At first sight, flying private may seem like an unnecessary and even economically wasteful thing to do. While it is true that private travel is a very expensive luxury, costing on average anywhere between $1,000 to $9,000 per flight hour, it is also true that flying private can reap significant benefits. Those who are fortunate enough to fly on private jets usually get to their destination a lot faster than if they were to travel on a commercial airline. They can also choose to travel on the dates and times that are most convenient for their schedule, and very rarely have to deal with flight delays. All of this equates to having more time to be productive.
With that being said, as with almost everything, there are some disadvantages of owning a private jet outright. The biggest disadvantage is the amount of time and work that is required to operate one. It can be quite a hassle to recruit and retain a highly certified flight crew while trying to keep an aircraft properly maintained and fully compliant with ever-changing regulatory requirements. One way around this headache is by purchasing a share in an aircraft that is managed by a third party rather than completely owning one. This is commonly referred to as fractional jet ownership.
Fractional Jet Ownership Explained
Much like owning a timeshare property, fractional jet ownership is an arrangement whereby more than one person collectively shares ownership of an aircraft. As of result of this agreement, part-owners can reap the benefits of owning a private jet while sharing the actual costs associated with acquiring and maintaining one. The maximum amount of hours that each part-owner of a jet can use to fly depends on the size of their ownership percentage in the aircraft. (For related reading, see: The Economics Of Private Jet Charters.)
Who Can Benefit from It The Most
Fractional jet ownership is best for someone who enjoys the perks of flying first class and flies for many hours on an annual basis. From an economical point of view, it probably would not make much, if any, sense to participate in an aircraft sharing program if you fly for less than 50 hours each year. A fractional jet ownership arrangement is also very suitable for wealthy individuals and corporations that would like to have the flexibility and efficiency of private air travel, but would prefer to avoid tying up their resources in managing a jet on a daily basis. Fractional aircraft providers like, Flight Options and Executive AirShare, usually handle all of the maintenance and operations for their customers.
People who have busy and unpredictable schedules would appreciate a service like this as well. This is because part-owners of jets have greater control over their travel dates and times. Generally speaking, private air travel is a lot faster than commercial travel and as a result passengers on private flights tend to get to their intended destinations a lot earlier than if they were to fly with a traditional airline. Customers of fractional jet providers can also schedule or change their flights without giving a lot of notice in advance. For example, NetJets, a leading private aviation company and a subsidiary of Warren Buffett's Berkshire Hathaway (BRK.A, BRK.B), only requires 4-6 hours notice time (depending on the type of aircraft requested) to make a flight reservation.
Also, the majority of fractional jet companies provide a guaranteed buy-back provision that allows their customers to resell their interest in an aircraft back to them at fair market value, after depreciation. On the other hand, it can take quite some time to find a buyer for your aircraft if you completely own it. (You might also like: Buying vs. Leasing a Private Jet.)
What Are the Different Costs?
To become a part-owner in an aircraft, one needs to first purchase a share in one. This is sometimes referred to as an acquisition fee and is based on the type of aircraft that is being bought as well as how large a share is being acquired. Once a person becomes a fractional owner of an aircraft he or she is required to pay a fixed monthly management fee which in addition to maintenance costs covers insurance expenses, wages for the flight crew and other indirect operating costs. A fee is also charged for every hour of flight time a part-owner uses. It is also important to note that fractional owners are not usually billed for non-occupied flights, i.e. flights that a jet takes to get to a passenger or to fly back to its home base. (See also: Time to Move from Business Class to a Private Jet Charter?)
The Bottom Line
It is very hard for some people to make any sense of the costs associated with private air travel especially when they are compared to the cost of flying with a commercial airline. Although expensive, flying private is a necessity and a very rewarding investment for anyone who cannot afford to experience flight delays and long layovers in airports. However, it can be extremely inconvenient to manage an aircraft all on your own. One can avoid this headache by becoming a part-owner is a jet through a company that sells fractional jet ownership like NetJets, Flight Options, and Executive AirShare.