, as opposed to paying premiums to charter.

What are Your Flight Needs?

Even if you fly more than 50 hours per year, you need to establish whether fractional ownership of a specific type of plane is what you really need.

Do your flights vary a lot in terms of duration and/or number of passengers and luggage? If so, you will need a way to access private aviation that offers you flexibility to use different sizes of planes with different ranges and passenger capacities.

Usually, if this is the case, fractional ownership may not be the best option as you are buying a share of a specific aircraft type.

For instance, you may buy a 1/16th share, equivalent to 50 hours a year, in a Light Jet (e.g., an Embraer Phenom 300 that seats up to 7 passengers). This aircraft has a range of up to 1,900nm and is typically used for flights of one to three hours. But if some of your flights are coast-to-coast across the US and/or you are transporting more passengers or luggage, you will need something bigger than a Light Jet.

Most fractional programs will let you interchange into a different size aircraft from the one you own a share of. This may be convenient, but it’s often an expensive way to access the right size aircraft.

If your 50 hours annually would be best served by 30 hours in a Light Jet and 20 hours in a Super Mid-size Jet, then fractional ownership may not be the best option. You could, of course, buy the 50 hours in a Super Mid-size Jet, but then for 60% of your hours you would be paying for way more airplane than you really need – an expensive option.

Is Your Fractional Share Eligible for Tax Write-Offs?

Another aspect to consider is whether your use is for business or leisure. If it’s business use, then owning a fractional share may provide you with depreciation, which can factor into your ownership considerations.

This is a detailed area which we’ll delve into in-depth in a future article.

What are the Other Options Than Fractional Aircraft Ownership?

If fractional ownership doesn’t fit your flying profile, the other aircraft ownership options are as follows...

Chartering: This option allows you to rent an aircraft on a per-flight (ad hoc) basis, providing maximum flexibility without the long-term commitments. This option is deal for infrequent flyers (less than 50 hours per year), there is no upfront investment, and there is access to a wide range of aircraft types.

On the flip side, availability is variable and, with many charter providers on the market, you are likely to experience inconsistencies in aircraft quality and service.

Jet Cards and Memberships: This option provides pre- paid access to a fleet of aircraft, with a fixed number of hours or flights. These programs often provide guaranteed availability and consistent service levels.

Among the pros is that it’s suitable for those flying between 25 and 50 hours per year, has predictable costs, and offers guaranteed recovery for mechanical issues, while having no long-term commitment for the card/membership holder.

Among the cons to consider is the higher cost per hour compared to fractional ownership, the upfront financial commitment, and potential restrictions on peak day usage.

Whole Aircraft Ownership: This involves buying and operating an entire aircraft for sale – an option offers complete control over the aircraft and its usage. This solution is ideal for those flying over 300+ hours annually, and offers the owner full customization of the aircraft and total flexibility in their scheduling and operations.

This option requires significant upfront investment, however, and has high ongoing operational and maintenance costs and responsibilities related to aircraft management.

In Summary...

Fractional ownership undoubtedly offers a compelling balance between flexibility, convenience, and cost-effectiveness for many flyers, whether it’s the right choice for you ultimately depends on your unique circumstances and flying profile.

This option makes most financial sense for those flying 50+ hours annually over consistent distances with roughly the same number of passengers and luggage on every flight, while also guaranteeing access to your plane in peak periods should you need it.

NICK COPLEY is President and Founder of SherpaReport, which for 20 years, has been a comprehensive source for insider knowledge to help people make informed decisions about buying a private aircraft or investing in alternatives such as fractional ownership, jet cards and/or charters. More information from www.sherpareport.com